Generally, income is attributed to where the customer is located.
An out-of-state business will establish nexus in Washington and must apportion their income to Washington and pay B&O tax on such income if any of the following thresholds are met:
- More than $50,000 in payroll or property in Washington, or
- More than $250,000 in income in Washington, or
- More than 25% of worldwide totals in any of these standards within Washington
Generally, the apportionment is to determine the amount of income that is attributable to its Washington customers regardless of where the services were performed.
Washington businesses that meet any of the above thresholds in another state or that pays a business activity tax (not including sales tax) in that state may apportion away from Washington income attributable to its customers in that state.
Reference: Chapter 23, Laws of 2010, Section 101