Deductions from the business license tax

If you use accrual basis accounting, you can deduct credit losses actually sustained.

You can deduct money paid on behalf of your customer if the customer is solely liable for the money and repays you in the form of an advance, reimbursement or other payment.

An artistic or cultural organization may deduct revenue from certain arts and cultural activities.

The deduction is for amounts received by an artistic or cultural organization which must be a not-for-profit corporation organized under RCW Ch. 24.03 and exclusively provide artistic or cultural exhibitions, presentations, or performances or cultural or art education programs. Therefore, you must be a non-profit organization performing artistic or cultural activities as defined in SMC 5.45.100(B).

In computing tax, there may be deducted from the measure of tax those amounts received by artistic or cultural organizations, as defined in SMC 5.30.020, which represent:

1. Income derived from business activities conducted by the organization, provided that this deduction does not apply to retail sales made by artistic and cultural organizations (the rental of space and the casual sales of props and fixtures used in or culture productions will be exempt from tax);
2. Amounts received from the United States or any instrumentality thereof or from the State of Washington or any municipal corporation or subdivision thereof as compensation for, or to support, artistic or cultural exhibitions, performances, or programs provided by an artistic or cultural organization for attendance or viewing by the general public; or
3. Amounts received as tuition charges collected for the privilege of attending artistic or cultural education programs.

The value of items manufactured for public arts events can be deducted as well. You cannot, however, deduct retail sales revenue.

 SMC 5.30.020(D): Definition of "Artistic or cultural organization."

You can deduct qualified tuition you collect for educational programs.

You can deduct money that you previously reported as taxable revenue but were later unable to collect.

You can deduct the amount of cash or trade discount actually taken by the purchaser.

You can deduct revenue from casual sales. Casual sales are the infrequent sale of tangible goods that are not part of your typical business activity.

You can deduct revenue earned by providing day care for children younger than 8 years old and not enrolled in first grade or above.

You can deduct revenue that the Washington or U.S. constitution prohibits cities from taxing.

You can deduct contributions, donations and endowments that are bona fide by law.

You can deduct the cost of merchandise that a distribution cooperative, or its affiliate, sells to its customer-owners who then resell the merchandise at retail.

You can deduct funds you receive from the government that support health or social welfare services provided by an organization of that type.

You can deduct initiation fees or membership dues if you do not provide goods or services in return for the fees or dues.

Financial businesses can deduct interest income secured by first mortgages or trust deeds on non-transient residential properties.

You can deduct interest on loans made to farmers and ranchers by certain types of lending institutions.

You can deduct revenue derived from interest paid on certain state financial obligations.

You can deduct revenue from the sale of tangible goods or retail services when you deliver them to another part of Washington, outside Seattle. Identify each city you deliver to.

Use the Intra State deduction if the delivery location does not impose a local gross receipts tax (B&O tax). Otherwise use the Taxed by Other Cities deduction.

You can deduct real estate rental revenue earned by boarding homes. The boarding home must be licensed by the state of Washington.

You can deduct funding that you receive from government-supported research and development in the life sciences. If you take the deduction, you must fill out a deduction report and submit it to the City by April 30 each year. Download the Annual Tax Report for Life Science Research Deductions.

NOTE: This deduction expired June 7, 2017. For further details about the life science research deduction, see Seattle Tax Rule 5-069.

If you have any questions, contact Joseph Cunha or Anna Pedroso by email or by calling 206-684-8484.

You can deduct revenue from the sale of tangible goods that you deliver to a buyer who is located outside Washington.

You can deduct revenue from the sale of precious metal bullion and monetized bullion.

You can deduct advertising revenue earned by radio and television broadcasters if that revenue meets certain requirements.

You can deduct money spent to improve or maintain residential structures and commonly held property. The money must be raised by residential associations described in the Seattle Municipal Code. Money spent to improve property that the public can pay to use cannot be deducted.

You can deduct revenue from items or services that were returned by a customer who you refunded.

Use this deduction to "back out" sales, admission or excise tax revenue that you included in the gross amount.

You can deduct revenue from the sale of tangible goods or retail services when you deliver them to another part of Washington, outside Seattle. Identify each city you deliver to.

Use the Taxed by Other Cities deduction if the delivery location imposes a local gross receipts tax (B&O tax). Otherwise use the Intra State deduction.

You can deduct gross income from transporting empty containers picked up in Seattle. To qualify you must exchange the empty container for a full container at the time of pick-up. The full container must come from outside Seattle, and the job must be billed to the customer as a round-trip charge.

Manufactures can deduct transportation costs for shipping outside the state.

You can deduct membership fees and certain service fees for youth nonprofits.