Business & Occupation Tax


The City mailed 2021 B&O Tax Return (RY2020) packets on January 12, 2021. 
Tax Returns for RY2020 are due April 15, 2021.


FOR REPORTING YEAR 2020, ALL PENALTY FEES ARE SUSPENDED DUE TO THE COVID-19 PANDEMIC.

For those requesting at filing last year that they receive an emailed return in 2021, a generic return was emailed to the email address on file with the WA-DOR Business Licensing Service.


The State of Washington, unlike many other states, does not have an income tax.  As an incorporated city, one way the City of Bainbridge Island raises revenue is through its Business & Occupation (B&O) Tax levied on businesses engaging in business in the City. Businesses with gross revenue in the City of more than $150,000 are subject to the City’s Business and Occupation Tax set at 1/10 of 1% (0.001). The City’s B&O Tax is a gross receipts tax; that is, the tax is measured on the value of products, gross proceeds of sales, or gross income of the business in the City. Being a gross receipts tax means there are no deductions for labor, materials, or other costs of doing business. The City does not distinguish between wholesale and retail for B&O Tax purposes.  The tax is filed annually reporting gross revenue for the prior calendar year. This B&O Tax is separate from and in addition to the Washington State B&O Tax. 

Definition of "Gross Revenue on the Island":  Under Bainbridge Island Municipal Code (BIMC) 5.05.050, the B&O Tax is levied on every person engaging in business activities within the City.  The definition of "engaging in business" can be found at BIMC 5.05.030. For B&O Tax purposes, BIMC 5.05.050.A.4defines "total gross revenue on the island" as the "gross proceeds of sales of the business without regard to the place of delivery of articles, commodities or merchandise sold."
  • The Municipal Code does not distinguish between retail and wholesale revenue. Both types of revenue are considered part of gross revenue.
  • The Municipal Code does not distinguish between sales made to Native American tribes and the general public.
  • Manufacturers and extractors are subject to tax on the value of products put into commercial or industrial use.

Note:  The City’s B&O Tax is a gross receipts tax meaning there are no deductions for labor, materials, or other costs of doing business.


Business & Occupation Tax Return Guide & General Instructions

Every person, firm, association, or corporation that engages in business within the jurisdiction of the City of Bainbridge Island must have a valid City business license in good standing. Subsequently, every person, firm, association, or corporation that engages in business within the jurisdiction of the City of Bainbridge Island, whether or not the business is located on the island, is required to file the City's B&O Tax Return unless otherwise exempted. The City of Bainbridge Island administers one business & occupation tax: gross receipts tax.

Note:

Nonprofit Organization and City B&O Tax Filing - Nonprofit organizations are subject to Business and Occupation Taxes only as a result of undertaking for-profit activities. If the nonprofit does not undertake for-profit activities, check the appropriate box at the top of the B&O Tax Return and mail the return to the address provided (see Tax Return tab below). Nonprofit organizations remain responsible for reporting all for-profit income activity.

Businesses Exempt from City B&O Tax - BIMC 3.88, 5.05.090, 5.08 states that the City’s B&O Tax does not apply to certain business activities to which tax liability is imposed by other means.  Business activities not subject to B&O Tax are:


The City mails a personalized B&O Tax Report to our businesses on or around the first week of January of each year.  A generic report is provided below for your convenience. B&O Tax Reports and tax payments are due by April 15th of each calendar year.  See the Fees & Penalties to calculate penalties for reports received after the due date. 

Taxpayers are required to keep records for the most recent five-year return period. Businesses must keep open for examination by the City's Finance Director or designated agent all books, records, invoices, receipts, etc.

Note: In 2019, the City's B&O Tax Return underwent extensive revision to bring the return into compliance with State law. The City B&O Tax Return now consists of the primary Tax Return plus three (3) schedules: 

  • Schedule A - Service & Other Income Apportionment
  • Schedule B - Deductions & Exemptions
  • Schedule C - Multiple Activities Tax Credit


The general instructions below, presented as a series of tabs, provides a basic, working description of the City's B&O Tax Return. The instructions are intended for general information purposes only.  It is current at the time of publication; however, potential future changes in the City of Bainbridge Island Municipal Code (BIMC) or State law may have an impact on the information presented. Not all possible applications of tax are included. In the event of a conflict between the information presented in this guide and an ordinance of the City, the ordinance prevails.

Additional information and specifics related to your B&O Tax Return may be obtained in the BIMC or by contacting Finance & Administrative Services. For help with any questions, please contact Finance & Administrative Services at:

Finance & Administrative Services
Phone: (206) 780-8591


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Current and past B&O Tax Returns packets are available below as a downloadable PDF.  Updates and revisions to City tax returns are effective retroactively.  Therefore, the City reserves the right to reject any submitted return that is grossly out of date, and thus, out of compliance. Accepted return packets are as follows:

Please Note: The City of Bainbridge Island B&O Tax Report is due April 15th, 2021. City cannot accept tax money for the 2020 reporting year before January 1, 2021.

  1. Tax Return
  2. Schedule A
  3. Schedule B
  4. Schedule c
  5. Glossary

The City of Bainbridge Island Annual Business & Occupation Tax Return is the primary document of the return.  The return must be signed, dated, and returned to the City for your return to be considered complete

IMPORTANT Information Regarding COVID-19 Subsidies and B&O Tax reporting:

  • Unemployment Payments - Unemployment payments are not taxable and should not be included in gross revenue.
  • Federal COVID-19 Payments and Grants - Any Federal COVID-19 payments or grants are to be included in gross revenue. HOWEVER, you are allowed to deduct these payments on Schedule B, Section I - Deductions.
  • Penalty Fees -The City is suspending all penalty fees for reporting year 2020. For reporting year 2020, no penalties will be assessed or are due.

Tax_Return_Numbered


1.

Unique Business Identifier, or UBI - The UBI is your business license number with the City.  The City adopted the UBI as its business license number in July 2018 as a means to streamline information between the State and the City when the City partnered with the WA-DOR Business Licensing Service. The City uses the database of WA-DOR Business Licensing Service to obtain information for distributing the City's B&O Tax Return.

2.

Businesses and Organizations Exempt from filing the City B&O Tax Return - There are a limited number of businesses and organizations exempt from filing a return under BIMC 5.05.90. Two entities require special notations:

Nonprofit Organizations - If the return is for a registered nonprofit organization with the City, the organization is exempt from completing the City's B&O Tax Return. However, the organization must still file a return.  If the nonprofit organization has zero for-profit revenue for the reporting year, check the box then sign and date the return where indicated.  Mail the return.  This completes the organization's filing for the reporting year.  If the organization has any for-profit income for the reporting year, the organization must report the for-profit income. Be aware, if a nonprofit organization has for-profit revenue, #3 applies. However, if the nonprofit has over $150,000 gross for-profit revenue on the island, the organization must report using the main tax reporting form (see #5).

Insurance Business - Insurance business is exempt from filing a B&O Tax Return except if involved in the following activities:

  • Bonding
  • Title Insurance
3.

Gross Revenue in the City Less than $150,000 for Reporting Year - If the gross revenue for the reporting year of a business or a nonprofit organization with for-profit income is less than $150,000, you are exempt from completing the City's B&O Tax Return. However, the business or nonprofit must still file a return. (Go to #4.)

4.

Exempt Business MUST Report Gross Revenue -  If gross revenue for the reporting year is less than $150,000, check the box, report your gross revenue on the island for the reporting year on the line provided, then sign and date the return where indicated. Mail the return. This completes the business or nonprofit's filing for the reporting year.

IMPORTANT: Gross revenue MUST be reported. A return claiming gross revenue on the island of less than $150,000 that does not report actual gross revenue will be rejected.


5.Gross Receipts Reporting - This section is the primary B&O Tax Return reporting form for businesses engaging in business on the island. Included in the form is the reporting from any of the adjacent schedules. To complete the form, a business reports their gross receipts (Column 2) for each business activity listed in Column 1. For each business activity, a business will report any deductions (Schedule B), exemptions (Schedule B), as well as any services that are apportioned (Schedule A). This form also allows businesses to take the Multiple Activities Tax Credit (Schedule C) on your total gross receipts. Every business engaging in the business in the City receives a one-time deduction of $150,000 on gross revenue made on the island.

a. Business Activity (Lines 1-7) - The City breaks out the type of activity for which a business is engaged to support internal purposes. It is important to note that while wholesaling and retail services are separate business activities for tax reporting, in terms of gross receipts the City does not distinguish between wholesale and retail.

b. Services & Other, Not apportioned and Apportioned (Lines 3-4) - Only a specific group of services are apportionable services. The distinction for apportioned and not apportioned services is between services to persons (apportionable) and services to property (not apportionable) as defined by the State. In addition, apportionable services are only apportioned if the business has a taxable presence on the island and another jurisdiction (e.g., physical location(s) elsewhere other than the island). When an apportionable business service has additional taxable presence outside of the City, apportionment calculates the portion of gross revenue that can be claimed by each jurisdiction to prevent double or overlapping taxation. 

IMPORTANT: If (a) your business is not an apportionable service and/or if (b) your business does not have a taxable presence in Bainbridge Island AND in another jurisdiction, Schedule A does not apply.  If Schedule A does not apply, gross service receipts are reported in Service & Other - Not Apportioned (Line 3). See the tab for Schedule A for detailed information.

c.  Deductions & Exemptions (Columns 3-4) - The City recognizes certain deductions and exemptions. Go to the Schedule B tab for detailed information.

d.  Multiple Activities Tax Credit (Line 8) - The Multiple Activities Tax Credit may apply for businesses engaged in activities that are subject to tax under two or more classifications. The purpose of the credit is to ensure that B&O Taxes are not paid by the same business more than once on the same amount. Go to the Schedule C tab for detailed information.

e. Standard Deduction (Line 10) - Each business engaging in business on the island is allowed the $150,000 standard deduction. If the business did not gross $150,000 or more in the reporting year, go to #3. The standard deduction is only allowable once per business. This means for businesses that have more than one physical location engaging in business on the island, the deduction may only be taken for one location and no deduction is allowed for the subsequent locations. This one-time deduction applies to such entities as businesses operating under a separate holding company or similar dual operating situation.
 
f. Tax Rate (Line 12) - The B&O tax rate for the City is 1/10 of 1%. Be careful in calculating the tax owed. Multiply the Total Taxable Amount by 0.001.


6.Signature Required - The return must be signed and dated in order for the return to be accepted. In signing, the signatory affirms that the information provided on the return in correct to the best of their knowledge.

7.Deliver Your Return - The City gives several options for getting your B&O Tax Return to the City (Note: There is no need to return unutilized schedules):

a. Third-Party Mailing Service (Seattle, WA) The City contracts with a third-party mailing service located in Seattle for the sending, receiving, and receipting the bulk of the City's B&O Tax Returns to ensure efficient and quick filing. This third-party mailing service collects tax returns at a post office box. You will note on returns mailed to you from our third-party mailing service the returns show a return address of:

City of Bainbridge Island
PO Box 94304
Seattle, WA 98124-6604


This is a valid mailing address for B&O Tax Returns. Please note:

****DO NOT SEND ANY NON-B&O TAX  PAYMENTS WITH YOUR RETURN**** 

when mailing to the third-party mailing service. There is no guarantee that other payments to the City sent c/o the third-party mailing service (e.g., utility or permit payments) will be received and receipted correctly or in a timely manner. All non-tax payments are to be sent directly to the City.

b. Mailing To The City  Finance & Administrative Services oversees the City's B&O Tax Returns. Returns may be mailed to the City at:

Finance & Administrative Services
City of Bainbridge Island
280 Madison Avenue N
Bainbridge Island, WA 98110

c. Email Zero-Returns  If you have a zero return, that is, an exempt return or a return owing no money, the City allows businesses the option to email their return. The return must be an email attachment in PDF format. Placing "B&O Zero Return" in the subject line, email the zero return to: taxes@bainbridgewa.gov  Senders will receive an automatic response email confirming receipt of their return.

d. City Drop Off  Returns may be brought to City Hall. Drop your tax return in the drop box located at City Hall (located across from the Town Square off Henshaw Way NE).

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