This tax guide was written to help mortgage brokers understand their tax liability in the state of Washington. For additional information or answers to any questions about Washington excise taxes, please contact us.
Updated January 2010
Gaming by Indian tribes is regulated by the federal Indian Gaming Regulatory Act. Nonmembers who operate or manage gaming operations for Indian tribes are not subject to tax for business conducted in Indian country. This exclusion from tax applies to taxes imposed on income attributable to the business activity (for example, the B&O tax), and to sales and use tax on the property used in Indian country to conduct the activity. Sales tax will apply if delivery of property is taken outside of Indian country.
Washington State does not have a corporate or personal income tax. However, Washington businesses generally are subject to the following:
Mortgage brokers owe B&O tax on their taxable income. Payments made by the brokerage house to independent contractors cannot be deducted.
Fees for specific services directly provided by the mortgage broker, such as document preparation and set up fees, are part of the mortgage broker’s gross income. Examples of activities which generate taxable income include:
Federal law provides that the sales of tangible goods, including motor vehicles, to tribes and enrolled tribal members are exempt from retail sales tax if the goods are delivered to or the sale is made in the tribe or enrolled tribal member’s Indian country.
Starting June 9, 2016, a new Washington law states there are updated requirements to document both:
No deductions are allowed for the costs of doing business (for example, amounts paid to independent contractors). However, certain income may be deducted including:
Bad debts: amounts previously reported and determined to be uncollectible. These amounts must also be written off for IRS purposes.
Cash and trade discounts: may be deducted from the gross proceeds of sales if the amount was previously reported. Discounts are typically used as incentives for early payment.
The statutory duties applicable to administration and enforcement of the cigarette tax are divided between the Department of Revenue and the Liquor and Cannabis Board. Enforcement of nonvoluntary compliance is the responsibility of the Liquor and Cannabis Board. Voluntary compliance is the responsibility of the Department of Revenue.
An independent contractor (loan originator or loan officer) that works in another’s mortgage broker business is not considered an employee. Independent contractors are subject to the B&O tax (and other business taxes) - employees are not. Various factors determine whether one is an independent contractor or employee.
Independent contractors generally:
Please see the following references:
Indians and Indian tribes are not subject to the refuse collection tax for service provided in Indian country, regardless of whether the refuse collection company hauls the refuse off of Indian country. See our Solid Waste Collection/Disposal and Recycling Businesses guide.
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