EVERETT — The city of Everett updated its business and occupation tax code on Wednesday to reflect changes in state law that required a number of services to become subject to certain taxes.
The new state law, Senate Bill 5814, changed the classification of a number of services — including advertising, live presentations, information technology, website development, security and more — making them subject to business and occupation taxes, known as B&O taxes, and sales tax. It also makes more nicotine products subject to specific taxes regarding tobacco products.
On Wednesday, the City Council approved an ordinance adding those services to the city’s B&O tax law. Cities across the state were required to update their B&O tax codes to align with the new state law, but don’t have to update rules regarding sales taxes as those are administered by the Washington Department of Revenue, a city spokesperson wrote in an email.
The state law passed this year and was put into place to help prevent a looming state budget shortfall. The law is expected to raise $1.1 billion over two years and $2.6 billion over four years, according to the Washington State Standard.
Local governments will also collect new revenue thanks to the revisions, although a more definitive estimate of exactly how much revenue Everett will receive is yet to come. That will happen after the new taxes have been implemented and an annual reporting period has passed, allowing the city to collect initial revenue data, a city memo read.
The new classifications have been contentious. Comcast sued the state over a provision of the code that made digital advertising services subject to sales and B&O tax, The Washington State Standard reported. That case is still pending. A Sequim-based security company also sued the state regarding the new taxes classification of security services, but later dropped the lawsuit, The Standard also reported.
The new tax rules will go into effect Jan. 1.
Will Geschke: 425-339-3443; william.geschke@heraldnet.com; X: @willgeschke.
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