B&O tax is a tax on gross receipts and is calculated on gross income with only certain deductions or credits permitted by law.
All timber owners who harvest timber from their own land or from the land of another for commercial or industrial use must report their gross income for B&O tax purposes.
Timber owners may engage in business activities that require them to report B&O taxes under several categories such as extracting, manufacturing, and/or wholesaling.
Extracting is felling, cutting (severing from land), or taking of trees. The extracting B&O tax applies to felled trees before any manufacturing activity.
Manufacturing is cutting of trees into logs (bucking), delimbing, skidding, yarding, and loading of the logs. The manufacturing B&O tax applies to the value of the logs.
Wholesaling is the sale of the logs to a buyer or mill. The wholesaling B&O tax applies to the price received for the logs without deducting hauling charges.
Every person who from his or her own land or from the land of another who takes title to or ownership of timber from privately or publicly owned forest land and harvests 2 million board feet or less of timber for sale or for commercial or industrial use in a calendar year.
Small harvesters are allowed to use a lower B&O tax rate and may be eligible for the $100,000 B&O Small Harvester Deduction and do not have to file the Department of Revenue (DOR) Annual Tax Performance Report.
No, logging contractors operate as extractors for hire and/or processors for hire. They are not considered the harvester because they never take title to or ownership of the timber.
B&O tax for timber harvesting is due on the gross income received for the logs from a buyer or the mill(s).
When a small harvester hires a logging contractor gross income is reported under three B&O tax classifications:
As a timber harvester, B&O tax must be reported for each business activity. A Multiple Activities Tax Credit (MATC) is allowed to ensure B&O tax is paid only once.
File your return electronically using My DOR, the Department's online filing tool. To use My DOR, you must create an online account. You will need your tax Account ID/UBI Number and Letter ID.
Once you create your account, click the Excise Tax link for the desired business. Under the Periods tab, click the File Return link for the appropriate period.
Most small harvesters file their B&O tax annually by April 15; a few may be required to file quarterly. For help filing your B&O return call Taxpayer Account Administration at 360-534-1324.
Qualifying small harvesters are not required to file the Annual Tax Performance Report.
Logging contractors must file the Annual Tax Performance Report electronically to receive the lower B&O tax rates under Extracting Timber for Hire and/or Processing for Hire of Timber Products.
If selling standing timber that will be harvested within 30 months of the sale date, the seller owes B&O tax on the sale value to the Department of Revenue.
If selling standing timber that is to be harvested after 30 months of the date of the sale agreement, the seller owes Real Estate Excise Tax (REET) payable to the county treasurer where the sale took place.
B&O tax or REET resulting from the sale of standing timber are due at the date of sale, not at the time of harvest.
If the timber is harvested after 30 months from the date of sale, REET is due.