How Washington's New Workforce Education Surcharge Applies To Law Firms

Law firms all around the state are receiving letters from the Washington State Department of Revenue regarding the new Workforce Education Surcharge.

And of course the big question is: What does this mean as far as what I pay in taxes?

For most Washington law firms, the new surcharge effectively changes your B&O tax rate from 1.5% to 1.8% of gross revenues. (Not profit, but gross revenues. That means that you pay the tax on all the money you bring in, without deducting any expenses.) This surcharge applies to income generated January 1, 2020 and later. In other words, you will first report and pay the surcharge on: (1) your January 2020 tax filing for monthly filers; (2) your first quarter 2020 tax filing for quarterly filers; and (3) your annual 2020 tax filing for annual filers.

As with any law, there are some nuances and exceptions. For more information about the surcharge, check out the DOR’s explanation here. To review the complete text of the law, see RCW 82.04.229. Or, to discuss the new surcharge or any other bookkeeping matters with a member of the Skepsis team, request a consultation here.