- New Tax on Advertising Services: Effective October 1, 2025, Washington State will expand its sales and use tax base to include certain advertising services, as outlined in ESSB 5814. This applies to both digital and non-digital services related to the creation, preparation, production, or dissemination of advertisements, while specifically excluding formats like newspapers, radio, and television.
- Guidance and Clarifications Provided: The Washington Department of Revenue has issued interim guidance detailing how to implement the new law, including how to determine the location of the sale of advertising services, exclusions from taxable services, and classifications of various advertising activities. It also addresses the applicability of the multiple points of use (MPU) exemption and resale of advertising services.
- Pending Litigation on Tax Validity: Current litigation challenges the legality of these new tax provisions for certain internet-based advertising services, claiming they may violate the federal Internet Tax Freedom Act (ITFA). Stakeholders are encouraged to reach out with questions regarding these changes and their implications.
Source Deloitte
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