Does New B&O Tax Apply to Your Business?

One of the elements of the recently adopted tax package is a temporary (5/1/2010 through 6/30/2013) B&O surcharge of 0.3% which is applied to select businesses in Washington State. AGC has had a few calls wondering who the tax applies to.

Firms that provide retail (RCW 82.04.050) and wholesale (RCW 82.04.060) construction services are NOT subject to the added B&O surtax.

The easiest way to determine whether a business is subject to this surcharge is to determine what their current B&O rate is. If the business now pays a 1.5% B&O tax they will be assessed the added 0.3% surtax.

Here are the list of business groups subject to the surtax and the pertinent section of state law describing their B&O tax:

  • Real Estate Brokers (RCW 82.04.255)
  • Gambling businesses (RCW 82.04.285) and
  • Service and other activities (RCW 82.04.290 (2)(a)). This broad category includes architects engineers doctors dentists lawyers accountants consultants and many other service providers. They all now pay B&O tax at the 1.5% rate and will be subject to the surtax.