On May 20, 2025, Governor Ferguson signed SSB 5314, comprehensive legislation modifying the state’s capital gains tax under RCW 82.87.020. The bill addresses various aspects of the state’s relatively new capital gains tax. Among its provisions, Section 15 establishes new 1099-B reporting requirements for brokers and barter exchanges, effective January 1, 2026.
This marks a significant development for Washington State, which has never previously required the filing of any 1099 information returns, as the state does not impose an income tax. Under the new requirements, brokers and barter exchanges must electronically file copies of IRS Form 1099-B with the Washington Department of Revenue within 90 days of filing with the IRS.
This requirement applies to sales or exchanges of long-term capital assets when the resulting capital gains are allocated to Washington State, and the broker or barter exchange serves as the payor. Under the legislation, capital gains are allocated to Washington by default when any of the following conditions exist: the payee’s last known domicile or address on file is in Washington, the account was opened in Washington, or the payee uses the broker’s physical place of business in Washington.
Payors who fail to comply with these requirements, whether through negligence or fraud, face penalties of $50 per violation. Since ESSB 5167 has already appropriated the necessary funding to the Department of Revenue, the implementation requirement has been satisfied, and the new reporting obligations will move forward.
While the Department has not yet released implementation guidance for brokers and barter exchanges, such instructions on compliance procedures and electronic filing protocols should be forthcoming now that funding has been secured.
To review SSB 5314 in greater detail, click here.
To review ESSB 5167 in greater detail, click here.
