Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction
(a) Washington has entered into the
streamlined sales and use tax agreement (SSUTA) pursuant to
RCW
82.58.030. Washington became an associate
member state on July 1, 2007, and was granted full membership status as of July
1, 2008.
(b) This rule explains the
monetary allowances for certified service providers (CSPs) with respect to
CSP-compensated sellers (also referred to as "model 1 sellers"). See
RCW
82.32.020,
82.32.715,
and
82.58.080.
The rule also lists rights and responsibilities applicable to these CSPs when
collecting and remitting retail sales and use taxes in Washington.
(c) This rule is effective for periods
beginning January 1, 2021, and is guided by the terms specified in the CSP
contract approved by the streamlined sales tax governing board as of August 31,
2020, to be effective January 1, 2021, (CSP contract). The CSP contract is the
agreement executed between each CSP and the streamlined sales tax governing
board under which CSPs perform services in SSUTA associate and member states.
To the extent there is a conflict between
RCW
82.32.715 and the CSP contract,
RCW
82.32.715 controls.
(d) For periods prior to January 1, 2021,
refer to terms of the applicable CSP contract in effect for such prior
period.
(e) For more information
concerning SSUTA visit the SSUTA website located at:
http://www.streamlinedsalestax.org.
The SSUTA website may include a list of the current member and associate
states, information concerning the CSP contract, CSP certification, and a list
of current CSPs, and other information referenced in this rule. The SSUTA
website is not maintained by Washington or the department of revenue
(department) and may contain recommendations or provisions that require a
change to Washington law prior to becoming effective in
Washington.
(2)
Definitions.
(a)
What is a
CSP for purposes of this rule ? A CSP is an agent of the CSP-compensated
seller certified under the SSUTA to perform a seller's retail sales and use tax
functions, other than the seller's obligation to remit retail sales and use tax
on its own purchases.
The sales and use tax functions contemplated are those services
necessary to:
(i) Set up and integrate
a CSP's certified automated system with a seller's system, including a product
mapping process;
(ii) Calculate the
amount of tax due on a transaction at the time of sale, including determining
the jurisdiction to which each of a seller's transactions is sourced,
determining whether the transaction is subject to tax, and determining the
amount of state and local sales or use tax due on the transaction;
(iii) Generate and file the required sales
and use tax returns, including compiling and maintaining the required data,
preparing the simplified electronic return (SER), filing the required SER, and
remitting tax funds;
(iv) Respond
to and provide supporting documentation with respect to notices and sales tax
and use tax audits;
(v) Protect the
privacy of tax information it obtains; and
(vi) Maintain compliance with the streamlined
organization's minimum standards for certification.
(b)
What is a CSP-compensated
seller? A CSP-compensated seller is a seller that has selected a CSP, as
agent, to perform that seller's retail sales and use tax functions as described
in subsection (2)(a) of this rule, who has registered through the streamlined
sales tax registration system (SSTRS), and meets all of the criteria to qualify
as a CSP-compensated seller under the terms of Section D.2(b) of the CSP
contract.
(c)
What are member
states and associate member states? Member states are those states that
have petitioned and been granted full membership under the SSUTA. Associate
member states are those states that have petitioned and been designated
associate member status under the SSUTA.
(d)
What are monetary
allowances? As a condition of becoming an associate member and member
state, Washington has agreed to permit CSPs to act as agents for sellers in
collecting and remitting sales and use taxes in Washington. Washington has
agreed to provide monetary allowances to CSPs acting as agents for
CSP-compensated sellers. A CSP will obtain these monetary allowances by
retaining a portion of the Washington retail sales and use taxes covered by the
SSUTA that they collect. However, monetary allowances will not reduce the
retail sales and use taxes collected for and remitted to local taxing
jurisdictions. The calculation of these monetary allowances is discussed in
subsection (3) of this rule.
(e)
What is a certified automated system (CAS)? A certified automated
system is software certified by Washington under the SSUTA: To calculate the
sales and use tax imposed by each taxing jurisdiction on a transaction; to
determine the amount of tax to remit; and to maintain a record of the
transaction.
(3)
How
are monetary allowances calculated? The formula for determining monetary
allowances in this rule is guided by the compensation formula set out in
Section D.5 of the CSP contract. This monetary allowance is the CSP's sole form
of compensation with respect to CSP-compensated sellers. The formula is the
same with respect to all CSPs. The monetary allowance is calculated as a
percentage of the taxes that are covered by the SSUTA due to Washington:
(a)
CSP-compensated sellers with gross
sales in preceding calendar year less than or equal to $100,000. For
CSP-compensated sellers with gross sales in Washington less than or equal to
$100,000 in the preceding calendar year, the allowance equals six percent of
the first $8,000 of taxes due in Washington in the calendar year. Thereafter,
the allowance is five percent of taxes due in Washington that exceed $8,000 but
do not exceed $500,000 in the calendar year, and two percent of the taxes due
in Washington in excess of the first $500,000 in the current calendar
year.
(b)
CSP-compensated
sellers with gross sales in the preceding calendar year exceeding
$100,000. For CSP-compensated sellers who had gross sales in Washington
exceeding $100,000 in the preceding calendar year, the allowance equals five
percent of the first $500,000 of taxes due in Washington and two percent of the
taxes due in Washington in excess of the first $500,000 in the current calendar
year.
(4)
Change in
status of CSP-compensated sellers.
(a)
Can CSP-compensated sellers lose CSP-compensated seller status?
CSP-compensated seller status ceases when, as a result of activities the seller
conducts in Washington, the seller fails to meet one or more of the criteria
required for qualification as a CSP-compensated seller identified in subsection
(2) of this rule.
(b)
Seller
statements. Each CSP-compensated seller must periodically send written
statements or written representations (statement) to the CSP verifying that the
seller continues to qualify as a CSP-compen-sated seller in Washington. The
CSP-compen-sated seller must send the first statement twenty-four consecutive
months from the date on which the CSP began remitting sales and use taxes for
the CSP-compensated seller in Washington. Subsequently, CSP-compensated sellers
will send a statement every year. A CSP may request a statement verifying a
seller's CSP-compensated seller status at any time. If the statement indicates
a seller is no longer a CSP-compensated seller, the CSP must provide notice of
the change in status. The change in status is then effective on the first day
of the month following the calendar month the statement was obtained. A
CSP-compensated seller's failure to respond to CSP may result in that person
losing its status as a CSP-compensated seller.
(c)
When will monetary allowances
terminate? Generally, a CSP is entitled to retain monetary allowances
granted prior to receiving a statement indicating that the seller has lost
CSP-compensated seller status. However, entitlement to monetary allowances will
end on the first day of the month following notice of change in status.
Regardless, a CSP will be entitled to monetary allowances for services
performed under this rule with respect to a CSP-compensated seller for a period
of twenty-four months (beginning on the date the CSP commenced remitting sales
and use taxes for the CSP-compensated seller in Washington and ending
twenty-four consecutive months later). If a CSP fails to obtain a statement and
the seller is determined not to be a CSP-compensated seller, the CSP will
forfeit compensation and such compensation will be forfeited to the later of
the due date of the missing statement or the date the seller lost its status as
a CSP-compensated seller. Additionally, Washington may also challenge the
status of a CSP-compensated seller if the state believes it does not meet the
requirements for a CSP-compensated seller.
(5)
CSP rights and
responsibilities.
(a)
Responsibility for retail sales and use taxes. A CSP is liable to
the member states and associate member states for the retail sales and use
taxes on the sales transactions that it processes.
If the CSP does not remit the collected retail sales and use
taxes when due, those taxes are delinquent. Washington may send a notice of
delinquency to a CSP for these delinquent taxes. The CSP must then remit the
delinquent taxes within ten business days of that notification. If the CSP does
not remit the delinquent taxes within those ten business days, the CSP is not
entitled to monetary allowances with respect to the delinquent taxes and is
liable for the payment of the taxes along with penalties and interest. However,
if the taxes are delinquent because a seller has not remitted part or all of
the delinquent taxes to the CSP, the CSP will be given relief if it properly
notifies the department and timely files the required return. In order to
obtain this relief, the CSP must notify the department of the seller's failure
to remit the retail sales and use taxes to the CSP and file the required return
within ten business days of the date on which those delinquent taxes should
have been remitted to the department. If the CSP has timely filed the return
without payment and provided the notice required under the CSP contract, and
the seller subsequently remits the taxes due to the CSP within sixty days of
the due date of the remittance, the CSP will still be entitled to the monetary
allowance provided in the CSP contract for those taxes, provided the CSP remits
the taxes due to Washington within ten business days after receiving the taxes
due from the seller. Notice by the CSP under this subsection must be provided
consistent with the notice provisions contained in the CSP
contract.
(b)
CSP
liability relief. The department is responsible for maintaining the
state's taxability matrix.
(i) A CSP is not
liable for charging or collecting the incorrect amount of sales or use tax
where that error results from reliance on incorrect data provided in the
department's taxability matrix, or from tax rates, boundaries, and taxing
jurisdiction assignments listed in Washington's rates and boundaries
databases.
(ii) Beginning July 1,
2015, if the taxability matrix is amended, sellers and certified service
providers are relieved from liability to the state and to local jurisdictions
to the extent that the seller or certified service provider relied on the
immediately preceding version of the state's taxability matrix. Relief under
this subsection (5)(b) of this rule is available until the first day of the
calendar month that is at least thirty days after the department submits notice
of a change to the state's taxability matrix to the streamlined sales tax
governing board.
(iii) To obtain a
copy of the taxability matrix, visit the SSUTA website located at:
streamlinedsalestax.org. Additionally, CSPs will be held harmless and not
liable for sales and use taxes, interest, and penalties on those taxes not
collected due to reliance on Washington's certification of the CSP's CAS.
Pursuant to
RCW
82.58.080, sellers that contract with a CSP
are not liable to Washington for sales or use tax due on transactions processed
by the certified service provider unless the seller misrepresents the type of
items it sells or commits fraud.
(c)
Seller's contract with the
CSP. A CSP must provide the department with a copy of its agreement with
contracting sellers if requested.
(d)
Credits or refunds with respect to
bad debt. A CSP may, on the behalf of a seller, claim credits or refunds
for sales taxes paid on bad debts. Bad debts have the same meaning provided in
26
U.S.C. Section 166, as amended in 2003. Bad
debts do not include expenses incurred in collecting bad debts; repossessed
property; and amounts due on property in the possession of the seller until the
full purchase price has been paid. See
RCW
82.08.037,
82.12.037,
and WAC
458-20-196 for more
information regarding bad debts.
(e)
Retention of personally identifiable consumer information. With
limited exceptions, CSPs must perform their services without retaining
personally identifiable consumer information. A CSP may retain personally
identifiable consumer information only as long as it is needed to ensure the
validity of tax exemptions or to show the intended use of the goods or services
purchased. See
RCW
82.32.735 for more information regarding
personally identifiable consumer information.
(f)
Filing of tax returns and
remittance of retail sales and use taxes. CSP will file retail sales and
use excise tax returns using Washington's electronic filing system (E-file).
CSPs will remit retail sales and use taxes due with respect to these returns
using ACH Debit, ACH Credit, or the Fedwire Funds Transfer System.
Statutory Authority:
RCW
82.32.300,
82.01.060(2), and
82.32.715. 08-01-017, §
458-20-277, filed 12/7/07, effective
1/7/08.