I was recently at a tax conference with several senior members of the Washington Department of Revenue and they referred to this filing as the “Thirteenth Return”. For businesses that have reportable revenues under any of the 19 apportionable classifications, this is treated as a required return in addition to the 12 monthly returns (less if you are on a quarterly or annual filing basis). By treating this as a required return, delinquent penalties can be assessed if a business fails to file it and is later deemed to have under-reported their revenues (an all too common occurrence). So by filing this annual reconciliation by the due date, you can save your future-self up to 29% in delinquent penalties.
Businesses meeting certain thresholds are able to apportion their revenues between Washington and other jurisdictions and take an apportionment deduction so they are not paying B&O on 100% of their revenues. This calculation is done on an annual basis, so for the periodic monthly (quarterly) returns an estimation methodology can be used. At the end of the year, the full year revenues are apportioned and reconciled to the reported tax with this filing. Any additional taxes due will be subject to interest, but not penalties, if the apportionment reconciliation is timely filed.
Finding this form is not easy, as it is not listed under the regular required returns. Instructions to find it on the DOR’s e-file system can be found here. Due to the DOR’s policy of treating this as a required return, we recommend businesses with any potential apportionable revenues file a reconciliation, even if all revenues are taxable in Washington.
If you have questions on how this applies to your business, please reach out to discuss.