Multiple activities tax credit (MATC)
The multiple activities tax credit (MATC) ensures that a business is not taxed twice when it performs multiple taxable activities (manufacturing and selling, for example) that result in the same product.
Who qualifies for it?
Take this credit if you perform two or more taxable business activities on the same product.
For example, if you both manufacture and sell a product, report sale revenue under two tax classifications: Manufacturing and Retail Sales. Then take the credit so you only pay tax on the product once.
Both business activities can occur in Seattle. Or one can occur in Seattle and the other in another Washington city that imposes a B&O tax (also called a gross receipts tax).
Guidelines to follow
Skip the MATC if you are reporting revenue in only one classification.
To claim a multiple activities tax credit, fill out the MATC worksheet. If you file taxes online, complete the MATC worksheet in the Seattle electronic filing system (SELF). If you choose to file on paper, download the MATC worksheet.
Also, please note that the MATC:
- is not a deduction, so do not enter it as a deduction
- applies to local B&O taxes only, so paying the Washington state B&O tax does not qualify you for taking a credit for a local B&O tax
If you have questions about whether or not a tax qualifies or is eligible, please contact us.
How the credit works
MATC credits are divided into two categories:
- Internal Credits
- External Credits
Use Internal Credits when both your business activities (manufacturing and retail sales, for example) occurred within Seattle.
Use External Credits when one of your business activities occurred outside Seattle and you already paid local B&O tax (gross receipts tax).
Example 1: Internal Credits
Company A makes furniture in Seattle's SODO neighborhood. It also has a retail store in downtown Seattle where it sells the tables, dressers and desks that it manufactures.
During one quarter, it sells $40,000 of furniture. So on its Seattle business license tax return, Company A enters a gross amount of $40,000 for the Retail Sales classification. And because it also made the furniture, it enters $40,000 for the Manufacturing classification.
At this point Company A owes $86 for Retail Sales and $86 for Manufacturing, or $172 total.
Company A then fills out the multiple activities tax credit (MATC) worksheet, and it receives a credit for $86. This insures that it is only taxed once. And its tax due is now $86, not $172.
Example 2: External Credits
Company B makes furniture in Bellevue. It sells its tables, dressers and desks at a retail store in downtown Seattle.
During one quarter, it sells $60,000 of furniture in Seattle. So on its Seattle business license tax return, it enters a gross amount of $60,000 for the Retail Sales classification.
Bellevue, like Seattle, has a business license tax (also called a B&O tax, or gross receipts tax). Because Company B manufactured the furniture in Bellevue, it reports $60,000 on its Bellevue tax return.
At this point Company B owes Seattle $129. And it owes Bellevue $89.76. (The two tax amounts owed are different because Seattle and Bellevue have different tax rates).
Company B then fills out the Seattle multiple activities tax credit (MATC) worksheet. It receives a credit for $89.76, which is equal to the amount it owes to Bellevue for Manufacturing. The credit is subtracted from the $129. As a result, it now owes only $39.24 to Seattle, not $129
Read the code
You can read the Seattle Municipal Code (SMC) for legal details about the multiple activities tax credit.
SMC Chapter 5.45.070 covers the multiple activities tax credit.