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WAC 19401 Minimum nexus thresholds for apportionable activities
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
WAC: 458-20-19401 01/22/2015

WAC 458-20-19401 Minimum nexus thresholds for apportionable activities, WAC 458-20-19402 Single factor receipts apportionment – Generally, WAC 458-20-19403 Apportionable royalty receipts attribution, WAC 458-20-19404 Financial institutions – Income apportionment and WAC 458-20-19405 CPI-U adjustments to minimum nexus thresholds for apportionable activities
The amendments to these rules:

  • Repeal Rule 19405 and put this language into a new Excise Tax Advisory (ETA);
  • Delete multiple references to Rule 19405 in Rules 19401 through 19404; and
  • Recognize provisions of SSB 6333, Sec. 305 (chapter 97, Laws of 2014) in Rules 19402 and 19403.
  458-20-19401 10/31/13 Minimum nexus thresholds for apportionable activities;
  458-20-19401 09/12/11 Minimum nexus thresholds for apportionable activities Part I of Chapter 23, 2010 Laws, 1st Special Session (2ESSB 6143) changed the apportionment and nexus requirements for apportionable activities, effective June 1, 2010.  The Department has adopted emergency rules to explain how this legislation applies while it engaged in rule making for permanent rules. 

The Department is at this time adopting WAC 458-20-19401 (Rule 19401) Minimum nexus thresholds for apportionable activities.  Rule making continues for the following rules:

WAC 458-20-19402 – Single factor sales receipts apportionment – Generally
WAC 458-20-19403 – Single factor sales receipts apportionment - Royalties
WAC 458-20-19404 – Financial institutions – Income apportionment
  458-20-19401 05/27/11 458-20-19401 Minimum nexus thresholds for apportionable activities

Part I of Chapter 23, 2010 Laws 1st Special Session (2ESSB 6143) changed the apportionment and nexus requirements for apportionable activities, effective June 1, 2010.  The Department has adopted the following emergency rule to explain how these requirements apply:

WAC 458-20-19401 (Rule 19401) Minimum nexus thresholds for apportionable activities
Changes from the previous emergency rule filed January 28, 2011 under WSR 11-04-068 were made as follows: 

Rule 19401 – Changes to same language as proposed final rule.  These changes include formatting, adding examples, clarifying language, and additional details.
  458-20-19401 01/28/11 Minimum nexus thresholds for apportionable activities Part I of Chapter 23, 2010 Laws 1st Special Session (2ESSB 6143) changed the apportionment and nexus requirements for apportionable activities, effective June 1, 2010.  The Department has adopted the following emergency rules to explain how these requirements apply:

WAC 458-20-19401 (Rule 19401) Minimum nexus thresholds for apportionable activities
WAC 458-20-19402  (Rule 19402) Single factor receipts apportionment – Generally
WAC 458-20-19403  (Rule 19403) Single factor receipts apportionment – Royalties
WAC 458-20-19404 (Rule 19404) Financial institutions – Income apportionment 
Changes from the previous emergency rules filed October 1, 2010 under WSR 10-20-104 were made in the following subsections: 

Rule 19401 – No changes
Rule 19402 –Subsection (5) Attribution of income
Rule 19403 - Subsection (5) How are royalty receipts attributed to Washington
Rule 19404 – No changes 
  458-20-19401   10/01/2010 WAC 458-20-19401 Minimum nexus thresholds for apportionable activities – Washington’s business and occupation (B&O) taxes may be imposed only if a business has substantial nexus with this state.  This rule explains the minimum nexus thresholds for the B&O taxation of businesses engaged in apportionable activities.

Part I of Chapter 23, 2010 Laws 1st Special Session (2ESSB 6143) changed the apportionment and nexus requirements for apportionable activities, effective June 1, 2010.  The Department has adopted the following emergency rules to explain how these requirements apply.
         
RCW:        
         
ETA: 3161.2011 05/13/2011 Apportionment of Income by Stockbrokers and Security Houses
ETA 3161.2011 Apportionment of Income by Stockbrokers and Security Houses. This Excise Tax Advisory (ETA) explains how stockbrokers and security houses should apportion their income for B&O tax purposes.  It discusses when and under what circumstances single factor receipts formula, cost apportionment, and the “60/40 convention” methods of apportionment apply.
         
INDUSTRY GUIDES:      
         
SPECIAL NOTICES:      
Subject Title Reference:      
Financial Businesses 09/19/2013 Purchases of Standard Financial Information by Qualifying International Investment Management Companies
Economic Nexus     10/08/2010 Economic Nexus in Washington State Applies to Securities Brokers/Dealers and Fund Managers
Economic Nexus     05/28/2010 New "Economic Nexus" in Washington State May Impact "Foreign Corporations"
Economic Nexus     05/28/2010 New "Economic Nexus" in Washington State May Impact Franchisors
Economic Nexus     05/28/2010 New Apportionment Method
Economic Nexus     05/28/2010 Tax Attorneys and CPAs New "Economic Nexus" in Washington State May Impact Your Clients
Economic Nexus     05/28/2010 Registered Out-of-state Businesses Currently not Reporting Income from Service Activities - New Apportionment for Certain Income
Director Fees     06/22/2010 Director Fees are Subject to the Business and Occupation (B&O) Tax
Economic Nexus     06/30/2010 New "Economic Nexus" in Washington State May Impact Businesses Receiving Royalty/Licensing Income from Patents
Economic Nexus     09/10/2010 B&O Tax Reporting Requirement Continues After Business Activity Stops (Trailing Nexus)
         
         
IAG:        
         
DIRECTIVE:        
         
TAX TOPICS:        
         
RPM:        
         
OTHER:        
         
WTD:        
  33 WTD 195 11-0347 06/30/2014 RCW 82.04.293 B&O TAX – INTERNATIONAL INVESTMENT MANAGEMENT SERVICES. Because a registered investment advisory firm actively managed its clients’ portfolios and had full discretion to buy and sell securities without client approval, its services have the requisite management components that qualify as “investment management services.”
  33 WTD 195 11-0347 06/30/2014 RCW 82.04.293 B&O TAX – INTERNATIONAL INVESTMENT MANAGEMENT SERVICES. Registered investment advisory firm primarily provided investment management services because it actively managed client portfolios and had authority to buy and sell securities on its clients’ accounts. The firm met the “primarily” standard because a majority of its services involved those qualifying activities.
  33 WTD 545 14-0165 10/31/2014 RULE 19401; RCW 82.04.460, RCW 82.04.067: SERVICE AND OTHER ACTIVITIES B&O TAX – ENGINEERING AND REPAIR SERVICES – APPORTIONMENT. When a taxpayer cannot provide evidence that it paid business activities taxes outside of Washington, and fails to provide evidence that it has substantial nexus outside of Washington, the taxpayer is not entitled to apportion its income outside of Washington.
  34 WTD 129 14-0306 02/26/2015 RULE 19401; RULE 19405; RCW 82.04.067: B&O TAX – SUBSTANTIAL NEXUS – PAYROLL THRESHOLD. During each calendar year at issue, Taxpayer paid more than the threshold amount in payroll expenses to its one Washington employee, and, therefore, created substantial nexus with Washington during those years.