The city of North Bend can reasonably expect to lose $50,000 a year after a new state business tax law takes effect Jan. 1, said Elena Montgomery, city finance director.
The new law assesses business and occupation taxes based on point of delivery rather than point of sale. Generally speaking, the new law awards the tax receipts to the delivery address and corresponding city or county, Montgomery said.
She used the example of a North Bend-based mattress company to illustrate how the law operates. Under the new law, the company would pay a business and occupation tax to North Bend only for mattresses delivered to North Bend. Snoqualmie, which also has a codified business and occupation tax, would receive tax money for mattresses delivered there. However, if mattresses were delivered to Carnation, Duvall or areas of unincorporated King County – none of which have a business and occupation tax – there would be no business and occupation tax paid on those sales, she said. Under the old law, all sales would have been taxed based on gross receipts and paid to North Bend, except those delivered to Snoqualmie.
The state legislature adopted the new law as a way to find relief of taxes payable to municipalities, Montgomery said.
The City Council adopted a city version of the state law Dec. 4 to incorporate it into city ordinances.