The Washington State Department of Revenue (DOR) recently announced a temporary penalty relief program for businesses affected by the expansion of retail sales tax to certain services under ESSB 5814.
The sales tax changes, which became effective October 1, 2025, introduced new tax obligations for many service providers. Recognizing that these changes have created confusion for some businesses, the DOR is offering eligible taxpayers an opportunity to receive relief from certain penalties while they come into compliance.
Who May Qualify?
Businesses may qualify for penalty relief if they:
– Owe retail sales tax or use tax due to the ESSB 5814 service tax changes.
– Voluntarily report and pay the tax owed.
– Submit an application for penalty relief by September 30, 2027.
It’s important to note that the program waives eligible penalties only. Businesses are still responsible for paying any tax due, along with applicable interest.
Why This Matters
If your business provides services that became taxable beginning October 1, 2025, and you’re unsure whether you’ve been collecting and remitting sales tax correctly, now is a good time to review your tax compliance.
Addressing any issues now may help you avoid costly penalties while bringing your business into compliance before the relief period expires.