Services Newly Subject To Retail Sales Tax

Senate Bill (ESSB) 5814 which was recently passed, added new business activities to the definition of retail sales. As a result, businesses will be required to begin collecting sales tax on the following services starting Oct. 1, 2025:

• Advertising services.

• Live presentations.

• Information technology services.

• Custom website development services.

• Investigation, security, and armored car services.

• Temporary staffing services.

• Sales of custom software and customization of prewritten software.

ESSB 5814 also removes the following exclusions from the definition of digital automated services (DAS):

• Services involving primarily human effort.

• Live presentations.

• Advertising services.

• Data processing services.

The bill also created a new exclusion to DAS for “telehealth” and “telemedicine services.”

What this means

• If you sell these services, you’ll be responsible for collecting and remitting sales tax.

• If you purchase these services, expect your costs to increase.

What should you do

While the department of revenue is still issuing guidance, there are a few things you can do to prepare.

• Review your services to determine if you may need to start collecting and remitting retail sales tax. If you are not sure and are a client of ours, please reach out! If we don’t have the answer, we will add to our list of clarifications with the state. If you are not a current client, be sure to talk with your accountant.

• Review contracts that extend beyond October 1, 2025 and talk with your vendors, clients, and customers about how invoicing may change.

• Register with the Department of Revenue if you haven’t already. The DOR is where you will file and pay these taxes.

• If DOR reporting is new to you, plan to attend a free Introduction to Sales Tax webinar.

• If you are still unsure about the applicability of this new tax, to your services, you can request a ruling via email. In your email be sure to explain your service in detail.