Beginning Jan. 1, 2020 the nexus threshold for all B&O tax classifications and sales tax collection will be $100,000 of combined gross receipts per calendar year for businesses without a physical presence. Physical presence will also establish nexus for all B&O tax classifications and sales tax collection (SSB 5581).
The economic nexus standard applies to apportionable income, which includes income derived from apportionable activities. Under the apportionment method effective June 2010 only the receipts factor for these businesses applies to apportionable income for these businesses.
A single-factor apportionment formula based on sales is adopted for apportionable income. Taxable income is determined by multiplying a taxpayer’s apportionable income times the receipts factor.
The receipts factor is a fraction:
- The numerator is the total gross apportionable income attributed to Washington income during the current tax year.
- The denominator is the total gross apportionable worldwide income during the current tax year less throwout income.
(Worldwide income) – (Throwout income)
Gross income from engaging in an apportionable activity is excluded from the denominator of the receipts factor if both:
- The income is attributed to a state where the taxpayer is not subject to tax or the taxpayer does not have nexus and
- At least some of the activity is performed in Washington.
Reconciling your apportionable income
Once a taxpayer has the information necessary to determine the receipts factor for an entire calendar year, it must file a reconciliation and either obtain a refund or pay any additional tax due. The reconciliation is due by October 31st of the following year. A reconciliation can be filed electronically through My DOR.
- Sign into My DOR.
- Select the "+View more" from the "I Want To" menu.
- Select "File Apportionment Reconciliation" under "Manage Taxes." (If you have multiple accounts, you will need to select an account.)
If you are unable to complete the online form, you may complete the paper form.