UPDATED 7/22/2025
If you’re a Washington resident, you may already have heard about the new sales tax law going into effect this fall. The details of the changes are confusing, but the Accountability Services team is here to stay on top of what’s coming and help you prepare.
Understanding the law
On May 20, 2025, Washington State Senate Bill 5814 was signed into law by Governor Bob Ferguson. As written, the new sales tax expansion law will impact Washington-based professional services businesses who deliver services electronically.
Barring a repeal of the law, professional service providers will be required to calculate, collect, and remit sales tax for all services delivered through digitally automated means – even if the work is done primarily through human effort. The provisions kick in on October 1, 2025.
Common professional services that will be affected when digitally delivered include IT consulting, tech support, website and software development, accounting, advertising, law, and live presentations. This list is not exhaustive. Any service delivered using digital automation will qualify.
Final rules and details are pending. Clarifications are expected from the Washington Department of Revenue over the coming months.
Note that the bill went through the legislative process in record time, denying the WA DOR ample opportunity to vet the law and write the guidelines. We hope aspects of the new law will be repealed but this is unlikely to happen before 2026.
- Our recommendation is to proceed as though the law will go into effect as announced, as the Department of Revenue does not typically apply credits for previously reported periods after a law has been repealed.
There are still many outstanding questions. Our team will regularly update this post with the latest information.
How this impacts you
Posted 8/22/2025
This week the Washington State DOR released two statements regarding services that will fall under the new tax bill. Both rules go into effect starting October 1, 2025.
- Live presentations will be considered a retail sale and subject to retailing B&O tax and retail sales tax. Live presentations include, but are not limited to, lectures, seminars, workshops, or courses where participants attend either in person or via the internet or telecommunications equipment that allows audience members and the presenter or instructor to give, receive, and discuss information with each other in real-time.
- Exception: Live presentations provided via the internet or telecommunications equipment are not considered a retail sale when sold between members of an affiliated group, as defined in RCW 82.04.299(1)(f).
- Businesses must collect retail sales tax for advertising services and gross income from these activities is subject to retailing B&O tax. Advertising services means all digital and nondigital services related to the creation, preparation, production, or dissemination of advertisements, including, but not limited to:
- Layout, art direction, graphic design, mechanical preparation, production supervision, placement, referrals, acquisition of advertising space, and rendering advice concerning the best methods of advertising products or services.
- Online referrals, search engine marketing, and lead generation optimization, web campaign planning, the acquisition of advertising space in the internet media, and the monitoring and evaluation of website traffic for purposes of determining the effectiveness of an advertising campaign.
- Direct mail advertising.
- Exceptions: Web hosting services and domain registration, services rendered in respect to newspapers, printing or publishing, or radio & television broadcasting, services rendered in respect to out-of-home advertising, and advertising services sold to members of an affiliated group, as defined in RCW 82.04.299(1)(f).
Posted 7/22/2025
New clarification from the WA Department of Revenue appears to state that accountants, lawyers, engineers, architects, and other professional service providers do not generally qualify as digitally automated services (DAS).
The DOR’s FAQs explain that, “if the service provider uses email or an online portal to receive files from their client or provide the results of their services, that alone would not cause the sale of the service to be considered a DAS. However, if the service provider offers a portal where their customer can choose from various do-it-yourself templates and merely have the results reviewed by the services provider, they could be considered a DAS.”
While this update is good news and points towards many professional service businesses being exempt from the new sales tax law, do note that the DOR guidelines have not yet been finalized.
Posted 6/20/2025
If you are the owner of a WA-based professional services business, you will be required to calculate, collect, and remit sales tax on all services delivered electronically to clients in Washington State.
- Accountability Services clients with a monthly accounting engagement will be contacted directly by your Accountant in Charge to help you navigate the change
- Clients without a monthly accounting engagement are responsible for making all necessary changes – if you need help, please email masterplan@accountabilityservices.com to set up a meeting to discuss your needs
We recognize that implementing this change may feel complex, and details will continue to evolve. Rest assured, our team is tracking every update.
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The sales tax expansion also applies to accounting firms providing services to WA-based clients. As Accountability Services is directly impacted by this, we are committed to not raising prices for 2026 to help offset the added expense of sales tax being levied on our services.
- Sales tax will be added to Washington client invoices starting from October 1, 2025, and remitted to WA DOR per our monthly reporting requirement
SENATE BILL 5814
The Washington State Department of Revenue has not yet published the new tax code.
Click here to read the full bill. The elimination of the exclusion for “services primarily involving human effort” can be found in Part II, starting on page 17.
