Updated February 2021
Businesses that are taxable in Washington and another state may use our apportionment formula to determine how much of their apportionable income is subject to business and occupation (B&O) tax in Washington (RCW 82.04.462).
Apportionable income means gross income from engaging in apportionable activities after taking exemptions and deductions (other than the interstate and foreign sales – apportionment deduction) (RCW 82.04.460).
Starting Jan. 1, 2020, taxable in another state means the business meets any of the following requirements in the current or prior calendar year:
In determining whether a business has exceeded the receipts threshold, apportionable income attributed to another state or country is included along with its retail and wholesale sales sourced to the same state or country.
If you do not meet any of the above requirements then your gross income is taxable in Washington and is not eligible to be apportioned to other states or countries.
For requirements before Jan. 1, 2020, see our Out of state businesses reporting thresholds and nexus.
Taxable income is determined by multiplying a taxpayer’s apportionable income from each apportionable activity by the receipts factor for that apportionable activity.
This formula is:
B&O taxable income = Apportionable income X Receipts factor
The receipts factor is a fraction.
Receipts factor = Washington income / (Worldwide income – Throwout income)
Gross income from engaging in an apportionable activity is excluded from the denominator of the receipts factor if both of the following are true:
For information regarding how to attribute your income, see our webpage regarding Attributing income.
If you are eligible to apportion your income, you may be able to take an Apportionment (Interstate and Foreign sales) deduction.
Once you have the information necessary to determine the receipts factor for an entire calendar year, you must file a reconciliation and either obtain a refund or pay any additional tax due. The reconciliation is due by Oct. 31 of the following year. A reconciliation can be filed electronically through My DOR. Learn how to file an apportionment reconciliation in My DOR.
If you are unable to complete the online form, you may complete the paper form.
If you file a tax return reporting no business activity and later discover that you did have business activity to report for that period, you should amend that return. Do not adjust a later return for the additional revenue to report. If you amend to report activity on a return that was previously reported with no activity, penalties will apply.