A worker provided by a staffing business may be required to engage in several different activities while on the same job that by themselves are subject to tax under different B&O tax classifications. Generally, the Department of Revenue will allow the income to be reported based on the predominant activity. "Predominant activity" will be considered to apply where for any given charge, more than 50 percent of the time is spent working in one tax classified activity, and the billing is not segregated with respect to the minor activity.
In the absence of segregated charges for each activity, where there are more than two different B&O tax classifications that may apply to the activities performed, the classification that will apply for reporting purposes will be the one applicable to the activity the worker spends the greatest amount of time doing.
Please note that when two or more workers, engaged in different activities, are provided to one customer, the income from each worker is reported based on their predominant activity.
A staffing business provides a housekeeper whose primary job is to clean an apartment (subject to the Service and Other Activities classification). The job also calls for the housekeeper to prepare one meal per day (subject to Retailing B&O tax and retail sales tax). The majority (over half) of the charge is associated with the housekeeping service (apartment cleaning). No segregated charge is made for the preparation of the meal. In this case, the predominant activity is cleaning the apartment. Therefore, the gross income received by the staffing business is reportable under the Service and Other Activities classification. Retail sales tax will not apply.
A staffing business provides a construction worker to a developer/property owner to perform construction-related services (subject to the Retailing B&O tax and retail sales tax). The worker has a commercial driver's license and is only occasionally required to drive the developer's truck within the city to pick up a load of gravel (an activity subject to the Urban Transportation public utility tax). The worker also spends about one hour per day helping in the office. The predominant activity is performing construction work for a property owner since the greatest amount of time is spent performing retailing activities, and there is no segregated charge for the other lesser activities. In this case, the staffing business is subject to the Retailing B&O tax on the gross amount charged to the developer. Retail sales tax also must be collected by the staffing business on the gross charge to the customer.
- Same facts as Example 2, except that the staffing business also provides a receptionist to the developer/property owner. In this case, the staffing business is subject to the Retailing B&O tax on the gross amount charged to the developer for work done by the construction worker. Retail sales tax must also be collected on this charge. The staffing business is subject to Service and Other Activities B&O tax on the gross amount charged to the developer for work done by the receptionist.