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  The Washington Department of Revenue has ruled that an out-of-state mail order retailer had substantial nexus with the state for purposes of retail sales tax and business and occupation tax based on the activities of its in-state affiliate. The mail order retailer had no employees or inventory in Washington. However, its in-state affiliate, which operated under the same business name, sold gift cards that could be redeemed via mail order, online, or at the retail store. When a gift card was redeemed, the sale was recorded in the financial records of the appropriate subsidiary. Therefore, by selling the gift cards, the affiliate was actually facilitating sales on behalf of the mail order retailer.


Furthermore, the affiliate distributed the mail order retailer's catalogs and assisted its customers with returns by contacting customer service to request free shipping labels. The department concluded that these activities were significantly associated with the ability of the mail order retailer to establish or maintain a market for sales in <!<st1:State>><!<st1:place>>Washington<!</st1:place>><!</st1:State>>.


Click the link below to view the ruling.



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