Washington State’s Most Complicated Tax Just Got Simpler

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Streamline Tax launches Washington B&O tax consultant service to help businesses navigate one of the nation’s most complicated taxes.

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In 2011, the B&O tax represented 19 percent of Washington’s tax receipts. So unfortunately, that leaves businesses in Washington in a position that they have to tolerate the B&O tax system.

The business and occupations tax in the state of Washington is a gross receipts tax that is known for being extraordinarily complicated. So complicated, in fact, that many tax consultants choose not to provide services to help businesses in Washington navigate the tax.

The B&O tax is unique to the state of Washington; no other state taxes businesses in this way. The tax was initially enacted as a temporary funding mechanism in 1933. Over the years, as with many tax laws, the B&O tax has been amended and changed to include hundreds of exemptions, exceptions and loopholes. To make things more complicated for businesses, many cities in the state have imposed their own versions of the tax.

“Because the B&O tax is Washington’s second-largest source of revenue, policymakers are wary of making any significant changes to tax policies,” said Susan Goertz, Streamline president and COO. “In 2011, the B&O tax represented 19 percent of Washington’s tax receipts. So unfortunately, that leaves businesses in Washington in a position that they have to tolerate the B&O tax system.”

Under Washington’s B&O tax law, businesses receive a classification with a corresponding tax rate. That rate is then applied to their gross receipts and the business cuts a check to the state. Although most classifications come with a tax rate below one percent, it creates a problem for companies that don’t make a profit, such as startups, small firms and struggling businesses. Regardless of how much money a business makes in a year, the state still get’s its check from the B&O tax. To further complicate the tax, classifications are dependent on what the business does and where it operates.

Though many tax consultants do not provide services for the B&O tax, Streamline has more than 50 years of combined experience with the B&O tax as former auditors with the Washington State Department of Revenue. Streamline will engage with businesses facing an audit by the Washington DOR to ensure the business does not overpay B&O taxes. Streamline will also review completed audit results and give businesses a recommendation as to whether or not the business would benefit from an audit adjustment.

In 2012, a multi-billion dollar chemical company with a Washington B&O assessment of more than $600,000 engaged Streamline to determine if there were any reductions available. Streamline reduced the assessment to $12,000 within six months.

Businesses in Washington state facing an audit can contact Streamline’s experienced B&O tax consultants to provide a thorough examination of the pending audit. In cases of a completed audit, Streamline will assist with the appeals process to ensure a business’ case is presented in a way that will optimize its chance of a successful outcome.

About Streamline Tax
Streamline is one of the nation’s preeminent tax services firms. Streamline provides a wide-range of state and local, consulting and advisory services. Streamline specializes in audit reduction strategies, audit defense and representation as well as managed audits for businesses of all sizes. Streamline's services include: tax audit defense, tax recovery, tax credits and tax incentives, tax process improvement and tax automation, tax appeals and strategic planning.

At the core of Streamline’s business is one principle driving all engagements: the client should keep more of their money. Streamline’s fees are negotiated on a case-by-case basis and depend on the engagement’s size and scope.

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Robyn Short
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