Tax Court ruling leads Barrett (NASDAQ: BBSI) to book charges

Rhea-AI Filing Summary

Barrett Business Services, Inc. reported that the United States Tax Court granted the IRS’s motion for partial summary judgment and denied the company’s motion regarding wage-based tax credits, including the Work Opportunity Tax Credit and Empowerment Zone Employment Credit, for tax years 2017 through 2020.

Because of this opinion, the company expects to record approximately $8.6 million of additional tax expense and approximately $3.4 million of related interest in the first quarter of 2026, covering tax years 2017–2022. The company does not plan to record penalties, is evaluating appeal options, and does not expect any effect on current operations or client services.

Insights

Tax and accounting analyst

Tax Court ruling triggers one-time charges but no operational impact.

The United States Tax Court opinion against several wage-based tax credit claims means Barrett Business Services expects about $8.6 million in additional tax expense plus $3.4 million in interest, recorded in the first quarter of 2026.

These charges relate to tax years 2017–2022 and appear as a discrete hit to earnings rather than an ongoing cost. The company does not intend to accrue penalties and states that current operations and services to clients are unaffected, while it evaluates potential appeal options.

8-K Event Classification

Item 8.01 — Other Events

1 item

Item 8.01 Other Events Other

Voluntary disclosure of events the company deems important to shareholders but not covered by other items.

Key Figures

Additional tax expense: approximately $8.6 million Related interest expense: approximately $3.4 million Tax years in dispute: 2017–2020 +1 more

4 metrics

Additional tax expense approximately $8.6 million Expected charge in first fiscal quarter of 2026

Related interest expense approximately $3.4 million Expected charge in first fiscal quarter of 2026

Tax years in dispute 2017–2020 Years covered directly by the Tax Court opinion

Remaining exposure years 2021–2022 Additional years tied to wage-based tax credit exposure

Key Terms

partial summary judgment, Work Opportunity Tax Credit, Empowerment Zone Employment Credit, United States Tax Court, +1 more

5 terms

partial summary judgment regulatory

"issued an opinion granting the Internal Revenue Service’s motion for partial summary judgment"

Work Opportunity Tax Credit financial

"claims for wage-based tax credits, including the Work Opportunity Tax Credit"

A work opportunity tax credit is a government tax incentive that lets employers reduce their federal tax bill when they hire people from certain groups that face barriers to employment (for example, veterans, long-term unemployed, or people receiving public assistance). For investors, it matters because these credits lower a company’s effective hiring costs and can improve short‑term cash flow and profitability—think of it like a per‑hire coupon that makes hiring cheaper and can influence labor and growth decisions.

Empowerment Zone Employment Credit financial

"including the Work Opportunity Tax Credit and the Empowerment Zone Employment Credit"

United States Tax Court regulatory

"On March 30, 2026, the United States Tax Court issued an opinion"

Internal Revenue Service regulatory

"granting the Internal Revenue Service’s motion for partial summary judgment"

The Internal Revenue Service is the U.S. federal agency that administers and enforces tax laws, collects taxes, issues refunds, and provides official guidance on tax rules. For investors, its actions are important because tax assessments, audits, rule changes or interpretations can change a company’s after-tax profits, cash flow and legal risk—similar to how a referee’s calls and rulebook affect the outcome in a game.

Understanding 8-K Material Events →

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 30, 2026

BARRETT BUSINESS SERVICES, INC.

(Exact name of Registrant as Specified in Its Charter)

Maryland			0-21886	52-0812977
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
8100 NE Parkway Drive Suite 200
Vancouver, Washington				98662
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s Telephone Number, Including Area Code: (360) 828-0700

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.01 per share		BBSI		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 8.01. Other Events.

On March 30, 2026, the United States Tax Court issued an opinion granting the Internal Revenue Service’s motion for partial summary judgment and denying the Company’s motion for partial summary judgment in Barrett Business Services, Inc. v. Commissioner of Internal Revenue with respect to the Company’s claims for wage-based tax credits, including the Work Opportunity Tax Credit and the Empowerment Zone Employment Credit, for tax years 2017 through 2020. The ruling did not determine the amounts of any tax deficiency, interest or penalties.

As a result of the Court’s opinion, the Company expects to record charges of approximately $8.6 million of additional tax expense and approximately $3.4 million of related interest in the first fiscal quarter of 2026 related to the tax years addressed by the opinion, as well as for tax years 2021 and 2022, which represent the remaining years of the Company’s potential exposure related to wage-based tax credits. The Company does not intend to record a charge for penalties, as it believes the matter involves novel legal issues, such that penalties should not apply.

The Company is evaluating the opinion and available legal options, including any rights to appeal. The Company does not expect the ruling to have an effect on its current operations or services provided to clients.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		BARRETT BUSINESS SERVICES, INC. Registrant
Dated: March 31, 2026		By:	/s/ Anthony J. Harris
			Anthony J. Harris Executive Vice President and Chief Financial Officer and Treasurer

FAQ

What did the Tax Court decide regarding BBSI’s wage-based tax credits?

The United States Tax Court granted the IRS’s motion for partial summary judgment and denied Barrett Business Services’ motion. The opinion went against the company’s claims for wage-based tax credits for tax years 2017 through 2020, including Work Opportunity and Empowerment Zone Employment credits.

How much in charges will BBSI record due to the Tax Court ruling?

Barrett Business Services expects to record approximately $8.6 million of additional tax expense and about $3.4 million of related interest. These amounts will be recognized in the first fiscal quarter of 2026 and relate to tax years 2017–2022 covered by the opinion and remaining exposure.

Which tax years are affected by BBSI’s wage-based tax credit dispute?

The Tax Court opinion directly addresses wage-based tax credits for tax years 2017 through 2020. Barrett Business Services also expects related tax and interest charges for tax years 2021 and 2022, which it identifies as the remaining years of potential exposure tied to these credits.

Will Barrett Business Services (BBSI) record any tax penalties?

Barrett Business Services does not intend to record a charge for penalties related to this matter. The company states it believes the case involves novel legal issues, and on that basis it considers that penalties should not apply to its wage-based tax credit positions.

Does the Tax Court ruling affect BBSI’s current operations or client services?

The company states it does not expect the ruling to affect current operations or services provided to clients. The impact is described as financial, through additional tax expense and interest, rather than operational changes in how Barrett Business Services serves its customer base.

Is Barrett Business Services appealing the Tax Court decision on tax credits?

Barrett Business Services is evaluating the Tax Court opinion and its available legal options, including any rights to appeal. The company has not committed to a specific course of action, but acknowledges it is actively considering potential next steps in the legal process.

Filing Exhibits & Attachments

1 document

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