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If the contract remains unchanged and unpaid after the effective date, businesses can continue to report it under the old classification until March 31, 2026. Beginning April 1, 2026, companies will be required to update these contracts to be reported under the retailing Business and Occupation (B&O) tax. The sales tax must be collected unless exempt. Taxpayers may elect to report under the new classification earlier, but they must also collect sales tax if they opt to do so.

Finally, any material changes to a contract after October 1 trigger the immediate application of retailing B&O and retail sales tax. These changes include alterations to the parties, scope of services, terms affecting rights and responsibilities, duration of services, and compensation. Clerical updates, like edits to contact information, do not affect tax treatment. (Interim Guidance Statement Regarding Contracts Existing Prior to October 1, 2025, Washington Department of Revenue, August 29, 2025)

Comcast lawsuit argues new Washington tax on advertising is illegal – Washington State Standard

UPDATE: Comcast filed a lawsuit against the State of Washington and its Department of Revenue on September 9, 2025, in Thurston County Superior Court, seeking to halt the sales tax on advertising services set to take effect on October 1. The company claims that the law introduced by Senate Bill 5814 targets internet-based advertising disproportionately, as ads via streaming services are taxed while ads via traditional media are exempt. According to the suit, Comcast is alleging that this violates the federal Internet Tax Freedom Act.

In response, the Department of Revenue is reviewing the lawsuit with legal counsel and preparing interim guidance on how the law will be implemented. The updated guidance is expected within the next two weeks. (Comcast Corp. v. State of Washington, Thurston County Superior Court, filed September 9, 2025.)

Posted on September 25, 2025
https://www.salestaxinstitute.com/resources/washingtons-senate-bill-5814-expands-sales-tax-to-digital-services-sparking-legal-concerns