Washington ~ Sales and Use, Business and Occupation Taxes: Online Retailer Taxable Nexus Not Created

A taxpayer that was an out-of-state online retailer of brand name apparel and accessories was not liable for retailing business and occupation (B&O) and retail sales tax because its activities were insufficient to establish a nexus with Washington. The taxpayer asserted that the Washington activities of its wholesaling affiliate were insufficient to establish taxable nexus. The Appeals Division concluded its promotion to third-party retailers of the same brand name products sold by an online retailer affiliate, wholesale product packaging containing the online retailer affiliate’s website, and the existence of a retail “store locater” on the online retailer affiliate’s website, were insufficient activities to create taxable nexus for the online retailer. Despite the brand name overlap, the activities of the wholesaling affiliate with conceded taxing nexus were not significantly associated with establishing or maintaining a market for the taxpayer’s products in Washington sufficient to create nexus for the taxpayer.

Determination No. 15-0321, Washington Department of Revenue, June 30, 2017, ¶204-244



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