Multiple activities tax credit (MATC)

When a business performs more than one taxable activity for the same product, it may take an MATC so tax is not paid twice on the same amount. This credit applies to Washington’s business and occupation (B&O) tax (internal) and gross receipts taxes paid to other states (external). Both the internal and the external MATC are subject to the following requirements:

• The amount of credit cannot exceed the Washington tax liability.
• The person claiming the credit must be the same person who is legally obligated to pay both taxes that create the credit situation.
• The taxes must actually be paid before the credit may be claimed.
• The taxable business activity which creates the credit situation must involve the same ingredients or products.

Internal MATC

Businesses must report each activity under the proper B&O tax classification. They may then take an internal MATC credit for each of the following situations:

• Products are extracted and sold in Washington.
• Products are extracted and manufactured in Washington.
• Products are manufactured and sold in Washington+.

External MATC

External credits arise when activities are taxed in Washington, and similar activities related to the same product are also subject to a gross receipts tax outside this state. Businesses must report each activity that occurs in Washington under the proper B&O tax classification. They may then take an external MATC credit for each of the following situations where the other state imposes a gross receipts tax:

• Products are extracted in Washington and manufactured or sold and delivered in another state.
• Products are manufactured, in whole or in part, in Washington and sold and delivered to another state.
• Products or ingredients are extracted in another state and are then sold and delivered to a buyer in Washington.
• Products are manufactured, in whole or in part, in another state and are then sold and delivered to a buyer in Washington.
• Products are partly manufactured in Washington and partly in another state and are then sold and delivered to buyers in Washington or another state.

Other states’ qualifying taxes

Gross receipts taxes generally include:

• Business and occupation tax privileges taxes upon extracting, manufacturing, and selling activities, which are similar to those imposed in Washington state.
• Severance taxes measured by the selling price of ingredients or products severed, such as oil, logs, minerals, natural products, etc.
• Business franchise or licensing taxes measured by the gross volume of business in terms of gross receipts.

Gross receipts taxes do not include:

• Income taxes.
• Value-added taxes.
• Retail sales or use taxes.
• Other consumer taxes, which are generally stated separately from the selling price.

Definitions

Gross receipts tax means a tax:

1. Which is imposed on or measured by the gross volume of business, in terms of gross receipts or in other terms, and in the determination of which the deductions allowed would not constitute the tax an income tax or value added tax.
2. Which is not, pursuant to law or custom, separately stated from the selling price.