EHB 2163 implements a state version of marketplace fairness (aka internet sales tax) on January 1, 2018, by imposing new requirements on more out-of-state internet retailers to collect sales tax or to report customer sales and notify customers for use tax purposes. The bill also requires the Department of Revenue (DOR) to determine impacts for streamlined sales tax mitigation and consult with the mitigation advisory committee regarding implementation.

The mitigation advisory committee met on December 14 to discuss DOR’s implementation plans. Here are some highlights of those plans:

• DOR will flag new sale tax collections resulting from EHB 2163 taxpayers in their system to identify those revenues for the mitigation calculations.
• The first mitigation payments that will reflect offsets from new revenues from marketplace fairness will be the June 30, 2018, mitigation payment reflecting actual EHB 2163 revenues from the first quarter of 2018.
• Key marketplace facilitators, as defined in the bill, have publicly stated their intent to collect sales tax on January 1, 2018, when the requirements take effect.
• For businesses that choose the alternative option to provide a use tax statement to their customers, the deadline to provide that annual statement is December 31, 2017, and the customers’ use tax returns will be due by April 1, 2018. As a result, the offsets for mitigation for the new use tax revenues may be reflected in either the June 2019 and September 2019 mitigation distributions.
• The last quarterly mitigation payment to local jurisdictions will be on September 30, 2019.

As part of the implementation process, DOR has been collecting questions from cities on implementation of EHB 2163 and other aspects of mitigation impacts. Answers to those questions are available here.

DOR has additional materials related to implementation of EHB 2163 here. If you have further questions on implementation, DOR has set up a specific email address: DORMarketplacefairness@dor.wa.gov.

The estimates of impacts to local sales tax distributions and mitigation have not changed since they were released during the bill’s consideration earlier this year.