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What You Need to Know: New Law Creates Workforce Education Investment Surcharge

Posted by Chris LeRoux, CPA on Jan 16, 2020 8:45:58 PM

Education 2This year on January 1, a new law put the Workforce Education Surcharge into effect. This means that a new three-tiered surcharge applies to the amount of tax payable under the Service and Other Activities B&O tax classification by businesses “primarily engaged” in one or more specific activities.

The funds for this new surcharge will be used as a part of the workforce education investment account (WEIA) for higher education operations, compensation, and programs as well as state-funded student aid programs.

The tiers break down, as follows:

Surcharge

43 business activities have been specified, and businesses “primarily engaged” in one or more of these activities will be required to report the surcharge on their excise tax return.

The law defines “primarily engaged” as meaning that more than 50% of a business’ cumulative gross income reportable under any B&O tax classification is generated from one or more of these activities in the current or preceding calendar year.

The 43 specified activities fall generally into the following groups:

  • Aerospace Manufacturing
  • Business-to-Business Electronic Marketers
  • Business, Professional, Labor, Political, and Similar Organizations
  • Electric Power
  • Finance and Insurance
  • Government
  • Healthcare (excluding hospitals)
  • Information Services
  • Intangible Assets
  • Management of Companies
  • Non-store Retailers
  • Professional and Commercial Wholesalers
  • Professional, Scientific, and Technical Services

Wondering if the surcharge applies to income subject to B&O tax under the Service and Other Activities classification? Use this Excel workbook created by the Washington State Department of Revenue to determine where your business stands.

If the surcharge applies to you, you must report and pay it with your regular excise tax returns. You will report the taxable amount on the Workforce Educations (Surcharge on Service & Other Activities) line.

If you do not believe the surcharge applies to you, leave the surcharge line blank. Remember to maintain the records to support your business activities in case you are contacted by the Department.

Questions on the new surcharge? Contact Chris LeRoux at 425.629.1990 or cleroux@sweeneyconrad.com

 

 

Topics: Tax

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