JULY 2011 WASHINGTON STATE DEPARTMENT OF REVENUE
Washington’s business and occupation (B&O) tax is the cond largest tax source for the state. In Fiscal Year, 2008, B&O tax collections totaled over $2.8 billion, reprenting over 16 percent of the taxes deposited into the state general fund.
Many Washington cities also tax business on their gross income. To find out if your city has a B&O tax, call your city business licen office.ABOUT THE STATE BUSinESS
And OccUpATiOn TAX
介绍出席领导Almost all business located or doing
business in Washington are subject to the
state B&O tax, including:
7Corporations
7Limited liability companies (LLCs)
7Partnerships
7Sole proprietors
7Nonprofit organizations
A sale does not have to occur for a business
to owe B&O tax.
Example: Extracting or manufacturing
goods for your own u is an activity that
generates a B&O tax liability.
Unlike many other states, Washington
does not have an income tax. Washington’s
B&O tax is calculated on gross income.
There are no deductions for labor,
materials, or other costs of doing business.
However, your business may qualify for河南理工大学是几本
certain exemptions, deductions, or credits
permitted by law.
dO i nEEd TO REGiSTER
my BUSinESS?
Register your business with us if you:
喜欢用英语怎么写7Gross $12,000 or more per
calendar year.
7Collect or pay any other taxes, including
retail sales tax.
7Are required to obtain a specialized
licen, including a renewable licen.
7Are a buyer or processor of cedar
or specialty wood products.
For more information, e our publication
Do You Need to Register Your Business?
on our web site at v.
WHEn dO i pAy my TAXES?
The state B&O tax is calculated and paid
when you file an exci tax return.
Business file tax returns monthly,
quarterly, or annually. After you register
your business, we determine your
reporting frequency bad on the
estimated annual tax liability and the
珠海容闳学校type of business.
Business and Occupation Tax
WHAT ARE THE mAJOR B&O TAX cLASSiFicATiOnS?
Following are brief descriptions of the major B&O tax classifications:Manufacturing
The Manufacturing B&O tax classification is ud by business that manufacture items in Washington, regardless of where the product is sold. Thus, products
manufactured in Washington but sold and delivered out-of-state are still subject to the Manufacturing B&O tax. Manufactured products ud by the manufacturer and not sold (or are ud prior to sale) are also subject to tax under this classification. The Manufacturing B&O tax is bad on the value of products, which is usually determined by the lling price. In cas where there is no sale, the value is the lling price of similar products. If the manufacturer lls and delivers the manufactured product within the state, the income is also reported under either the Wholesaling or Retailing B&O tax classifications. A Multiple Activities Tax Credit (MATC) is available so B&O tax is not paid twice on the same product. Service and Other activitieS This classification is for business that provide personal and professional rvices or for activities not otherwi classified. Any activity that is not specified under a particular classification of the B&O tax must report under this catch-all category. Services that fall under this category include, but are not limited to:
7Consulting or management rvices 7Medical rvices 7Legal rvices 7Beautician rvices 7Computer programming
retailing
Sales of goods and certain rvices to consumers are retail sales. There are numerous rvices def
ined as retail sales. See our Retail Sales Tax fact sheet at v for additional information. Business making retail sales are subject to the B&O tax under the Retailing classification, even when the sales are exempt from retail sales tax. For example, certain food sales are exempt from retail sales tax, but the income from food sales is taxable under the Retailing B&O tax classification.
WhOleSaling
Wholesalers ll goods and certain rvices to business that will rell them to others. Retail sales tax is not collected on wholesale transactions.书房布置
Reller Permits
Free reller permits are issued by the Department to business that buy
qualifying items for resale without using or consuming them. Wholesalers must collect and keep a copy of a valid reller permit on file from each buyer that makes purchas without paying sales tax. Permits are generally good for four years. Contractors, however, are issued reller permits that are good for one year. Tho who make qualifying purchas for resale, but do not have a reller permit, may take a Taxable amount for tax paid at source deduction on their return or request a refu
nd. Complete information about this sales tax deduction and the reller permit are on our web site at v/rellerpermit.
WHAT ARE THE B&O TAX RATES?
B&O tax rates and classifications vary according to the type of business activity. Business may report under one or more tax classifications.
Example: A floor covering store may ll carpet directly to a homeowner or speculative builder for their own u (taxed under the Retailing classification) and may also ll carpet to a custom contractor, who will then rell it to the home buyer (taxed under the Wholesaling classification).
B&O TAX cLASSiFicATiOnS And RATES
In addition to the major B&O tax classifications, there are veral specialized tax classifications.
Not all classifications appear on the paper exci tax return. Some classifications appear only on
the return available through electronic filing. Array
You are responsible for determining which B&O tax classification(s) to report your income under. If you are unsure which classification(s) to u:
7Check our web site at v. Click on File and pay taxes, then Before I file, then Tax classifications. 7***********************************.gov.
7Write to us for tax reporting instructions. (See address on back.)
7Call 1-800-647-7706.
dEdUcTiOnS
Unlike exemptions, deductions must first be reported on your tax return as part of your gross income, then taken as a deduction. The most common B&O deductions are listed below. This list is not all-inclusive.Note: Business cannot deduct costs of doing business, including, but not limited to:
▪Wages and salaries ▪Product costs ▪Delivery or travel costs
7Advancements/reimburments Amounts received as advancements or reimburments when the
customer or client alone is liable to pay for the goods and rvices. The person making the payment cannot have primary or
condary liability, other than as agent, to pay for the goods and rvices. (WAC 458-20-111)
7Returns/allowances/cash discounts When the customer returns the product and the entire lling price is refunded or credited. Bona fide discounts taken by the buyer. (WAC 458-20-108)
7Bad debts
Amounts previously reported and
determined to be uncollectible. The debt must also be written off for IRS purpos. (WAC 458-20-196)
7Casual sales
Amounts received for sales of tangible personal property by persons not usually lling such items. Note: The ller must collect and remit the sales tax. (WAC 458-20-106)
EXEmpTiOnS
Some of the most common activities that are not subject to B&O tax are listed here. Income from exempt activities does not need to be reported on your tax return. This list is not all-inclusive. 7Farming
Wholesale sales by farmers
of agricultural products (WAC 458-20-210).
7Nonprofit and social rvice organizations
▪Fundraising sales from certain nonprofit organizations (does not include the regular operation of a business enterpri such as a bookstore, thrift shop, or restaurant) (WAC 458-20-169). ▪Child care provided by churches. ▪Receipt of certain government grants. ▪Nonprofit boarding homes.
EXEmpTiOnS, dEdUcTiOnS, And cREdiTS
Although Washington’s B&O tax applies to almost all business income, various exemptions, deductions, and credits are available.
7Government
▪County, city, school, and fire district income (except utility or enterpri operations that compete with other business and are over 50 percent funded by ur fees). ▪State and federal grants received by political subdivisions where no significant rvices are performed in return.
7Financial
State and federally chartered credit unions.
7Miscellaneous exemptions李雨珂
▪Sale or rental of real estate other than lodging. ▪Small timber harvesters who gross income is less than $100,000 per year. ▪Processing fresh fruits and vegetables or wholesale sales of the products by the processor lling to purchars who transport the goods out of this state.
▪Manufacturing dairy and afood products or wholesale sales of the products by the manufacturer lling to purchars who transport the goods out of this state.
cREdiTS
Credits are granted by the Legislature for specific purpos or are amounts that have been paid to th
e Department that are not due. Credits are subtracted from the B&O tax due on your tax return. If the Department determines you have overpaid your taxes, you will be issued a credit memorandum for that amount. This can be applied to any tax due for up to five years. When the credit is ud, a copy of the memorandum must be attached to the return.
The major B&O tax credits are:
7Multiple activities tax credit (MATC) When a business performs more than one taxable activity for the same product, such as manufacturing and lling a product at wholesale, it reports each activity under the proper B&O classification. The business can then take the MATC so B&O tax is only paid once on the same amount.
This also applies to a business that has paid a gross receipts tax to another state or an out-of-state city. A Multiple Activities Tax Credit, Schedule C, must be completed each time the credit
is claimed. (WAC 458-20-19301)
7Small business B&O tax credit Available for business who combined B&O tax liability for
all classifications is less than:
▪$71 for monthly taxpayers
▪$211 for quarterly taxpayers
▪$841 for annual taxpayers桌面图标排列
The Small Business B&O tax credit is taken after other B&O tax credits allowed under Chapter 82.04 RCW have been applied. It may not exceed the amount of B&O tax due, and unud portions may not be carried into the next reporting period.
Other B&O tax credits are available for qualifying business. They include:
5月天7High technology B&O tax credit An annual credit up to $2 million is allowed for business that perform rearch and development in certain areas in Washington AND meet the minimum expen requirements. For additional information, e our Special Notice, High Technology Business and Occupation Tax Credit Changes available at v.
7Commute trip reduction credit Available to employers and property managers who provide financial incentives for using commute trip reduction methods. See our Special Notice, Commute Trip Reduction Credit Program - 2005 Updates available
at v.
7Rural county B&O tax credit
for new employees
Provides a credit for qualified business located in eligible areas against B&O tax for each new employment position filled and maintained. See our Rural County Business and Occupation Tax Credit for New Employees publication available at v.
7Accommodation sales Amounts received by a business for lling goods at cost to a like business to fill an existing order. (WAC 458-20-208) 7Interstate and foreign sales Amounts received from goods delivered to customers outside of Washington. Transportation of persons or goods across state or international boundaries. Documentation is necessary. Note: Manufacturers and extractors who ll outside of Washington must report under the manufacturing
or extracting classifications. This deduction is not valid for the classifications. Service providers must render the rvice outside state boundaries.
(WAC 458-20-193, -193C, -194)
