The city B&O tax apportionment workgroup is nearing a critical deadline to submit a report.

The task force has been meeting monthly for almost a full year to discuss potential changes to the two-factor apportionment formula for service-income for local B&O taxes. This task force consists of city and business community representatives with the goal of recommending changes simplifying the two-factor service income apportionment formula in RCW 35.102.130.

With a deadline to submit a report to the Legislature by October 31, 2018, the task force is at a critical point in its discussions and is focused on finding consensus on potential changes to the service income elements of the apportionment factors. The elements the task force members are evaluating 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, although some proposals suggested from the business community may include elements that go further on other aspects of service B&O taxes.

The next several meetings will include presentations by each group on proposed changes to the current formula for potential inclusion in the task force’s recommendation, and we will share the proposals for feedback by B&O tax cities when they are available.

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

In addition, 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.