The gross receipts B&O tax is primarily measured on gross proceeds of sales or gross income for the reporting period. For purposes of the gross receipts tax, businesses have been divided into several classifications discussed below.
Businesses conducting multiple activities will report in more than one tax classification and may qualify for a multiple activities tax credit. The current gross receipts tax rate of 0.1496 percent applies to all gross receipts tax classifications.
Gross Receipts Tax Classifications:
Manufacturing/Processing for Hire
Manufacturing is the business of producing articles for sale from raw or prepared materials by giving these matters new forms or qualities, such as fabricating, processing, refining, mixing, packing, canning, etc. B&O tax is calculated on the value of products manufactured, determined by selling price. Processing for hire means the performance of labor and mechanical services upon materials or ingredients belonging to others so that as a result a new, different or useful product is produced for sale or commercial or industrial use. B&O tax is calculated on gross receipts.
Extracting/Extracting for Hire
Extracting is the taking of natural products, such as logging, mining, quarrying, etc. B&O tax is calculated on the value of products extracted, determined by selling price. Extractor for hire means a person who performs under contract necessary labor or mechanical services for an extractor. B&O tax is calculated on gross receipts.
Sellers of products to persons other than consumers are considered to be wholesalers. The B&O tax is calculated on the wholesale selling price.
Businesses that sell products and specific services to consumers are defined as retailers. Taxable retail services include those generally performed on property, such as repair, but not personal or professional services, such as services performed by doctors, attorneys or accountants. The B&O tax is calculated on gross receipts.
Publishers of newspapers, magazines and periodicals are taxable under this classification, as well as persons who both print and publish books, music, circulars, etc. Printing includes letterpress, offset-lithography, and gravure processes as well as multigraph, mimeograph, autotyping and similar activities. B&O tax is calculated on gross receipts. Firms engaging in photocopying documents should report under the Retailing classification.
Services and Other Activities
Businesses that provide personal and professional services, such as lawyers, doctors, financial institutions, real estate brokers, insurance brokers and solicitors and accountants, are subject to the B&O tax under this classification. Also, any business not subject to another B&O tax classification must report under this “catch-all” category. B&O tax is calculated on the gross receipts of the business.