Title of Rule and Other Identifying Information: WAC 458-20-162 (Rule 162) Stockbrokers and security houses,
explains the business and occupation (B&O) tax-reporting
responsibilities of stockbrokers and security houses.
THIS RULE IS BEING PROPOSED UNDER AN EXPEDITED RULE-MAKING PROCESS THAT WILL ELIMINATE THE NEED FOR THE AGENCY TO HOLD PUBLIC HEARINGS, PREPARE A SMALL BUSINESS ECONOMIC IMPACT STATEMENT, OR PROVIDE RESPONSES TO THE CRITERIA FOR A SIGNIFICANT LEGISLATIVE RULE. IF YOU OBJECT TO THIS USE OF THE EXPEDITED RULE-MAKING PROCESS, YOU MUST EXPRESS YOUR OBJECTIONS IN WRITING AND THEY MUST BE SENT TO Gayle Carlson, Department of Revenue, P.O. Box 47453, Olympia, WA 98504-7453, e-mail GayleC@dor.wa.gov , AND RECEIVED BY January 22, 2013.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The department proposes to amend Rule 162 to recognize that these stock brokers and security houses engaging in business in multiple states must apportion income for purposes of determining their B&O tax reporting responsibilities. For periods on and after June 1, 2010, the proposed changes refer readers to WAC 458-20-19402 Single factor receipts apportionment -- Generally. For periods prior to June 1, 2010, the proposed rule refers readers to WAC 458-20-194 Doing business inside and outside the state.
Reasons Supporting Proposal: To update the rule to recognize provisions of 2ESSB 6143 (chapter 23, Laws of 2010 1st sp. sess.).
Statutory Authority for Adoption: RCW 82.32.300 and 82.01.060(2).
Statute Being Implemented: RCW 82.04.460.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of revenue, governmental.
Name of Agency Personnel Responsible for Drafting: Gayle Carlson, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 534-1576; Implementation: Alan R. Lynn, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 534-1599; and Enforcement: Russ Brubaker, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 534-1505.
November 16, 2012
Alan R. Lynn
AMENDATORY SECTION(Amending Order ET 83-16, filed 3/15/83)
WAC 458-20-162 Stockbrokers and security houses. (1) Introduction. With respect to stockbrokers and security houses, "gross income of the business" means the total of gross income from earnings accounts, specifically gross income from interest, gross income from commissions, gross income from trading, and gross income from all other sources((
Provided(( ,)) that:
(1))) (a) Gross income from each account is to be
computed separately and on a monthly basis;
(2))) (b) Loss sustained upon any earnings account may
not be deducted from or offset against gross income upon any
other account, nor may a loss sustained upon any earnings
account during any month be deducted from the gross income
upon any account for any other month;
(3))) (c) No deductions are allowed on account of
salaries or commissions paid to employees or salesmen, rent,
or any other overhead or operating expenses paid or incurred,
or on account of losses other than under (( "2" above)) (b) of
(4))) (d) No deductions are allowed from commissions
received from sales of securities which are delivered to
buyers outside the state of Washington.
(2) Gross income from interest. Gross income from
interest includes all interest received upon bonds or other
securities held for sale or otherwise, ((
except direct obligations of the federal government and of the
state of Washington. No deduction is allowed for interest
paid out even though such interest may have been paid to
banks, clearing houses or others upon amounts borrowed to
carry debit balances of customers' margin accounts.
Interest accrued upon bonds or other securities sold
shall)) must be included in gross income where such interest
is carried in an interest account and not as part of the
selling price. Conversely, interest accrued upon bonds or
other securities at the time of purchase may be deducted from
gross income where such interest is carried in an interest
account and not as a part of the purchase price.
(3) Gross income from commissions. Gross income from commissions is the amount received as commissions upon transactions for the accounts of customers over and above the amount paid to other established security houses associated in such transactions: Provided, however, That no deduction or offset is allowed on account of salaries or commissions paid to salesmen or other employees.
(4) Gross income from trading. Gross income from trading
is the amount received from the sale of stocks, bonds and
other securities over and above the cost or purchase price of
such stocks, bonds and other securities. In the case of short
sales gross earnings ((
shall)) must be reported in the month
during which the transaction is closed, that is, when the
purchase is made to cover such sales or the short sale
contract is forfeited.
(5) Gross income from all other sources. Gross income from all other sources includes all income received by the taxpayer, other than from interest, commissions and trading, such as dividends upon stocks, fees for examinations, fees for reorganizations, etc.
(6) Services inside and outside the state-apportionment. Stockbrokers and security houses ((
rendering services and
maintaining places of business both inside and outside the
state may, in computing tax, apportion to this state that
portion of the gross income which is derived from services
rendered or activities conducted inside this state. Where
such apportionment cannot be made accurately by separate
accounting methods, the taxpayer shall apportion to this state
that portion of his total income which the cost of doing
business inside the state bears to the total cost of doing
business both inside and outside the state.)) engaging in
business in multiple states are required to apportion income
for B&O tax purposes.
(a) For periods on and after June 1, 2010. Effective June 1, 2010, RCW 82.04.460 requires that any person, including stockbrokers and security houses, earning apportionable income subject to B&O tax, and who is also taxable in another state, must apportion to this state that portion of the person's apportionable income from business activities pursuant to WAC 458-20-19402.
(b) For periods prior to June 1, 2010. RCW 82.04.460 authorized apportionment of income by either a separate accounting method or cost apportionment. (See WAC 458-20-194.)
[Statutory Authority: RCW 82.32.300. 83-07-033 (Order ET 83-16), § 458-20-162, filed 3/15/83; Order ET 70-3, § 458-20-162 (Rule 162), filed 5/29/70, effective 7/1/70.]