The Washington State Department of Revenue is offering two temporary voluntary disclosure programs designed to help businesses address past tax obligations and come into compliance with Washington tax laws. For qualifying businesses, participation in these programs can result in penalty relief of up to 39%, creating a meaningful opportunity to reduce financial exposure while gaining certainty and compliance in the future.
Voluntary disclosure programs are particularly valuable for businesses that may be unintentionally out of compliance due to evolving tax laws, expanded nexus standards, or misunderstandings about how specific income streams are taxed in Washington. By coming forward proactively, businesses can often resolve historical issues on more favorable terms than if those issues are discovered through audit or enforcement activity.
Because these programs are temporary and time-sensitive, understanding eligibility requirements and acting promptly is critical.
Investment Income Voluntary Disclosure Program — Now Available
The Investment Income Voluntary Disclosure Program is currently open to businesses with unreported investment income subject to Washington’s Business & Occupation (B&O) tax.
Many businesses assume that investment income is excluded from Washington taxation or overlook how certain investment activities may be classified under the B&O tax. However, depending on the facts, investment income may be taxable, particularly when it is closely related to a business’s core operations or exceeds certain thresholds. As the Department of Revenue continues to focus on investment income reporting, businesses with historical exposure may face unexpected assessments if these issues are not addressed proactively.
This temporary program allows eligible businesses to:
- Voluntarily disclose previously unreported investment income
- Resolve outstanding tax liabilities
- Significantly reduce penalties
- Establish a compliant reporting position moving forward
Participation can also help businesses avoid uncertainty, disruption, and additional costs that often accompany audits or enforcement actions. Because eligibility is limited and participation is voluntary, businesses must act before the Department initiates contact to qualify.
Since this program is only available for a limited time, timely evaluation of investment income streams, prior filings, and reporting positions are essential.
International Remote Seller Voluntary Disclosure Program — Launching February 1, 2026
From February 1 through May 31, 2026, Washington will offer a separate voluntary disclosure program for unregistered foreign remote sellers that have established substantial nexus in the state.
This program is intended for international businesses that sell into Washington but have not registered with the Department of Revenue or complied with Washington tax requirements. With economic nexus standards firmly in place, foreign sellers may trigger Washington tax obligations based solely on amount of sales even without a physical presence in the state.
The International Remote Seller Voluntary Disclosure Program provides a short but important window for qualifying businesses to:
- Register with the Department of Revenue
- Address prior tax obligations
- Reduce or eliminate certain penalties
- Transition into ongoing compliance
Because the application period is limited to four months, planning is strongly recommended. Businesses that sell into Washington from outside the United States should begin reviewing their sales activity, nexus exposure, and registration status well before the program opens to ensure they are prepared to act quickly.
How Thompson Tax Can Help with Your Sales and Use Tax Compliance Needs
Navigating voluntary disclosure programs requires careful analysis, detailed documentation, and strategic timing. Each business’s facts are unique, and eligibility depends on multiple factors, including prior filing history, income classification, nexus considerations, and whether the Department has already initiated contact.
Thompson Tax helps businesses identify exposure, evaluate eligibility, and manage the voluntary disclosure process from start to finish. Our goal is to minimize risk, reduce penalties, and help businesses move forward with confidence.
Our team can:
- Review your business activities to identify potential Washington tax exposure
- Analyze income streams and nexus factors to determine eligibility for one or both voluntary disclosure programs
- Quantify potential liabilities and evaluate penalty savings
- Prepare and submit voluntary disclosure applications accurately and efficiently
- Communicate directly with the Department of Revenue on your behalf
- Assist with implementing compliant reporting practices going forward
With deep experience in Washington sales, use, and B&O tax matters, Thompson Tax provides practical, tailored guidance—not one-size-fits-all advice.
Why Timing Matters
These voluntary disclosure programs are temporary and offer benefits that may not be available once they expire. Delaying action can result in:
- Loss of eligibility if the Department contacts you first
- Increased penalties and interest
- Higher audit risk
- Greater financial and administrative burden
Taking action early allows businesses to maintain control over the process and resolve issues on the most favorable terms possible.
Take the Next Step Today
If your business has unreported investment income, sells into Washington from outside the U.S., or wants clarity around potential exposure, now is the time to act.
Contact Thompson Tax today to schedule a confidential review and determine whether participating in a voluntary disclosure program is the right solution for your business. Proactive planning today can lead to significant savings, reduced risk, and a clean compliance position tomorrow.