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WAC 108

Selling-price-Credit card service fees, foreign currency, discounts, patronage dividends

WAC: 458-20-108   12/15/1987 Returned goods, allowances, cash discounts.
  458-20-108 07/21/2015 Selling price-Credit card service fees, foreign currency, discounts, patronage dividends. Originally discussed returned goods, allowances and cash discounts. The Department has amended Rule 108 to include information on credit card service fees, purchases with foreign currency, use of coupons and discount vouchers, patronage dividends, and payments to dealers for “make-ready” services previously included in ETAs 3008, 3041, 3060, 3081, 3129, and 3147.  These ETAs will be canceled when the rule is adopted and effective. Discussion of discounts is now arranged by what is and is not a bona fide discount;

WAC 458-20-278 Returned goods, defective goods – Motor vehicle lemon law. The Department has moved discussions on returned goods, defective goods and the motor vehicle lemon law to this new rule, and added examples.
RCW: 82.04.080   1961 "Gross income of the business."
  82.04.160   1961 "Cash discount."
  82.08.010   1985 Definitions.
  82.16.050   1989 Deductions in computing tax.
  82.04.4283   1980 Deductions--Cash discount taken by purchaser.
  82.04.4286   1980 Deductions--Nontaxable business.
ETA 3008.2009 09/14/2015 (Cancelled) Credit Cards Service Charges on Transactions The issues addressed in this ETA have been incorporated into revised WAC 458-20-108, which became effective on August 21, 2015.
  3060.2009 09/14/2015 (Cancelled) Coupons Used I Retail Sales The issues addressed in this ETA have been incorporated into revised WAC 458-20-108, which became effective on August 21, 2015.
  3081.2009 09/14/2015 (Cancelled) Effect of Manufacturers' Rebates on the Measure of Tax Liability The issues addressed in this ETA have been incorporated into revised WAC 458-20-108, which became effective on August 21, 2015.
  3147.2009 09/14/2015 (Cancelled) Make-ready services performed by dealers  The issues addressed in this ETA have been incorporated into revised WAC 458-20-108, which became effective on August 21, 2015.
  3191.2014 09/30/2014 Rewards Programs-Retail Sales Tax

This ETA explains the application of “sales price” to selected types of rewards program awards for retail sales tax purposes under RCW 82.08.010.  The ETA provides guidance and examples clarifying: (1) when awards must be included in the sales price of a customer’s purchase, or (2) when the awards represent a discount excluded from sales price. 
  3173.2013 01/07/2013 Distributor Discounts/Allowances to Grocery Stores WAC 458-20-108 explains that a bona fide discount may be deducted from gross proceeds of sales for determining tax liability. The Department has issued ETA 3173 to clarify for taxpayers whether a discount is a bona fide discount. The Department’s long standing position has been that a discount is bona fide if it is not in exchange for a service or benefit. The Department has also issued ETA 3173 to provide examples of the types of documentation and activities that would qualify as bona fide discounts.
  3008.2009 2/2/09 Service charges on transactions financed through credit cards
3041.2009 2/2/09 Patronage dividends of cooperative associations
3147.2009 2/2/09 Make-ready services performed by dealers  
3060.2009 2/2/09 Coupons used in retail sales
3081.2009 2/2/09 Effect of manufacturer's rebates on the measure of tax liability
34.04.108 3/1/93 MAKE-READY SERVICES PERFORMED BY DEALERS Revised 2/2/09. See ETA 3147.2009
408.08.108 7/24/70 COUPONS USED IN RETAIL SALES Revised 2/2/09. See ETA 3060.2009
Discount Vouchers 08/23/2012 Discount Vouchers
DIRECTIVE: 8108.1   03/15/1984 Merchandise Returns with Restocking Charge - 3/15/84
RPM: None      
WTD: 3 WTD 281 87-214   BUSINESS AND OCCUPATION TAX (B&O) -- DEDUCTION -- CASH DISCOUNTS. Cash discounts given buyers by sellers may be deducted from the measure of the latter's business and occupation tax.
  4 WTD 217 87-338   RETAIL SALES TAX -- CASH DISCOUNTS. In order to take a deduction from retail sales tax for cash discounts given, a seller must refund (to the buyer) that portion of the tax attributable to the discount.
  5 WTD 355 88-194   USE TAX -- TANGIBLE PERSONAL PROPERTY --  DONATED ITEMS -- COUPONS -- DISCOUNTS. "Coupons" that can be redeemed for a free item are not a "discount."  The value of the item actually given for the coupon is a donation and its value is subject to use tax.
  5 WTD 379 88-202   B&O TAX -- SERVICE -- DEDUCTIONS -- DISCOUNTS -- SALES COMMISSIONS. Cash discounts from the selling price of tangible personal property may not be deducted from sales commissions taxed under the Service B&O category when calculating the measure of the sales agent's tax.
  5 WTD 379 88-202   B&O TAX -- SERVICE -- EXCLUSION -- SALES COMMISSIONS --DISCOUNTS. Where a sales agent contracts with its principal for a full commission but does not receive such a commission because it allows a discount on the sale of its merchandise, only the actual or partial commission received by the agent will be subjected to Service B&O tax.
  7 WTD 189 89-107   SALES TAX -- SELLING PRICE -- AUTOMOBILE REBATE. A manufacturer's automobile rebate endorsed by a customer in favor of a dealer, as part of the consideration for the purchase of an automobile, is part of the selling price of the auto and is subject to retail sales tax.
  8 WTD 52-1 89-329   B&O TAX -- DEDUCTION -- REPOSSESSIONS. A manufacturer who resells its goods after they have been repossessed from its dealer by a lender may not deduct the difference between the list price of the goods and the resale price from the measure of its B&O tax.
  8 WTD 52-1 89-329   This Determination has been overruled by    Det. No. 91-263, 11 WTD 263 (1991).
  11 WTD 5 83-180   DISCOUNTS -- ADVERTISING ALLOWANCES. The deduction for a bona fide discount is not available if the purchase is required to provide any service to the seller in return for the reduction.
  11 WTD 95 91-077   CHARGES FOR CROSSMATCHING--LABORATORY OPERATORS--SERVICE ACTIVITIES. When a hospital returns crossmatched blood to taxpayer, the charge made to the hospital for the crossmatching is subject to the service B&O tax.
  11 WTD 263 91-263   B&O TAX -- DISCOUNTS, ALLOWANCES, OR REDUCTION IN PURCHASE PRICE -- FLOORING ALLOWANCE.   A surcharge made by the manufacturer to its dealer on the original purchase invoice of an automobile, that is later refunded to the dealer, based on the flooring interest rate obtained by the dealer, is an adjustment to the original purchase price of the automobile. Therefore, credits are not subject to Service B&O tax when received by the dealer. NOTE: THIS DETERMINATION OVERRULES DET. NO. 89-329, 8 WTD 52-1, (1989).
  11 WTD 389 91-210   SERVICE B&O TAX -- GROSS INCOME -- REFUNDS -- DEDUCTIONS. Amounts taxpayer magazine subscription service refunds to subscribers due to overpayment are deductible if overpayments were reported as gross income. Overpayments are not gross income because they are not consideration for services rendered. Cancellation refunds in full or part are deductible because sales were not finally completed.
  12 WTD 589 93-069   RETAIL SALES TAX -- DISCOUNTS. The measure of retail sales tax will not be imputed based on vendor price reductions for cellular phones improperly labeled as "rebates" when the retail vendor receives a bona fide commission from the cellular phone company for enrolling the phone purchaser for retail cellular phone service.
  18 WTD 220 98-183   DISCOUNTS - REBATES - MANUFACTURERS. Rebates paid by product manufacturers to grocers for shelf space to cover the grocers' costs of stocking the products were not deductible as discounts, but taxable as income.
  18 WTD 387 98-172E   B&O TAX -- GROSS INCOME -- GROCERY -- SLOTTING -- ALLOWANCE -- DISCOUNT. Slotting fees and other payments to grocers for services are subject to service B&O tax as gross income to grocers. Discounts from the selling price or rebates paid to the grocer directly from the party selling the goods to the grocer may be deducted provided the grocer does not perform any service for the payment.   
  18 WTD 387 98-172E   B&O TAX -- EQUAL PROTECTION CLAUSE. Businesses that structure their transactions differently may be taxed differently. The Department will not disregard the form of the transaction structured by the taxpayer.
  18 WTD 387 98-172E   B&O TAX -- OPPRESSIVE. B&O Tax based on a difference in the method of operation is not oppressive.
  19 WTD 771 98-202   RETAIL SALES TAX -- MEASURE - DISCOUNTS - PRODUCTIVITY/VOLUME -- COMMISSIONS. Productivity discounts based on the number of reservations booked on a reservation system and used to offset monthly equipment, software and communication charges are not true discounts and cannot be deducted from the measure of the tax.
  21 WTD 180 01-185   B&O TAX -- LOANS -- CASH DISCOUNTS. Discounts given by a Taxpayer on loans it sells to investors, to increase the attractiveness of the investment's yield, are not allowable cash discounts.
  23 WTD 238 03-0045   RETAIL SALES TAX - RETURNED GOODS. In order to qualify as a returned good for which sales tax could be refunded, the seller has to accept the return of the property sold and refund to the taxpayer (buyer) the entire purchase price. Sales tax may not be refunded where the seller does not accept the return of the property but instead brokers the sale of the property to a third party.
  26 WTD 256 05-0142   RCW 82.04.080, RCW 82.04.090: SERVICE B&O TAX -- ADVERTISING DISPLAY SERVICE -- BONA FIDE DISCOUNT -- NET CHARGE. Service B&O tax on advertising display service charges billed on a net basis is measured by the amount billed and legally due.
  33 WTD 204 13-0198R 06/30/2014 RCW 82.04.080(1); RULE 108(5): DISCOUNT – PUBLIC/NONPROFIT HOSPITAL B&O TAX – WHETHER TAXPAYER’S EMPLOYEES RECEIVED A BONA FIDE DISCOUNT FOR SERVICES UNDER THE EMPLOYEE MEDICAL PLAN. Taxpayer’s employees do not receive a bona fide discount on medical services under the employee medical plan. Taxpayer never reduces the amount it bills employees for services under the plan. Therefore, Taxpayer must report B&O tax on the full amount of funds it receives from the plan for providing medical services to employees.
  34 WTD 160 14-0125 03/27/2015 ETA 3060.2009; RULE 108; RCW 82.08.010: RETAIL SALES TAX – DISCOUNTS – MANUFACTURER’S COUPONS. A taxpayer accepted coupons issued by manufacturers of certain goods the taxpayer sold at retail. The taxpayer does not dispute that it redeemed the manufacturer coupons at face value. Retail sales tax is properly assessed on the amount of manufacturer’s discounts that the taxpayer excluded from the sales price of the goods.
  34 WTD 257 14-0159 05/29/2015 RULE 108; RCW 82.08.010: RETAILING B&O TAX – CASH AND TRADE DISCOUNT DEDUCTION – DISCOUNT VOUCHERS. A taxpayer may not take a cash and trade discount for any business expenses associated with offering discount vouchers.
  34 WTD 443 (2015) 13-0050 10/30/2015 RCW 82.04.080(1); RCW 82.04.4283; RCW 82.04.160; Rule 108(5) – BONA FIDE DISCOUNTS.  When the taxpayer provides to its customer an amount off of the wholesale price of the products in exchange for the customer to advertise the taxpayer’s products in specific orders and specific quantity, the amount is not a bona fide discount.  The amount represents the taxpayer’s cost of doing business and the taxpayer may not exclude the amount from the measure of its gross income.