Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction. As a
requirement of membership in the Streamlined Sales and Use Tax Agreement
(SSUTA), Washington has agreed to provide compensation to model 2 volunteer
sellers collecting and remitting retail sales and use taxes in Washington. For
more information concerning the SSUTA, visit streamlinedsalestax.org. This rule
explains who qualifies as a model 2 volunteer seller and the compensation
available to such sellers as authorized under
RCW
82.32.715.
The web site referenced in this rule is not maintained by
Washington or the department of revenue (department). This referenced web site
may contain recommendations that require a change to Washington law before
becoming effective in Washington. The web site is current as of the date of
adoption of this rule, but may change in future periods by action of the owner
of the web site without notice.
(2)
Model 2 volunteer sellers.
This subsection discusses the qualifications for status as a model 2 seller and
a model 2 volunteer seller. Only those model 2 sellers qualifying as model 2
volunteer sellers are eligible to receive compensation for remitting sales and
use taxes to Washington under subsection (3) of this rule. A taxpayer that
qualifies as a model 2 volunteer seller under this subsection will be referred
to as a "qualified seller."
(a)
What is
a model 2 seller? You will qualify as a model 2 seller if you meet all
of the following conditions:
(i) You use a
certified automated system to perform part of your sales and use tax functions.
(See (f) of this subsection for a definition of certified automated system);
and
(ii) You retain the
responsibility for remitting your sales and use taxes to Washington.
(b)
What is a model 2
volunteer seller? If you are a model 2 seller under (a) of this
subsection, you will be a model 2 volunteer seller if you are registered
through the SSUTA central registration system (CRS) as a model 2 seller and you
meet the following additional conditions:
(i)
You have represented that you do not have a legal requirement to register and
do not in fact have a legal requirement to register in Washington at the time
you register with the CRS, regardless of any previous registration you may have
made in Washington; or
(ii) You
register with Washington through the CRS after November 12, 2002, and you meet
all of the following requirements immediately before the date of your
registration with Washington through the CRS (and you do not cease to meet
these requirements thereafter pursuant to subsection (3)(d) of this rule):
(A) You have no fixed place of business in
Washington for more than thirty days;
(B) You have less than fifty thousand dollars
of property in Washington;
(C) You
have less than fifty thousand dollars of payroll in Washington; and
(D) You have less than twenty-five percent of
your total property or payroll in Washington.
If you have registered in Washington because you had a legal
requirement to register resulting from an administrative, legislative, or
judicial action before October 1, 2005, you cannot be a model 2 volunteer
seller under this subsection.
(c)
If I am a qualified seller, do I
still need to register with the department for Washington state tax purposes
under RCW
82.32.030(1) ? Your
status as a qualified seller does not impact your requirement to register with
the department. If you meet the conditions for registration with the department
under RCW
82.32.030, you must register with the
department.
(d)
What is
property for purposes of (b) of this subsection and how is it valued?
Property refers to the "average value" of the real property and tangible
personal property that you own and rent. You will value owned property at its
original cost basis. Rented property will be valued at eight times the net
annual rental rate of that property. The net annual rental rate is the annual
rental rate paid by you less any annual rental rates you receive from
subrentals.
You must determine the "average value" of this property by
averaging the value of property at the beginning of the twelve-month period
immediately before the date you register with Washington with the value of
property at the end of the twelve-month period immediately before you register
with Washington.
(e)
What is payroll for purposes of (b) of this subsection? Payroll is
the total amount paid by you for compensation during the twelve-month period
immediately preceding the date you register with Washington. Compensation means
wages, salaries, commissions, and any other form of payment to employees or
similar persons that meet the definition of gross income under section 61 of
the Internal Revenue Code in effect on the effective date of this rule.
Compensation is deemed to be payroll in Washington if:
(i) The employee's service is performed
entirely within Washington;
(ii)
The employee's service is performed both within and outside Washington, and the
performance of services outside Washington is merely incidental to the services
performed within Washington;
(iii)
The employee performs some services within Washington, and the base of
operations or the place from which the services are directed or controlled is
within Washington; or
(iv) The
employee performs some services within Washington, and the base of operations
or place from which the services are directed or controlled is not within any
state (where some part of the services are performed), but the employee's
residence is within Washington.
(f)
What is a certified automated
system for purposes of this rule? 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)
Qualified seller
compensation. This subsection explains compensation available to
qualified sellers.
(a)
What type of
compensation is available to qualified sellers? If you are a qualified
seller, you are eligible to receive monetary allowances from Washington under
this subsection and this is in addition to any existing discount afforded by
each member state. You may view a list of SSUTA member and associate member
states at streamlinedsalestax.org. You obtain these monetary allowances from
Washington by retaining a portion of the Washington state retail sales and use
taxes you collect and report to Washington. You are not entitled to monetary
allowances unless you are a qualified seller and have filed and paid a timely
return.
(b)
How long are
qualified sellers permitted to receive monetary allowances? If you
install a certified automated system on or after July 1, 2007, you are eligible
to receive monetary allowances under this subsection for a period up to
twenty-four months from the date that you install your certified automated
system.
(c)
How do qualified
sellers calculate their monetary allowances? You will calculate your
monetary allowance under the following formula:
(Applicable rate) multiplied by (Washington retail sales and
use taxes you collect and report).
The applicable rate for this formula is one and one-half
percent. Your total monetary allowance for the first twelve months of the
twenty-four month period described in (b) of this subsection cannot exceed ten
thousand dollars. Your total monetary allowance for the second twelve months of
the twenty-four month period described in (b) of this subsection cannot exceed
ten thousand dollars. For purposes of determining when each ten thousand dollar
limit is reached, affiliated qualified sellers must be treated as a single
qualified seller if they would qualify as "related persons" under sections
267(b) or 707(b) of the Internal Revenue Code in effect on the effective date
of this rule.
You may not retain monetary allowances under this subsection
based on any sales taxes determined or calculated without the use of a
certified automated system. Moreover, you may not retain monetary allowances
under this subsection based on any sales taxes determined or calculated with a
certified automated system that you have failed to update or modify in
accordance with your agreement with your certified automated system provider.
It is your duty to make sure all updates and modifications to your certified
automated system are properly implemented.
(d)
Can a qualified seller continue to
receive monetary allowances if it ceases to be a qualified seller? No.
If you cease to be a qualified seller, you are not entitled to monetary
allowances. If you cease to be a qualified seller during any part of a calendar
month, you will not be entitled to monetary allowances for that entire month.
You will cease to be a qualified seller if you conduct activities in Washington
that would require you to register in Washington and as a result of these
activities fail to meet one or more of the requirements of subsection
(2)(b)(ii)(A) through (D) of this rule. The meanings given to property and
payroll in subsection (2)(d) and (e) of this rule apply for purposes of this
subsection (3)(d). However, you must determine the "average value" of property
and the amount of payroll under this subsection (3)(d) as follows:
(i) You must determine the "average value" of
property by averaging the values at the beginning and end of your last fiscal
year that terminates at least thirty days before the date the determination is
made.
(ii) You must determine
payroll, by calculating the total amount of compensation paid to employees
during your last fiscal year that terminates at least thirty days before the
date the determination is made.
(e)
Are monetary allowances funded from
both Washington state and local retail sales and use taxes? No, monetary
allowances will only be funded from the Washington state portion of the retail
sales and use taxes that you collect and must remit.
(4)
Do qualified sellers have any
liability protections when operating in Washington? You are not liable
for charging or collecting the incorrect amount of sales or use tax when that
error results from reliance on incorrect data provided in the state's
taxability matrix.
(a) 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 (4)(a) 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. To obtain a copy of the taxability matrix, visit the SSUTA web site
located at: streamlinedsalestax.org.
(b) Additionally, you will be held harmless
and not liable for sales and use taxes, including interest and penalties on
those taxes, not collected due to reliance on Washington's certification of the
certified automated system you use. However, you will not be held harmless for
the incorrect classification of an item or transaction into a product based
exemption certified by the department unless that item or transaction is listed
within a product definition approved by the SSUTA's governing board or the
department. See also
RCW
82.32.745.
(5)
Filing returns and remitting
taxes. Qualified sellers must electronically file retail sales and use
excise tax returns and must remit retail sales and use taxes due with respect
to these returns using ACH Debit, ACH Credit, or the Fed Wire Funds Transfer
System.
Statutory Authority:
RCW
82.32.300,
82.32.715, and
82.01.060(2).
08-22-048, § 458-20-27701, filed 10/31/08, effective
12/1/08.