Washington State Offers Temporary Voluntary Disclosure Relief for Non-US Companies

Foreign-based companies selling into Washington state may soon benefit from a unique opportunity to resolve outstanding state tax obligations. The Washington Department of Revenue (DOR) announced a limited time International Remote Seller Voluntary Disclosure Program (IRSVDP) that streamlines the path to compliance for qualifying non-U.S. businesses, including reduced lookback periods and significant penalty relief.

The program runs from February 1 through May 31, 2026.

Program Overview

The IRSVDP is designed specifically for foreign remote sellers that have established nexus in Washington but have not registered or reported state taxes. With the program open for only four months, Washington  encourages voluntary compliance, allowing businesses to bring prior liabilities current and transition non-U.S. businesses into proper registration and reporting on a go-forward basis.

In Washington, a business may establish nexus for sales tax or business and occupation (B&O) tax through either physical presence (such as property, employees or inventory in the state) or economic nexus. Economic nexus can be triggered when a remote seller has more than $100,000 of retail sales sourced to Washington in the current or prior calendar year.

Eligibility Requirements

To qualify for the IRSVDP, a business must meet the following criteria:

• Headquartered outside the U.S.
• Not registered with the Washington DOR during the current statutory period and prior four years
• No enforcement contact from the Washington DOR during the same statutory period
• No evidence of tax evasion or intentional misrepresentation related to Washington tax liabilities

If a business does not meet these criteria, other voluntary disclosure or penalty-mitigation options may still be available.

Key Program Benefits

Reduced lookback periods

Washington is offering significantly shortened lookback periods compared to standard audit or enforcement actions:

• B&O tax: Last four years plus the current year
• Uncollected retail sales tax: 12 months only

This 12-month lookback for retail sales tax is particularly favorable and substantially reduces both the tax base and associated interest.

Penalty relief (Up to 39%)

Penalty relief is one of the greater benefits of the IRSVDP. Outside the IRSVDP, penalties assessed through enforcement can reach 39%. On the other hand, voluntary reporting by registered taxpayers typically results in penalties ranging from 9% to 29%.

Eligible IRSVDP participants may receive full waiver of the following penalties:

• 5% assessment penalty
• 5% unregistered taxpayer penalty
• 29% late payment penalty

Streamlined resolution

Under the IRSVDP, liabilities are generally resolved through a single summarized assessment, rather than multiple assessments issued across different tax types and periods. This approach reduces administrative burden and accelerates resolution for both taxpayers and the department.

Application Requirements and Process

Voluntary disclosure requests must be submitted online and include:

• Business name, address and contact information
• Gross income spreadsheet in Washington state’s format
• Washington Business Activities Questionnaire

Once approved, participants must file a business license application, pay the required registration fee and comply with ongoing reporting obligations. Businesses not accepted into the program may still request a penalty waiver of up to 5% of the tax due.

Weaver Can Help

Non-U.S. companies with Washington operations or customers should proactively evaluate this compliance opportunity. Addressing historical exposure now, under reduced lookback periods and penalty relief, can significantly mitigate future audit and enforcement risk. Weaver can help businesses understand the program requirements and determine next steps. Contact us today.

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