Washington Department of Revenue Provides Comprehensive Guidance on Crowdfunding Sales Tax Treatment

• The Washington Department of Revenue has provided guidance on the sales tax implications of crowdfunding.
• Individuals or businesses involved in crowdfunding in Washington state may be required to register with the department if their annual crowdfunding income exceeds $12,000 or if they need to collect sales tax on rewards.
• Taxation occurs either upon project completion or upon receipt of funds by the project creator.
• Creators must collect and report sales tax on tangible items, digital products, or retail services offered as rewards.
• The service fee retained by the host is considered part of the creator’s gross income and is taxable.
• Different tax treatments apply based on the nature of the rewards provided for Business & Occupation tax classifications.
• Donations or rewards with negligible value are generally exempt from B&O tax, while tangible items, digital products, and retail services fall under Retailing B&O tax.
• Non-retail services are classified under Service and Other Activities, each with specific tax implications.

Source: salestaxinstitute.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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