WA Employers: New Sales Tax on Services is Unfair and Unclear
- Greater Issaquah Chamber of Commerce
- Aug 25, 2025
- 1 min read
Gathering feedback: In July, the state Department of Revenue held 10 listening sessions and launched a survey following the fast-tracked passage of Senate Bill 5814. The law, effective Oct. 1, significantly expands the state’s sales tax, applying it to range of services including advertising, IT, custom website development and more. (For background, see AWB’s issue brief.)
Key concerns: In feedback sessions and surveys, many expressed confusion and concern over the law’s ambiguous definitions, administrative burdens, and competitive disadvantages — especially for small businesses. Read more in DOR’s report.
Temporary staffing: Employers want clear definitions (i.e. what counts as “temporary”) and the ability to deduct wages, benefits and payroll taxes.
Advertising services: Many raised concerns about economic harm to Washington state businesses. "Clients could easily hire an out-of-state contractor and avoid this tax entirely,” one survey respondent wrote.
Live presentations, IT & web services, software, and security services: Businesses want narrow definitions, educational and nonprofit exemptions, practical sourcing rules, and clear guidance.
What’s next: The department’s goal is to provide interim guidance by early September. To share additional feedback and concerns, please reach out to AWB Tax & Fiscal Policy Director Max Martin.
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This was a refreshing article that focused on practical information instead of unnecessary details. I enjoyed the simple writing style and the organized structure. Thank you for sharing your expertise in such an easy-to-understand way. Keep up the fantastic work, and best wishes for your future publications. epfo employer login
I totally feel you on the confusion around this new sales tax! It’s like every time I think I understand my expenses, something else pops up. cookie clicker How are other businesses managing all these changes?
In short, the criticism centers on three points:
Ambiguity: unclear definitions for services like “temporary staffing” or IT work.
Economic harm: advertising and web firms worry about losing local clients.
Compliance burden: added costs and administrative headaches for small employers.
It’s a bit like Slope game, where every sharp turn demands precision—without clear rules, businesses risk crashing into unexpected costs. The Department of Revenue plans interim guidance by early September, but until then, uncertainty remains
This new sales tax on services certainly raises valid concerns for businesses, especially with the uncertainty around compliance and additional costs. Clear guidance is essential so employers can plan ahead without unnecessary confusion. For businesses looking to strengthen their financial position during changing regulations, this guide on sme loans ireland offers useful insights into funding options that can support growth and stability.