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July 30, 2013


Det. No. 12-0039R, 32 WTD 139 (2013) A Washington corporation, which provides skydiving services, protests retail sales taxes assessed on its skydiving receipts and DVD sales.  The corporation contends that its charges were for air commerce, preempted by federal law.  Because skydiving is not air commerce, Washington may tax the skydiving charges.  Charges to skydivers holding an A class parachute license and charges for instructional DVDs are retail sales.  Petition denied.
Det. No. 12-0126, 32 WTD 144 (2013) A nightclub appeals an assessment of retail sales tax and retailing business and occupation (B&O) tax on cover charges claiming that the charges should be taxed under the service and other activities B&O tax classification under RCW 82.04.050. Taxpayer also asserts that even if the cover charges are subject to the retail sales tax and retailing B&O tax, only a portion of the cover charge should have been classified as retail.  We deny the petition.
Det. No. 12-0201, 32 WTD 151 (2013) An owner of a restaurant that failed to maintain source records protests Audit’s use of an industry average percentage to determine cash sales and the assessment of retail sales tax.  It contends its records and facts and circumstances reasonably prove its cash sales were less than the industry average percentage.  We conclude the Taxpayer failed to maintain adequate records of cash sales, Audit’s use of an industry average percentage was correct, and deny the petition.
Det. No. 12-0260, 32 WTD 156 (2013) A retailer protests the denial of a bad debt deduction for sales tax paid that it received from private label credit card sales.  The customers purchased retail goods and services from the taxpayer using banks’ credit cards, but failed to pay the banks the amounts due on their accounts.  Because the banks held the debt, the taxpayer was not entitled to claim a credit for bad debts on their customer’s purchases using the banks’ credit cards.  Petition denied.
Det No. 12-0305, 32 WTD 163 (2013) A medical equipment provider protests the assessment of retail sales tax on sales of its continuous positive airway pressure machines on the grounds that they are (i) exempt prosthetic devices, or (ii) exempt legend drugs.  The petition is denied in part and granted in part.
Det No. 12-0320, 32 WTD 168 (2013) A county jail health services program appeals a Department of Revenue (Department) letter ruling that the sale of packaging and labels used to package prescribed drugs to be dispensed to inmates is not exempt from retail sales tax under RCW 82.08.0281.  The taxpayer’s petition is denied.

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