If you do business in Washington, you’ve probably heard rumblings about the state’s major tax changes under ESSB 5814. And if you offer services like advertising, IT, custom software development, temporary staffing, or investigation/security services, these changes directly impact you.
Starting October 1, 2025, many of these services will be treated as retail sales—which means new tax obligations for a lot of businesses that have never had to collect sales tax before.
Big shifts in tax policy often bring uncertainty, and this situation is no exception. The positive news is that Washington’s Department of Revenue (DOR) introduced two programs designed to help businesses get compliant while reducing penalties and limiting historical exposure:
- The expanded Voluntary Disclosure Program (VDP or VDA)
- The ESSB 5814 Penalty Relief Program
Both can substantially reduce your financial risk—even if you’re already registered but haven’t been reporting everything correctly.
Let’s break down what’s changing and how you can take advantage of these opportunities.
Washington’s Voluntary Disclosure Program: Now More Accessible Than Ever
The DOR recently expanded its Voluntary Disclosure Program to make it easier for businesses, particularly unregistered ones, to resolve past liabilities.
What’s New?
As of September 1, 2025, the program includes:
- Broader eligibility, including businesses that did not have an active registration at the start of the statutory lookback period and had no enforcement contact during that time.
- A limited lookback period of four years plus the current year, instead of Washington’s possible seven-year reach.
- Penalty waivers of up to 39%
- The ability for DOR to summarize your exposure in one assessment, simplifying the process.
What If You Are Already Registered?
Many businesses assume that once they’re registered, they’re stuck. That’s not the case.
Even if you have a Washington tax account but haven’t been reporting certain activities—especially newly taxable services—you may still qualify for relief.
Washington offers:
- Penalty waivers for the 5% assessment penalty
- Options for structured resolution
- Paths that allow correction without triggering additional enforcement
Key Point:
Being registered does not eliminate your options. You may still be eligible for meaningful penalty relief if you misclassified services or misunderstood the new ESSB 5814 rules.
Our team at Perkins helps many registered businesses navigate this without triggering unnecessary scrutiny.
ESSB 5814 Penalty Relief: Temporary but Valuable
Alongside the VDP, Washington created the ESSB 5814 Penalty Relief Program, designed specifically for businesses affected by the new taxable-services rules.
What Does It Cover?
- Waives certain penalties (not tax or interest)
- Applies to periods between October 1, 2025 and December 31, 2026
- Only applies when liability is due to ESSB 5814 changes
Who Qualifies?
You may be eligible if:
- Your services became newly taxable
- You owe sales or use tax because of those changes
- You apply before September 30, 2027
Relief also applies to some existing contracts, but only until the earlier of:
- When the contract no longer qualifies, or
- April 1, 2026
Choosing the Right Path — and Why You Should Not Go At It Alone
Both programs provide meaningful relief, but each has nuances:
| Your situation | Potential path |
| You were unregistered and have historical liability | VDP |
| You were registered but misunderstood new ESSB 5814 rules | ESSB 5814 Penalty Relief or other penaltywaiver options |
| You were registered but not reporting certain activities correctly | Relief may still be available through penalty waivers or structured resolution |
| You are not sure whether your exposure is historical or tied to new taxable services | Start with professional guidance |
Because DOR processes applications in the order received, and because the wrong filing can accidentally expand your lookback period or disqualify you from relief, self-filing carries real risk.
Why Contact Perkins Before Filing Anything?
Perkins helps businesses:
- Determine whether liabilities stem from historical exposure, ESSB 5814, or both
- Evaluate whether the VDP, penalty waivers, or ESSB 5814 relief applies
- Structure disclosures to minimize penalties and limit lookback periods
- Review contracts, revenue streams, and service classifications under the new rules
- Communicate with DOR on your behalf
- Avoid missteps that could trigger audits or enforcement action
- Even well-meaning businesses can inadvertently increase their tax exposure by reaching out to DOR directly. A strategic approach protects your interests.
Let’s Navigate This Together
Washington’s tax rules are shifting, but with the right guidance, you can come into compliance in a way that protects your business and minimizes penalties.
Before you apply for any relief with DOR, reach out to Perkins. We will help you understand your options, manage the disclosure process, and ensure you get the maximum relief available.