Dear Mr. Hoban,
Thank you for your email. I appreciate your position on the issue of repealing the B&O tax exemption for on-site property managers.
Washington State's B&O tax generally applies to all sales of services. The tax applies to the income received both by the service provider, as well as by any subcontractor hired to perform all or part of the services on behalf of the original service provider. The success of the B&O tax depends on this "pyramiding" application. Therefore, exemptions from the tax are infrequent and typically narrow. RCW 82.04.394 provided a narrow exclusion from B&O for amounts received by a property management company from the owner of a property for gross wages and benefits paid to on-site personnel, and paid directly from a trust account maintained under RCW 18.85.285.
While the legislature did approve SB 6143, which in part repealed the B&O exemption for on-site property managers, the bill does not affect the general agency exemption outlined in WAC 458-20-111 (Rule 111). Taxpayers may still receive pass-through treatment for certain income, provided that all elements of Rule 111 are met. Where the property owner (rather than the property management company) is the employer of record for on-site managers, Rule 111 may potentially still apply.
Determining eligibility for pass-through treatment under Rule 111 is a very fact-specific process. The Department of Revenue's Taxpayer Information and Education section can provide a written ruling on whether Rule 111 would apply in any particular situation.
I know this doesn’t alleviate all of your concerns, but I hope it helps address some of the issues you described.
Sincerely,
John McCoy
State Representative, 38th LD
Posts
0 comments:
Post a Comment