Business and Occupation Taxes
Contents
Introduction
These taxes are levied at a percentage rate on the gross receipts of the business, less some deductions. Businesses are put in different classes such as manufacturing, wholesaling, retailing, and services. Within each class, the rate must be the same, but it may differ among classes.
Effective April 20, 1982, the legislature set the maximum tax rate that can be imposed by a city's legislative body at 0.2 percent (0.002), but grandfathered in any higher rates that existed on January 1, 1982. RCW 35.21.710. All ordinances that impose this tax for the first time or raise rates must provide for a referendum procedure. RCW 35.21.706. Any city may levy a rate higher than 0.2 percent, if it is approved by a majority of the voters. RCW 35.21.711. Currently, 39 of Washington's 281 cities levy this tax.
In 2003, the legislature passed a bill that required the Association of Washington Cities (AWC) to convene a committee to develop a model ordinance that must be adopted by all cities imposing a B&O tax. The legislature was concerned about the lack of uniformity of the cities' B&O tax ordinances and about allegations that some business income was subject to multiple taxation. Beginning January 1, 2008, cities that levy the B&O tax must allow for allocation and apportionment, as set out in RCW 35.102.130.
Legal References
- RCW 35.21.706: Referendum procedure. An ordinance that imposes the tax or increases the tax rate must include a provision for a referendum procedure.
- RCW 35.21.710: Maximum B&O tax rates established.
- RCW 35.21.711: Voter approval for higher rates.
- RCW 35.22.280(32): Authority for first class cities to levy a B&O tax.
- RCW 35.23 440(8): Authority for second class cities to levy a B&O tax.
- RCW 35.27.370(9): Authority for towns to levy a B&O tax.
- RCW 35A.82.020: Authority for code cities to levy a B&O tax.
- Ch.35.102 RCW: Municipal business and occupation tax.
Documents
- 2007 B&O Tax Model Ordinance Documents (from the Association of Washington Cities website)
- EHB 2030 (Chapter 79, Laws of 2003), the city B&O legislation adopted in the 2003 session, requires the 39 cities with local B&O taxes to adopt allocation and apportionment provisions as part of an updated city B&O tax model ordinance by January 1, 2008. (RCW 35.102.130)
- City B&O Tax Model Ordinance Update. (
) (PowerPoint presentation, Association of Washington Cities, October 2007
- City Business & Occupation (B&O) Tax Required Updates () effective January 1, 2008, Association of Washington Cities Fact Sheet, October 2007
- 2007 Revised Model Ordinance Word, PDF
- 2007 Revised Administrative Provisions Word, PDF
- 2007 Model Ordinance Guidelines Word, PDF
- The Municipal Tax Work Group Report of the Department of Revenue () November 2001 - Recommendations for legislation on municipal B&O taxation.
- Municipal Business and Occupation Tax Study of Potential Net Fiscal Impacts () (Allocation and Apportionment Study), Washington State Department of Revenue, November 2005. RCW 35.102.1301 required the Department of Revenue to do study the potential fiscal impacts.
- 2012 City B&O Tax Rates ()
- 2012 Treasury rate calculation for penalty and refund interest. RCW 35.102.080 and .090 require cities to use these rates.
- Comparison of B&O Tax Code Deviations from Core Model Ordinance Provisions. (RCW 35.102.040(4) provides: Any city that adopts an ordinance that deviates from the nonmandatory provisions of the model ordinance shall make a description of such differences available to the public, in written and electronic form.
Related MRSC Resources
MRSC Index – Business and occupation tax, B&O taxes