As per a previous posting, a new Washington law regarding the taxation of digital products and services went into effect yesterday, July 26, 2009.

Libraries are eligible for an exemption to this tax, if they are purchasing the digital product or service for the purpose of making it available at no charge to others. The law requires that to claim the exemption, the buyer must provide an exemption certificate to the seller. That certificate is now available on the Department of Revenue’s Web site. For more information about the law, consult the DOR’s frequently asked questions page.

Tracking the effect of this bill on libraries is coordinated at the State Library by Will Stuivenga, Statewide Database Licensing Project Manager: [email protected] or 360.704.5217.

In response to a previous query about the exemption and the certificate, DOR provided the following response this morning:

Thank you for your question regarding the new digital products legislation. Because of the complexities of this bill and the number of inquiries about it, some responses may take longer than our normal two-week turnaround. We will send you a response as soon as we can. Thank you for your patience.

The Department has announced that it will pursue a phased implementation of this new law. The Department is issuing guidance on the new law through a series of Excise Tax Advisories (click on the links below) that will provide progressively more detailed guidance to taxpayers. Taxpayers are expected to make a good faith effort to comply with the Department’s published guidance as it is issued. The Department will work with taxpayers that the Department finds to have made a good faith effort to comply with the guidance issued by the Department to bring them into compliance with ESHB 2075 without adverse consequences.

Please see Excise Tax Advisory 9001: Digital Products General Implementation and ETA 9002:  Taxation of digital songs, movies, books, and online games transferred electronically. 

Also, review our Draft rule 15503 – Taxation of Digital Products and our Digital Products and Remote Access Software Exemption Certificate

For more information, please see the Department’s web page at http://dor.wa.gov/digitalproducts.

Taxpayer Services Division

WASHINGTON STATE DEPARTMENT OF REVENUE