Legal Question in Tax Law in Washington

It is not really Washington State law. An important consideration is whether the Oregon company has physical location in Washington State. If a company sells into a state where they have a physical presence, they will be required to collect sales tax for sales made into the state. The basis for this is federal law and not state, and all flows from the Commerce Clause. Keep in mind, a physical presence doesn't have to be a full fledged sales location.

There is also a practical reason for this. If the company has a physical location in the state, the state has the ability to collect these taxes simply by the fact that they have physical assets located within the state. In essence, they don't have to go outside of the state to get the money. The only entity that can pass a law allowing one state to have jurisdiction over the activities that take place in another state, is the US Congress. States can deny access to their markets, but enforcing tax collection in another state is not reallly possible in the absence of a federal law that allows this.

The usual thing that the Washington Department of Revenue will do, is collect use tax. Use tax is basically what the purchaser is supposed to pay on items where they pay no sales tax. Very few individuals comply with this unless it is made mandatory such as with automobiles, but the DOR does audit businesses for this, so many businesses pay it rather than pay the penalties later. But going after the seller is difficult if there is no physical presence in the state.

Hope this helped. If you are having issues with the DOR, feel free to contact our offices.

Christopher Larson

Insight Law

http://www.insightlawfirm.com/