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WAC 159 Consignees, bailees, factors, agents and auctioneers.
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
       
WAC: 458-20-159   03/15/1983 Consignees, bailees, factors, agents and auctioneers.
    04/27/2007 Consignees, bailees, factors, agents and auctioneers.
         
       
RCW:      
  82.04.080   1961 "Gross income of the business."
  82.04.250   1993 Tax on retailers.
  82.04.270   1994 Tax on wholesalers, distributors.
  82.04.290   1995 Tax on selected business services, financial businesses, or other business or service activities.
  82.04.480   1975 Sales in own name--Sales as agent.
  82.08.010   1985 Definitions.
  82.08.020   1992 Tax imposed--Retail sales--Retail car rental.
  82.08.040   1975 Consignee, factor, bailee, auctioneer deemed seller.
  82.08.050   1993 Buyer to pay, seller to collect tax--Statement of tax--Exception--Penalties.
  82.14.030   1989 Sales and use taxes authorized--Additional taxes authorized--Maximum rates.
  82.32.070   1999 Records to be preserved--Examination-Estoppel to question assessment--Unified business identifier account number records.
         
       
ETA: 3046.2009 2/2/09 Tax liability of charter boat owners and charter agencies - reporting instructions
  144.04.159 8/19/66 DISTRIBUTOR FOR OUT-OF-STATE MANUFACTURER--AGENT OR SELLER Cancelled effective June 29, 2007. There is not need for this document as the tax reporting responsibilities of such arrangements are sufficiently addressed in WAC 458-20-159.
  248.04.159/190 9/16/66 RENTALS OF FEDERAL GOVERNMENT EMPLOYEES RECEIVING REIMBURSEMENT AND SALES TAX EXEMPTION. The issues discussed in this document are already addressed in WAC 458-20-190 (Sales to and by the United States, its departments, institutions and instrumentalities--Sales to foreign governments.) Cancelled by ETA 2003 06/30/99
  249.04.159 9/16/66 INTERSTATE SALES AND CONSIGNOR AS AGENT OF SELLER - This document is no longer needed.  It simply explains that under a specific set of circumstances, a taxpayer substantiated its claim as the seller by obtaining affidavits of agency and “other evidence” that consignors on bills of lading were in fact agents for the taxpayer.  Cancelled by ETA 2003 -2s  6/30/00.
  325.08.159 10/20/67 TAX LIABILITY OF CHARTER BOAT OWNERS AND CHARTER AGENCIES--REPORTING INSTRUCTIONS Revised 2/2/09 See ETA 3046.2009
  386.04.159 6/19/70 CONSIGNEE OR SELLER Cancelled effective June 29, 2007. This document is not needed. WAC 458-20-159 adequately addresses this issue and also discusses record keeping requirements, which are not addressed in this document.
         
       
INDUSTRY GUIDES:      
         
         
SPECIAL NOTICES:      
Subject Title Reference:      
Consignment Sales     04/09/2003 Tax Reporting for Consignment Sales
         
       
DIRECTIVE: None      
         
       
RPM: None      
         
       
WTD: 29 WTD 70 09-0181 12/15/10 RULE 111, RULE 126, RULE 159; RCW 82.04.070; ETA 3134.2009: B&O TAX - FUEL SALE - FRANCHISE.  Payments to fuel franchisee (taxpayer) that charged its customers for fuel pumped from other franchises, purchased the fuel from the other franchisees, and resold it to its customers, were not excludable as advances or reimbursements.    
  1 WTD 75 86-229   RETAILING BUSINESS & OCCUPATION TAX; AGENCY; BROKER; CONSIGNMENT; USED CAR SALES; COMMISSIONS; ETB 386.04.159.Taxpayer, an automobile dealer, is selling used cars on consignment where agreement between taxpayer and vehicle owners clearly stated taxpayer was only a broker; taxpayer had no obligation to pay for vehicles if purchaser not found; title to the vehicles was never in taxpayer's name; and taxpayer's books and records showed sales were made for owner/seller.The fact that the taxpayer's commission was difference between purchase price and agreed net cash amount to be paid to owner, and that sales invoices showed taxpayer as seller, did not make the contracts between the vehicle owners and the taxpayer ones of sale rather than of consignment. See 7 WTD 205 BTA 85-183.
  1 WTD 337 86-289   SERVICE B&O - SERVICE CHARGES - ADVANCEMENTS/REIMBURSEMENTS.Taxpayer liable only for Service B&O tax on amounts charged as override or service charge if it meets the requirements of Rules 111 and 159.
  2 WTD 391 87-76   BROKERS AND AGENTS -- SEAFOOD INDUSTRY.A taxpayer claiming that it is an agent must show that a contract or agreement exists which "clearly establishes" a principal and agent relationship.How a taxpayer reports income on its federal tax returns does not, by itself, establish such a relationship.All requirements of Rule 159 must be met.
  3 WTD 205 87-184   USE TAX -- CONSUMABLE ITEMS -- CONSUMER -- ALLEGED USE OF TAXPAYER'S ID NUMBER BY ANOTHER.Where taxpayer's records indicated it had purchased items for a vessel which it had leased from another business entity owned by an officer of the taxpayer, and the lease agreement stated the taxpayer was responsible for such purchases, the taxpayer owed use tax on the purchases on which it had not paid retail sales tax.The fact that the taxpayer produced statements from the former officer of the corporation stating the taxpayer should not be liable for the taxes and that he should not have used the taxpayer's number on the re-sale certificates was not controlling.
  5 WTD 245 87-184A   USE TAX -- RESALE CERTIFICATES -- SUBSTANCE OVER FORM.In determining tax liabilities under the law the Department of Revenue elevates substance over form but does not ignore the formal agreements, documents, and transactions which reveal the substantive benefits derived.One of the primary substantive effects of lease of tangible property to a registered business for its business use (bare-boat chartering) is the legal capacity of the business to purchase materials for resale through resale certificates, sans sales 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.
  6 WTD 19 88-219   PRINCIPAL AND AGENT -- PURCHASING AGENT -- RULE REQUIREMENT.In order for a taxpayer to be recognized as an agent in making purchases for a principal, the requirements of Rule 159 must be met.There must be an agreement which clearly establishes a principal-agent relationship and certain record-keeping requirements must be met.
  6 WTD 19 88-219   PRINCIPAL AND AGENT -- FEDERAL INCOME TAX REPORTING.The fact that a taxpayer is considered an agent for federal income tax purposes does not establish agency under Rule 159.Determination No. 87-76, 2 WTD 391 (1987).
  6 WTD 19 88-219   This determination has been overruled in part by Det. No. 88-219A, 10 WTD 264 (1991).
  6 WTD 409 88-367   B&O TAX -- DOING BUSINESS -- PRESUMPTION -- AGRICULTURAL COMMISSION AGENTS.Persons conducting business as agents or on a consignment basis are presumed to be conducting business as sellers of tangible personal property unless they clearly segregate commission sales in their books and records.Where no such records evidencing segregation are produced, taxpayer is taxable under the wholesaling or retailing B&O classification.
  6 WTD 439 88-377   B&O TAX -- GROSS INCOME -- AGENT -- BILLING FEE.A personal service corporation which had an agreement with an affiliate, a partnership, to do the billing for itself and the partnership and retain a portion of the amount collected on behalf of the partnership as a billing fee is liable for Service B&O on the amount received for its charges for services rendered and for the billing fees retained from the partnership's charges.The corporation is not liable for Service B&O on amounts collected for the partnership.
  7 WTD 101 89-2   FISH TAX -- AGENCY -- REQUIREMENTS OF.An alleged agency relationship between fisherpersons and a buyer of their catches will not be recognized if the record-keeping requirements of Rule 159 are not met.
  8 WTD 7 89-286   B&O TAX -- AGENT -- COMMISSION SALES -- CONSIGNMENT -- TEXTBOOK DEPOSITORY.A textbook depository which stores publisher's books, then sells them on behalf of the publisher, is an agent and taxable at the service business and occupation tax rate on commission income rather than at the retail business and occupation tax rate on gross book sales.
  8 WTD 325 113 Wn2d 561   PRINCIPAL AND AGENT - RELATIONSHIP - DETERMINATION - IMPLICATION.The existence of an agency relationship can be implied from the parties' actions manifesting consent that one of the parties is to act under the control of the other.
  8 WTD 325 113 Wn2d 561   PRINCIPAL AND AGENT - RELATIONSHIP - DETERMINATION - CONTRARY CONTRACTUAL TERM EFFECT.A contractual provision that expressly disavows the creation of an agency relationship, while relevant, is not dispositive in determining the nature of the relationship.
  9 WTD 249 90-118   B&O TAX - SALE V. "BROKERED LEASE" - MSO.Absent an agency relationship, a taxpayer listed on a vehicle's Manufacturers Statement of Origin (MSO) will be deemed its owner, and a further transfer (by way of either MSO or title) will be deemed a sale, even if such intermediate ownership in a "brokered lease" transaction is effected only as an accommodation to other parties in order to accomplish necessary paperwork such as registration and titling. . . .
  10 WTD 13 90-219   AGENT OR BROKER -- PRINCIPAL -- FISH BROKER/AGENT -- CLAIM OF PRINCIPAL -- PROOF.The taxability of seafood principals as actual sellers is determined on the basis of the evidence available to the Department.Where the only evidence provided for the audit period is the written agreements of the parties, those agreements will control.
  10 WTD 264 88-219A   PRINCIPAL AND AGENT -- PURCHASING AGENT -- RULE REQUIREMENTS.Where a taxpayer provides agreements showing that all inventory for resale purchased was as agent for specific subsidiaries, and where the books and records of the taxpayer show that at all time such relationships were maintained and documented, a taxpayer's claim of agency for such purchases will be granted.Reverses Det. 88-219,
6 WTD 19 (1988), on this issue.
  10 WTD 264 88-219A   PRINCIPAL AND AGENT -- PURCHASING AGENT -- BULK PURCHASES. When taxpayer purchases supplies in bulk, maintains an inventory of such supplies, and fills orders for supplies as the subsidiaries request them, a claim of agency will not be recognized.
  10 WTD 381 91-011   SERVICE B&O TAX -- SALESCOMMISSIONS -- SELLING AGENT -- DIRECT SELLER'SREPRESENTATIVE.Merely because Rule 246 explains that a "direct seller's representative" is subject to the Service B&O tax on commissions earned does not mean if a taxpayer is a selling agent who does not qualify as a direct seller's representative under the rule's definition that the taxpayer's sales commissions are exempt from the Service B&O tax. The taxpayer's earned sales commissions are Service B&O taxable under Rule 159. Accord: 8 WTD 7 (1989), Det. 89-286.
  11 WTD 197 91-155   B&O TAX -- GROSS INCOME -- AGENT -- MANAGEMENT SERVICES. A taxpayer corporation which has agreements with affiliated physicians/independent contractors to provide management services, is liable for Service B&O on amounts it receives, without any deduction for costs, taxes, or other expenses, whether the income is paid directly by the doctors or retained from their accounts receivables. The corporation is not liable for Service B&O on amounts collected for the physicians from patients if the money is collected only as agent for the doctors. Accord: Det. 88-377, 6 WTD 439.
  11 WTD 389 91-210   SERVICE B&O TAX -- GROSS INCOME -- DEDUCTIONS -- AGENT.Taxpayer acting as an agent who solicits subscription renewals on behalf of magazines is liable for Service B&O tax on amounts it receives from subscribers and retains as its commissions and on amounts, if any, it receives directly from publishers for its services. The taxpayer does not owe the tax on amounts collected and remitted to the publishers where the taxpayer is not primarily or secondarily liable for subscription payments to the publishers other than as agent and where it is not entitled to retain the full amount of receipts.Accord: Det. No. 88-377, 6 WTD 439 (1988), Det. No. 91-155, 11 WTD 197 (1991).
  12 WTD 109 92-057   B&O TAX -- INTERSTATE -- TIME AND PLACE OF SALE -- CONSIGNMENT SALES.An out-of-state taxpayer who consigns inventory to an out-of-state distributor's warehouse pending subsequent sales by that distributor in in its own name to retail outlets is deemed to be making wholesale sales to that distributor.If the warehouse is located outside the state of Washington, then the sale takes place outside the state of Washington.
  12 WTD 227 92-190   BUSINESS AND OCCUPATION TAX -- RETAILING AND WHOLESALING.A taxpayer who sells wood products in its own name is taxable as a seller of such products for purposes of wholesaling business and occupation tax, regardless of a contract designating it as an "agent".
  12 WTD 263 BTA 41700   B&O TAX -- GROSS INCOME -- AGENCY.A medical partnership is not liable for service B&O tax on funds which it collected from patients and paid to an affiliated laboratory for services rendered because it was collecting the money as an agent only for the laboratory due to an agreement which absolved the partnership of liability for bills it did not collect. There is no requirement that such an agreement must be in writing.
  12 WTD 403 92-232   B&O TAX -- PURCHASING AGENT -- BOOKS AND RECORDS -- DOCUMENTATION. Taxpayer's claim of agency allowed where the taxpayer presented written agency agreements, executed purchase orders identifying the member as the "Buyer," and retained other appropriate records to establish a principal/agent relationship.
  17 WTD 170 97-228   SALES TAX -- DEDUCTION -- TRADE-IN PROPERTY -- CONSIGNMENT SALES.Where a dealer holds a boat on consignment for sale, sells that boat, and accepts a trade-in boat at the time of the sale for its own account, the sales tax deduction for trade-ins will be disallowed.In order for that deduction to apply, the party selling the boat and the party accepting the trade-in must be the same.THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 99-005R, 19 WTD 223 (2000)
  17 WTD 231 98-004   B&O TAX -- AGENCY -- AUTHORITY FOR.In order for one party to be considered the agent of another, there must be an agreement between the two that one will act on behalf of the other.
  18 WTD 260 Withdrawn See ETA 3133.2012 98-101 10/31/2003

The taxpayer in this determination is engaged in the business of escrow and closing of vessel sale transactions. Standard practice had been that upon closing of a transaction involving a vessel dealer the taxpayer would remit the sales tax collected on the sale to the selling vessel dealer. The taxpayer requested a ruling that it be permitted to collect and pay sales or use tax directly to the Department of Licensing when the vessel dealer was acting as an agent or broker for a vessel owner. This would relieve the vessel dealer of the duty to remit the collected retail sales tax to the Department of Revenue. The determination granted the taxpayer's request on the basis that there was no legal bar to the taxpayer collecting and remitting sales tax on behalf of dealers, as their agent.

This determination has been cancelled because the conclusion is incorrect. The Department of Licensing is by law only authorized to collect use tax on behalf of the Department of Revenue. Thus, in a transaction not involving a vessel dealer and where the owner/seller is not registered with the Department, the taxpayer as agent of the buyer may remit use tax to the Department of Licensing at the time of vessel registration. There is no statutory authority for remitting collected retail sales tax to the Department of Licensing. Consistent with RCW 82.08.040 and WAC 458-20-159 (Consignees, bailees, factors, agents and auctioneers), the selling vessel dealer as agent of the vessel owner is responsible for collecting and remitting retail sales tax to the Department of Revenue.

  18 WTD 295 98-192   B&O TAX - FRUIT SALES - DEALER - BROKER - COMMISSION MERCHANT.The Washington receipts of a fruit wholesaler licensed as a dealer under the Commission Merchants' Law, who does not have any agreement establishing a principal-agent relationship, will be taxed under the wholesaling B&O tax classification.
  19 WTD 212 98-224   B&O TAX -- PROCESSING FOR HIRE OR MANUFACTURING -- AGENCY SOFTWARE -- FULFILLMENT CENTER. Taxpayer's claim of agency on sales of computer software to customers was not recognized where Taxpayer failed to establish all of the requirements of Rule 159.
  19 WTD 223 99-005R   SALES TAX - SELLING PRICE -- EXCLUSION -- TRADE-IN PROPERTY OF LIKE KIND - CONSIGNMENT SALES.A consignee may exclude from the retail sales tax the value of a vehicle traded-in by a purchaser of a consigned vehicle provided the traded-in vehicle was delivered as consideration for the purchase of the consigned vehicle.In other words, the seller must actually accept ownership of the trade-in property and reduce the price of the purchased property at the time of sale by the value of the trade-in property.Because the definition of "seller" for purposes of the retail sales tax includes an agent or consignee, a consignee can qualify as a seller for retail sales tax purposes.OVERRULING DET. NO. 97-228, 17 WTD 170 (1980).
  19 WTD 355 99-220   B&O TAX -- MULTI-LEVEL MARKETING NETWORK --COMMISSIONS ON SALES BY DOWN-STREAM DISTRIBUTORS -- GROSS INCOME.A representative of a multi-level marketing company who receives commissions on sales by down-stream distributors, is taxable on the commission income of distributors in the same chain under him, when he recruits, trains, and motivates distributors with the expectation that they in turn will recruit, train, and motivate additional levels of distributors downstream.The commissions on sales by down-stream distributors are gross income of the taxpayer's business.
  19 WTD 477 99-300   B&O TAX - SALES OF GOODS VS. COMMISSION INCOME - AGENT - IMPORTER.To determine whether an importer takes title to goods it purchases and sells as the owner or acts as an agent receiving commission income, documents of sale to the U.S. customers offer the best evidence.Actual payment for the goods by the customers indicate exempt purchases from the owner, while commission payments for the services of an agent would be taxable.Letters of credit conditioned upon providing title indicate the party required to provide title has title.
  19 WTD 477 99-300   B&O TAX - SALES OF GOODS VS. COMMISSION INCOME - AGENT - IMPORTER.The commissions paid customers to an agent are taxed under the service and other activities classification.Because title to the goods did not flow to or through the agent, the income received by the agent was not for goods, but was commission income taxable under the service and other activities classification.Invoices, contracts, and payment records are evidence of the nature of the transaction.
  19 WTD 799 99-112   B&O TAX - SALES TAX - CONSIGNMENT SALES - ANTIQUE MALL.The operator of an antique mall who makes sales on behalf of her or his tenants will be deemed as making consignment sales when it is established that there is an agency agreement to that effect and the agent's records show on whose behalf the sales are made, in what amount, and the commissions derived by the operator.
  20 WTD 1 99-223   COMMISSION INCOME - MULTI-LEVEL MARKETERS.All commission income of a multi-level marketer must be included in its gross income for B&O tax purposes.
  20 WTD 84 00-106   WHOLESALING B&O TAX -- SALES OF SPRAY TO FARMERS -- FARMER DEFINED.Sales of spray materials to farmers for the purpose of producing for sale any agricultural product are classified as wholesale sales.However, if a person uses agricultural products as ingredients in a manufacturing process, the person does not qualify as a farmer.A person will qualify as a farmer, provided:1) the person grows or produces an agricultural product on the person's own land or land in which the person has a present right of possession; and 2) the person does not use such products as ingredients in a manufacturing process (however packing such products is not considered to be manufacturing).
  20 WTD 240 99-218R   B&O TAX -- PROSPECTIVE RULING.When the Department is asked to rule prospectively on whether a taxpayer's receipts will qualify for pass-through treatment under Rule 111, it relies upon the facts stated by the taxpayer and any written agreements.It cannot base its ruling on the taxpayer's representation that the parties' actual relationships will be quite different from those set out in the written agreements.
  20 WTD 240 99-218R   B&O TAX -- RHO -- TAXPAYER'S INABILITY TO PERSONALLY RENDER THE SERVICE -- CONTRACTOR-SUBCONTRACTOR.Merely showing that the taxpayer lacked the technical skills to personally perform the services for which it received payment does not establish the second Rho element (the payments involve services the taxpayer did not or could not render), when the taxpayer contracted to provide the services, and the contract clearly contemplated that it would provide them by hiring or subcontracting personnel with the necessary expertise.
  20 WTD 240 99-218R   B&O TAX - RHO - AGENCY -- THIRD-PARTY PAYEE'S AGREEMENT ABSOLVING TAXPAYER OF LIABILITY.The third Rule 111 element set out in Rho requires that the taxpayer have received and paid the funds as agent of its client.The agency relationship is created as a result of conduct between the taxpayer and its client.The taxpayer cannot make itself the agent of its client in procuring a service from a third party merely by getting the third party to agree to absolve the taxpayer of liability for paying the third party if the taxpayer is not paid by its client.
  22 WTD 84 02-0102   B&O TAX - GROSS INCOME -- DEDUCTION -- BOAT BROKERS - COMMISSIONS -- CO-BROKERING.A listing broker will be taxed on the entire commission earned on a co-brokered sale unless the boat owner and listing broker have previously agreed in a written listing agreement that a split commission should be paid directly to the individual co-brokers.
  22 WTD 84 02-0102   RULE 221; RCW 82.12.040: USE TAX - COLLECTION OF -- BOAT SALES -- BROKERS.Rule 221 and RCW 82.12.040 require that a person that receives compensation for acting as an independent selling agent for unregistered principals making sales of tangible personal property are required to collect and remit use tax on those sales.
  24 WTD 341 03-0250ER   AGENTS AND PRINCIPALS - PROOF OF AGENCY.A taxpayer cannot claim it bought tangible personal property as an agent where the purchase documents show the taxpayer bought the property in the taxpayer's name only without any indication that it made the purchase as an agent.
  24 WTD 413 05-0045   B&O TAX - AGENT -- TOBACCO PRODUCTS.A person who claims to be acting merely as agent in making purchases of tobacco products will have such claim recognized, for B&O tax purposes, only when the contract or agreement clearly establishes the relationship of principle and agent and the person's books and records comply with requirements of WAC 458-20-159.
  24 WTD 413 05-0045   TOBACCO PRODUCTS TAX - DISTRIBUTOR.The Tobacco Products Tax is imposed only once, upon the "distributor," as defined in RCW 82.26.010.A person was liable for tax as the distributor of the tobacco products when the person was engaged in the business of selling tobacco products in this state, was the first person who handled for sale tobacco products that were within this state but upon which tax had not been imposed, and was not acting merely as an agent in purchasing and receiving payment for the tobacco products.
  24 WTD 413 05-0045   TOBACCO PRODUCTS TAX - CLAIM OF AGENCY.The burden is on the taxpayer to establish the existence of an agency relationship.The Department will not recognize a claim that a person was acting merely as the agent of another in purchasing and receiving payment for tobacco products when the taxpayer provides no evidence that he or she was acting under the control of the purported principal.
  24 WTD 413 05-0045   TOBACCO PRODUCTS TAX - CLAIM OF AGENCY.It would be incompatible with the recordkeeping requirements of Chapter 82.26 RCW to recognize a claim that a person was acting merely as an agent in purchasing and receiving payment for tobacco products, when the person did not maintain any records documenting the name and address of the alleged principal or the dates and quantities of purchases allegedly made for the principal.
  26 WTD 21 05-0304   USE TAX - EXEMPTION -- FERTILIZER & SPRAY MATERIALS -- BAILOR OF SEED -- FARMER - PRESENT RIGHT OF POSSESSION -- PERMISSION TO ENTER LAND.A bailor of seed did not have the required "possessory interest" in land to be considered a "farmer" eligible for the RCW 82.04.050(8)(b) fertilizer and spray material exemption, even though the grower gave the bailor permission to enter the land in order to help grow the crop.
       
OTHER: