Washington State
House of Representatives
Office of Program Research
BILL
ANALYSIS
Finance Committee
HB 1653
Brief Description: Providing a business and occupation tax exemption for amounts derived from animal adoption fees collected by a nonprofit.
Sponsors: Representatives Caldier, Walen and Duerr.
Brief Summary of Bill
  • Creates a business and occupation tax exemption for animal adoption fees collected by a nonprofit.
Hearing Date: 2/20/23
Staff: Kristina King (786-7190).
Background:

Business and Occupation Tax.
Washington's major business tax is the business and occupation (B&O) tax.  The B&O tax is imposed on the gross receipts of business activities conducted within the state, without any deduction for the costs of doing business.  Businesses must pay the B&O tax even though they may not have any profits or may be operating at a loss.
 
A taxpayer may have more than one B&O tax rate, depending on the types of activities conducted.  Major B&O tax rates are 0.471 percent for retailing; 0.484 percent for manufacturing, wholesaling, and extracting; and 1.5 percent (businesses with taxable income of less than $1 million) or 1.75 percent (businesses with taxable income of $1 million or more) for services and for activities that are not classified elsewhere.  Several preferential rates also apply to specific business activities.
 
In addition, a taxpayer may be eligible to utilize other tax preferences, including credits and deductions, to reduce their tax liability.  For example, a taxpayer engaging in activities subject to different B&O tax rates may be eligible for a Multiple Activities Tax Credit.  A taxpayer may also be eligible for a small business credit that will either eliminate or reduce their B&O tax liability.  In general, the credit is $70 per month for service businesses and $35 per month for all other businesses, multiplied by the number of months in the reporting period.  The amount of the credit available phases out based on the business's gross receipts.
 
A business does not have to file an annual B&O tax return if the business does not owe other taxes or fees to the Department of Revenue and has annual gross proceeds of sales, gross income, or value of products for all B&O tax classifications of less than $28,000 per year, or less than $46,667 if at least 50 percent of its taxable income is from services or activities not classified elsewhere.
 
There is no B&O tax exemption for animal adoption fees collected by a nonprofit.
Summary of Bill:

Beginning January 1, 2024, a B&O tax exemption for animal adoption fees collected by a nonprofit is created.  This bill excludes the exemption from tax preference performance statement requirements.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.