In the current challenging economic environment, it’s critical to look for every opportunity to save costs. While nobody enjoys paying taxes, we understand it’s necessary, but did you know that there’s a critical exemption for one of our industry’s major business taxes?
The Seattle business license tax, often referred to as the Seattle Business and Occupation tax (B&O tax), is applied to the gross revenue that businesses earn. The current rate is 0.222% of all retail sales, but certain types of revenue are exempt, including sales of alcoholic beverages.
You can find the full list of exemptions here. Scroll down to section L to Z and under “Liquor” it states the following:
State-sanctioned liquor sales are exempt from the Seattle business license tax. “Liquor” is defined by the State of Washington in RCW 66.04.010. Liquor does not include confections or food products that contain one percent or less of alcohol by weight.
This means sales of alcoholic beverages at your restaurant or bar are exempt from Seattle’s B&O taxes. Depending on how much liquor sales are a part of your business, you can save a significant amount on taxes. The sale of liquor should be omitted from the gross revenue when filing (i.e. – don’t include the amount of liquor sales when filing).
If you want to amend your previous filings to claim a refund for overpaid taxes, you can find the Seattle B&O tax filing amendment instructions here. Seattle allows you to file amended returns going back up to 4 calendar years.
When filing for the amendment, remember to include the reason for amending on the “Application for Refund/Credit” page from the link above.
If you need additional assistance, you can contact the City Finance Department at (206) 684-8484 or by email at tax@seattle.gov.
Please share this information with your fellow owner/operators!
The Seattle Restaurant Alliance is here to support you and your business. If you have any questions or suggestions for other topics for us to look into, please don’t hesitate to contact us.