In a ruling that will be of interest to taxpayers following Massachusetts appeals on the issue, Washington has issued recent guidance (see Washington DOR – Termination Fees) asserting that early termination fees for cancelling cellular phone contracts are subject to retail sales tax as taxable telecommunications services.

This guidance takes the same position that the Massachusetts Department of Revenue allegedly took at audit against a telecommunications provider; a position that the taxpayer challenged at the Appellate Tax Board (“ATB”). For more information on the pending ATB appeal, please see our prior update.