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No charge which represents a reimbursement of a cost of doing business, even though such charge is made as a separate item, will be construed as a reimbursement. Therefore, charges for such things as transportation or traveling expenses are not excludable, but are part of gross sales or gross income of the business. Such charges are taxed in the same manner as the charges for the product or service provided, even if the charges are billed separately. In other words, if the charges are subject to B&O tax under the service and other activities classification, the associated expense is also taxable in that manner. Some common examples for bail bond agencies are:
- Hiring Bail Bond Recovery Agents (Bounty Hunters): Hiring a bail bond recovery agent is a cost of doing business and not deductible from gross income when calculating B&O tax.
- Bail Bond Insurance: Paying a premium to an insurer to insure against the risk of default on bail bonds posted by the agency is part of the agency’s cost of doing business and not deductible from gross income when calculating B&O tax.
- Agency Bond: The purchase price of the surety bond insuring against breaches of fiduciary duty which is required by chapter 18.185 RCW is part of the agency’s cost of doing business and not deductible from gross income when calculating B&O tax.
References:
RCW 82.84.070
RCW 82.04.080
WAC 458-20-111
