- Proposed Tax Legislation: Washington Governor Bob Ferguson is considering signing SB 5814, which would impose the state’s high sales tax on all worldwide digital advertising purchased by Washington-based businesses, significantly impacting local tech companies.
- Tax Classification Changes: The legislation reclassifies digital advertising as a retail transaction, subjecting it to a 10.35% sales tax in cities like Seattle, while also modifying the Business & Occupation (B&O) tax rates, potentially generating an additional $2.8 billion in revenue by 2027.
- Legal and Regulatory Challenges: The bill presents various complications, including potential violations of the Internet Tax Freedom Act, questions about the authority to implement new sourcing rules for tax allocation, and the risk of businesses relocating to avoid the tax, complicating Washington’s tax landscape.
Source Tax Foundation
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