Business & Occupation Taxes
What it Is
The City of Issaquah levies and collects a tax called the Business and Occupation (B&O) tax to every person for the act or privilege of engaging in business activities within the city, whether the person’s office or place of business is located within or outside of the city limits of Issaquah (IMC 5.04.050).
As a businesses engaged in any business activity in Issaquah, you must have an Issaquah endorsement on your Washington State Master Business License. You can verify your license status by visiting the State of Washington Business licensing Service Website.
How it Works
Once your business is licensed at the State level, you will automatically receive quarterly tax return forms near the end of each quarter. Businesses that file B&O taxes quarterly and have a gross taxable income of more than $25,000 for Issaquah business activities in the quarter being reported must pay B&O tax based on their business classification. Business classifications are provided in the table below.
However, if your business’s gross taxable income is less than $100,000 in the calendar year, you qualify for annual filing. To register for annual filing status, you will need to contact a B&O team member at 425-837-3065 or 425-837-3049.
Beginning January 1, 2019, annual filers will no longer be required to file zero-tax-due returns and will not receive a tax return form. But should your taxable gross income is more than $100,000 you will be required to file an annual tax return form (PDF) and pay applicable business taxes. Your filing status would then revert to quarterly filing.
Effective April 1, 2015, the business classifications and their respective tax rates are:
|Business Classifications||Tax Rate|
|Manufacturing / Extracting||.0012|
|Printing, Publishing or Extracting/Processing for Hire||.0015|
|Services & Other Business Activities||.0015|
Quarterly filers with a gross taxable income of less than $25,000 still need to file a Quarterly Tax Return Form (PDF), even though no tax is due.
Tax return forms must be completed and returned with payment of any taxes due (if applicable) by the last day of the month that follows the quarter being reported. All businesses with quarterly filing status must submit a tax return form even if no tax is due. B&O Tax is payable quarterly on the following schedule:
|Quarter Ending||Payment Due|
|March 31||April 30|
|June 30||July 31|
|September 30||October 31|
|December 31||January 31|
Annual filers whose gross taxable income exceeds $100,000 must file and pay any taxes due by January 31 following the end of the previous calendar year.
Penalties are due if tax returns are not filed and taxes paid by the due date. Penalties are charged as follows:
|Days Past Due||Penalty|
|If postmarked 1 – 30 days after the Due Date||9% of Tax Due, Minimum of $5 Due|
|If postmarked 31 – 60 days after the Due Date||19% of Tax Due, Minimum of $5.00 Due|
|If received 61 or more days after the Due Date||29% of Tax Due, Minimum of $5.00 Due|
When submitting your return, please:
- 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!
- Advise the Tax Division in writing of any changes in address or status of ownership.
- $0 (no tax due) returns may be scanned and emailed, or faxed to 425-837-3029.
Tax Code Changes of Note
Beginning Jan. 1, 2020, specific rules for how you allocate and apportion revenue to the jurisdictions in which you engage in business will change. Substitute House Bill (SHB) 1403 primarily changes the definition of customer location to adopt market-based sourcing in the income factor. Full text of the revised Model Rule regarding Apportionment of Service Receipts taking effect Jan. 1, 2020, is available here.