Washington State Expands Voluntary Disclosure Program for International Businesses

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If your business has had a taxable presence in Washington State but hasn’t paid Washington Business & Occupation (B&O) Tax or collected sales tax, now is a good time to consider Washington’s temporary, expanded Voluntary Disclosure Agreement (VDA) program. This program allows eligible international businesses to reduce potential penalties and limit the period of tax liability.

Program Window

From February 1 through May 31, 2026, Washington’s Department of Revenue is offering a temporary International Remote Seller Voluntary Disclosure Program. This program is for foreign remote businesses that are unregistered and have established substantial nexus in Washington.

Who Qualifies

To participate, your business must:

Be headquartered outside the U.S.
Not have been registered with or reported taxes to Washington within the last four years plus the current year.
Not have been contacted by Washington for enforcement (audits or compliance reviews) during that period.
Not have engaged in tax evasion or misrepresentation.

Benefits of Voluntary Disclosure

Participating in the VDA program may provide:

Limited lookback period:
- B&O Taxes: Four years plus the current year
- Retail Sales Tax: 12 months
Penalty relief: Potential waiver of up to 39% in penalties, including:
- 5% assessment penalty for substantially underpaid tax
- 5% unregistered penalty
- 29% late payment of a return penalty
Interest: Applied at the statutory rate, while penalties may be partially or fully waived

Important Consideration

If your business has collected retail sales or use tax but hasn’t remitted it, there’s no limit on the lookback period, and the 29% late payment penalty applies to unremitted amounts.

Next Steps

If your company may qualify, consider reviewing your Washington tax obligations promptly to determine eligibility and reduce exposure.

Not sure whether this applies to your business? Our SALT team can help you assess your Washington nexus, estimate potential liabilities and determine whether voluntary disclosure is the right path. Connect with us to get started.