The Washington Court of Appeals held that for local business and occupation (B&O) tax purposes, a securities broker with employees in its Seattle office must source to Seattle the receipts from commissions for services performed by the employees via phone and Internet. Under the city ordinance implementing the state’s required apportionment formula for local B&O tax, service income is sourced to Seattle if: (i) the customer is located in the city; or (ii) the greater proportion of the service income-producing activity is performed in the city than in any other location, based on costs of performance, and the taxpayer is not taxable at the customer location; or (iii) the service income-producing activity is performed within the city, and the taxpayer is not taxable at the customer location. For several years, the city has interpreted “customer location” to be the place where the majority of physical contacts with customers occur. In this case, because the taxpayer’s services were provided by phone and Internet, it had no physical contacts with customers. Therefore, the court held that the taxpayer must source all of its receipts from commissions earned from services provided by employees in its Seattle office to Seattle, where the majority of its income-producing activities occurred, rather than only commissions earned from services provided to customers located in Seattle. Although the court recognized that some of the taxpayer’s activities occurred outside of the Seattle area, it found that the taxpayer failed to provide any documentation or support for its non-Seattle activities. Wedbush Sec., Inc. v. City of Seattle, No. 71932-7-I (Wash. Ct. App. Aug. 10, 2015)