Business and Occupation Tax

Report revenue under wholesaling if you sell products or services to another person or business who intends to resell your product or service to a consumer.

Examples of Wholesaling:

• Sale of tangible products to someone other than the end consumer
• Sale of digital products to someone other than the end user

Report revenue under Manufacturing if you make new or different products from raw or prepared materials.

Report revenue under Extracting if you remove raw materials from nature.

Examples of Manufacturing:

• Fabricating
• Mixing
• Packing
• Processing
• Refining
• Fishing
• Logging
• Mining
• Quarrying

Examples of Extracting:

• Fishing
• Logging
• Mining
• Quarrying

Report revenue under retailing if you sell tangible products directly to consumers, or if you install, repair, clean alter, improve, construct, or decorate real or personal property for consumers.

Examples of retail sales:

• Sale of tangible products
• Sale of digital products
• Construction for consumers

Report revenue under retail services if you perform any of the following activities:

• Amusement or recreation services
• Abstract, title insurance and escrow services
• Credit bureau service
• Automobile parking and storage garage services
• Landscape maintenance and horticultural services
• Service charges associated with tickets to professional sporting events
• Physical fitness services
• Tanning salon services
• Tattoo parlor services
• Steam bath services
• Turkish bath services
• Escort services
• Dating services
• Renting or leasing tangible personal property to consumers and rental of equipment with an operator

Report revenue under Service & Other if your business activities are not specifically taxable under any other classification.
Report revenue under Service if you provide professional services to others. These professional services differ from the Retail Services classification.

Examples of Service businesses:

• Accountants
• Administrative professionals
• Architects
• Attorneys
• Bankers
• Bookkeepers
• Data processors
• Design services
• Engineers
• Entertainers
• Insurance brokers
• Janitors
• Physicians, dentists and veterinarians
• Real estate brokers
• Tax preparers

Examples of other business activities:

• Any business activity not taxable under another classification
• Software development and customization
• Producing royalties or commissions
• Freight brokering

Report revenue under Printing or Publishing if you print or publish media.

Examples of Printing or publishing:

• Books
• Electronic media
• Gravure processes
• Letterpress
• Magazines
• Music
• Newspapers
• Offset-lithography
• Periodicals

Starting January 1, 2023 new tax rates will take effect:

If your business is discovered through the city's own efforts (e.g., enforcement, investigation, audit), you may be liable for tax, interest, penalties of 34% of the tax due, and a "look back" period of 10 years plus the current year.

The Voluntary Disclosure Program can offer the following benefits:

• The "look back" period for tax liability is limited to the prior four years plus the current year.
• Up to 34% in potential penalties can be waived, which include:
  • 5% assessment penalty for substantially underpaid tax
  • 29% late payment of a return penalty
• A $250 failure to obtain license penalty
• The city can summarize your unreported tax liability in a single tax assessment.

Full statutory interest will still be imposed on all amounts due.

To qualify for full voluntary disclosure benefits, a business must have:

• Not been contacted by the city to determine if the business should have been registered or regarding specific outstanding obligations.
• Not engaged in evasion or misrepresentation in reporting tax liabilities.

You may not know if your business has been previously registered with the city for business license and tax purposes. Please contact the Tax & Licensing Division at 425-430-6851 or taxandlicensing@rentonwa.gov.

If a business that is currently registered discovers that it has underreported its tax obligations, it should amend its returns and submit any additional tax and interest due.

If city's records indicate your business was previously contacted by the city in an effort to determine our registration and reporting requirements, or regarding other enforcement issues, you will not qualify for the Voluntary Disclosure Program.

If you would like the city to work with a third-party representative, you must provide a completed Confidential Tax Information Authorization(PDF, 230KB) at the time of disclosure in order for the city to correspond with the designated representative regarding your confidential taxpayer information.

Taxpayers must submit the following items to begin the voluntary disclosure process:

• Letter or application(PDF, 275KB) requesting voluntary disclosure (including an explanation of the business activities, both in Renton and worldwide).
• Schedules (by year) showing gross income generated in Renton, along with any deductions.
• A Confidential Taxpayer Information Authorization form if a third party will be representing the business.

Once your tax liability has been determined, the city will prepare a tax assessment with interest. You will be sent a draft copy of the assessment for review. The assessment will then be submitted for processing and you will receive a billing notice. Full payment must be received according to the payment instructions on the billing notice. Additional interest and late payment penalties will accrue if the billing notice is not paid in full by the due date.

In the event that your application was not approved, you will receive an explanation from the city along with further instructions. All monies paid with the registration are non-refundable.

Service Income Apportionment allows businesses to proportionately divide their taxes among multiple Washington cities in which they do business. Calculate Service Income Apportionment if you report revenue under the Service and Other Business Activities classification.

Guidelines to follow

Service Income Apportionment applies only to revenue classified as Service and Other Business Activities. If you do not have income to report under this classification, you do not have to calculate the apportionment.

Before you calculate Service Income Apportionment, gather the following information:

• total gross service receipts
• total payroll cost for each employee
• office location for each employee

You will also need to know the locations of your customers. For tax purposes, customer location means the city or unincorporated area of a county where the majority of the physical contact between you and your customer takes place. Phone contacts are assigned to the place of business.

Calculation
Total Gross Service Receipts * ((Payroll in Renton/Payroll Everywhere) + (Renton Service Receipts/Total Gross Service Receipts)/2)

The City of Renton strives to ensure all businesses are adequately educated on the city’s B&O tax regulations. The city holds tax seminars annually or by request. Staff are also available for individual tax trainings by request. To schedule a seminar, contact the tax and licensing division at taxandlicensing@rentonwa.gov