Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-163 - Insurance companies, including surety companies, fraternal benefit societies, fraternal fire insurance associations, beneficiary corporations or societies and Washington state health insurance pool

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
Income earned
			 by insurance companies, including surety companies, fraternal benefit
			 societies, fraternal fire insurance associations, beneficiary corporations or
			 societies, and the Washington state health insurance pool is generally subject
			 to the service and other activities business and occupation (B&O) tax,
			 unless the law provides an exemption or deduction. This section identifies
			 exemptions and deductions available to these businesses. It also explains the
			 reporting responsibilities for retail sales and use taxes for retail purchases
			 and retail services.
(2)
Exemptions.
The law provides the following B&O tax exemptions.
			 These amounts do not need to be reported on the excise tax returns filed with
			 the department of revenue.
(a)RCW
			 82.04.320 provides an exemption to any person
			 with respect to insurance business upon which a tax based on gross premiums is
			 paid to the state of Washington. It should be noted, however, that the law
			 provides expressly that this exemption does not extend to "any person engaging
			 in the business of representing any insurance company, whether as general or
			 local agent, or acting as broker for such companies" or to "any bonding company
			 ... with respect to gross income derived from the completion of any contract as
			 to which it is a surety, or as to any liability as successor to the liability
			 of the defaulting contractor." The exemption also does not apply to any
			 business engaged in by an insurance company other than its insurance business.
			 Thus an insurance company is subject to the retailing or wholesaling BO tax on
			 sales of salvaged property unless the sales are casual or isolated sales as
			 described in WAC
			 458-20-106 (Casual or isolated
			 sales -- Business reorganizations). Also see WAC
			 458-20-102A (Resale certificates)
			 and WAC 458-20-102 (Reseller permits) for
			 documentation requirements for wholesale sales.
(b)RCW
			 82.04.322 provides an exemption to any health
			 maintenance organization, health care service contractor, or certified health
			 plan in respect to premiums or prepayments that are taxable under
			 RCW
			 48.14.0201.
(c)RCW
			 82.04.370 provides an exemption to fraternal
			 benefit societies or fraternal fire insurance associations organized or
			 licensed pursuant to
			 Title
			 48 RCW and as defined in
			 RCW
			 48.36A.010.
The statute also exempts beneficiary corporations or societies
				organized under and existing by virtue of
				Title
				24 RCW, if such beneficiary
				corporations or societies provide in their bylaws for the payment of death
				benefits.
The exemption provided by
				RCW
				82.04.370, however, is limited to gross
				income from premiums, fees, assessments, dues, or other charges directly
				attributable to the insurance or death benefits provided by such persons. It is
				not intended that all the varied, regular business activities (e.g., sales of
				food, liquor, admissions, and amusement devices receipts) of these societies or
				organizations be exempt from BO tax. Only that portion of income which can be
				demonstrated as directly attributable to charges made for insurance or
				providing death benefits is exempt.