Desk fees and shared expenses

Sales tax now applies to some services

Starting October 1: Some business services are now subject to retail sales tax, as required by state law, ESSB 5814. When you buy these services, vendors should add sales tax to your bill. If you sell these services, you should begin collecting retail sales tax. Learn more about Services newly subject to retail sales tax.

Real estate firms may charge brokers for providing space (desk fees) and other resources (shared expenses) such as telephones, advertising, multiple listing services, and office supplies. These charges may be a fixed amount per month or may be computed as a percentage of commissions or percentage of sales.

The amounts charged for desk fees and shared expenses are subject to business and occupation (B&O) tax under the Service and Other Activities classification. These charges are part of a real estate firm’s gross income whether they are deducted from a broker’s commission or billed separately. Retail sales tax does not apply.

References

RCW 82.04.290 Tax on service and other activities.

WAC 458-20-224 Service and other business activities.

ETA 3145 Real Estate Brokers – Shared Commissions and Expenses