In today’s e-commerce driven economy, sales can be made from practically anywhere to any person/entity. The Washington State Department of Revenue (“Department”) has recognized this and is moving forward with an enhanced voluntary disclosure agreement (“VDA”) program specifically for sellers of property/services/intangibles that are located outside of the US from February 1 through May 31, 2026. Specifically, all entities that are headquartered outside the US and meet all of the following qualify for this program:
Has not had an active registration with or reported taxes to the Department within the current statutory period (four calendar years plus the current calendar year);
Has not been contacted by the Department for enforcement purposes (for example, audit or compliance contacts regarding registration or reporting requirements) within the current statutory period; and
Has not engaged in evasion or misrepresentation in reporting tax liabilities.
This program is more beneficial than Washington’s typical VDA program, as it provides the following benefits:
A limited lookback period.
Four calendar years plus the current calendar year for business and occupation (“B&O”) taxes.
12 months for uncollected retail sales tax.
Waiver of up to 39% of potential penalties, including:
5% assessment penalty for substantially underpaid tax.
5% unregistered penalty.
29% late payment of a return penalty.
The Department may summarize any unreported tax liability in a single tax assessment.
As detailed above, the temporary expansion of Washington’s VDA program applies to certain out of country (i.e., non-US) entities selling to customers located in Washington. This is an attractive program that non-US entities should consider moving forward with if they make sales of any kind to customers located in Washington and have not reported taxes to the state.
Why State and Local Tax Matters for an Entity Selling into the US
For a prospective buyer’s perspective, the challenge isn’t just knowing whether a business is profitable but understanding the components that lead to profitability.
Are state and local taxes accounted for properly?
What will state and local tax filings look like? Will the company’s liability change in the future? We are able to uncover all kinds of tax exposures and favorably remediate them if necessary. In practical terms, a VDA engagement may reveal more about the company than simply knowing whether transactions are taxable. A small discrepancy may be manageable, but uncovering hidden risks, such as not complying with Wayfair nexus requirements and paying taxes as required, can significantly impact the profitability of a company. We have seen noncompliance with state and local tax requirements lead to major adjustments in purchase price valuation.
The SingerLewak Approach
While national and international firms can and do provide state and local VDA services, their work frequently comes with a hefty price tag and a one-size-fits-all approach. SingerLewak takes a different tack.
We’re big enough to rely on, and flexible enough to adapt. We take to heart what clients actually need. You’ll be working with the same team you met at the start of an engagement, without being handed off to someone else.
Beyond the Numbers
In the end, Washington’s expanded VDA window offers a meaningful opportunity for non-US sellers to reduce risk, limit historical exposure, and enter the Washington market on solid footing. Taking action during this limited timeframe can help businesses protect future profitability and strengthen their position with customers, investors, and potential buyers. For companies unsure where to begin, partnering with experienced state and local tax professionals can turn a complex requirement into a clear and manageable path forward. SingerLewak is ready to guide that process and help businesses move ahead with confidence.
Jonathan Drugge, CPA
Partner, State and Local Tax
SingerLewak
206.459.6641
[email protected]
