Definitions for each B&O tax classification are listed below. Use these definitions to determine which classification(s) under which you need to report business income on the excise tax return. If you conduct multiple activities,you may need to report under several B&O tax classifications. [ ] Brackets indicate ID code on excise tax return, not line number.
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Aerospace Industry [13]
Manufacturers and processors for hire of commercial airplanes or component parts of commercial airplanes. Excise tax returns should be filed electronically. See Aerospace Industry Tax Incentives (pdf) for additional information. |
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Canned Salmon Labelers [11]
For persons inspecting, testing, labeling, or storing canned salmon owned by another person. Effective July 1, 2006. ETA 2024.04.182. |
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Chemical Dependency Centers [11]
Effective July 27, 2003, there is a new B&O tax classification and rate (0.00484)
for income received by qualifying chemical dependent/drug treatment facilities from
government agencies. See our Special Notice - Chemical Dependency Service Providers. |
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Child Care [80]
Care of children age eight and above or enrolled in the first grade or above when
provided in non-church facilities. Care provided to children under the age of eight or
enrolled in kindergarten or below is deductible under the Other deduction line.
Care provided to children in church facilities is exempt. Child Care Tax Guide; WAC 458-20-167 |
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Cleanup of Radioactive Waste for US Government [83]
Cleanup of radioactive waste resulting from production of weapons or nuclear research and development when the work is done for the federal government. RCW 82.04.263 |
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Extracting, Extracting for Hire [16]
Removing natural resources from land or water. Examples include logging, mining, quarrying,
and fishing operations. Persons selling resources extracted in Washington must also report
under wholesaling [03] and/or retailing [02]. A Multiple Activities Tax Credit
is available for persons extracting and selling natural resources in Washington. Note: Taxpayers are also subject to timber (forest) or fish taxes. To register for forest tax, call (800) 548-8829. A limited exemption is available to small timber harvesters. To register for fish tax, call (360) 902-7084. WAC 458-20-135, 458-20-13501. |
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Gambling Contests of Chance (less than $50,000 per year) [04]
Contests of chance with a gross income of less than $50,000 per year are subject to the same B&O tax rate as Service and Other Activities (.015). Effective July 1, 2005. RCW 82.04.285, Special Notice – Gambling Business and Occupation Tax (pdf). |
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Gambling Contests of Chance ($50,000 per year or more) [192]
For contests of chance with a gross income of $50,000 or greater per year. Effective July 1, 2005, a specific B&O tax classification and rate (.016 through June 30, 2006, and .0163 thereafter). RCW 82.04.285, Special Notice – Gambling Business and Occupation Tax (pdf). |
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Government Contracting [11]
Building, repairing or improving real property owned by the United States, its departments,
institutions and instrumentalities, and city, county and Indian housing authorities. This
classification applies only to construction contracts. Persons performing government
contracting activities owe sales and/or use tax on all materials installed
or used, regardless of supplier. Persons performing construction activities for state and
local governments report on retailing [02] and retail sales tax [01]. Construction Tax Guide, WAC 458-20-17001 |
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Insurance Agents/Insurance Brokers Commission [14]
Insurance agents, brokers, or solicitors. The amount of gross commissions received and not
the gross premiums paid by the insured determines gross income. WAC 458-20-164 |
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International Charter, Freight Brokers, and Stevedoring [28]
International trade, brokering or cargo business, stevedoring, and associated activities
of moving goods and commodities in waterborne foreign commerce. WAC 458-20-193D |
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Licensed Boarding Homes [28]
Providing room and domiciliary care to residents of boarding homes licensed under chapter 18.20 RCW. A deduction is allowed for amounts received for providing adult residential care, enhanced adult residential care or assisted living services under contract with the Department of Social and Health Services to residents who are Medicaid recipients. See our Special Notice – Taxability of Licensed Boarding Homes (pdf). |
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Manufacturing [07]
Producing a new, different or useful substance or article of tangible personal property for
sale or commercial or industrial use. Persons selling items must also report under
wholesaling [03] and/or retailing [02]. For products manufactured and sold in
Washington, see Multiple Activities Tax Credit, WAC 458-20-136 |
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Manufacturing Bio/Alcohol Fuel [21]
Effective July 1, 2003, there is a new B&O tax classification and rate (0.00138) for
qualifying biofuel manufacturers. See our Special Notice - Biofuel Sellers; Special Notice – Biofuel Manufacturers |
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Manufacturing Dairy Products [21]
Manufacturing dairy products, such as milk, cheese, yogurt, ice cream, or whey from raw
dairy materials, such as fluid or dehydrated milk or various milk products. This also
includes sales of dairy products to buyers who transport the goods out of state. Sales must
also be reported under wholesaling [03] and/or retailing [02], retail sales tax [01], and
litter tax [36]. Multiple Activities Tax Credit, Exempt Food Sales deduction, Special Notice - Tax Changes for Manufacturers of Dairy Products (pdf) , RCW 82.04.260(d) |
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Manufacturing Fresh Fruits and Vegetables [21]
Effective July 1, 2005, persons who manufacture fresh fruit and vegetables by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables and sell these products at wholesale to buyers who transport the goods, in the ordinary course of business, out of Washington. Instate wholesale sales to persons who do not transport the goods out of this state should report under the Wholesaling B&O tax. Effective July 1, 2006, all excise tax returns, surveys, and any other forms and information required must be filed electronically. See our Special Notice – Fruit and Vegetable Processors Tax Exemption and Fruit and Vegetable Processors Tax Exemption New E-File Requirement. RCW 82.04.4266. |
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Manufacturing Wheat into Flour, Soybean & Canola Processing [30]
Manufacturing wheat into flour, soybeans into soybean oil, sunflower seeds into sunflower
oil, and canola into canola oil, meal or canola byproducts. Persons selling these products
in Washington must also report under wholesaling [03] and/or retailing [02], retail sales
tax [01], and litter tax [36]. Multiple Activities Tax Credit,
Exempt Food Sales deduction, WAC 45 8-20-136 |
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Prescription Drug Warehousing [21]
Operating a warehouse and reselling prescription drugs to persons selling
at retail or to hospitals, clinics, health care providers, or other providers of health
care services. Must be registered with the Federal Drug Enforcement Administration and the
State Board of Pharmacy. RCW 82.04.272 |
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Printing and Publishing [10]
Persons printing and/or publishing newspapers, magazines, and periodicals must report income,
including advertising income, under this classification. Persons who both print and
publish books, music, circulars, etc., report gross income, including advertising income,
under printing and publishing. Persons who only publish books, music,
circulars, etc., report advertising income on service and other activities [04]. Persons
selling printed and/or published material to consumers must also collect retail sales tax.
Persons reporting under printing and publishing are not subject to the retailing or
wholesaling B&O tax with respect to these sales. Retailing [02] and Retail Sales [01]
lines will not be the same. Litter tax [36] may also be owed. WAC 458-20-143;
458-20-144 |
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Processing for Hire [10]
Performing labor and mechanical services upon materials belonging to others resulting in a
new, different or useful article of tangible personal property produced for sale or
commercial or industrial use. If a person provides 20 percent or more of the value of
materials, the income should be reported under the manufacturing classification. Persons
who are processing for hire tangible personal property for consumers must also collect and
report retail sales tax. Persons reporting under processing for hire are not subject to
the retailing or wholesaling B&O tax with respect to these sales. Retailing [02] and
Retail Sales [ 01] lines will not be the same. WAC 458-20-136 |
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Public or Nonprofit Hospitals [55]
Operating public or nonprofit hospitals. WAC 458-20-168; RCW 82.04.260 |
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Public Road Construction [11]
Building, repairing or improving roads, transportation facilities, bridges, or like
facilities owned by municipal corporations, political subdivisions of the state, or the
federal government which are used primarily for foot or vehicular traffic. Persons
reporting public road construction activities owe sales and/or use tax on all
materials installed or used. Persons building, repairing, or improving roads for the
state of Washington report on retailing [02] and retail sales tax [01]. Construction Tax Guide;
WAC 458-20-171 |
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Radio and TV Broadcasting [11]
Radio or TV advertising income. WAC 458-20-241 |
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Raw Seafood Products [30]
Persons who manufacture certain seafood products when the seafood products remain in a raw, frozen, or raw salted state at the end of the manufacturing process. Includes the value of products from manufacturing seafood and gross proceeds on seafood products sold to buyers who transport the goods, in the ordinary course of business, out of Washington. Instate wholesale sales to persons who do not transport the goods out of this state should report under the Wholesaling B&O tax. All returns, surveys, and any other information required must be filed electronically. Effective July 1, 2006. See our Special Notice – Seafood Processors Receive B&O Tax Exemption (pdf) . |
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Retailing [02]
Applies to all transactions subject to retail sales tax [01]. Sale, rental, repair, or
installation (including labor) of tangible personal property purchased by consumers for
their own use (not for direct resale or as an ingredient used to produce or process an
article for resale). Includes transient lodging and some amusement, personal services and
recreation activities. Construction (materials and labor) performed for a consumer is a
retail activity. RCW 82.04.050 |
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Retailing of Interstate Transportation Equipment [19]
Retail sales or repair of equipment or component parts used in interstate transportation or
used in conducting deep sea fishing operations outside territorial waters of Washington.
The seller must obtain a Buyers' Retail Sales Tax Exemption Certificate from the buyer. WAC 458-20-174; 458-20-175;
458-20-176 |
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Royalties [80]
Income from royalties or charges in the nature of royalties for the granting of intangible
rights. The term royalties means compensation for the use of intangible property
such as copyrights, patents, licenses, franchises, trademarks, trade names, and similar
items. This classification does not include licenses for canned software, compensation
relating to natural resources, such as mining or drilling rights. RCW 82.04.2907 |
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Service and Other Activities [04]
This classification includes all other activities not otherwise classified.
WAC 458-20-224;
RCW 82.04.290 |
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Slaughtering, Breaking and Processing Perishable Meat - Wholesale [30]
Slaughtering, breaking, and/or processing perishable meat products and/or selling the same
at wholesale. If perishable meat products are sold at retail in Washington, report under
retailing [02], retail sales tax [01], and litter tax 36. Exempt Food Sales deduction, WAC 458-20-136 |
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Splitting or Processing of Dried Peas [21]
Splitting or processing dried peas in Washington. Persons selling these products in
Washington must also report under wholesaling [03] and/or retailing [02], retail sales tax
[01], and litter tax [36]. Multiple Activities Tax Credit,
Exempt Food Sales deduction, WAC 458-20-136 |
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Travel Agent Commissions [28]
Arranging transportation, lodging, meals, or other similar services that are purchased by the customer and where the travel agent or agency merely receives a commission for arranging the service. WAC 458-20-258 |
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Warehousing [11]
Operating a storage warehouse. Note: Rental of cold storage lockers should be
reported under service and other activities [04]. The rental of mini-storage units is
exempt from the B&O tax. WAC 458-20-182 |
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Wholesaling [03]
Sales of tangible personal property and/or labor performed for persons who resell the same
in the normal course of business. Wholesalers must obtain a completed Resale Certificate
from their customer. Merely obtaining a UBI/tax registration number
from the customer is not sufficient for this requirement. WAC 458-20-102 |
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Note for Manufacturers and Extractors
All persons reporting manufacturing or extracting activities are to value their manufactured
goods at the selling price. Therefore, manufactured items are not reported until sold.
During the same reporting period, the items are to be reported under either the wholesaling
[03] or retailing [02] classification, or both, depending on how the items are sold. To
prevent double B&O taxation, complete Part II of the Multiple Activities Tax Credit (MATC)
(Schedule C) form and take the MATC on your tax return. WAC 458-20-136 |
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