DOR Issues First Round of Guidance for Sales Tax Changes Effective October 1

by Mike Nelson

Update September 17, 2025: On September 17, 2025, DOR issued interim guidance on the sales tax for temporary staffing services. Some in the CPA profession were concerned that certain aspects of a CPA’s services provided to clients might fall under temporary staffing services. The guidance clarifies that independent contractors are not considered temporary staffing services, nor is outsourcing work to a third-party that engages independent contractors subject to sales tax as a temporary staffing service. Since every business situation is different, CPAs are encouraged to review the guidance to determine how it applies to their own or their clients’ circumstances.

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Late on September 12, 2025, the Washington State Department of Revenue (DOR) issued much anticipated interim guidance on sales tax changes that will go into effect on October 1, 2025. Guidance on several areas, including Advertising Services, Custom Software, and Temporary Staffing, has yet to be released.

Links to the interim guidance can be found on the DOR website based on topic areas.

Included among the interim guidance are three areas of particular interest to the CPA profession:

• Existing contracts
• Live presentations and sales tax sourcing
• Exclusions from Digitally Automated Services

Existing Contracts

The DOR issued guidance a few weeks ago on existing contracts, which are defined as contracts which are entered into and paid prior to October 1. These contracts will be exempt from any new sales tax being applied after October 1. The guidance also explains the various treatments for contracts that are signed before October 1 and paid after or paid on a contractually stipulated recurring basis. Please refer to the guidance for details on your specific industry or client situation.

Live Presentations and Sales Tax Sourcing

The interim guidance defines live presentations, along with how sales tax sourcing for them. CPE will be subject to sales tax as a live presentation. You can find more detailed information on how that will affect your CPE as a CPA in the WSCPA Sales Tax on Live Presentations FAQ.

More broadly, if you have a client who hosts live presentations, there are several areas of importance. For the sourcing of the sales tax burden, taxpayers are instructed to use the actual location where a digital live presentation is received for the sales tax calculation, as opposed to a billing address. Similarly, if a group of tickets is purchased by one individual or entity the location for each individual member should be gathered. There is some leeway if these locations are not known. However, if the seller discovers this information after the fact, they are responsible for the correct sales tax remittance to the state regardless of what was collected from the buyer at the point of sale.

The DOR has clarified what is NOT considered to be a live presentation. This includes one-on-one instruction and “professional services where the presentation is merely a part of delivering a broader service to the client.” These exclusions provide some protections for classes and training that some CPAs and CPA firms offer to clients on how to use systems for the larger service of providing audit, tax preparation, or other services. 

Exclusions from Digitally Automated Services (DAS)

The FAQ that DOR had published previously explained that professional service providers (including CPAs) were not subject to sales tax under the new changes to the exclusions from digitally automated services (DAS). While this statement is still true, the interim guidance published highlights the need for legislative action to secure this tax treatment. Specifically in this guidance DOR states that the legislature did not intend to tax professional services as the basis for the exclusion instead of the existing RCW. But DOR states it “will continue to evaluate the applicability of sales tax pending final guidance and legislative clarification in 2026.” 

The WSCPA Government Affairs team has already anticipated and is working with legislators and other industries to obtain clarification and recommend changes to these tax policies in the upcoming legislative session.