Washington: Out-of-State Sellers Caught in Nexus Trap
by AccountingWeb on
Are you selling goods into Washington State, but do not have a permanent physical presence in Washington? If yes, do you send employees into Washington State to maintain your market in Washington State? If yes, you could have nexus in Washington State for B&O tax purposes. Are your goods shipped F.O.B.? If yes, does the freight consolidator, freight forwarder or for-hire carrier have express written authority to accept or reject the goods for the purchaser with the right of inspection? If not, the goods could be considered to be received in Washington State. The above conclusions are what the Court of Appeals for the State of Washington Division II reached in Lamtec Corporation, Appellant, v. Department of Revenue of the State of Washington, Respondent; No. 37516-8-11. Important Notes Washington's B&O tax is an excise tax imposed for the privilege of doing business. Therefore, virtually all business activities carried on within Washington are taxable. Washington's rules for interstate sales of tangible property state when goods originating outside of Washington are received by a purchaser in Washington, and the out-of-state seller has nexus with Washington, the B&O tax applies to the seller. Facts:
- Lamtec is a company based in New Jersey with no permanent physical location in Washington State.
- Lamtec sent employees into Washington State to maintain Lamtec's market in Washington State, but not to solicit or accept individual orders.
- All goods were shipped F.O.B. (from New Jersey)