WAC 458-20-277
Certified service
providers -- Compensation. (1) Introduction. This section
explains compensation paid to certified service providers
(CSPs) as defined in Substitute Senate Bill No. 5089 (SSB
5089), chapter 6, Laws of 2007 and RCW 82.58.080. The section
also lists rights and responsibilities applicable to these
CSPs when collecting and remitting retail sales and use taxes
in Washington. On March 22, 2007, Washington enacted SSB
5089, a legislative package that brings Washington's sales and
use tax laws into conformity with the streamlined sales and
use tax agreement (SSUTA). For more information concerning
the SSUTA, visit http://www.streamlinedsalestax.org. The web
sites referenced in this section are not maintained by
Washington or the department of revenue (department). These
referenced web sites may contain recommendations that require
a change to Washington law prior to becoming effective in
Washington.
(2) CSP compensation for volunteer sellers.
(a) What is a CSP? A CSP is an agent of the seller
certified under the SSUTA to perform all of a seller's retail
sales and use tax functions, other than the seller's
obligation to remit retail sales and use tax on its own
purchases. For more information concerning CSP certification
or a list of current CSPs, visit the SSUTA web site located
at: http://www.streamlinedsalestax.org.
(b) What is a volunteer seller? A volunteer seller is
any seller that has selected a CSP, as agent, to perform all
of that seller's retail sales and use tax functions, other
than the obligation to remit retail sales and use tax on the
seller's own purchases and who has voluntarily registered
through the SSUTA central registration system (CRS) in
accordance with the terms of the CSP contract (CSP contract).
The CSP contract is the agreement executed between each CSP
and the streamlined sales tax governing board under which CSPs
perform services in SSUTA associate and member states.
(c) What are member states and associate member states?
Member states are those states that have petitioned and been
granted full membership under the SSUTA. Associate member
states are those states that have petitioned and been
designated associate member status under the SSUTA.
Washington became an associate member state on July 1, 2007.
Washington has been granted full membership status as of July
1, 2008. For a list of the current member and associate
member states, visit the SSUTA web site at:
http://www.streamlinedsalestax.org.
(d) What are monetary allowances? As a condition of
becoming an associate member and member state, Washington has
agreed to permit CSPs to act as agents for sellers in
collecting and remitting sales and use taxes in Washington.
Washington has agreed to provide monetary allowances to CSPs
acting as agents for volunteer sellers. A CSP will obtain
these monetary allowances by retaining a portion of the
Washington retail sales and use tax they collect. However,
monetary allowances will not reduce the retail sales and use
taxes collected for and remitted to local taxing
jurisdictions. The calculation of these monetary allowances
is discussed in subsection (3) of this section.
(e) What is a certified automated system (CAS)? A
certified automated system is software certified by Washington
under the SSUTA: To calculate the sales and use tax imposed
by each taxing jurisdiction on a transaction; to determine the
amount of tax to remit; and to maintain a record of the
transaction.
(3) How are monetary allowances calculated? The formula
for determining monetary allowances is set forth in the CSP
contract. This monetary allowance is the CSP's sole form of
compensation with respect to volunteer sellers during the term
of the CSP contract and is the same with respect to all CSPs.
This monetary allowance is calculated by using the
following formula: (The combined volume of taxes due to all
member and associate member states from a volunteer seller in
such capacity) multiplied by (the applicable base rate).
Simply stated, the formula is (combined collected taxes) x
(base rate). Affiliated volunteer sellers will be treated as
a single volunteer seller if they are related persons under
267(b) or 707(b) of the United States Internal Revenue Code.
The base rate resets annually. Table A below sets forth the
schedule for "combined collected taxes" and the applicable
"base rate":
Table A
Combined Collected Taxes:
Base
Rate:
$0.00
-
$250,000
8%
$250,000.01
-
$1,000,000
7%
$1,000,000.01
-
$2,500,000
6%
$2,500,000.01
-
$5,000,000
5%
$5,000,000.01
-
$10,000,000
4%
$10,000,000.01
-
$25,000,000
3%
Over $25,000,000.01
2%
(a) Can volunteer sellers lose volunteer seller status?
Volunteer seller status ceases when the seller conducts
activities in Washington that would require the seller to
legally register in Washington as described in the CSP
contract.
(b) Seller statements. Each volunteer seller must
periodically send written statements (statement) to the CSP
verifying that the seller continues to qualify as a volunteer
seller in Washington. The volunteer seller must send the
first statement twenty-four consecutive months from the date
on which the CSP began remitting sales and use taxes for the
volunteer seller in Washington. Subsequently, volunteer
sellers will send a statement every twelve consecutive months
thereafter. A CSP may request a statement verifying a
seller's volunteer seller status at any time. The CSP must
notify the department when a seller loses volunteer seller
status and this notification must be sent no later than ten
business days after receipt of a seller's statement indicating
the seller is no longer a volunteer seller. Notice to the
department must be provided consistent with the notice
provisions contained in the CSP contract. Entitlement to
monetary allowances will be terminated after a seller sends a
statement that the seller is no longer a volunteer seller.
(c) When will monetary allowances terminate? A CSP is
entitled to retain monetary allowances granted prior to
receiving a statement indicating that the seller has lost
volunteer seller status. However, entitlement to monetary
allowances will end on the first day of the month following
receipt of such statement. Regardless, a CSP will be entitled
to monetary allowances for services performed under this
section with respect to a volunteer seller for a period of
twenty-four months (beginning on the date the CSP commenced
remitting sales and use taxes for the volunteer seller in
Washington and ending twenty-four consecutive months later).
(4) CSP rights and responsibilities.
(a) Responsibility for retail sales and use taxes. A CSP
is liable to the member states and associate member states for
the retail sales and use taxes on the sales transactions that
it processes.
If the CSP does not remit the collected retail sales and
use taxes when due, those taxes are delinquent. Washington
may send a notice of delinquency to a CSP for these delinquent
taxes. The CSP must then remit the delinquent taxes within
ten business days of that notification. If the CSP does not
remit the delinquent taxes within those ten business days, the
CSP is not entitled to monetary allowances with respect to the
delinquent taxes and is liable for the payment of the taxes
along with penalties and interest. However, if the taxes are
delinquent because a seller has not remitted part or all of
the delinquent taxes to the CSP, the CSP will be given relief
if it properly notifies the department. In order to obtain
this relief, the CSP must notify the department of the
seller's failure to remit the retail sales and use taxes to
the CSP within ten business days of the date on which those
delinquent taxes should have been remitted to the department.
Notice by the CSP under this subsection must be provided
consistent with the notice provisions contained in the CSP
contract.
(b) CSP liability relief. A CSP is not liable for
charging or collecting the incorrect amount of sales or use
tax where that error results from reliance on incorrect data
provided in the department's taxability matrix, or from tax
rates, boundaries, and taxing jurisdiction assignments listed
in Washington's rates and boundaries data bases. To obtain a
copy of the taxability matrix, visit the SSUTA web site
located at: http://www.streamlinedsalestax.org.
Additionally, CSPs will be held harmless and not liable for
sales and use taxes, interest, and penalties on those taxes
not collected due to reliance on Washington's certification of
the CSP's CAS. Pursuant to RCW 82.58.080, sellers that
contract with a CSP are not liable to Washington for sales or
use tax due on transactions processed by the certified service
provider unless the seller misrepresents the type of items it
sells or commits fraud.
(c) Seller's contract with the CSP. A CSP must provide
the department with a copy of its agreement with contracting
sellers if requested.
(d) Credits or refunds with respect to bad debt. A CSP
may, on the behalf of a seller, claim credits or refunds for
sales taxes paid on bad debts. Bad debts have the same
meaning provided in 26 U.S.C. Section 166, as amended in 2003.
Bad debts do not include expenses incurred in collecting bad
debts; repossessed property; and amounts due on property in
the possession of the seller until the full purchase price has
been paid. See section 103, SSB 5089 and WAC 458-20-196 for
more information regarding bad debts.
(e) Retention of personally identifiable consumer
information. With limited exceptions, CSPs must perform their
services without retaining personally identifiable consumer
information. A CSP may retain personally identifiable
consumer information only as long as it is needed to ensure
the validity of tax exemptions or to show the intended use of
the goods or services purchased. See section 601, SSB 5089
for more information regarding personally identifiable
consumer information.
(f) Filing of tax returns and remittance of retail sales
and use taxes. CSP will file retail sales and use excise tax
returns using Washington's electronic filing system (E-file).
CSPs will remit retail sales and use taxes due with respect to
these returns using ACH Debit, ACH Credit, or the Fedwire
Funds Transfer System.