In Washington state, our state legislature (in its infinite wisdom) switched us to a “destination based sales tax” state. For the past year, Web store operators in Washington state have needed to compute sales tax in a different way than they have expected. Even though this has been law for a year, we still get lots of questions about this.

Let’s take a common scenario: a user lives in Bellevue, WA and is buying an item from a Web store, based in Spokane, WA.

Old way: The Web store operator charged the sales tax due in Spokane, WA. Being that the store owner lives in Spokane, that’s something they can handle.

New way: The Web store operator charges the sales tax due wherever the item is being shipped to (i.e. Bellevue, WA). This means that every store operator has to know what the sales tax is everywhere else in the state. To add to the confusion, sales tax rates don’t obey city, county or even zip code boundaries, so there can be subtle changes based on exactly where the customer is located.

Note that out of state shipments still don’t require sales tax, unless you have a business presence in that state. Of course, always consult with a tax professional before proceeding with any of this!

Unfortunately, most ecommerce vendors still don’t support this “destination-based” system. Here are some tips for following the law:

- If using a “3rd party hosted” shopping cart, consult with your cart vendor before signing up with them. If they don’t support the sales tax system properly, there will be nothing you can do about it.

- If using a cart that you host yourself, see what the options are and see what it takes to set it up. Keep in mind sales tax rates change quarterly so you need to build in a way for updates to be made. The state of Washington makes sales tax tables available in a digital format, but it may take work to get those tables into your system.