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Advocacy


Published on Apr 27, 2018

City B&O tax service apportionment workgroup

Contact: Victoria Lincoln, Sheila Gall

The task force to discuss potential changes to the two-factor apportionment formula for service-income for local B&O taxes established in EHB 2005 has been meeting since August 2017. This task force consists of city and business community representatives and must submit a report to the Legislature by October 31, 2018, to recommend changes simplifying the two-factor service income formula in RCW 35.102.130 and using a market-based model that relies on common business records.

The task force has been reviewing market-based tax apportionment models used in other state tax systems, with the goal of finding consensus on potential elements of those systems. The elements the task force is looking for would simplify tax administration for both cities and the business community, compared to the current service income factor primarily based on the location of contacts with customers.

AWC recognizes the importance of this revenue source to the 46 cities with local B&O taxes and the potential impact to city revenues.

The cities on the task force have begun to estimate what impact a change to service income apportionment might mean for their jurisdictions. If your city has done recent estimates or would like to provide input on the task force process, please contact Sheila Gall.

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