Seattle Rule 5-030
Persons making sales through a direct seller's representative
(1) Definitions.
(a) "Direct seller" is any person in respect togross income derived from the business of making sales at wholesale
or retailif such person:
(i) Does not own or lease real property within the city;and
(ii) Does not regularly maintain a stock of tangiblepersonal property in the city for sale in the ordinary course of
business; and
(iii) Is not a corporation incorporated under the laws ofthis state; and
(iv) Makes sales in the city exclusively to or through adirect seller's representative.
(b) "Direct seller's representative" means aperson who buys consumer products on a buy-sell basis or a
deposit-commissionbasis for resale, by the buyer or any other person, in the home or otherwisethan in a permanent retail establishment, or who sells, or solicits the saleof, consumer products in the home or otherwise than in a permanent
retailestablishment; and
(i) Substantially all of the remuneration paid to suchperson, whether or not paid in cash, for the performance of services
describedin this subsection is directly related to sales or other output, including theperformance of services, rather than the number of hours worked; and
(ii) The services performed by the person are performedpursuant to a written contract between such person and the person for
whom theservices are performed and such contract provides that the person will not betreated as an employee with respect to such purposes for federal tax purposes.
(2) Tax Treatment.
(a) The RCW provides an exemption under the State'sBusiness & Occupation tax for sales made by a direct seller to or
through adirect seller's representative. However, the City of Seattle does not allow asimilar exemption under the City's business license tax. Therefore, a personmaking sales to or through a direct seller's representative is subject to thebusiness
license tax in the same manner as other manufacturers, retailers,distributors, or wholesalers.
(b) If the sale between the direct seller and the directseller's representative is on a buy-sell basis then the business
license tax isdue by both the direct seller and the representative (wholesale sale and then aretail sale, respectively).
(c) If the sale by the direct seller's representative ismade on a commission basis then the representative shall report
suchcommissions under the service and other business license tax classification,and the direct seller shall report the total amount of the sale under the retailingclassification.
(3) Special Agreement. A direct seller may enter into anagreement with the Director whereby the direct seller reports the
businesslicense tax for their own sales and also those of their representatives. Insuch case, the representatives will not be required to obtain business licensetax certificates.
DIRECTOR'S CERTIFICATION
I, Glen M. Lee, Finance Director of the City ofSeattle, do hereby certify
under penalty of perjury of law, that the within andforegoing is a true and
correct copy as adopted by the City of Seattle,Department of Finance and
Administrative Services.
DATED this ______ day of July 2016.
CITY OF SEATTLE,
a Washingtonmunicipality
By: ____________________________________
Glen M. Lee,Finance Director
Department ofFinance and Administrative
Services
Effectivedate: July 14, 2016