Focusing on your local community not only benefits the neighborhood, but can also benefit your business.
The Main Street Tax Credit Program in Washington State provides business and occupation (B&O) tax or public utility tax (PUT) credits for private contributions given to eligible downtown organizations. These organizations must be part of the Main Street Program, which helps communities revitalize the economy, appearance, and image of their commercial districts.
There are two ways businesses may qualify for the B&O tax or PUT credit:
- Contribute directly to an eligible downtown organization, and be eligible for a tax credit valued at 75 percent of the contribution
- Contribute to the Main Street Trust Fund, and be eligible for a tax credit valued at 50 percent of the contribution
There’s an extra benefit if the downtown organization is a Section 501(c)(3) organization, because the business contribution may be eligible for a federal income tax deduction as a charitable contribution as well.
Requirements for Receiving the Credit
In order to receive the credit, the donation request must be:
- Approved by the Department of Revenue each year
- The business must be registered to file their state excise tax returns electronically
The donation request application process starts on January 1 each year, and space is very limited. However, once the donation request is approved, the donation can be spread out throughout the calendar year.
Businesses may need to contact the Washington Trust for Historic Preservation at (206) 624-9449 to determine if the downtown organization is a member of the state Main Street Program.
Restrictions on the Credit
A business can donate up to $250,000 to eligible organizations and the Main Street Trust Fund. The business must take the tax credit in the calendar year following the donation, which must be in cash, but the credit can’t be carried forward and is nonrefundable if the credit is above the business’s tax liability. For example, if a taxpayer made a contribution in December of the current calendar year, the credit would be available starting in January of the following calendar year.
Eligible downtown organizations and the Main Street Trust Fund can receive donations totaling up to $133,333.33 each calendar year.
Step-by-step instructions to apply for the Main Street Tax Credit are available on Washington State Department of Archaeology & Historic Preservation’s site. You can also find more information here.
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If you have any questions about your next steps or how this may affect your business, contact your Moss Adams professional or email email@example.com.