Business and Occupation Taxes
B&O Tax Updates for 2014 (PDF)
Business licensing is responsible for the issuance of business licenses along with the collection of business license fees and business and occupation taxes and preparing monthly state excise tax reports. For more information use the links below or call (360) 426-4491.
B&O taxes support general governmental services. Every person, firm, association, or corporation doing business in the city is subject to the B&O tax based on gross receipts. All businesses report based on their gross receipts.
The ordinances related to B&O taxes, exemptions, deductions, and administrative provisions may be downloaded from the Municipal Code website at http://www.codepublishing.com/wa/shelton.html See Chapters 3.52 and 3.10.
All businesses are subject to B&O tax unless exempted by Shelton Municipal Code. Businesses with gross receipts of less than $20,000 annually or $5,000 quarterly are not subject to B&O tax.
City of Shelton B&O Tax is a different tax than that of the State Department of Revenue B&O Tax. If you engaged in business in the City of Shelton then you would be required to report to both the City and the State. Business and Occupation Tax Reports must be filed even if there is no business activity or no tax is due.
B&O Tax Classifications
For B&O tax purposes, businesses are divided into six classifications. Businesses conducting multiple activities will report in more than one tax classification.
- Extracting is taking of natural products, such as logging, mining, quarrying, etc. The B&O tax is calculated on the value of products extracted, determined by selling price.
- Manufacturing/Construction is the business of producing articles from raw or prepared materials, giving these matters new forms or qualities, such as fabricating, processing, refining, mixing, packing, canning, etc., or building, repairing, improving any street, road, highway, etc. which is used for foot or vehicular traffic. The B&O tax is calculated on the value of products manufactured, as determined by selling price or gross receipts.
- Wholesaling is sellers of products to persons other than consumers are considered to be wholesalers. The B&O tax is calculated on the wholesale selling price.
- Retail Sales is businesses that sell products to consumers. The B&O tax is calculated on gross receipts.
- Printing/Publishing of newspapers, magazines, and periodicals are taxable under this classification, as well as persons who both print and publish books, music, circulars, etc. The B&O tax is calculated on gross receipts. Photocopying documents is considered Retail.
- Retail Service is a business that sells specific services to consumers. Taxable retail services include those generally performed on property, such as repair, and also on personal or professional services, such as doctors, attorneys, or accountants. The B&O tax is calculated on gross receipts.
- Other Business is any business activity that does not fit in one of the first six classifications. Any business that is not subject to another B&O tax classification must report under this category also. The B&O tax is calculated on the gross receipts of the business.
Current B&O Tax Rates:
B&O tax is calculated on gross receipts at a rate of 0.1% for all classifications.
Exemptions and Deductions Allowed for Certain Business Activities:
The following section discusses the most common exemptions and deductions from the B&O tax. If you have questions about specific exemptions contact the city.
- Sale, lease, or rental of real estate. However, no exemption is allowed for a license to use real estate or for amounts received as commissions.
- Farm products or edibles raised, produced or manufactured within Washington and sold by the farmer or gardener.
- Casual and isolated sales, such as an accountant selling his or her office furniture.
- Sales related to motor vehicle fuel.
- Liquor sales.
- Cash discounts taken by customers.
- Manufacturing, selling or distributing motor vehicle fuel.
- Credit losses or bad debts sustained by sellers.
- Gross receipts reported to and taxed by another local jurisdiction in Washington.
- (Costs of doing business like insurance, rent or salaries are not valid deductions)
B&O Tax Payment Procedures
- The tax return form must be completed and postmarked by the last day of the month following the reporting period.
- Taxpayers are required to keep records for the most recent five-year period. All books, records, invoices, receipts, etc. shall be open for examination at reasonable times by the City or designated agent.
- When submitting your tax return:
- Use the pre-addressed envelope provided.
- Make check or money order payable to "City of Shelton". Do not send cash.
- Advise the City of Shelton of changes in address or ownership.
- Penalties and interest are due if tax returns are not postmarked by the due date.
Penalties & Interest
1-30 days late 5% of the tax due $5 minimum
31-60 days late 15% of the tax due $5 minimum
61 + days late 25% of the tax due $5 minimum
If a tax of penalty less than properly due has been paid then interest will be imposed at 2% annually from date due and will continue accruing until payment is made.
Businesses will be assigned a filing period, monthly, quarterly or annually. Tax Reports must be filed, even if there was no business activity during the taxable period. Return the B&O Tax Report and write “no activity” for the gross amount.
Taxpayers are required to keep records for the most recent five-year period. All books, records, invoices, receipts, etc. shall be open for examination at reasonable times by the City or designated agent.