What changed. EHB 2487 rewrote the B&O exemption in RCW 82.04.320 and repealed RCW 82.04.322. DOR says the bill "clarifies that no taxpayer is exempt from business and occupation (B&O) tax simply because they receive payment from an insurance business." Per DOR, "Effective October 2, 2019," the exemption applies to four categories: premium income of an insurer subject to premium tax; premiums and prepayments of a person exempt under RCW 48.14.0201(6); premiums of a legislatively established assigned risk plan where a servicing carrier paid premium tax; and amounts an insurer receives for annuities regulated under chapters 48.23 and 48.24 RCW. The statute says the change "applies both prospectively and retroactively to October 2, 2019."
Who it affects. Businesses that claimed the RCW 82.04.320 or 82.04.322 exemption on income not subject to insurance premiums tax, including businesses that are paid by insurers but did not pay premium tax themselves.
Relief program. DOR offers relief for "taxes owed as early as Oct. 2, 2019, and no later than March 31, 2026." To be eligible, the unreported income must have resulted "from taking the exemption under either RCW 82.04.320 or 82.04.322 (or both) on gross income not subject to insurance premiums tax under chapter 48.14 or 48.15 RCW." Relief is not automatic. DOR says the business "must submit an application ... on or before December 31, 2026," and "Applications received after Dec. 31, 2026, are not eligible." If DOR determines a business qualifies, it must return a signed agreement "within 30 days of your application."
What it does not do. "This program only waives penalties and interest. You must still pay the tax owed." "The evasion, negligence, and tax avoidance penalties are not eligible for relief via this program." Late or incomplete payments bring "additional interest and late-payment penalties."
What to do. Review past B&O returns for amounts reported as exempt under RCW 82.04.320 or 82.04.322. If any may not fit the four categories, read DOR's program page and apply through its online application before the deadline. (DOR's notice refers to the Audit Division. The program page says requests "must be submitted through our online application.")
Not settled here: DOR has not published rules for the restated exemption yet. The statute directs DOR to adopt rules and guidance. Whether particular income fits a category depends on the facts.
Primary sources
- DOR special notice, "Clarifications to taxes on insurers and payback program" (Issue Date September 01, 2026)
- DOR, EHB 2487 Penalty and Interest Relief Program
- EHB 2487, ch. 263, Laws of 2026
General information, not individualized tax advice. Results depend on the facts and applicable law. Washington Tax Desk is independent of Washington DOR.