Foreign companies selling into Washington State may have just received an unexpected gift. The Washington Department of Revenue has announced a temporary International Remote Seller Voluntary Disclosure Program, running from Feb. 1 through May 31, 2026—providing international businesses an opportunity to address tax compliance with reduced consequences.
Why This Matters Now
Companies headquartered outside the United States that have been selling into Washington without registering for state taxes may already be on borrowed time. Washington's enforcement efforts have been ramping up, and discovery through normal audit procedures may result in a seven-year lookback period, interest, and penalties possibly reaching 39% of taxes due.
This voluntary disclosure program offers an alternative approach.
Program Details
Instead of facing the potentially harsh reality of full penalties and extended lookback periods, qualifying international sellers may benefit from:
- Shortened lookback periods: Four years plus the current year for business and occupation taxes, and 12 months for uncollected retail sales tax.
- Penalty relief: Up to 39% in penalties may be waived, including a 5% assessment penalty, a 5% unregistered penalty, and a 29% late payment penalty.
- Streamlined resolution: All unreported tax liability may be summarized in a single assessment.
Qualification Requirements
This program targets a specific group: foreign companies without current Washington tax registration. To qualify, a business must be headquartered outside the United States and who have not engaged with Washington—meaning no active registration, no prior contact from the Department of Revenue, and no history of tax evasion or misrepresentation in reporting tax liabilities.
The program offers a 15-day anonymous application window, allowing companies to test the waters before fully committing to disclosure.
The Clock Is Ticking
Washington is offering this program for four months, and applications are processed in order of receipt. Companies that submit complete applications—including detailed financial information, business activity questionnaires, and supporting documentation—will be prioritized over incomplete submissions.
Strategic Considerations
For international companies evaluating their options, this program presents a classic risk management decision. Companies may consider participating in Washington's temporary program or continuing their current approach, recognizing that Washington continues to develop its enforcement capabilities.
Participating companies face a one-year lookback period and substantially reduced penalties. Those that do not participate and are subsequently discovered face the full weight of Washington's enforcement powers: seven-year lookbacks, maximum penalties, and no negotiating leverage.
The 15-day anonymous application period offers an opportunity to gauge potential exposure without immediate commitment, though companies note that Washington has built in strict timelines throughout the process, and missing deadlines would mean forfeiting all program benefits.
Takeaways
While the state's ability to enforce a judgement against a wholly foreign entity may depend on the facts and circumstances, foreign businesses selling directly into Washington should consider this opportunity. Washington's limited voluntary disclosure program represents an opportunity for international sellers to resolve their tax obligations on potentially favorable terms. The narrow qualification criteria, strict deadlines, and complex application requirements, however, make the program sufficiently complex.
Foreign companies that have been operating in the gray areas of Washington's tax requirements should evaluate whether to engage in the program before the amnesty period kicks off early next year.
The application window closes May 31, 2026. Companies considering participation may wish to act quickly to ensure they can meet all program requirements and deadlines.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
