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 Department of Revenue Website.

Please note, the B&O tax filings you make to the State Department of Revenue are not for City of Issaquah B&O Tax. Also, the City of Issaquah does not offer the same deductions and exemptions as the Washington State Department of Revenue. Please see IMC 5.04.100 and 5.04.110 for a list of exemptions and deductions available.

How it Works

Once your business is licensed with the State, you will automatically receive either a quarterly business and occupation tax form or an annual business and occupation tax form by mail from the City of Issaquah near the end of each reporting period. Tax returns must be filed (even if no tax is due) along with payment for any taxes due by the deadlines determined by their reporting status. 

The City of Issaquah has two reporting/filing statuses:  Quarterly and Annual.

Newly registered businesses will be assigned quarterly reporting status. However, businesses earning less than $100,000 in Issaquah Gross Taxable Income for the tax year (January through December) qualify to file tax returns annually. Qualifying businesses may contact a City of Issaquah B&O team member at BandO@issaquahwa.gov to request to be placed on annual filing status. 

When is Tax Owed?

Only businesses that exceed the income threshold set for their reporting status will owe taxes.

Only, quarterly filers with an Issaquah Gross Taxable Income of $25,000 or greater per quarter will owe taxes. Only annual filers with an Issaquah Gross Taxable Income of $100,000 or greater per tax year (January through December) will owe taxes. 

Issaquah Gross Taxable Income is the total gross income  of your business less any allowable deductions and exemptions as described in IMC 5.04.100 and 5.04.110. To determine what qualifies as income, please refer to IMC 5.04.040. The City of Issaquah does not offer the same deductions and exemptions you may receive from the Washington State Department of Revenue. 

How to File and Pay

If you owe taxes, you must file either in person via payment drop box or by mail.

The payment drop box for in-person payments is located near the front door of City Hall at 130 E Sunset Way, Issaquah, WA.

Tax forms and payments being mailed should be addressed to:

City of Issaquah Finance Department
PO Box 1307
Issaquah, WA  98027

If I Don't Owe Taxes, Do I Still Need to File?

Yes! All taxpayers must file a return to avoid penalties, even if no tax is owed.

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

Tax Rates

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

Tax Filing 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:

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 BandO@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

Beginning in 2020, Annual Tax Returns are due by April 15 of the next year.