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Washington DOR Says Certain Online Instruction Not Subject to Sales Tax But Subject to B&O Tax
Publication – Tax Topics: Online instructional classes, Wash. Dept. of Rev. (2/6/23). The Washington Department of Revenue (Department) issued a publication explaining the Washington sales/use and business and occupation (B&O) tax consequences of certain online instructional classes, providing that live online classes allowing for real-time participation and interaction between the presenter and the participants generally are not subject to Washington retail sales tax, but gross income generated from this type of business activity generally is subject to Washington B&O tax under the service and other activities classification. The Department explains that in these circumstances, the interaction between the presenter and participants must be a part of the live class and not just a separate ability to ask questions. According to the guidance, classes, including prerecorded videos, with interaction through a chat room or a digital help desk do not provide “real-time participation.” The Department also notes that online classes that do not allow for real-time participation or interaction between the presenter and the participants generally are subject to Washington retail sales tax and B&O tax under the retailing classification. Please contact us with any questions.
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