The
B&O tax is a gross receipts tax; it applies to the gross income of the business.
This means no deduction is allowed for labor, materials, doingbusiness/businesstypes, or other costs of doing business.
The nature of the business activity determines appropriate B&O tax reporting. Different tax
classifications with different rates apply for the various business activities. Businesses
performing more than one activity may be subject to tax under one or more B&O tax classifications.
The state B&O tax is reported on the Department of Revenue's excise tax return. A business
may file on a monthly, quarterly, or annual basis, depending on the estimated yearly tax due and the
type of business.
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Taverns and B&O Tax
The most common B&O tax reporting classifications for taverns and related businesses are:
Retailing: Sales to consumers of meals and prepared food, beverages (alcoholic and nonalcoholic), cigarettes and miscellaneous items of tangible personal property are subject to the B&O tax under the Retailing B&O tax classification. Included under this classification is pool, billiards, and shuffleboard income.
Wholesaling: Sales to persons other than consumers of prepared food/meals, beverages, etc., are subject to B&O tax under the Wholesaling B&O tax classification. For example, a tavern that sells sandwiches to a nonprofit organization that resells the sandwiches as part of a fund raising activity is making a wholesale sale. The tavern business must obtain a properly completed resale certificate (pdf) from the buyer to document the wholesale sale.
Service and Other Activities: Tavern businesses may receive "other" income, such as compensation or commissions for allowing placement of coin-operated machines at the tavern. This includes coin-operated telephones, cigarette machines, candy, etc. Commissions received from coin-operated machines, pull-tab, punchboard, or bingo games, are taxable under the Service and Other Activities B&O tax classification. Refer to "Games and Gambling" section.
References: RCW 82.08.0293; WAC 458-20-119, 458-20-124, and 458-20-244
In addition to the state B&O tax, some Washington cities impose a B&O tax. The Department of Revenue does not administer the city B&O tax. |
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