A provision buried in Washington's tax bill carves out intercompany charges for IT, software, and data services—potentially saving health systems thousands in annual compliance and tax costs.
Most health services owners in Washington don't realize that a provision in SB6113 has quietly changed how they report and pay sales tax on certain internal technology and data services. If your organization is part of a larger health system or corporate structure, this change could affect your tax liability and compliance obligations starting October 1, 2025.
SB6113, a tax bill signed into law, added a new exemption to Washington's retail-sales definition. Under the new provision in RCW 82.04.050(17), certain transactions between affiliated entities are no longer classified as taxable retail sales.
Specifically, the exemption covers intra-affiliate charges for:
When one part of your affiliated health organization bills another part for these services, those transactions are now exempt from sales and use tax collection requirements.
This provision applies to health services organizations that operate as part of an affiliated group—meaning entities under common ownership or control. This includes health systems with multiple clinics or hospitals, corporate structures with shared service centers, and organizations with centralized IT or administrative functions.
If your organization handles IT services, software development, data management, or marketing internally and bills other affiliated entities for those services, you likely qualify.
The practical impact is twofold: reduced tax liability and simplified compliance.
First, you no longer owe sales or use tax on these intercompany charges. If your health system's IT department bills affiliated clinics for software licenses or cybersecurity services, that transaction is now tax-exempt. The same applies to a shared services center billing member organizations for data processing or training.
Second, you reduce your sales-tax compliance burden. Fewer transactions to track, fewer returns to file, and fewer potential audit issues around whether a particular service qualifies as taxable.
For organizations already paying sales tax on these services, the exemption applies retroactively to October 1, 2025, which may create an opportunity to review past filings.
The exemption is effective retroactively and prospectively to October 1, 2025. The bill itself became effective June 11, 2026. The provision is codified in Section 2 of SB6113, amending RCW 82.04.050(17), found on pages 18–19 of the bill text.
Health services owners should review their current intercompany billing practices and consult with their accountants or tax advisors to ensure they're correctly applying this exemption and, if applicable, to determine whether amended returns are warranted for transactions dating back to October 1, 2025.
For a detailed, health-services-specific guide to this provision and how it applies to your organization's structure, speak with your tax advisor or contact your state health services association.