The application of the Business & Occupation (B&O) tax, Public Utility Tax (PUT), and sales tax to businesses providing staffing services has been clarified in a new rule.
This rule does not apply to businesses providing professional employer services.
To clarify, staffing businesses recruit and hire their own employees, find other business that need the services of those employees, assign those employees on a temporary basis to perform work at the other businesses, and attempt to reassign their employees to other businesses after their assignment has been completed.
Gross income received by a staffing service business is subject to B&O and/or PUT. When the activity of the assigned worker is a retail sale, then sales tax must also be collected from the client, unless a specific exemption or exclusion applies.
It is the responsibility of the staffing service to determine the applicable B&O classification for the activity performed by the worker. Retail, wholesale, manufacturing, services, and travel agent activities are just some of the classifications to chose.
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