In 2010, Washington adopted the economic nexus principle for its business gross receipts tax. The new nexus standards apply only to taxpayers engaged in service, royalty, and financial businesses; the new principles do not apply to sales of goods or to sales by public utilities. For many months, the Washington Department of Revenue has struggled to write definitive, objective rules related to the subjective standard of “where the benefit is received.”

In this article, published by the Bureau of National Affairs, DWT attorney Garry Fujita explains the law and the new rules related to economic nexus, specifically addressing how to determine if an out-of-state taxpayer’s gross receipts meet the nexus thresholds. He also raises questions as to whether the rules accomplish their mission to provide definitive, objective rules that actually result in tax that is related to a taxpayer’s activities in the state.

Click here to read the complete article.