Sales tax now applies to some services

Starting October 1: Some business services are now subject to retail sales tax, as required by state law, ESSB 5814. When you buy these services, vendors should add sales tax to your bill. If you sell these services, you should begin collecting retail sales tax. Learn more about Services newly subject to retail sales tax.

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Hedge fund management fees

If my business receives a federal deferral for hedge fund management fees, do I also receive a deferral on my Washington state taxes?

No. Unlike many states with income taxes, Washington’s business and occupation (B&O) tax does not generally align with federal income tax rules, including income deferrals.

Income that your business earns from hedge fund management services that you are allowed to defer under federal income tax rules is generally subject to B&O tax when your business receives or accrues the income.

Businesses must attribute this income based upon the apportionment rules.

References

RCW 82.04.090 - Value proceeding or accruing

WAC 458-20-197 - When tax liability arises

WAC 458-20-199 - Accounting methods

WAC 458-20-19401 - Minimum nexus thresholds for apportionable activities and selling activities

WAC 458-20-19402 - Single factor receipts apportionment—Generally