On December 4, 2017 the City Council adopted a B&O tax in Shoreline. All businesses operating in Shoreline that have gross receipts in excess of $500,000 per year (or $125,000 per quarter), except 501(C)(3) non-profits, will be subject to the tax effective January 1, 2019. A rate of 0.001 will be applied to all gross receipts for all business classifications except services which will be taxed at a rate of 0.002.
Business Outreach Workshops
Two workshop sessions were held in June 2017 for businesses to provide information on the City’s financial forecast and budget, and to collect feedback on the potential B&O tax.
Business Outreach Workshop Presentation
The City of Shoreline, like most cities in Washington, faces a structural imbalance in funding core operations, where the cost of maintaining services is growing faster than the revenues available to support them.
In 2014, the City Council developed a 10 Year Financial Sustainability Plan that identifies seven strategies to help achieve financial sustainability over the 10 year forecast. Five of the seven strategies have been implemented, and the City forecasts sufficient revenues through 2021, primarily relying on a voter-approved levy lid lift that expires in 2022.
State law allows cities to levy a B&O tax rate of up to 0.002 applied to gross receipts. Currently, 44 cities in Washington, many of them in the Puget Sound region, impose a B&O tax.
A B&O tax can be calculated several ways: by gross receipts, the number of employees or number of hours worked, or the square footage of physical locations and/or facilities. The tax may be simple – based on a single, easily calculated factor like number of employees, or a more complex factor like square footage. Some cities use a combination of factors.
State law requires cities set a small business exemption threshold of at least $20,000 in gross receipts. All businesses with gross receipts less than this amount are exempt from paying a B&O tax. Cities have the authority to set the exemption threshold higher and city thresholds vary greatly, from a low of $20,000 to a high of $1,000,000.
Shoreline B&O Tax
The Shoreline B&O tax is a gross receipts tax. It is measured on the value of products, gross proceeds of sales or gross income businesses earn.
There are no deductions for labor, materials, rent, or other costs of doing business. If you do business in Shoreline and generate more equal to or more than $2,000 in gross receipts annually, you must have a Shoreline business license and file a B&O tax return.
Businesses are subject to the B&O tax if the annual taxable revenue is above the following thresholds:
- 2019 - $500,000
The Shoreline B&O tax is not the same as the Washington State B&O tax. Shoreline taxes must be filed separately from your state taxes.