B&O

Business & Occupation Taxes

What it Is

The City of Issaquah collects Business and Occupation (B&O) taxes from businesses based on gross income (IMC 5.04.050). Although there are exemptions (listed in IMC 5.04.100), every person, firm, association or corporation doing business in the City is subject to the B&O tax whether the business is physically located within the City of Issaquah or not. All businesses doing business in the City, whether located in Issaquah or outside the City limits, must register with the Washington State Department of Revenue and obtain a Washington State Master Business License with a City of Issaquah endorsement. You can verify your license status by visiting the Washington State Business Licensing Service Website.

How it Works

Once your business is licensed with the State, you will automatically receive a quarterly business and occupation tax form by mail from the City of Issaquah near the end of each quarter. You must file the tax return by the deadlines listed below and pay any tax due. 

By City Code, most businesses file B&O returns quarterly. However, the City may assign taxpayers with less than $100,000 in gross taxable income to an annual filing status. These taxpayers will receive an annual business and occupation tax form by mail in December and must report and pay any tax due by April 15 of each year. 

Quarterly filers who believe they may qualify to be an annual filer may contact a City of Issaquah B&O team member at BandO@issaquahwa.gov to request to become an annual filer.

The City has established minimum income thresholds to determine if taxes are owed. Quarterly filers with gross taxable income of less than $25,000 in a quarter owe zero taxes for the quarter, while annual filers with gross taxable income of less than $100,000 owe zero taxes for the year. Businesses below these thresholds should indicate zero tax owed on the tax return.

All taxpayers must file a return to avoid penalties, even if no tax is owed. If you owe taxes, you must file either in person or by mail: 

130 E Sunset Way
PO Box 1307
Issaquah, WA  98027

If no taxes are owed, you may file electronically by email (zerotaxduereturns@issaquahwa.gov) or fax (425-837-3029).

Tax Rates

Effective April 1, 2015, the business classifications and their respective tax rates are:

Due Dates

Tax return forms and any payments owed must be postmarked or delivered (if filing/paying in person) by the following dates:

Quarterly Filers:

Annual Filers:

Returns and payments due may be sent or delivered to: 

130 E Sunset Way
PO Box 1307
Issaquah, WA  98027

You must file by the deadlines above even if zero tax is due

Returns with zero taxes due must still be filed by the due date, but may be emailed to zerotaxduereturns@issaquahwa.gov or faxed to 425-837-3029.

Penalties and Interest

By law, late returns and payments are subject to penalties and interest. Taxpayers who file late are encouraged to include the penalty with their payment. The penalty amount is calculated according to the following table.

Interest is also charged on late payments based on rates established by the Washington Department of Revenue. You can find current and historical interest rates here and a penalty and interest calculator here.

Canceling the Penalty

All requests to cancel late penalties must be received within 30 days of being billed for the penalty. The request should address why the taxpayer believes the penalty cancellation is warranted.

City Code allows penalties to be cancelled for the following two reasons:

1. The taxpayer was late due to circumstances beyond their control
   
   OR
   
   
2. The taxpayer is (a) not currently licensed and filing returns, (b) was unaware of its responsibility to file and pay the tax, and (c) obtained a business license and filed past due returns within 30 days of being notified by the department.

City Code stipulates that the City cannot forgive interest charges.

Filing Tips

•    Use the tax return form provided. Substitutions can cause errors.
• Use the pre-addressed envelope provided.
• Make check or money order payable to City of Issaquah; Do not send cash!
• Changes in address or status of ownership should be noted on the back of the return.
• $0 (no tax due) returns may be scanned and emailed, or faxed to 425-837-3029.

Tax Code Changes of Note

Substitute House Bill (SHB) 1403 simplified the apportionment of service revenue. The model rule detailing the new methodology can be found here.

Apportionment Worksheet

Apportionment Worksheet Instructions

Starting in 2020, Annual Returns are due by April 15 of the next year. Previously, annual returns were due by January 31.