Page 198 - Washington Nonprofit Handbook 2018 Edition

true “gross receipts” taxes and are essentially taxes on the “privilege” of doing
business within the city rather than taxes on the actual business activity conducted
within the city. Consequently, cities often impose a B&O tax on activities with only
minimal connection to business activities conducted within the taxing city.

Most cities with a local B&O tax typically exempt the activity of nonprofits,
with the exception of retailing activity, which is subject to tax. The City of Seattle is
a notable exception to this rule and subjects more nonprofit activities within its
borders to different tax classifications. Because cities have broad freedom to
define their local B&O taxes differently from the state and offer different
exemptions and deductions, it is advisable to review the local tax code for any city
in which an organization has activity.

Even if an organization has otherwise taxable activity, many cities have
established an annual minimum gross receipt threshold that must be reached
before any tax is due.

Many Washington cities impose other requirements, such as the need for a
business license or other purely local taxes such as the admissions tax, which is a
local sales tax on tickets. Nonprofits should contact the finance office of any cities
in which they have activities to verify the specific local licensing and tax
requirements.

CHAPTER 54. Retail Sales Tax Issues for Nonprofit Organizations

Washington imposes a tax upon the sale of any article of tangible personal
property to consumers and certain services performed for consumers. See RCW

82.08. This is the retail sales tax, which is imposed upon the same activities subject
to the Retailing B&O tax. Therefore, unless an exemption applies, nonprofit
organizations should collect the retail sales tax on all sales of tangible personal
property and any services that fall within the definition of retailing.

a. Exemptions (See RCW 82.08.0203-82.08.036, WAC 458-20-190 for
Exemptions.)

The following sales are exempt from the retail sales tax:

• Sales to the Red Cross;

• Sales of food products for human consumption. The exemption
applies only to certain food products that are not sold for immediate
consumption on the premises;

WASHINGTON NONPROFIT HANDBOOK -187- 2018