Day care monitors and resource and referral agencies

Day care monitors

Monitors of home day care operators work for sponsors under one or more federal nutrition programs for the US Department of Agriculture (USDA). The sponsors receive funds from the Office of the Superintendent of Public Instruction (OSPI), which works with the monitors to ensure all federal regulations are met.

Monitors must report the gross amounts received under the Service and Other Activities business and occupation (B&O) tax. However, they may use the Advancements/Reimbursements deduction to deduct payments made to child care operators for providing meals.

Additionally, monitors who qualify as health or social welfare organizations may deduct amounts received from the OSPI using the “Other” deduction with a description such as “health and social welfare services.”

Resource and referral agencies

Child care resource and referral agencies are generally subject to B&O tax under the Service and Other Activities classification. Taxable income of resource and referral agencies includes:

• Monitoring funds from OSPI.
• Payments from businesses.
• Payments from other resource and referral agencies.

Child care resource and referral services do not include care services provided directly to children. Additionally, you may not deduct amounts paid to or received from other resource and referral agencies.

However, if you are a nonprofit organization, you do not owe B&O tax on amounts received for resource and referral services. You must include these amounts in your gross income and then take an “Other” deduction with a description such as “Child care resource and referral services.”

References

• RCW 82.04.3395 Exemptions-Child care resource and referral services by nonprofit organizations
• RCW 82.04.431 Health or social welfare organization defined – Conditions for exemption – Health or social welfare services defined
• WAC 458-20-169 Nonprofit organizations