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September 25, 2008

Det. No. 07-0209, 27 WTD 145 (2008) - A nonprofit health or social welfare organization appeals a Taxpayer Information and Education (TI&E) letter ruling that an employee of an independent third-party service provider placed on its board of trustees disqualifies it from claiming a business and occupation (B&O) tax deduction under RCW 82.04.4297.  We reverse the TI&E ruling.

Det No. 07-0227, 27 WTD 154 (2008) - A business that pressured-washed and otherwise cleaned hoods, vents, ducts, and fans in restaurant kitchen exhaust systems protests the assessment of retail sales tax on such activity.  We affirm the assessment in full.

Det No. 07-0233, 27 WTD 158 (2008) - A certified court videographer providing video production services appeals a letter ruling concluding those services constituted a retail sale because the business activity at issue was primarily a recording service.  On appeal, the Taxpayer provided additional information about the scope and nature of the services provided, which include production activities, integration of colloquy logs, time code synchronization, and certification for admissibility purposes, which establish that the services rendered involve more than bare recording.  Therefore, we conclude that the service rendered is more appropriately classified as a professional service rather than a retail sale.  Accordingly, we grant the Taxpayer’s petition requesting confirmation that the legal videography services offered constitute a professional service.

Det No. 07-0282, 27 WTD 162 (2008) - A taxpayer who prepares and sells kettle corn in tents at festivals, shows, and sporting events protests an Audit Division of the Department of Revenue assessment of retail sales tax, contending its sales of kettle corn qualify for the retail sales tax exemption for sales of food products for human consumption (RCW 82.08.0293).  We deny the petition.

Det No. 07-0342, 27 WTD 169 (2008) - A Taxpayer building a wastewater treatment plant that will produce water for distribution and compost for sale contests a letter ruling holding that equipment used for these activities is not eligible for the manufacturing machinery and equipment (M&E) exemption set out in RCW 82.08.02565.  With regard to the water treatment and distribution activities, we  conclude that the majority use of the water treatment equipment is not in a qualifying manufacturing operation, and, therefore this equipment is not eligible for the M&E exemption.  Under the evidence presented, we also affirm TI&E’s conclusion that the production of Class B biosolids is part of the treatment process, and those items are a by-product or waste product of sewerage treatment, rather an article produced for sale in a manufacturing operation.  Accordingly, we affirm the letter ruling and deny the Taxpayer’s petition.

Det No. 08-0032, 27 WTD 182 (2008) - A corporation, which provided staff for a hospital in Washington, protests an assessment of business and occupation (B&O) tax on amounts it paid to medical personnel.  Because the corporation was liable other than as agent to pay the staff, we deny the petition.  Further, the corporation could not rely on 1994 audit instructions because its situation had changed.

Det No. 08-0050, 27 WTD 189 (2008) - A company which slaughters cattle and processes beef in Washington protests a denial of refund.  The taxpayer sought to deduct amounts received for breaking or processing perishable beef products.  Because the taxpayer did not own the beef (and sell it at wholesale), the taxpayer did not qualify for the deduction.  Petition denied.

Det No. 08-0067E 27 WTD 194 (2008) - Taxpayer appeals the additional retailing business and occupation and retail sales tax assessed on sales of custom background reports used to screen employee applicants.  The Audit Division assessed the tax concluding that Taxpayer sold “credit bureau services” and that retail sales occurred in Washington.  We conclude that Taxpayer’s income is subject to the service and other activities B&O tax.  Taxpayer is not providing “credit bureau services” because its reports are not provided for the customer to determine the creditworthiness of the applicant.













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