WASHINGTON – If you pay a third-party to help you provide online account access to your customers or clients, the cost of the service is taxable, said the Dept. of Revenue in a recent decision.
A company providing these services to credit unions claimed its services weren’t taxable since various features it offered customers were considered data processing services, which are exempt under state tax laws. However, the services provided actually fell under the category of taxable digital automated services, according to Det. No. 19-0284R, 41 WTD 118.
Here’s why: Although individual services the company provided clients as part of its business model could be considered tax-exempt, both exempt and non-exempt services were sold together in the same package. Since clients couldn’t purchase the tax-exempt services separately, that meant the purchase of the whole service was subject to sales tax.