Key insights
- Washington is offering a limited‑time voluntary disclosure program (VDP) exclusively for foreign (non‑U.S.) businesses selling to customers in the state.
- The temporary program (February 1 – May 31, 2026) provides significantly more favorable terms — most notably, only a 12‑month lookback for uncollected retail sales tax.
- CLA’s SALT team can help international sellers evaluate multistate exposure, quantify potential liabilities, and navigate anonymous voluntary disclosure filings.
Get the help you need with Washington tax compliance.
Washington state has launched a temporary international remote seller voluntary disclosure program (VDP) running from February 1 through May 31, 2026. The initiative is aimed specifically at foreign (non‑U.S.) companies selling to customers in Washington but haven’t registered or filed required state taxes. This temporary program provides a path for compliance with reduced risk.
Many international sellers file U.S. federal returns — or protective Form 1120‑F filings — but remain unaware that state tax rules operate independently of federal treaty protections. States use their own nexus standards, often based on economic thresholds. Washington determines whether a business must register and comply with its laws by analyzing if the seller has a “substantial nexus” with the state. In Washington, substantial nexus exists if a business, in the current or prior years:
- Has physical presence (employees, contractors, inventory) in Washington;
- Has more than $100,000 in Washington‑sourced gross receipts; or
- Is commercially domiciled or organized in Washington.
Since a seller can establish substantial nexus through sales into the state, even companies without a U.S. trade or business for federal purposes may still owe:
- WA Business and occupation (B&O) tax (a unique type of tax imposed on sales revenue); and
- Washington retail sales and use tax collection and remittance.
Who qualifies?
To participate in Washington’s temporary international remote seller VDP, a business must:
- Be headquartered outside the United States and meet all the following criteria:
- Has not had an active registration with or reported taxes to Washington within the current statutory period (four years plus the current year).
- Has not been contacted by the Department for enforcement purposes within the statutory period (e.g., audit, notice of registration or reporting requirements).
- Has not engaged in evasion or misrepresentation in reporting tax liabilities.
Washington’s international remote seller VDP benefits
This temporary VDP offers more favorable terms than Washington’s standard year‑round VDP.
1. A reduced lookback period
- B&O tax: Four prior years plus the current year
- Retail sales tax: Only 12 months of uncollected sales tax (versus four-plus years under the standard program)
2. Penalty relief (Up to 39%)
Eligible waivers may include:
- 5% substantial underpayment penalty
- 5% unregistered taxpayer penalty
- 29% late‑filing penalties
3. Application Process
Anonymity option
Applicants may submit anonymously for 15 days while eligibility is confirmed. Identity must be disclosed after that period. Using a representative, such as CLA, can maintain anonymity throughout the application stage.
Formal agreement
Once approved, the business must sign and return a voluntary disclosure agreement within 30 days. Failure to do so may:
- Void participation;
- Extend lookback periods to seven years plus the current year; and
- Reintroduce penalties up to 39%.
How CLA can help with Washington’s international remote seller VDP
CLA assists foreign companies with:
- Nexus analysis
- Quantifying potential exposure
- Strategizing participation
- Anonymous (no‑name) filings
- Compliance support, including return preparation or spreadsheet alternatives
Beyond Washington state, CLA can help foreign businesses understand their federal tax and multistate tax compliance obligations and help strategize tax compliance entrance.
Engaging CLA provides protection, clarity, and a structured path toward tax compliance.