Monitors of home day care operators are working under one or more federal nutrition programs for the US Department of Agriculture (USDA). The monitors receive funds from the Office of the Superintendent of Public Instruction (OSPI), which works with the monitors to ensure all federal regulations are met.
- Income received by monitors is reported under the Service and Other Activities classification on the excise tax return.
- The majority of income received by monitors through the OSPI from the USDA is passed directly on to the child care operators for providing meals and is considered a reimbursement. Such income is deductible from the B&O tax. All deductible income must first be reported in column 1 of the excise tax return before it is taken as a deduction in column 2.
Monitors of home child care operators who qualify as health or social welfare organizations may take a deduction for the amount they receive as monitoring income from the OSPI. Child care resource and referral agencies also may incur business and occupation tax liability. Taxable income of resource and referral agencies includes:
- Day care monitor funds from the Superintendent of Public Instruction.
- Payments from businesses.
- Payments received from other resource and referral agencies.
Resource and referral agencies pay Service and Other Activities B&O tax on gross income. They may not deduct amounts paid to other resource and referral agencies. The receiving agency must pay tax on amounts received from other resource and referral agencies. Nonprofit organizations providing child care resource and referral services are not required to pay B&O tax on the amounts they receive from these services.