Nexus Standards for Wholesale Sales
With the passage of SB 6138 this past year by the Washington State Senate, wholesalers with sales into Washington are subject to a new set of nexus standards. Specifically, these businesses will be subject to the wholesaling B&O tax on Washington wholesale sales if they are “organized or commercially domiciled in Washington” or meet any of the following “economic nexus” thresholds during the prior calendar year:
- More than $267,000 of gross receipts in Washington
- More than $53,000 of payroll in Washington
- More than $53,000 of property in Washington
- At least 25 percent of total property, payroll, or receipts in Washington
Under this legislation, wholesale businesses that lack physical nexus but exceed the $267,000 receipts threshold in any calendar year will, for the first time, become subject to B&O tax on wholesale sales into Washington.
Nexus Standards for “Click-Through” Retail Transactions
Also included in SB 6138 are nexus standards concerning “click-through” retail transactions. Starting September 1, 2015, out-of-state retailers are presumed to have physical nexus with this state if they:
- Enter into agreements with Washington residents and pay a commission or other consideration for referrals (such as linking on a website), and
- Gross more than $10,000 in sales into Washington state during the prior calendar year under this type of agreement
Credit for Hiring Unemployed Veterans – Special Notice – May 24, 2016
Businesses who hire unemployed veterans for full-time employment positions located in Washington State beginning October 1, 2016 may take a credit against their B&O tax. The credits are available for application through June 30, 2022. The credit equals 20 percent of wages and benefits paid to a qualified employee. There is no limit to the aggregate amount of credit that the employer is entitled to take. However, the maximum credit is capped at $500,000 per year and at $1,500 per employee.
For purposes of the credit, a qualified employee is a veteran who is employed for at least two consecutive full calendar quarters by the business, and who had previously been unemployed for at least 30 days prior to his or her date of hire. All businesses must electronically file an Annual Tax Incentive Survey every year the credit is claimed.
Tax Credits Related to Clean Alternative Fuel Commercial Vehicles Expanded – Special Notice – May 11, 2016
Beginning January 1, 2016, businesses may take a credit against their B&O tax if they:
- Purchase a clean alternative fuel commercial vehicle OR
- Pay to have a commercial vehicle modified to run on clean alternative fuel
Beginning July 1, 2016, businesses may also take a credit against their B&O tax if they lease a clean alternative fuel commercial vehicle.
The credit is calculated based on the gross vehicle weight and the difference in price between the commercial vehicle purchased and a comparable conventionally-fueled vehicle. It is limited to the lower of the incremental cost or the maximum credit per vehicle purchased or leased. The annual limit to the credit is $250,000 or 25 vehicles, whichever is smaller.
|Gross Vehicle Weight||Incremental Cost Amount||Maximum Credit Per Vehicle||Maximum Annual Credit per Class|
|Up to 14,000 pounds||50% of incremental cost||$5,000||$2,000,000|
|14,001-26,500 pounds||50% of incremental cost||$10,000||$2,000,000|
|Above 26,500 pounds||50% of incremental cost||$20,000||$2,000,000|
Businesses must first apply to the Department of Revenue to obtain eligibility for the credit. Once the DOR approves the application, the business may make qualifying purchases or take receipt of a qualifying leased vehicle. No Annual Tax Incentive Survey is required.
Late Payment Penalty Rates Increase – Special Notice – February 1, 2016
Penalty rates for overdue taxes increased August 1, 2015 per Senate Bill 6138:
|When do late payment penalty rates apply?||What is the late payment penalty rate?|
|One day after the due date, to the last day of the next month.||9% (previously 5%)|
|First day of the second month following the due date, to the last day of that month.||19% (previously 15%)|
|First day of the third month and thereafter.||29% (previously 25%)|
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