⚠️ Summary: What You Need to Know

Beginning October 1, 2025, Washington State law will require businesses—including IT service providers like ZiryTech—to:

  • Collect retail sales tax on certain services previously not taxed.
  • Report income from those services under the Retailing B&O, Retail Sales, and Local Sales Tax classifications.

Services Now Subject to Sales Tax:

  • IT training
  • Technical support and help desk services
  • Network setup and support
  • Data processing and entry
  • Software implementation and customization
  • Custom website and software development

Local Tax Rates (Yakima Region):

As of August 2025, here are the total sales tax rates for commonly served areas:

Location Rate
Yakima 8.3%
Union Gap 8.3%
Moxee 8.1%
Selah 8.3%
Terrace Heights (Unincorp.) 7.9%

Use the official lookup tool to confirm:
➡️ dor.wa.gov/TaxRateLookup

📋 In-Depth Explanation

🔍 Why This Is Happening

The Washington State Legislature passed ESSB 5814 (Chapter 422, Laws of 2025), expanding the definition of “retail sales” to include various professional services—including information technology and digital services.

As a result, sales tax must be collected and Retailing B&O tax applied for affected services starting October 1, 2025.

Source: ESSB 5814 Overview – Washington DOR

💼 Services Affected

Businesses must now collect retail sales tax and report under Retailing B&O for the following services:

  • Information technology services
    • Training
    • Technical support
    • Help desk
    • Network operation and support
    • System support
  • Data services
    • Data entry
    • Data processing
    • Implementation services
  • Software services
    • Custom software development
    • Sale of custom software
    • Customization of prewritten software
  • Web services
    • Custom website design and development

These services are now considered taxable retail sales.

🧾 How to Report These Services

On your Washington Excise Tax Return:

  1. Report gross income under the following classifications:
    • Retailing B&O
    • Retail Sales Tax
    • Local Sales Tax
  2. If you have not previously reported these classifications:
    • Log in to My DOR
    • Click Get Started under Excise Tax Return
    • Click File Return
    • Use the Add/Delete Tax Classifications button
    • Add:
      • Retailing
      • Retail Sales
      • Local Sales Tax

📍 Finding the Right Tax Rate

Important Note: We’re IT professionals, not tax experts. This is our understanding of the new requirements, but we recommend consulting with a tax professional for specific advice.

From what we understand, the sales tax rate depends on where your customer receives the service. Here’s how we’re handling it:

  1. We’re using the Department of Revenue’s official tool to look up rates:
    🔗 https://dor.wa.gov/TaxRateLookup

  2. For our local Yakima area, these are the rates we’ve found (as of August 2025):

    Location Rate
    Yakima 8.3%
    Union Gap 8.3%
    Moxee 8.1%
    Selah 8.3%
    Terrace Heights (Unincorp.) 7.9%

⚠️ Please verify rates yourself as they can change and may be different for your specific situation.

❗ What This Means for IT Providers

If you haven’t filed excise tax returns before, here’s what we’ve learned:

  • New Requirement: Collect and remit sales tax on covered services
  • Action Needed: Register with the Department of Revenue if you haven’t already
  • Questions? Contact DOR at 360-705-6705 or consult your tax professional

📘 Definitions

Website Development Services

The design, development, and support of a website provided by a website developer to a customer.

Custom Software Sales

Software that is designed and developed for a specific customer and not sold as off-the-shelf software.

📚 Further Resources

🙋 Questions?

If you’re a ZiryTech customer and want to know how this affects your billing going forward, feel free to contact us.

For official tax filing help, contact the Washington Department of Revenue at 360-705-6705.

#ZiryTech

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