Business and Occupation Tax
Beginning Jan. 1, 2026, the City will implement a Business & Occupation (B&O) Tax on certain retail businesses and services operating within city limits.
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Overview
Beginning Jan. 1, 2026, the City will implement a Business & Occupation (B&O) Tax on certain retail businesses and services operating within city limits. Under this tax, Retail Sales and Retail Service businesses will be required to submit a quarterly tax return. Retail businesses meeting the defined criteria and exceeding the minimum gross income threshold are also required to submit a tax payment. The taxes imposed shall be used only to fund the construction and operations of a new bridge shelter for the homeless.
Who is required to file?
The B&O tax is levied for businesses that are classified as Retail Sales and/or Retail Service in Vancouver, WA. It applies to gross receipts or the value of products manufactured or extracted. If your retail sales and/or retail business earns $50,000 or less for the year, or $12,500 or less in a quarter, you are below the threshold. This means you must still file a return, but you do not have to pay any tax. Only businesses that are above the threshold—more than $50,000 annually or more than $12,500 in any quarter—are required to both file and pay the tax.
When are tax returns due?
You must file your B&O Tax return on the last day of the month following the end of each quarter.
Quarterly filing schedule:
- Q1 January–March: Due by April 30
- Q2 April–June: Due by July 31
- Q3 July–September: Due by October 31
- Q4 October–December: Due by January 31
An annual filing frequency is also available. The due date for the annual filing is April 15 every year.
If the due date is a weekend or holiday, it will automatically default to the next business day.
Where to file?
You must file and pay through Localgov or in-person. Payment must be submitted by the deadline to avoid penalties and interest.
There is an option to pay in-person for those that are unable to file/pay online. The B&O Tax form can be submitted by mail or in person to Customer Service at City Hall. Please contact the City B&O Tax team at 360-487-8410, option 7 or business.taxes@cityofvancouver.us with any questions.
Tax rates, penalty and interest rates
This section outlines how the B&O Tax is calculated, including current rates, penalties, and interest for late payments. It also defines key terms and outlines available exemptions under VMC 5.03.
Definitions
- Business: Any activity for gain, benefit, or advantage to the taxpayer or others, whether for profit or not.
- Engaging in Business: Includes sales, services, leasing, installation, consulting, deliveries, solicitation, or maintaining property or offices in the city—even without a physical storefront.
- Gross Income of Business: All value received from business activities including sales, services, interest, commissions, dividends, fees, royalties, and rent—without any deductions.
- Retail Sales: Selling goods directly to the final customer (the consumer), not for resale. Example: a clothing store selling shirts to shoppers.
- Retail Services: Providing personal, business, or retail professional services directly to consumers. Example: construction, gyms, tattoo parlors, parking garages, or landscape maintenance for homeowners. Visit the Vancouver Municipal Code for the full definition and additional examples.
- Consumer: A person who buys for personal use, not for resale, or who uses the product in producing something else.
Tax, penalty, and interest rates
- Tax Rate: Retailing and retail services are taxed at a rate of 0.100% (or 0.001 of gross income).
- Interest: Delinquent taxes will accrue interest at a rate of 6% per annum, .5% a month, for each month the taxes remain unpaid. Interest rates are recalculated every first day of January of each year. See RCW 82.32.050 for more information.
- Penalty: 9% of tax due if 1–30 days late, 19% if 31–60 days late, 29% if over 60 days late.
Exemptions
- Exemption for Employees: Wages and salary income (not contractors). Booth renters are not employees.
- Exemption for Dividends and Investments: Passive income from investments not related to active business.
- Insurance Companies: Exempted due to gross premiums already taxed by the state (RCW 48.14.020).
- Real Estate Sales: Gross proceeds from selling property, not including commissions or interest charges.
- Fuel/Liquor Sales: Sales exempt under RCWs 82.38 and 66.08.
- Motor Vehicle Fuel: shall not apply to the manufacturing, selling, or distributing of motor vehicle fuel under RCW 82.38.020.
- Casual/Isolated Sales: Non-recurring sales by persons derived from casual or isolated sales.
- Accommodation Sales: Reimbursement resale at cost between registered vendors.
- Trust Fund Taxes: Retail sales tax and other pass-through taxes collected for the government.
Available exemptions, deductions and credits
Deductions and credits are allowed if specific criteria are met and specific documentation is provided.
Exemptions
A. Public Utilities
- State or city tax returns filed under utility tax chapter
- General ledger accounts showing utility revenue
- Regulatory filings (e.g., utility commission reports)
- Business classification documentation confirming utility status
B. Investments – Dividends
- Dividend statements (1099-DIV or equivalent)
- Subsidiary financial statements
- Ownership records (stock certificates, equity ledger)
- Corporate structure/org chart showing parent-subsidiary relationship
- Bank statements showing receipt of dividends
- Investment account statements
C. Insurance Business
- State premium tax filings and payment confirmations
- Insurance licenses (carrier or producer)
- General ledger showing premium revenue
- Commission statements (for agents/producers)
- Contracts showing surety/bonding activity (to identify taxable vs exempt revenue)
D. Employees
- Employees (exempt wages)
- Payroll records and payroll registers
- Forms W-2
- Employment agreements
- IRS classification support (employee vs contractor analysis)
E. Real Estate Sales / Rentals
E. Real Estate Sales / Rentals
- Closing statements (HUD-1 / settlement statements)
- Purchase and sale agreements
- Deeds and title transfer documents
- Lease agreements (showing 30+ day terms)
- Rent rolls and tenant ledgers
- Separate records for commissions/fees (to show excluded taxable amounts)
F. Mortgage Broker Trust Accounts
- Trust account bank statements
- Trust account reconciliations
- Client ledger detail (showing third-party disbursements)
- Invoices from third-party providers (appraisers, credit agencies, etc.)
- Compliance documentation with state regulations
- Mortgage broker agreements
G. Motor Vehicle Fuel
- Fuel sales reports
- Supplier invoices
- State fuel tax filings and payment records
- Inventory records (gallons purchased/sold)
- Documentation showing fuel subject to excise tax
H. Liquor Sales
- Liquor purchase invoices from distributors
- State liquor tax filings/reports
- Sales reports separating liquor vs non-liquor sales
- Licensing documentation
I. Casual and Isolated Sales
- Invoice or bill of sale
- Fixed asset records showing asset disposition
- Proof transaction is non-recurring (historical sales records)
- Board minutes or internal approval (for asset sale)
J. Accommodation Sales
- Purchase invoices (original cost)
- Resale invoices (showing no markup)
- Customer order documentation (proof of accommodation purpose)
- Timing documentation (within 14 days if applicable)
- Correspondence with buyer/seller
K. Taxes Collected as Trust Funds
- Sales tax payable account (general ledger)
- Sales tax returns filed
- Customer invoices showing tax separately stated
- Reconciliation of tax collected vs remitted
- Bank statements showing remittance payments
Deductions
1. Sales Delivered Outside Washington
- Shipping documents (bill of lading, freight invoices)
- Delivery receipts / proof of delivery
- Customer invoices showing out-of-state destination
- Contracts specifying delivery terms (FOB shipping point/destination)
- Sales reports by destination
2. Cash Discounts
- Customer invoices with discount terms
- Payment records showing discounted amounts paid
- Accounts receivable aging reports
- General ledger entries for discounts taken
3. Credit Losses (Bad Debt)
- Accounts receivable aging reports
- Write-off documentation and journal entries
- Collection efforts documentation (emails, notices)
- Bad debt policy
- Invoice records tied to write-offs
4. Constitutional Prohibitions
- Legal analysis or tax position memos
- Contracts showing interstate commerce activity
- Revenue breakdowns isolating exempt activity
- Supporting case law or statutory references
- Workpapers showing calculation of excluded amounts
5. Delivered Outside City (Within Washington)
- Shipping/delivery records showing destination outside city limits
- Customer address records
- GIS or jurisdictional mapping support (if needed)
- Sales reports segmented by location
- Invoices with delivery location
6. Professional Employer Organizations (PEOs)
- Client service agreements
- Payroll reports (gross wages, taxes, benefits)
- Billing invoices to clients (clearly separating fees vs pass-through costs)
- Workers’ compensation and benefits invoices
- General ledger detail supporting pass-through amounts
7. Mortgage/Deed of Trust Interest
- Loan agreements and promissory notes
- Mortgage or deed of trust documents
- Amortization schedules
- Interest income reports
- Property records showing residential classification
- General ledger accounts for interest income
Credits
- Double Taxation
- If tax was paid in another city for the same gross receipts, a credit may be applied
- Documentation examples:
- Tax returns filed with the other city
- Proof of payment (receipts, canceled checks, or confirmations)
- Revenue schedules showing the same income reported to both jurisdictions
- Allocation or apportionment schedules
Business and Occupation Tax filing and payment
To make your local Business and Occupation tax payments easier, the City has partnered with Localgov. This service facilitates secure online filings and payments. You can file and pay your Business and Occupation Tax Return at your convenience. Additionally, there is an alternative option to pay in person. Please contact the City B&O Tax team at 360-487-8410, option 7 or business.taxes@cityofvancouver.us for more information.
LocalGov features:
- Automatic calculation of taxes and fees owed.
- Secure processing that keeps your data safe.
- Multiple payment options, including ACH/EFT drafts, credit and debit card payments.
- Payments that can be made when you have time—not only during government hours.
- No need for paper forms, envelopes, checks, or stamps.
- Help is available when you need it.
Get started
- Set up your account: If you have any questions or need assistance, please contact Localgov Customer Service or call 877-842-3037.
- Schedule a training with Localgov Customer Service and they will walk you through how to register and submit your first filing.
How to file your taxes on Localgov
First, add your business into your Localgov portal:
- Sign into your Localgov account
- Go to the “My Businesses” page.
- Click the button “Add a Business.”
- Search for the “City of Vancouver, WA.”
- Select your business and click the button “Add Business.”
- You will be redirected back to the Businesses list page.
- To view your business details and required forms, click the “Actions” button and select “view details” next to your business name.
Submit your tax filing:
- Sign into your Localgov account.
- Go to the “Submit Forms” page.
- Search for the “City of Vancouver, WA.”
- Select the tax form you are required to file. If you select the wrong form, you will receive an error message.
- Fill out all required fields. The form will automatically calculate the tax and fees due.
Support and resources
- Government Support: Review the City’s Business & Occupation Ordinance.
- Localgov Support: If you need technical support while filing on Localgov, please reach out to Localgov Customer Service or call 877-842-3037.
Frequently asked questions
Who must file and/or pay the B&O tax?
Any business operating in the City that makes retail sales (selling goods to consumers) or provides retail services (like construction, gyms, parking, landscaping, or tattoo services) must pay this tax. For businesses with annual gross receipts less than $50,000 (or $12,500 per quarter), it is still required to submit a zero-dollar tax return via Localgov. Visit the Vancouver Municipal Code for the full definition and additional examples.
What is the tax rate?
The tax is 0.100% (one-tenth of one percent) of gross receipts from retail sales and retail services. Example: If you earn $100,000 in taxable sales, with no deductions or exemptions, your B&O tax would be $100.
How do I file if my business has multiple locations?
If your business operates in multiple locations, you should file your Vancouver Business & Occupation tax the same way you file with the Washington Department of Revenue (WDOR).
- If you file separately with WDOR for each location, file separate B&O tax returns for each Vancouver location
- If you file under one combined account with WDOR, file one combined B&O tax return with the City of Vancouver
This keeps your city filing consistent with your state filing method.
What counts as a retail sale?
A retail sale is when you sell tangible goods (like clothing, electronics, or food) directly to consumers and not for resale. Example: A bookstore selling books to customers.
What counts as a retail service?
A retail service is when you provide certain services directly to consumers, such as:
- Construction Services
- Amusement/recreation (bowling, gyms, swimming)
- Automobile parking and storage garage services
- Landscape maintenance and horticultural services
- Personal services, such as physical fitness, tanning salons, tattoo parlors and steam bath services.
- Renting or leasing tangible personal property to customers
Visit Vancouver Municipal Code for the full definition and additional examples.
Are wholesalers or manufacturers taxed?
No. Extractors, manufacturers, and wholesalers are listed in the ordinance, but their current tax rate is 0.00%. Only retail sales and retail services are taxed at this time.
I’m a small business. Do I still need to file?
If your gross receipts are $50,000 or less in a calendar year (or $12,500 or less in a quarter if filing quarterly), you do not owe B&O tax, but you must still submit a return.
Does it matter if I deliver my product outside the city?
Gross income is generally allocated to the location where the activity takes place. In the case of sales of tangible personal property, the activity takes place where delivery to the buyer occurs. Please see VMC 5.03.077 for detailed guidance on allocation and apportionment of income.
Do I have to file/pay online?
There is an option to pay in-person for those that are unable to file/pay online. The B&O Tax form can be submitted by mail or in person to Customer Service at City Hall. Please contact the City B&O Tax team at 360-487-8410, option 7 or business.taxes@cityofvancouver.us with any questions.
What if I only deliver goods into the city but don’t operate here?
If you are outside the city and only deliver using a common carrier (like UPS, FedEx, or USPS), you do not need to register or pay this tax, as long as you don’t engage in other business activities within Vancouver.
When does the tax go into effect?
The B&O tax will go into effect on Jan. 1, 2026.
What happens if I don’t file or pay?
Like other city taxes, failure to file or pay may result in penalties, interest, or enforcement actions by the City of Vancouver.
What will the B&O tax fund be used for?
The taxes imposed shall be used only to fund the construction and operations of a new bridge shelter for the homeless.