Washington – Tax and Licensing Simplification Act

SALT Report 1357 – In an effort to improve the business climate in Washington, Governor Chris Gregoire issued an executive order that required the Department of Revenue to evaluate and recommend solutions that would lessen the complexity of the state’s tax system.

In her order, the governor stated that despite 2003 legislation requiring a model B&O tax ordinance for municipal B&O taxes, there are still many significant differences between the state’s B&O tax system, the model B&O tax ordinance, and each city’s B&O tax system.

She also noted that local business licensing requirements are a burden on many small businesses. Approximately two hundred twelve of the two hundred eighty cities in Washington require a license to engage in business within the city. In most cases, fees associated with city business licenses vary from flat-rate charges to fees based on one or more factors.

Based on recommendations made by the Department of Revenue, the governor’s Tax and Licensing Simplification Act, HB 2490 and SB 6176, would:

  • Reduce the number of state business and occupation tax classifications
  • Require greater uniformity between local B&O tax and state B&O tax, with a goal of state-level administration of all local B&O taxes by January 1, 2015, or as soon thereafter as possible, and
  • Simplify local business licensing to facilitate the transition to mandatory issuance and renewal of local business licenses through the state’s business licensing system by July 1, 2014, for cities imposing a business and occupation tax, and by January 1, 2018, for all other cities and towns that have a business licensing requirement

If passed, the bill would also provide a single place to handle all business licensing, registration, and tax reporting requirements, for state and local governments.

For Further Information:

House Bill 2490

Senate Bill 6176