The B&O tax is a gross receipts tax, assessed against an entity for conducting business in Washington. It applies to the gross income of the business. This means no deduction is allowed for labor, materials, taxes or other costs of doing business.
The appropriate B&O tax classification depends on the business activity. Different tax classifications have different tax rates. Businesses performing more than one activity may be subject to tax under more than one B&O tax classification.
The B&O tax is reported on Revenue’s excise tax return. Revenue assigns a reporting frequency based on the estimated yearly tax due and the type of business. A business may be assigned to report on a monthly, quarterly, or annual basis.
Podiatric physicians and the B&O Tax
The two most common B&O tax reporting classifications for podiatric physicians are:
Retailing: Income from retail sales is reported under the retailing classification.
Example: Gross income from arch support slipper sales (non-prescription) is subject to retailing B&O tax.
Service: Income from professional services provided by the podiatric physician is reported under the service and other activities classification.
Example: Gross income from examinations and diagnostic services associated with routine foot care is subject to service and other activities B&O tax.
A podiatric physician may be engaged in both activities, in which case they must segregate their income prior to reporting for B&O tax purposes.
In addition to the state B&O tax, some Washington cities impose business activity taxes. The Department of Revenue does not administer business activity taxes levied by cities. Consequently, you should contact each city or town in which you conduct business regarding their specific requirements.