HB 1403, introduced by Rep. Noel Frame (D-Seattle), simplifies apportionment rules when determining local business and occupation (B&O) tax liability for service income.

The bill is the product of the Local Business and Occupation Tax Apportionment Task Force which consisted of three voting members each from cities and businesses that met from the end of 2017 through September 2018. The Department of Revenue (DOR) was a non-voting member. The final report required by EHB 2005 was submitted to the Legislature on October 31, 2018 by DOR.

The bill:

• Clarifies the definition of customer location in RCW 35.102.130 for attribution of gross income between jurisdictions;
• Sets out a hierarchy of tests for determining when a customer is located in a taxable location; and
• Clarifies that the burden of proof for requiring use of an alternative method of apportionment is on the party requesting the alternative.

Dates to remember

The bill will be heard Tuesday, February 5 in the House Finance Committee at 8 am.