Penalties increase for late B&O taxes

New penalty rates go into effect Aug. 1

Jul 28, 2015 - by Brian Henshaw, Finance Director

In accordance with the Washington Legislature, penalty rates for late payment of Business and Occupation (B&O) taxes are increasing effective August 1.

All individuals and firms doing business in Bellingham, whether located inside or outside the City limits, must register with the City Finance Department and are subject to B&O tax, unless specifically exempted by Bellingham Municipal Code. B&O tax is a gross receipts tax and is measured on the value of products, gross proceeds of sale, or gross income of the businesses. Bellingham City Code refers to state law to set penalty rates for B&O taxes, which fund a wide variety of general city services, including police, fire, parks, and library.

In early July, legislators passed ESSB 6138, which increases late penalty rates in RCW 82.32.090(1) from 5 percent to 9 percent if payment is postmarked after the due date; 15 percent to 19 percent if sent after the last day of the month following the due date; and 25 percent to 29 percent if postmarked after the last day of the second month following the due date

What does this mean?

This means effective August 1, 2015, any taxpayers that have filed their B&O tax returns late will incur an increased penalty rate. This only applies to B&O tax filings.

When does it apply?

The state of Washington Department of Revenue has determined that for taxpayers, the date of the payment of tax will determine the applicable penalty rate. A taxpayer who remits payment before August 1, 2015 is subject to the pre ESSB 6138 rates, while a taxpayer who remits payment after August 1, 2015 is subject to the new ESSB 6138 penalty rates, regardless of the filing period.

The new state legislation can be found here. If you have any questions, please contact the City of Bellingham License and Tax department at 360-778-8012 or email Bellingham.bls@cob.org.

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