Page 194 - Washington Nonprofit Handbook 2018 Edition

gross income and pay tax on only the portion attributable to the
services performed within the state.

Grants by the federal government to municipal corporations or
political subdivisions of the state may be deducted from B&O tax
liability.

(e) Health or Social Welfare Organizations

“Health or social welfare organizations” are allowed to deduct grants or fees
received from government sources for providing certain “qualifying services.” First,
the organization must qualify as a “health or social welfare organization,” which
requires that the organization meet all of the following requirements (see RCW
82.04.431):

• The organization must be either (A) a nonprofit corporation managed
by a governing board of not less than eight individuals, none of whom
is a paid employee of the organization, or (B) a corporation sole (See
box above on Requirements Concerning Boards for further
discussion);

• No part of the corporation’s income may be paid directly or indirectly
to its members, stockholders, officers, directors or trustees, except in
the form of services rendered by the corporation in accordance with
its purposes and bylaws;

• Salary or compensation paid to the corporation’s officers and
executives must be only for actual services rendered, and at levels
comparable to the salary or compensation of like positions within the
public service of the state;

• Assets of the corporation must be irrevocably dedicated to the
activities for which the exemption is granted and, upon liquidation,
dissolution or abandonment by the corporation, may not inure directly
or indirectly to the benefit of any member or individual, except a
nonprofit organization, association or corporation which would also be
entitled to the exemption;

• The corporation must be duly licensed or certified where licensing or
certification is required by law or regulation;

WASHINGTON NONPROFIT HANDBOOK -183- 2018