The rental or lease income received by a taxicab owner from an independent driver for use of the taxicab is subject to retailing B&O tax.
The taxicab owner must also collect retail sales tax from the driver on that amount and remit it to the Department of Revenue (Department). This is true regardless of how (under the rental agreement) the rental payment is determined. Under some agreements, the rental payment is based on fares received by the driver. Under other agreements, the rental payment is based on the amount of time (for example, hours or days) the taxicab is used by the driver.
Also, the taxicab owner must charge the driver the Motor Vehicle Sales/ Lease Tax of .3% on the rental amount. (See RCW 82.08.020(3).)
Taxicab owners may be prohibited from requiring a driver to pay owner expenses under local codes. However, the retail sales tax that is due on a taxicab rental/lease is a driver obligation as it is imposed on the taxicab driver (lessee) but collected and remitted to the Department by the taxicab owner. The Department requires the driver to pay retail sales tax on the lease amount and the Department requires the owner to collect this money and submit it to the Department.