New tax laws may change the way you do business

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Hundreds of new laws passed during the 2009 legislative session are now taking effect, including three major tax collection bills that the state Department of Revenue (DOR) says may impact the way you do business.

Senate Bill 5571 implements a new E-file/E-pay system. Starting with the July 2009 excise tax return (due Aug. 25), businesses that report their taxes on a monthly basis will now be required to file and pay their taxes electronically. Once businesses are set up to electronically file their taxes, they will no longer receive paper tax returns, tax rate flyers or other publications by mail. Instead, they can sign up to receive that information via e-mail.

Electronic filing is a quicker process, generally with fewer errors. By going to this new system, it's expected to save the state about $2.5 million every biennium in paper, postage and labor charges.

After Aug. 25, businesses filing a paper return and paying by check or cash may be subject to penalties if payments are not received in a timely manner. However, the Department of Revenue assures me it will be flexible during the transition and will try to assist businesses through this change.

Businesses that do not have computers or Internet access may request a waiver from electronic reporting and payment by writing to:

Electronic Filing and Payment Team
Department of Revenue
P.O. Box 47476
Olympia, WA 98504-7476

House Bill 2075 requires sales and use taxes to be collected on digital products, including downloaded music, streaming video, online video games and legal research tools. I voted against this measure because it is essentially a tax increase on these intangible products that have not been taxed in the past. Nevertheless, the bill took effect July 26.

Specifically, this new law:

defines digital products as goods and services transferred electronically;

includes certain exemptions for businesses and end consumers;

requires sellers of digital products to electronically file their tax returns; and

provides amnesty to those who didn't collect or pay sales tax on digital products that were taxed before July 26.

Questions about this new law may be sent to DigitalProducts@dor.wa.gov.

Senate Bill 6173 requires businesses that make wholesale purchases for resale to use a DOR-issued seller's permit after Jan. 1, 2010. This also includes qualified custom construction contractors. The seller's permit replaces the “resale certificate.” The new permit allows businesses to purchase items and services for resale without paying retail sales tax. State law requires only the final customer to pay sales tax.

The measure addresses a concern by DOR that some businesses are not reselling items on which they deferred paying sales taxes and are instead using the items themselves, with no one paying the sales tax. That problem is estimated to cost local and state governments about $100 million annually in unpaid sales tax revenue.

DOR says businesses will be notified Sept. 1 if they are getting a permit. Permits will be mailed in December.

For more information on these and other new tax laws, go to the Department of Revenue's Web site at: www.dor.wa.gov.

EDITOR'S NOTE: State Rep. Dan Kristiansen, R-Snohomish, represents the 39th Legislative District, and also serves as chairman of the Washington House Republican Caucus. He can be contacted at (360) 786-7967 or from his Web site at: houserepublicans.wa.gov/Kristiansen.

State Representative Dan Kristiansen, 39th Legislative District
RepresentativeDanKristiansen.com
426A Legislative Building | P.O. Box 40600 | Olympia, WA 98504-0600
dan.kristiansen@leg.wa.gov
(360) 786-7967 | Toll-free: (800) 562-6000