State & Local Tax Impacts of COVID-19 for Washington

Thoughtware Alert Published: Dec 11, 2020
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Information current as of January 31, 2021.

The SARS-CoV-2 virus and the incidence of COVID-19 are changing life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor or visit our COVID-19 Resource Center for current information as needed.

Information Specific to Washington

  • The DOR will provide extensions for filing and payment for purposes of the business and occupation tax, as well as other taxes it administers, of 60 days for monthly filers and 30 days for quarterly and annual filers.
    • DOR News Release, March 19, 2020.
  • Washington amended several excise tax provisions dealing with liquor and marijuana licensees, which generally provide a penalty waiver retroactive to Feb. 29.
    • Washington Emergency Regulations §314-02-109 et al., effective March 27, 2020.
  • Washington will extend the business and occupation (B&O) tax returns to June 30 for the first-quarter return for quarterly filers, and annual filers may file their return by June 15, 2020.
    • Washington DOR Notice, April 8, 2020.
  • Washington will waive: 1) interest on outstanding balances until the termination of the COVID-19 State of Emergency or May 4, whichever occurs first; 2) the Business Licensing Service delinquency fee on late renewals of licenses expiring in February, March, and April; and 3) penalties for nonprofit applications and renewals for exempt property for the months of February through May. The DOR will also delay issuing new compliance assessments, tax warrants, notices of withhold and deliver, and revocations until mid-May. Estates filing a state and federal estate tax return can request an extension until July 15.
    • Washington DOR Notice, April 17, 2020
  • Washington has extended the waiver and suspension of laws and rules regarding tax penalties, interest, fees and due dates through the earlier of the termination of the COVID-19 state of emergency or May 31, 2020.
    • Governor’s Proclamation 20-20.2, May 5, 2020, extending Proclamations 20-05, 20-20 and 20-20.1, which were due to expire May 4, 2020.
  • Washington will exempt businesses receiving assistance from federal programs (including the PPP) to cope with the effects of the COVID-19 pandemic from B&O tax on these amounts. At the present time, no penalties or interest will accrue in relation to any tax that may be due on such receipts (pending future legislative action).
    • Washington DOR Tax Topics, May 12, 2020.
  • Washington extended the waiver or suspension of enforcement of interest and penalties on sales and use, excise, property and estate taxes, as well as business licensing provisions, for taxpayers adversely affected by COVID-19 until the earlier of the termination of the COVID-19 State of Emergency or August 1.
    • Governor’s Proclamation 20-20.5, July 2, 2020.
  • Washington extended the waiver and suspension of statutory restrictions concerning tribes’ use of fuel tax refunds for excise tax purposes due to COVID-19 until the earlier of the termination of the COVID-19 State of Emergency or August 1. This includes contractual provisions in agreements between the governor and an Indian tribe or tribes restricting the use of fuel tax refund monies to highway or transportation-related purposes and directing the Department of Health, the Washington State Military Department Emergency Management Division and other agencies to identify and provide appropriate personnel for conducting necessary and ongoing incident-related assessments.
    • Governor’s Proclamation 20-56.2, July 2, 2020.
  • Washington clarified that for taxpayers who are working with the DOR on a collection-related issue for sales and use, excise, property and estate tax purposes, the DOR will delay the issuance of tax warrants, notices of withhold and deliver and revocations until September 1.
    • Washington DOR Business Relief During COVID-19 Pandemic, July 15, 2020.
  • Washington extended the waiver of interest on tax payments from February 29, 2020, through the end of the emergency or September 1, 2020, whichever occurs first. Furthermore, the department will delay the issuance of tax warrants, notices of withhold and deliver, and revocations until September 1. 
    • Governor’s Proclamation 20-20.6, August 3, 2020.
  • Washington has further extended the waiver and suspension of laws and rules regarding tax penalties, interest, fees and due dates through the earlier of the termination of the COVID-19 state of emergency or October 1, 2020. This further extends Proclamations 20-05 and 20-20 et seq.
    • Governor’s Proclamation 20-07, September 2, 2020.
  • Washington has further extended the waiver or suspension of enforcement of interest and penalties on sales and use, excise, property, and estate taxes, as well as business licensing provisions, for taxpayers adversely affected by the COVID-19 pandemic until the earlier of November 9 or the termination of the COVID-19 state of emergency. 
    • Governor’s Executive Order 20-20.8, October 2, 2020.
  • Washington has further extended the waiver or suspension of enforcement of interest and penalties on sales and use, excise, property, and estate taxes, as well as business licensing provisions, for taxpayers adversely affected by the COVID-19 pandemic until the earlier of December 7 or the termination of the COVID-19 state of emergency. 
    • Governor’s Proclamation 20-20.9, November 10, 2020.
  • Washington has further extended the waiver and suspension of laws and rules regarding tax penalties, interest, fees, and due dates through the earlier of the termination of the COVID-19 state of emergency or January 19, 2021.
    • Governor’s Proclamation 20-20.10, December 8, 2020.
  • Washington has amended and extended Proclamations 20-05 and 20-20 concerning sales and use, property, excise, and estate tax relief from penalties, fees, interest, and due dates. The measures include 1) extending statutory waiver or suspension of enforcement of interest and penalties on taxes, along with business licensing provisions, for taxpayers adversely affected by COVID-19; and 2) providing that the extension will remain in force until the termination of the state of emergency or until rescinded, whichever occurs first. 
    • Governor’s Proclamations No. 20-20.11 and 20-56.8; January 19, 2021.
  • Washington updated its tax guidance on COVID-19 financial assistance. Businesses receiving assistance under federal, state, and local programs shouldn’t report or pay business and occupation (B&O) tax for the assistance. The state will delay any final decision on taxability or enforcement actions until after the legislature has had an opportunity to act. No penalties or interest will accrue with regard to any tax that may be due until further notice. Advanced or accelerated payments received in the medical industry must be reported and could be subject to the B&O tax at the time of receipt. 
    • Washington DOR, FAQs Regarding COVID-19; January 1, 2021.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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