Washington State: B&O Surcharge Implementation Delayed

Legislation enacted last year adopted a new Business and Occupation (B&O) Tax Workforce Education Surcharge. Under the first tier of the workforce education investment surcharge, if a business was primarily engaged in one or more specified service activities, the surcharge was to be equal 20 percent of the total amount of taxes payable by the business on activities taxed under the B&O tax rate for services. The surcharge, which was to be used to fund higher education, was to apply to business activities occurring on or after January 1, 2020.   There are bills pending in the Washington legislature that would make certain changes to the surcharge provisions. As a result, the Department of Revenue recently announced that implementation of the surcharge will be delayed until further notice, and the line for computing the surcharge will not appear on the January 2020 return.

In addition to the 20 percent surcharge, the legislature also adopted a surcharge specific to advanced computing businesses and an additional tax on specified financial institutions. Both of these changes were also effective beginning January 1, 2020. The advanced computing surcharge is paid on a quarterly, rather than monthly basis, so at this point, there is no immediate need for a delay. The additional tax on financial institutions is not impacted. Please contact Michele Baisler at 206-913-4117 with questions.