Current through Register Vol. 24-06, March 15, 2024
(2)
Other rules. In addition to
this rule, readers may want to refer to the following rules for additional
information:
* WAC
458-20-103
Gift certificates-Sale deemed to occur and retail sales tax collected at time
of redemption.
* WAC
458-20-108
Selling price-Credit card service fees, foreign currency, discounts, patronage
dividends.
* WAC
458-20-145
Local sales and use tax.
* WAC
458-20-193
Interstate sales of tangible personal property.
* WAC
458-20-193C
Imports and exports-Sales of goods from or to persons in foreign
countries.
* WAC
458-20-221
Collection of use tax by retailers and selling agents.
(4)
Organization of rule. This
rule is divided into six parts:
* Part I - Definitions.
* Part II - Defining a Marketplace Facilitator.
* Part III - Tax Collection Responsibilities.
* Part IV - Liability Relief.
* Part V - Providing Sales Information to Marketplace
Sellers.
* Part VI - Marketplace Audits.
Part I - Definitions
The definitions in this part are provided in
RCW
82.08.010 and apply throughout this rule
unless the context clearly requires otherwise.
(101)
(a)
"Affiliated person" means a person that, with respect to another person:
(i) Has an ownership interest of more than
five percent, whether direct or indirect, in the other person; or
(ii) Is related to the other person because a
third person, or group of third persons who are affiliated persons with respect
to each other, holds an ownership interest of more than five percent, whether
direct or indirect, in the related persons.
(b) For purposes of this subsection:
(i) "Ownership interest" means the possession
of equity in the capital, the stock, or the profits of the other person;
and
(ii) An indirect ownership
interest in a person is an ownership interest in an entity that has an
ownership interest in the person or in an entity that has an indirect ownership
interest in the person.
(102) "Consumer" has the same meaning as
provided in chapters 82.04, 82.08, and 82.12 RCW.
(103) "Marketplace" means a physical or
electronic place including, but not limited to, a store, a booth, an internet
website, a catalog or a dedicated sales software application, where tangible
personal property, digital codes and digital products, or services are offered
for sale.
(104)
(a) "Marketplace facilitator" means a person
that:
(i) Contracts with sellers to facilitate
for consideration, regardless of whether deducted as fees from the transaction,
the sale of the seller's products through a marketplace owned or operated by
the person (collectively "facilitates sales for consideration");
(ii) Engages directly or indirectly, through
one or more affiliated persons, in transmitting or otherwise communicating the
offer or acceptance between the buyer and seller (collectively "transmits offer
or acceptance"). For purposes of this subsection, mere advertising does not
constitute transmitting or otherwise communicating the offer or acceptance
between the buyer and seller; and
(iii) Engages directly or indirectly, through
one or more affiliated persons, in any of the following activities with respect
to the seller's products:
(A) Payment
processing services;
(B)
Fulfillment or storage services;
(C) Listing products for sale;
(D) Setting prices;
(E) Branding sales as those of the
marketplace facilitator;
(F) Taking
orders; or
(G) Providing customer
service or accepting or assisting with returns or exchanges (collectively
"specified activities").
(b)
(i)
"Marketplace facilitator" does not include:
(A) A person who provides internet
advertising services, including listing products for sale, so long as the
person does not also transmit offer or acceptance and engage in any specified
activities; or
(B) A person with
respect to the provision of travel agency services or the operation of a
marketplace or that portion of a marketplace that enables consumers to purchase
transient lodging accommodations in a hotel or other commercial transient
lodging facility.
(ii)
The exclusion in (b) of this subsection does not apply to a marketplace or that
portion of a marketplace that facilitates the retail sale of transient lodging
accommodations in homes, apartments, cabins, or other residential dwelling
units.
(iii) For purposes of (b) of
this subsection, the following definitions apply:
(A) "Hotel" has the same meaning as in
RCW
19.48.010.
(B) "Travel agency services" means arranging
or booking, for a commission, fee or other consideration, vacation or travel
packages, rental car or other travel reservations or accommodations, tickets
for domestic or foreign travel by air, rail, ship, bus, or other medium of
transportation, or hotel or other lodging accommodations.
(105) "Marketplace
seller" means a seller that makes retail sales through any marketplaces
operated by a marketplace facilitator, regardless of whether the seller is
required to be registered with the department as provided in
RCW
82.32.030.
(106) "Person" means any individual,
receiver, administrator, executor, assignee, trustee in bankruptcy, trust,
estate, firm, copartnership, joint venture, club, company, joint stock company,
business trust, municipal corporation, political subdivision of the state of
Washington, corporation, limited liability company, association, society, or
any group of individuals acting as a unit, whether mutual, cooperative,
fraternal, nonprofit, or otherwise and the United States or any instrumentality
thereof.
(107) "Product" has the
same meaning as provided in
RCW
82.32.023.
(108) "Purchaser" means any consumer who
purchases or leases a product sourced to this state under
RCW
82.32.730.
(109) "Retail sale" and "sale" have the same
meaning as provided in chapter 82.04 RCW.
(110) "Seller" has the same meaning as
provided in
RCW
82.08.010.
Part II - Defining A Marketplace
Facilitator
(201)
(a)
Who is a marketplace
facilitator? A marketplace facilitator is a person who facilitates sales
for consideration of a marketplace seller's products through a marketplace,
transmits offer or acceptance between the buyer and seller, and engages in at
least one of the specified activities listed in subsection (104)(a)(iii) of
this rule. A person must meet all three parts of the definition to be a
marketplace facilitator. Generally, a person is facilitating a sale when the
sale is conducted through the person's marketplace.
(b)
Who is not a marketplace
facilitator?(i)
Advertisers. Persons that merely advertise goods for sale,
including listing products for sale in the advertisement, and do not handle
transactions do not meet the definition of a marketplace facilitator, as long
as those persons do not meet the other requirements of the marketplace
facilitator definition. Additionally, mere advertising does not constitute
transmitting or otherwise communicating the offer or acceptance between the
buyer and seller for the purposes of subsection (104)(a)(ii) of this rule of
the marketplace facilitator definition.
(ii)
Travel agents and hotel
marketplaces. A person operating a marketplace is not considered a
marketplace facilitator for any portion of its marketplace that provides travel
agency services or enables consumers to purchase transient lodging
accommodations in a hotel or other commercial transient lodging facility. This
exclusion does not apply to any portion of a marketplace that facilitates the
retail sale of transient lodging accommodations in homes, apartments, cabins,
or other residential dwelling units.
(c)
Responsibilities depend on role in
transaction. A person can be a retailer for some transactions and a
marketplace facilitator for some transactions, but it can only be one of these
designations in any particular transaction. A person's specific reporting
responsibilities as a retailer or marketplace facilitator depends on its
particular role in the transaction.
Example 1. Intergalactic Fulfillment Portal (IFP)
lists products sold by third parties at retail on its website. IFP communicates
the offer and acceptance between the seller and buyer for the sale of these
third-party products. IFP completes the sales transactions on its website,
processes the payments, and is paid a percentage of the sales price. IFP is a
marketplace facilitator, as it meets all three parts of the marketplace
facilitator definition (facilitates sales for consideration, transmits offer or
acceptance, and engages in at least one specified activity--processing
payments).
Example 2. Same facts as Example 1, except IFP
uses a third party to process the payments. IFP still meets the definition of a
marketplace facilitator, as it still meets all three parts of the marketplace
facilitator definition (facilitates sales for consideration, transmits the
offer or acceptance, and engages in a specified activity--listing products for
sale). A person does not need to process payments to meet the definition of a
marketplace facilitator, as any one of the specified activities listed in
subsection (104)(a)(iii) of this rule is sufficient.
Example 3. Taste of Andromeda (TOA) is a business
that contracts with various restaurants to allow them to prepare and sell food
(all of which is subject to retail sales tax) in the business's food court.
Customers order and collect their food from the restaurants, but TOA, not the
third-party restaurants, completes the sale and accepts payment for the
prepared food. TOA gives the third-party restaurants the remaining proceeds of
the sale net of the amount TOA retains for itself. TOA meets the definition of
a marketplace facilitator, as it meets all three parts of the marketplace
facilitator definition (facilitates sales for consideration, transmits offer or
acceptance, and engages in a specified activity--processing payments).
Example 4. First Alpha Centauri Technology (FACT)
performs the payment processing for an online marketplace. Neither FACT nor any
of FACT's affiliates performs any other function related to the operation or
sale of products on the marketplace. FACT does not meet the definition of a
marketplace facilitator, as it only satisfies one of the three parts of the
marketplace facilitator definition, in this case engaging in a specified
activity. FACT does not meet the other two parts of the marketplace facilitator
definition (it is neither facilitating sales for consideration, nor is it
transmitting offer or acceptance).
Example 5. Neptunian Connection (NC) is a business
that lists products sold by third parties on its website. NC does not
facilitate the sale of these products for consideration. When purchasers want
to purchase a listed product, NC transfers the purchaser to the third-party
seller's website to complete the sale. NC has no involvement in the sales
transaction. NC does not meet the definition of a marketplace facilitator (NC
neither gets paid to facilitate a sale for consideration on a marketplace, nor
transmits offer or acceptance).
Example 6. Antares Travel Solutions (ATS) owns and
operates a marketplace for used teleporters and gets paid for facilitating
sales of used teleporters by third-party sellers. ATS facilitates sales for
consideration, but neither transmits offers or acceptances, nor engages in a
specified activity. However, ATS owns 19% of the capital stock of the
Scorpius-Centaurus Association (SCA). SCA owns 11% of the capital stock of
Mahtab Affiliated Technologies (MAT), which transmits the offers and
acceptances on the ATS marketplace, and processes payments for the ATS
marketplace. Since ATS has an indirect ownership interest in MAT, MAT is an
affiliated person with respect to ATS. As a result, ATS meets all three parts
of the definition of a marketplace facilitator (facilitates sales for
consideration, transmits offers or acceptances indirectly through an affiliated
person, and engages in a specified activity indirectly through affiliated
person--payment processing services).
Example 7. Triangulum Transient Geological
Excursions (TTGE) operates a marketplace specializing in transient lodging for
individuals interested in geology. TTGE's marketplace facilitates the retail
sale of transient lodging accommodations in residential cabins offering views
of volcanoes. TTGE's marketplace also allows for the sale of transient lodging
located in a hotel next to a tectonic fault. TTGE is a marketplace facilitator
for the sales of transient lodging located in the residential cabins, but is
not a marketplace facilitator for the sales of the transient lodging located in
the hotel. TTGE does not need to report its sales of the transient lodging
located in the hotel.
Part III - Tax Collection Responsibilities
(301)
What must be collected and
remitted?(a)
Requirement to
collect and remit sales or use tax. A marketplace facilitator must
collect and remit sales or use tax on all taxable retail sales sourced to
Washington on behalf of any marketplace seller making retail sales through the
marketplace facilitator's marketplace.
(i)
Determining the correct combined state and local sale of use tax
rate. The marketplace facilitator must determine the correct combined
state and local sales or use tax rate to charge for sales sourced to
Washington. The state tax rate is established in
RCW
82.08.020. For information on determining the
applicable local tax rate, see WAC
458-20-145.
(ii)
Relief for marketplace
seller. Except as otherwise provided in subsection (401)(b) of this
rule, a marketplace seller is not required to collect or remit sales or use tax
on taxable retail sales through a marketplace facilitator's marketplace if the
marketplace seller has obtained documentation from the marketplace facilitator
indicating that the marketplace facilitator is registered with the department
and will collect all applicable taxes due under chapters 82.08 and 82.12 RCW on
all taxable retail sales made on behalf of the marketplace seller through the
facilitator's marketplace. The required documentation must be in writing, but
may be transmitted electronically. The required documentation may be included
in agreements between the marketplace seller and the marketplace facilitator or
in information distributed or accessible to marketplace sellers through the
facilitator's marketplace. Marketplace sellers should retain this documentation
with their own tax records. The documentation must clearly state the
marketplace facilitator's intention to collect sales or use tax on behalf of
the marketplace seller, along with the department-issued tax account ID number
that the marketplace facilitator will use to report and remit the sales or use
tax collected on behalf of the marketplace seller. If the marketplace seller
does not obtain documentation from the marketplace facilitator, then it may be
held liable for any uncollected sales tax on sales through that facilitator's
marketplace.
(b)
Requirement to collect and remit other taxes and fees.
(i)
(A)
Taxes and fees authorized in chapter 82.08 RCW. In addition to
collecting and remitting sales or use tax, a marketplace facilitator must also
collect and remit all other applicable taxes and fees authorized in chapter
82.08 RCW on all retail sales sourced to Washington on behalf of any
marketplace seller making retail sales through the marketplace facilitator's
marketplace.
(B)
Taxes and
fees in chapter 82.08 RCW. Applicable taxes and fees in chapter 82.08
RCW may include, but are not limited to:
(I)
Motor vehicle sales tax (see
RCW
82.08.020(2) ).
(II) Spirits taxes (see
RCW
82.08.150 ).
(ii)
(A)
Other applicable taxes and fees. Beginning January 1, 2020, a
marketplace facilitator must also collect and remit all other applicable taxes
and fees on all retail sales sourced to Washington on behalf of any marketplace
seller making retail sales through the marketplace facilitator's marketplace.
For the purposes of this subsection, "taxes and fees" means any monetary
exaction, regardless of its label, imposed on a buyer and that the seller is
required to collect and pay over to the department.
(B)
Examples of taxes and fees.
Other applicable taxes and fees may include, but are not limited to:
(I) Lodging taxes and charges (see WAC
458-20-166
).
(II) Solid fuel burning device
fee (see RCW 70A.15.-3620).
(III)
Tire fees (see
RCW
70A.205.405,
46.37.427, and
WAC
458-20-272
).
(302)
Exemptions.
(a)
Verification. In cases where
a marketplace facilitator seeks to determine whether an exemption applies to a
particular retail sale, the marketplace facilitator may request required
documentation from the marketplace seller or purchaser to determine whether the
exemption applies. This subsection does not obligate a marketplace facilitator
to accept a purchaser's claim of an exempt sale.
(b)
Documentation. The
marketplace facilitator must retain any documentation from the marketplace
seller or purchaser needed to verify any exemption claimed. See
RCW
82.08.050. Exemption certificates provided by
purchasers may designate either the name of the marketplace facilitator or the
marketplace seller in the field referring to the seller in order to ensure
there is a properly completed exemption certificate.
(c)
Common exemptions.
Applicable exemptions may include, but are not limited to:
(i) Sales of food and food ingredients (see
RCW
82.08.0293 and
82.12.0293
and WAC
458-20-244
).
(ii) Sales of prescription drugs
and prosthetic devices (see
RCW
82.08.0281 and WAC
458-20-18801
).
(iii) Sales to an Indian tribal
member in Indian country (see WAC
458-20-192
).
(iv) Sales to the United States
government (see WAC
458-20-190
).
(d)
Sales for
resale. If a marketplace facilitator chooses to make a sale for resale,
it must also accept and retain any documentation from the purchaser needed to
verify that a sale is for resale rather than for end use by the purchaser (see
RCW
82.04.060 and WAC
458-20-102 ).
(303)
Tax return
reporting.(a)
Remitting
tax. A marketplace facilitator may report the sales or use tax, along
with any other applicable taxes and fees, collected on behalf of marketplace
sellers separately from the sales or use tax collected on its own sales into
Washington under a separate tax reporting account or separate legal entity
account. Alternatively, a marketplace facilitator may report all such taxes on
the same tax reporting account as it reports its own direct sales.
(b)
Business and occupation tax.
Generally, marketplace facilitators do not owe retailing business and
occupation (B&O) tax on retail sales facilitated on its marketplace, but do
owe retailing B&O tax on products they sell in their own name (see
RCW
82.04.480 ). A marketplace facilitator may be
subject to B&O tax under the service and other activities classification on
the gross income from any commission, fee, or other compensation earned from
facilitating a sale. See WAC
458-20-19401
and
458-20-19402
for more information on when such B&O tax is due.
Part IV - Liability Relief
(401)
Incorrect information provided by
marketplace seller.(a)
Marketplace facilitator relief. A marketplace facilitator is
relieved of liability for failure to collect the correct amount of sales or use
tax, with respect to sales on behalf of marketplace sellers, to the extent that
the marketplace facilitator can show to the department's satisfaction that the
error was due to incorrect information given to the marketplace facilitator by
the marketplace seller, unless the marketplace facilitator and the marketplace
seller are affiliated persons. To qualify for the liability relief under this
subsection, a marketplace facilitator must have received erroneous information
from a marketplace seller that prevented the marketplace facilitator from
properly determining the correct tax amount owed. A marketplace facilitator
does not qualify for the liability relief under this subsection when a
marketplace seller provided information that was correct, but was incomplete or
insufficient to make the proper taxability determination.
(b)
Marketplace seller
liability. Where the marketplace facilitator is relieved of liability
under (a) of this subsection, the marketplace seller is solely liable for the
amount of uncollected tax due.
(402)
Percentage of tax due.
(a)
Conditions for relief.
Subject to the limits detailed below in (b) and (c) of this subsection, and
subsection (403) of this rule, a marketplace facilitator is relieved of
liability for the failure to collect sales and use tax on taxable retail sales
to the extent that the marketplace facilitator can show to the department's
satisfaction that:
(i) The taxable retail sale
was made through the marketplace facilitator's marketplace;
(ii) The taxable retail sale was made solely
as the agent of a marketplace seller, and the marketplace facilitator and the
marketplace seller are not affiliated persons; and
(iii) The failure to collect sales or use tax
was not due to an error in sourcing the sale under
RCW
82.32.730.
(b)
Limitations on relief.
Liability relief for a marketplace facilitator under (a) of this subsection is
limited as follows:
(i) For calendar year
2018, the liability relief may not exceed ten percent of the total tax due
under chapters 82.08 and 82.12 RCW on taxable retail sales by the marketplace
facilitator and collected on behalf of a marketplace seller and sourced to this
state under
RCW
82.32.730 during the same calendar
year.
(ii) For calendar year 2019,
the liability relief may not exceed five percent of the total tax due under
chapters 82.08 and 82.12 RCW on taxable retail sales by the marketplace
facilitator and collected on behalf of a marketplace seller and sourced to this
state under
RCW
82.32.730 during the same calendar
year.
(c)
Situations when relief is not available. The liability relief
identified in this subsection is not available for retail sales that a
marketplace facilitator determined were subject to sales or use tax but chose
not to collect the tax, or where the marketplace facilitator otherwise acts
fraudulently to avoid collecting tax. Liability relief is also not available
when the failure to collect sales or use tax was contrary to specific written
instructions provided by the department.
(d)
Marketplace seller relief.
Where the marketplace facilitator is relieved of liability under (a) of this
subsection, the marketplace seller is also relieved of liability for the amount
of uncollected tax due.
(e)
How to claim the relief. The liability relief provided in (a) of
this subsection may be claimed when the department determines that additional
sales or use tax is due for a particular calendar year on sales meeting the
criteria of (a)(i) through (iii) of this subsection. Upon such a determination
by the department, the marketplace facilitator may claim relief from liability
on such additional tax, subject to the limitations in (b) and (c) of this
subsection, and subsection (403) of this rule. Any amounts remaining after
application of these limitations are due in full by the taxpayer and subject to
any applicable penalty and interest as provided in chapter 82.32 RCW.
(f)
When is a sale facilitated?
For purposes of this subsection, a retail sale is deemed to be facilitated by a
marketplace facilitator when the marketplace facilitator either:
(i) Accepts the order for the
product;
(ii) Communicates to the
marketplace seller the buyer's offer to purchase the product;
(iii) Accepts the buyer's payment for the
product; or
(iv) Delivers or
arranges for delivery of the product.
(403)
Loss of liability relief.
A marketplace facilitator that does not provide the reports required under
subsection (501) of this rule is not eligible for the liability relief provided
under subsections (401) and (402) of this rule.
Part V - Providing Sales Information to Marketplace
Sellers
(501)
Facilitated
Washington sales.(a)
Monthly
access. Beginning July 1, 2019, a marketplace facilitator must provide
each of its marketplace sellers with access, through a written report or other
means, to gross sales information for all Washington sales facilitated on
behalf of the marketplace seller during the immediately preceding month.
Marketplace facilitators must provide such written report or access within
fifteen calendar days following the end of each month. The report must include
all information required by the marketplace seller to fulfill its tax reporting
obligations with the department, including any delivery charges, fees, or other
charges on sales facilitated by the marketplace facilitator.
(b)
Reasonable method of estimating
sales. If a marketplace seller does not receive the gross sales
information for all Washington sales through a marketplace facilitator, the
marketplace seller may determine its business and occupation tax liability
under chapter 82.04 RCW based on a reasonable method of estimating Washington
sales as may be required or approved by the department.
(c)
What are Washington sales?
For purposes of this subsection, "Washington sales" means any sale sourced to
this state under
RCW
82.32.730, regardless of whether the sale is
a retail sale or wholesale sale.
(502)
Loss of liability relief.
A marketplace facilitator that does not comply with subsection (501)(a) of this
rule is not eligible for the sales tax liability relief provided in subsections
(401) and (402) of this rule.
Part VI - Marketplace Audits
(601)
Marketplace audit. A
marketplace facilitator is subject to audit in order to ensure tax is properly
reported and remitted on all sales occurring on the marketplace, including
sales facilitated on behalf of marketplace sellers.
(602)
Additional documentation.
(a)
Verifying tax collection and
exemptions. A marketplace facilitator may be required to provide
documentation for all sales occurring on its marketplace to verify that the
marketplace facilitator:
(i) Remitted all tax
charged to customers, charged the correct amount of tax on all taxable retail
transactions, and properly sourced all taxable retail sales pursuant to
RCW
82.32.730; and
(ii) Properly granted exemptions, if
applicable, verified the type of exemption granted, and retained the
appropriate supporting documentation to substantiate the exemption as required
under
RCW
82.32.070 and subsection (302) of this
rule.
(b)
Electronic format. The marketplace facilitator must provide this
information electronically, in agreed upon format, at the department's
request.
(c)
Frequency. The department may request this information on a more
frequent or periodic basis to supplement its routine audit effort.
(603)
Information
from marketplace sellers. The marketplace facilitator may request
additional information from a marketplace seller making sales on its
marketplace in order to comply with these audit
requirements.