Washington’s new sales tax on services faces a second lawsuit that could undercut the state’s moves to bring in hundreds of millions of dollars in revenue.

A Sequim-based security company is suing to pause the tax on its services that took effect Oct. 1. 

Security Services Northwest wants the state’s tax on security services blocked until Jan. 1, arguing its implementation moved too quickly and violated due process. The company filed the 6-page lawsuit Sept. 30 in Thurston County Superior Court, with the state, the Department of Revenue and agency director Drew Shirk named as defendants.

A Department of Revenue spokesperson declined to comment on the complaint, other than to say the agency “is reviewing the lawsuit with legal counsel.”

The law in question expanded taxes on a number of services and is expected to fuel $1.1 billion in the two-year budget that began July 1, and over $2.6 billion over four years. Hundreds of millions of dollars will also flow to local governments, as they get a share of state sales tax proceeds. 

Other services covered by the tax law include live presentations, information technology and temporary staffing. 

The levy on investigation, security and armored car services makes up $127 million of the anticipated four-year collections, according to the Department of Revenue. 

Security Services Northwest provides security officers, remote video monitoring and security alarm installation. 

Senate Bill 5814, signed by Gov. Bob Ferguson in May, already faces litigation from cable giant Comcast over a separate provision targeting digital advertising services for taxation. Comcast says the statute violates federal law because it doesn’t apply the tax to all advertising services equally.

Late last month, the state filed its response to Comcast in court, disagreeing with the allegations and asking a judge to dismiss the lawsuit. A hearing in the case could be months away. 

The advertising services tax is projected to bring in $475 million to state coffers over the next two budget cycles. 

The lawsuits bring into question new revenue that state lawmakers relied upon to fill a gaping budget shortfall and fund a $77.8-billion two-year operating budget. The challenged law is part of a package of new and increased taxes and fees that Democrats in the Legislature pushed through this year in hopes of raising $9 billion in the next four years.

Over the summer, the Department of Revenue hosted listening sessions with businesses covered by the new taxes on services. Over 90,000 businesses are expected to pay under the law. Companies complained of a lack of clarity on how the taxes would be implemented and the adverse effects on their bottom line. 

Ahead of the law’s Oct. 1 implementation, the Department of Revenue released detailed guidance on companies’ obligations, including on Sept. 12 for security services. Included in the tax are private investigators, bounty hunters, security guards, fingerprinting, background checks, missing person tracking and lie detectors and polygraphs.

Security Services Northwest says in the lawsuit that this wasn’t enough time to “adapt to and implement internal controls and procedures to ensure that proper sales tax is charged.”

Department of Revenue spokesperson Mikhail Carpenter said the state notified all businesses set to pay the new tax via letter or email between Aug. 13 and Aug. 22. Notices of the changes were also issued in late July, around the time of the listening sessions. 

The company also takes issue with the tax itself, calling it a “direct tax on public safety” in a press release. And it argues that security services are being taxed unfairly compared to other professional services. 

“This policy punishes communities trying to stay safe and makes protection less affordable for everyone,” Joe D’Amico, the company’s president, said in a statement.

This story is republished from the Washington State Standard, a nonprofit, nonpartisan news outlet that provides original reporting, analysis and commentary on Washington state government and politics.