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Washington State’s Sales Tax Prepayment Requirement: What Large Retailers Need to Know
Washington State’s Sales Tax Prepayment Requirement: What Large Retailers Need to Know
In a sweeping change to Washington State’s sales tax rules, a new prepayment requirement is set to impact larger businesses starting in 2027. As part of recent legislation expanding the state’s tax base, the measure targets businesses with high-volume retail sales, requiring them to remit sales tax in advance.
What’s Changing?
Businesses that report monthly and generated $3 million or more in taxable retail sales in 2026 will be required to make a one-time sales tax prepayment by June 25, 2027. This prepayment must equal 80% of the state sales tax they collected during June 2026 reporting period.
The goal? Accelerate the timing of revenue collection for the state. But for businesses, it means preparing now for a shift in how and when they pay.
Key Dates and Requirements
- Prepayment Amount: 80% of June reporting period for 2026
- Due Date: June 25, 2027
- Final Reconciliation: Filed with the July 2027 return, due by July 26, 2027
What Happens If You Miss It?
Failing to make the required prepayment on time will result in a 10% penalty—unless a business can show that its June 2027 taxable retail sales were less than 80% of the prior year’s June sales. This exception allows businesses to avoid penalty if their sales meaningfully declined.
Planning Ahead
This rule presents both logistical and financial challenges:
- Cash Flow Management: Businesses will need to plan for a significant outlay of cash earlier than expected.
- System Updates: Accounting processes must be updated to calculate and track this prepayment accurately.
- Risk of Error: Missteps could trigger penalties or reconciliation headaches later.
Businesses subject to this rule are encouraged to begin evaluating their June 2026 numbers now and work with finance professionals to prepare for the upcoming changes.
Source:
https://www.eidebailly.com/insights/alerts/2025/washington-state-tech-sales-tax
