Construction Law Blog

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Washington Contractors Should Refrain from Separately Itemizing and Billing Customers for B&O Tax

Date: June 14, 2017  /  Author: Bruce A. Cohen  /  Categories: Change Orders, Claims, Rants and Raves, Memorable Quotes, Construction News and Notes, Contracting, Out of the Ordinary  /  Keywords: Washington Contractors Should Refrain from Separately Itemizing and Billing Customers for B&O Tax 1  /  Comments (0)

Construction attorneys rarely encounter state and local tax issues.  However, in a recent negotiation over a disputed change proposal, an Owner’s attorney argued that Washington prohibits recovery of B&O tax as a separately-billed line item in the change proposal.  Given that itemization of B&O surcharges seemed a fairly common business practice, I was initially skeptical of the position.  Upon further review, it became apparent that the Owner’s argument was indeed correct and that many contractors may be unknowingly violating the law by separately itemizing and adding a percentage for B&O tax to their billings or change proposals.