Washington Court of Appeals rejects Department Rule, no transactional nexus or dissociation for Washington B&O Tax

On April 29, 2015, the Washington Court of Appeals rejected the transactional nexus requirement, also known as dissociation, for Washington B&O tax and also concluded that a drop-shipper with Washington nexus is subject to B&O tax on sales delivered directly to its customer’s in-state customers. In deciding these issues, the Court held that WAC 458-20-193 (Rule 193), which supports transactional nexus, was not binding on the Court as the Department’s interpretive rules “cannot subtract from the force of the statute” and “do not constrain the courts.” Read more

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