Multistate Tax Alert: Washington State Adopts Final Rules on Sales and Use and Business and Occupation Taxation
Computer hardware, software, and digital products
The Washington Department of Revenue recently adopted final rules on the sales and use tax and business and occupation (“B&O”) tax treatment of computer hardware, software, and digital products. The rules will become effective March 28, 2013 and are intended to clarify the effect of legislation passed in 2009 and 2010 that: (1) expanded the Washington sales and use tax base to include digital products and remote access software, and (2) changed the treatment of these items for B&O tax purposes. The rules also address other tax issues related to computer hardware and software. Specifically, the rule changes include the following:
- Amendment of existing WAC 458-20-15501 - Taxation of Computer Systems and Hardware
- Adoption of WAC 458-20-15502 - Taxation of Computer Software
- Adoption of WAC 458-20-15503 - Digital Products
- Repeal of existing Rule 155 - Information and Computer Services
The attached Tax Alert summarizes the final rules and highlights some of the more complex issues.