- The Department of Revenue in Washington State has issued guidance on the taxability of termination fees.
- The guidance states that termination fees are generally taxable under the same tax classification as the payments made under the contract.
- The Department of Revenue has also clarified the taxability of rental of real property versus a license to use real property.
- A lease or rental of real property is not subject to business and occupation (B&O) tax or retail sales tax.
- However, a license to use real property is subject to B&O tax and may be subject to retail sales tax.
- The guidance provides examples of scenarios when a license to use real property may be taxable.
Source: kpmg.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
