220 Fourth Avenue South, Kent WA 98032 - (253) 856-5200

Logo

The Official Website of the City of Kent

Business and Occupation (B&O) Tax

(Kent City Council Ordinances 4054 and 4055)

Overview:

Effective January 1, 2013 the City adopted a business and occupation (B&O) tax.  In general, all businesses subject to the State of Washington B & O tax, whether located within or outside Kent city limits, that conduct business activities in Kent are subject to the city’s tax.  Effective October 1, 2013, all businesses will be required to file their City of Kent Business & Occupation (B&O) Tax Return Online.  B&O Taxes are administered by the Audit Division of the Finance Department and can be contacted by email at Business-occupation@Kentwa.gov or by phone at 253-856-6266.

 

Section 3.28.030 of the Kent City Code establishes the definition of terms used on this website and certain related referenced documents, e.g. “engaging in business” and “manufacturer”.

 

News and Announcements

Annual B&O Tax Return Filing Option 

 

The City of Kent is pleased to announce that effective January 1, 2014 qualifying businesses will have the option of filing annual rather than quarterly City Business & Occupation (B&O) tax returns.  This option will benefit an estimated 40% of businesses who paid their City B&O tax for the year 2013.

 

On March 14, 2014 the City provided notifications and instructions via email to businesses that are being place on an annual filing status.  If you did not receive notification that you are being placed on annual filing status but reasonably believe that your business meets the eligibility requirements for annual filing, then you may submit an Application for Business & Occupation Tax Annual Filing Status. 

 

To see Tax Return Filing Frequency, annual filing eligibility requirements and application procedures please go to How do I file my Taxes Annually.

 

See Tax Return Filing Frequency, annual filing eligibility requirements and application procedures. 

 

Expanded B & O Tax Exemptions and Deductions 

 

The City of Kent is pleased to announce that, effective January 1, 2014, additional exemptions and deductions are available to businesses for qualifying activities.  These include, but are not limited to, exemptions for certain fraternal and beneficiary organizations and deductions for bona fide initiation fees, dues, contributions, donations, and tuition fees.

 

See "Who is subject to B & O tax?" and "What Tax Deductions are Available and How are They Claimed".  

 

Required Online Filing of B & O Tax Returns 

 

Effective October 1, 2013, the City of Kent requires all businesses to file their Business and Occupation (B&O) taxes electronically using our Business & Occupation Tax Return System.  Online Filing is free, fast, secure, and results in fewer errors and omissions, as well as offers an online payment option by Credit Card, or e-Check in addition to mailing in a check payment. 

 

Businesses who are unable to file online because they do not have access to the Internet may file their return using our kiosk.  Our kiosk is available from 9:00 a.m. to 4:00 p.m. Monday through Friday (excluding government holidays).  Our kiosk is located at:  City of Kent - Finance Department (Centennial Building) 400 West Gowe Street, Suite 406, Kent, Washington 98032.

  

How to File and pay your Taxes

 

  1. File your return electronically using Online Services.
    1. To use Online Services, you will need to create an online account.  To create your account you will need your Tax Registration Number (TRN) in order to link it to your account.  Your TRN is the 9-digit number shown on your Washington Business License and State of Washington Excise Tax Return.  A separate tax return is required for each TRN used by your business for Kent activity.  Enter only one city business license number for each tax return.  A separate City business license is required for each facility your business maintains within city limits. 
    2. Once you have created your account and have linked it to your TRN, click on 'Start a new B&O Tax Form' and follow the prompts in Online Services.
  2. Businesses who are unable to file online because they do not have access to the Internet, may file their return using our kiosk.  Our kiosk is available from 9:00 a.m. to 4:00 p.m. Monday through Friday (excluding government holidays)  Our kiosk is located at:  City of Kent - Finance Department (Centennial Building) 400 West Gowe Street, Suite 406, Kent, Washington 98032.
How do I File my Taxes Annually

Effective January 1, 2014, qualifying businesses will have the option to file annual rather than quarterly B&O tax returns. 

 

Eligibility Requirements:  To qualify for annual filing, businesses must meet all of the following eligibility requirements:

  1. The amount of City B&O tax due from the business must have been less than $250 for each quarter paid during the previous calendar year for which annual filing status is requested.
  2. The business must have filed its returns and paid all City of Kent B&O taxes due, if any, for its business activities for all prior years for which annual filing status is requested.
  3. The business reasonably believes that it will not generate more than 40% of its annual gross receipts in any quarter of the calendar year (i.e. a "seasonal business").
  4. The business reasonably believes that its City B&O tax obligation will remain less than $250.00 for each and every quarter for which annual filing status is requested.

Businesses meeting the annual filing eligibility requirements must:

  1. Submit an Annual Filing Application.
  2. Notify the Audit Division of the Finance Department by phone (253) 856-6266 or by email at Business-occupation@Kentwa.gov
How do I amend a previously submitted business and occupation tax return?
  1. Make a copy of the return you need to correct as originally filed.
  2. At the top of the return write, "AMENDED" in large letters.
  3. Cross out, with a simple line through, any erroneous figures using red or bold ink.  If possible highlight corrections so they will be easily seen.
  4. Make the appropriate corrections on the return and recalculate your totals.
  5. If you are amending your return and you owe money include a check or money order when you mail in your amended return.
  6. If you are seeking a refund include a letter or note with your amended return explaining the reason for any changes.
  7. Mail the letter, the amended return(s) and, if tax is due, check/money order to:

                  City of Kent

                  Attn:  Customer Services

                  220 4th Avenue South

                  Kent, Washington  98032-5895

 

Please Note: Checks submitted to the City of Kent for B&O Taxes will be processed by Electronic Funds Transfer (EFT). Please authorize your bank to process EFTs from the City of Kent for your B&O Tax payment. There will be no transaction fee charged for the EFT.

 

If you have any additional questions please call 253-856-6266 or contact us by email at Business-occupation@Kentwa.gov.

 

The City may only honor refunds dating back four years prior to the year in which the refund request is made so long as the period covered by the amended return has not been the subject of an assessment or judicial proceeding.  (KCC 3.29.100) 

How do I pay my taxes Online?

Paying your taxes online is the last step of the online filing process.  You will find your payment options on the Online Services Payments page.  Below is a description of each online payment option:

  • eCheck - Enter your bank account number and routing information to make a one-time payment.  The transaction is free and only gives the City permission to withdraw the amount that you authorize.
  • Credit Card - Enter your credit card information to make a one-time payment.  You can use Visa or MasterCard.  If you choose this payment option, a convenience fee of 2.6% of the transaction amount will be charged to your credit card.

You may also continue to pay your City B&O taxes by check or money order.  Please be sure to enter your TRN and filing number on your check.  Mail your payment with a copy of your Kent B&O tax return to: 

                  City of Kent

                  Attn:  Customer Services

                  220 - 4th Avenue South

                  Kent, Washington  98032-5895

 

Please Note: Checks submitted to the City of Kent for B&O Taxes will be processed by Electronic Funds Transfer (EFT). Please authorize your bank to process EFTs from the City of Kent for your B&O Tax payment. There will be no transaction fee charged for the EFT.

 

Resources: 

 

What is a Business & Occupation (B&O) tax? 

The B&O tax is a gross receipts tax.  It is measured on the value of products, gross proceeds of sale, or gross income of the business for activities conducted in the City of Kent.  There are no deductions for labor, materials, taxes, or other costs of doing business unless otherwise provided for in Section 3.28.100 of the Kent City Code.

 

Who is subject to the B&O tax?  

Any individual or business required to obtain a City business license must also register with the City for B&O tax purposes through the city business license process (see Business Licenses).  There is no fee associated with this registration. 

 

In general, all businesses subject to the State of Washington business and occupation tax and conducting business activities within Kent city limits are subject to the City’s tax.  However, Section 3.28.090 of the Kent City Code establishes exemptions including the following:

  • United States, the state of Washington, or any Washington state local government
  • Non-profit corporations or non-profit organizations, except with respect to retail sales
  • Public utilities
  • Manufacture, sale or distribution of motor vehicle fuel
  • Sale or distribution of liquor

Effective January 1, 2014 the following additional exemptions are available to qualifying businesses for qualifying activities:

  • Certain fraternal and beneficiary organizations
  • Certain corporations furnishing aid and relief
  • Operation of sheltered workshops

 

It is important to note that vendors and other suppliers of goods and services to businesses located within Kent city limits may be subject to this tax. 

 

The first $62,500 of gross receipts earned in any quarter is exempt from the gross receipts tax.  Also, businesses with warehouse business floor space of 4,000 taxable square feet or less and total other business space of 12,000 taxable square feet or less would not be subject to the square footage tax.  However, these businesses are still required to file a Business & Occupation Tax Return and applicable Schedules.

 

When is payment due? 

The B&O tax for quarterly returns is due and payable on or before the end of the month immediately following the end of the tax reporting quarter, e.g. 1st Quarter-April 30th.  The B&O tax for annual returns is due and payable on or before January 31st immediately following the end of the calendar year. 

Penalties and interest for late payments are charged as follows:

 

Penalties ($5.00 minimum) 

One month or less overdue                               5%

Over one month through two months               15%

Over two months                                              25%

 

The annual interest rate for 2013 is 2%

There is a “non-sufficient funds” (NSF) charge of $25.00

 

What are the B & O tax classifications and rates? 

The B & O tax has two components:  gross receipts and square footage.   Most businesses will report in both the gross receipts business tax category and in the square footage category.  Those businesses located entirely outside Kent city limits, but doing business in Kent will report only in the gross receipts category.

 

Business Activity Tax Rate
Manufacturing .046% (.00046)
Processing for Hire / Extractor for Hire         .046% (.00046)
Wholesaling .152% (.00152)

Retailing

.046% (.00046)
Services (including Retail Services) .152% (.00152)
Printing / Publishing .046% (.00046)
Extracting .152% (.00152)
Other Activities .152% (.00152)
 

The square footage tax component is based on the total taxable square footage of all business facilities maintained by a business within Kent city limits, applied as follows:

  • Business Warehouse Facility - $.03 per square foot per quarter
  • All Other Types of Facilities - $.01 per square foot per quarter

If the square footage tax due exceeds your B&O tax obligation in any quarter, the amount of that overage would be due with your B&O tax payment.  If the square footage tax is less than your B&O tax obligation in any quarter, you will only pay the B&O tax.

 

What tax credits are available and how are they claimed? 

The Multiple Activities Tax Credit (MATC) has two components:

  • External Credits.  Persons that engage in business activities that take place in one or more cities with an eligible B&O gross receipts tax. 
  • Internal Credits.  Comprised of credit for the sale of products in the city that they extract or manufacture, credit for persons that manufacture products in the city using ingredients they extract, and credit the sale of products that they print, or publish and print in the city. 

Schedule B – Multiple Activities Tax Credit Form must be completed and properly supported in order to claim this credit.  See also Section 3.28.070 of the Kent City Code.

 

What tax deductions are available and how are they claimed? 

Section 3.28.100 of the Kent City Code establishes deductions including the following:

  • Retail or wholesale sales delivered outside of Kent
  • Receipts from the sale of tangible personal property and retail services delivered outside of the City but within Washington
  • Cash discounts taken by customers
  • Credit losses or bad debts sustained by sellers
  • Compensation from public utilities for health or social welfare services
  • Professional employer services 

Effective January 1, 2014 the following additional deductions are available to qualifying businesses for qualifying activities:

  • Membership fees and certain fees by non-profit youth organizations
  • Bona fide initiation fees, dues, contributions, donations, and tuition fees
  • Certain charges made by a non-profit trade or professional organization
  • Charges made for operation of privately operated kindergartens
  • Endowment funds
  • Income from certain business activities of artistic and cultural organizations
  • Value of articles for use in displaying art objects or presenting by artistic and cultural organizations
  • Certain daycare activities
  • Repair, maintenance, replacement, etc. of residential structures and commonly held property for eligible organizations
  • Certain advertising fees for radio and television broadcasting

 

 

Schedule C – Deduction Detail must be completed and properly supported in order to claim these deductions.  In addition, Schedule A – Service Income Apportionment Detail must be completed and properly supported for amounts reported for the City of Kent.

Admissions Tax

Whenever a charge is collected for admission to any place or event for entertainment or recreation within the Kent city limits, an admissions tax is levied. 

READ MORE

Gambling Tax

All persons, associations, and organizations that have been duly licensed by the Washington State Gambling Commission to conduct or operate gambling activities are subject to Gambling Tax.

READ MORE

Utility Tax

All organizations (including the City of Kent) providing the following services are subject to the utility tax:

  • Water
  • Sewer
  • Drainage
  • Garbage collection and disposal
  • Electric and Natural Gas
  • Cable
  • Telephone and cellular

 

READ MORE