Page 184 - Washington Nonprofit Handbook 2018 Edition

(ii) Service and Other Activities.

The Service and Other Activities classification includes all other sources of

income that do not fall into another B&O tax classification. Nonprofit organizations
must pay a tax rate of 1.5% of the gross income the organization receives from
services, rents, fees, advertising income, dues, reimbursements, agency fees, and
commissions. Unlike retailing, items in this classification are not subject to the
retail sales tax.

b. Exemptions for Low Gross Receipts and the Small Business Tax
Credit

(i) Low Gross Receipts.

Nonprofit organizations are not required to register with the Washington

State Department of Revenue or pay the B&O tax if their gross annual receipts are
$12,000 or less and the organization is not required to pay any other state tax such
as the sales or use tax.

(ii) The Small Business B&O Tax Credit.

The Small Business B&O Tax Credit may offset all or a portion of the B&O tax.
For example, a nonprofit organization that reports in the Service and Other
Activities classification will pay no B&O tax if its annual gross receipts are $56,000
or less. This credit, however, applies only to the B&O tax due from the organization
and does not apply to any retail sales and use taxes due.

c. Exemptions and Deductions for Artistic and Cultural
Organizations

Washington exempts certain nonprofit organizations from liability for the
B&O tax.

Artistic and cultural organizations may deduct from their B&O tax liability all
of their income from business activities.

Artistic or cultural organizations include nonprofit corporations that are
organized and operated exclusively for the purpose of providing “artistic or cultural
exhibitions, presentations, or performances or cultural or art education programs”
for viewing or attendance by the general public. The term “artistic or cultural
exhibitions, presentations, or performances or cultural or art education programs”
includes and is limited to:

WASHINGTON NONPROFIT HANDBOOK -173- 2018