Gross receipts tax services

Address gross receipts tax exposure, compliance obligations and planning opportunities

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Gross receipts taxes are an increasingly important consideration for businesses operating across multiple states and jurisdictions. Unlike income-based taxes, these taxes are imposed on total revenue, which can significantly affect margins, compliance requirements and strategic decisions.

As organizations expand operations, introduce new offerings or acquire businesses, understanding where gross receipts tax exposure exists and how compliance obligations apply becomes critical. RSM helps companies assess taxability, quantify risk and implement practical planning and compliance strategies aligned to their operations.

What is a gross receipts tax?

A gross receipts tax is a tax imposed on a business’s total revenue generally without deductions for expenses.

Gross receipts vs. gross revenue and taxable income

Gross receipts vs. gross revenue: These two terms are often used interchangeably, but gross receipts may include additional inflows such as interest or ancillary income depending on jurisdiction
Gross receipts vs. taxable income: Taxable income reflects profit after deductions, while gross receipts taxes apply before expenses

Gross receipts tax vs. sales tax

Sales tax is generally imposed on the end consumer and collected by the business
Gross receipts tax is imposed directly on the business regardless of profitability or transaction type

How gross receipts tax works

Tax on revenue, not profit: Businesses pay tax even when operating at a loss
Tax pyramiding: The tax may apply at multiple stages of production or service delivery
Variable rates: Rates differ by state, industry and revenue type

Where gross receipts taxes apply

State-level: Certain states impose gross receipts-based taxes in place of or alongside income taxes, like the Washington Business and Occupation Tax or the Oregon Corporate Activity Tax
Local jurisdictions: Counties, cities and municipalities may assess similar taxes on business activity, like the Virginia Business, Professional and Occupational Licenses tax or the San Francisco Gross Receipts Tax
Quasi-gross receipts states: Some states impose gross receipts taxes that look and act similar to a sales tax, with higher rates and similar compliance obligations; these taxes often share some characteristics of both traditional gross receipts taxes and sales taxes (examples include the Hawaii General Excise Tax or the New Mexico Gross Receipts Tax)

What is a gross receipts tax?

A gross receipts tax is a tax imposed on a business’s total revenue generally without deductions for expenses.

Gross receipts vs. gross revenue: These two terms are often used interchangeably, but gross receipts may include additional inflows such as interest or ancillary income depending on jurisdiction
Gross receipts vs. taxable income: Taxable income reflects profit after deductions, while gross receipts taxes apply before expenses

Sales tax is generally imposed on the end consumer and collected by the business
Gross receipts tax is imposed directly on the business regardless of profitability or transaction type

Tax on revenue, not profit: Businesses pay tax even when operating at a loss
Tax pyramiding: The tax may apply at multiple stages of production or service delivery
Variable rates: Rates differ by state, industry and revenue type

State-level: Certain states impose gross receipts-based taxes in place of or alongside income taxes, like the Washington Business and Occupation Tax or the Oregon Corporate Activity Tax
Local jurisdictions: Counties, cities and municipalities may assess similar taxes on business activity, like the Virginia Business, Professional and Occupational Licenses tax or the San Francisco Gross Receipts Tax
Quasi-gross receipts states: Some states impose gross receipts taxes that look and act similar to a sales tax, with higher rates and similar compliance obligations; these taxes often share some characteristics of both traditional gross receipts taxes and sales taxes (examples include the Hawaii General Excise Tax or the New Mexico Gross Receipts Tax)

Why partner with RSM for gross receipts tax services

RSM helps you assess how gross receipts taxes apply to your business, identify multistate exposure and clarify filing obligations to reduce risk.

Our team identifies practical planning opportunities to reduce tax exposure through revenue analysis, structuring and operational alignment.