Definitions

Definitions

Business and Occupation (B&O) Tax: The B&O tax applies to the gross amount received from conducting business in Washington. Under the B&O tax, there are many different tax reporting classifications. Each classification corresponds to a different type of business activity and has its own tax rate. Businesses report their income under the tax classification that matches their business activity, such as retail sales, wholesale sales and professional services.

Businesses owe B&O tax on their gross income. There are no deductions for labor, materials, taxes, rent, or other costs of doing business.

Consumer: A consumer is any person who uses tangible personal property or receives retail services. The tangible personal property or service may be for personal use or conducting business activities. It is important for sellers to know who the consumer is to correctly collect sales tax.

Gross Amount: The term “gross amount,” which appears at the top of column one on the Combined Excise Tax Return, refers to your “gross proceeds of sale” or “gross income of the business.” The gross amount includes all consideration received without deductions for the costs of doing business or other expenses.

Reseller Permit: A reseller permit is a permit issued by the state that allows a business to purchase products for resale without paying sales tax. The buyer affirms that the goods are purchased for resale in the normal course of business without intervening use. Sales tax must be collected when the product is resold. Collected sales tax must be remitted to the state.

Retail Sales Tax: Retail sales tax is a tax imposed on the buyer of goods and retail services. Sellers are responsible for collecting the tax from the consumer and remitting the tax to the Department of Revenue (DOR). The term “sales tax” refers to the combined state and local portion of the tax.

RCW: The Revised Code of Washington (RCW) is the compilation of Washington State laws and statutes.

UBI/Account ID: Sometimes called a registration number, tax number, “C” number, or resale number, the Unified Business Identifier (UBI) number is a nine-digit number used to identify registered businesses. The number is assigned when a person completes a Business License Application to register with, or obtain a license from, state agencies. The Departments of Revenue, Licensing, Employment Security, Labor & Industries and the Corporations Division of the Secretary of State are among the state agencies participating in the UBI program. In most cases, your UBI number will also be your Revenue account ID. Spouses who file separately and corporations who file multiple accounts are assigned separate account IDs by Revenue as needed.

Use Tax: Use tax is owed when a consumer acquires goods or certain services without paying retail sales tax, and those goods or services are used in this state. The use of goods and certain services as a consumer requires either sales tax or use tax to be paid, but not both. Both sales tax and use tax combine state and local taxes. Use tax rates and sales tax rates are the same.

WAC: Washington Administrative Code (WAC) is a compilation of administrative rules and regulations used by state agencies to execute the laws enacted by the Legislature.