multiple points of use/MPU Archives

Washington DOR issues interim guidance on advertising services

The Washington Department of Revenue (DOR) released an Interim Guidance Statement (IGS) on Advertising Services implementing Engrossed Substitute Senate Bill (ESSB) 5814 ahead of the October 1, 2025, effective date. In previous posts, we addressed the passage of ESSB 5814 and the sourcing rules.

The Advertising Services IGS is part of a broader rollout of interim guidance DOR is publishing before the effective date. Previous IGSs include guidance on Custom Website Development; Digital Automated Services (DAS) Exclusions; Information Technology Services; Live Presentations; Investigation/Security/Security Monitoring, and Armored Car Services; Temporary Staffing Services; and Existing Contracts (among others). We view this cadence as a positive sign of the tax policy team’s commitment to provide implementation detail ahead of the effective date of the new taxes.

Two categories the advertising services IGS addresses

In response to industry requests, the IGS addresses both “creative” or pre-dissemination services and “dissemination” services (i.e., advertising services involving the actual dissemination). The IGS states that it is responding to the need for clarity on both types.

Where the sale takes place

The IGS applies the destination-based sourcing statute and frames receipt as first use, guided by the Streamlined Sales and Use Tax Agreement’s concepts of where a purchaser (or donee) can first make use of the result of the service. For disseminated advertising services, including creative services bundled with dissemination, the IGS illuminates that “receipt occurs where the result of the advertising services is first used … which is the location where the advertising services are disseminated.” The IGS continues:

The location of dissemination may be indicated by, but not limited to: instructions as to where advertising will be placed for viewing, actual locations of placement, IP addresses of potential customers’ viewers of advertising, or other similar information about where the advertising is consumed.

For pre-dissemination (creative) services where the seller does not also disseminate, “receipt occurs where the purchaser reviews the advertising or related service prior to dissemination.” If the seller does not know the location of receipt at the time of charge, the IGS walks through the statutory sourcing hierarchy and cautions against “bad faith” address selection. In instances where the full address or ZIP+4 Code cannot be determined with due diligence, the use of Washington “pool codes” is permitted.

Illustrative examples highlighted in the IGS

Disseminated advertising: Washington-only, known viewer locations (Example 1). Source to specific ZIP+4 Codes tied to impressions; where matching isn’t possible, use Washington pool codes.
Disseminated advertising: Washington-only, viewer location unknown at payment (Example 4). Source to the purchaser’s Washington address (not an out-of-state address).
Disseminated advertising: Multijurisdictional, prepaid, viewer location unknown at invoice (Example 5). May source to the purchaser’s address unless the parties agree by invoice time to a reasonable, consistent multijurisdictional allocation.
Creative advertising (advisory only) (Example 7). Source to the purchaser’s review location (g., the client’s marketing office).

Maryland sales tax multiple points of use exemptions: Is the juice worth the squeeze?

In the waning days of its 2025 session, the Maryland Legislature passed the Budget Reconciliation and Financing Act, and Governor Wes Moore signed it into law.[1] This bill expands the sales tax base to include sales of various data and information technology and cloud computing services.[2] The sales tax rate on these new categories of taxable services is 3% as opposed to the prevailing state-wide tax rate of 6%. Imposition of the tax on sales of these new categories is effective starting July 1, 2025.

Putting aside the unworkable nature of keying the imposition to North American Industry Classification System codes and the obvious Internet Tax Freedom Act preemption of the imposition on web hosting and data storage, the Maryland Comptroller recently issued interim guidance that adds new, unwarranted complexity in the administration of multiple points of use (MPU) exemption certificates.

The new law takes effect July 1, and many taxpayers are scrambling to interpret and implement it. On June 10, the Comptroller issued a bulletin providing guidance on many of its more technical components,[3] which introduces a distinction between installment sales of and subscriptions to the newly taxable categories of services. This distinction has implications for managing MPU exemption certificates.

Included with the guidance are provisions that give buyers of these newly taxable services (if they plan on using the services in more than one jurisdiction) the option of providing the seller with an MPU exemption certificate.[4] Receipt by the seller of an MPU exemption certificate relieves the seller of the obligation to collect and remit Maryland sales tax on the sale, shifting the obligation of paying the use tax to the buyer.[5] The applicable tax the buyer must pay is determined using a reasonable method of apportionment of the use within Maryland as compared to all the locations of use of the service. Relevant headcount is a reasonable method of apportionment.[6] The presentation of an MPU exemption certificate by the buyer to the seller is optional.

In an installment sale context, there is one sale transaction that occurs at the time of contract execution. Buyers electing into the MPU process would need to supply only one certificate to the vendor that would cover all subsequent installment payments under the contract. Subscriptions are treated differently. Many of these newly taxable categories of computer-related services often are sold on a subscription basis. Under the guidance, each subscription payment is considered a separate sale requiring the issuance of a separate MPU exemption certificate for each subscription payment.[7] We told the Comptroller’s staff that requiring a separate MPU exemption certificate for each subscription payment is unnecessary. The staff responded saying that the rigidity of the process they’ve outlined in this context is under consideration and may be updated in subsequent guidance. (Vendors and buyers concerned about the practical implications of the MPU regime outlined are encouraged to contact the authors of this blog post for more details.)

Washington DOR issues interim guidance on advertising services

Maryland sales tax multiple points of use exemptions: Is the juice worth the squeeze?

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