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July 24, 2008

Det. No. 05-0325, 27 WTD 99 (2008) - Taxpayers, who provide electronic insurance claims processing services, petition for correction of assessment.  The Audit Division concluded that the taxpayers provide network telephone services subject to retail sales tax and retailing B&O tax and issued an assessment accordingly.  We conclude that the taxpayers provided information services subject to service B&O tax; however, separate charges for telephone lines, canned software, and other items are properly classified under the retail classification and subject to retail sales tax.  We remand the assessment to the Audit Division to allocate the taxpayers’ income between retailing and service and to apportion the taxpayers’ service income.

Det No. 07-0120, 27 WTD 109 (2008) - Nationwide retailer that purchased prewritten computer software under a multiple use license arrangement seeks refund of sales tax paid on software programs received in Washington but loaded onto desktop computers for use at its stores located outside this state.  We find that the retail sale occurred in Washington and that there is no provision in Washington law that permits proration or apportionment of the taxable sale price in the case of “multiple points of use” property.  Taxpayer’s petition for refund is denied.

Det No. 07-0150, 27 WTD 114 (2008) - A medical doctor whose business activities in Washington during the audit period included operating clinics providing care to patients with sleep disorders, including obstructive sleep apnea, protests the assessment of retail sales tax on the sales of continuous positive airway pressure machines (CPAP) and bi-level positive airway pressure machines (Bi-PAP) and related accessories (including, for example, nasal devices headgears, chinstraps, tubing, filters, filters, face masks, humidifiers, humidifier heaters), as well as oral appliances.  We conclude that CPAP and Bi-PAP machines are generally subject to retail sales tax as “durable medical equipment.”  However, certain CPAP machines that are worn on the patient’s body and oral appliances qualify as “prosthetic devices and are exempt from retail sales tax.  Petition granted in part.

07-0324E, 27 WTD 119 (2008) - Contractor that collected and remitted retail sales tax on the construction of a water treatment facility it built seeks a refund of a portion of the tax remitted.  The Contractor maintains that much of the construction qualifies for the sales tax exemption set out in RCW 82.08.02565 for machinery and equipment purchased by a “manufacturer” for use directly in a “manufacturing operation” and that based on its contract with the purchaser it is the proper party to obtain the refund.  We deny the refund request on the grounds that the purchaser of the water treatment facility is not a “manufacturer” engaged in a “manufacturing operations” and, therefore, does not qualify for the exemption.

07-0354, 27 WTD 131 (2008) - The seller of a one-third interest in real property requests correction of a Department ruling that she owed real estate excise tax on one-third the appraised market value of the property plus one-third the amount of the outstanding mortgage on the property.  We modify the ruling.

 

 

 

 

 

 

 

 

 

 

 

 


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