WAC 193-01

Denturists

Private Mailing Business Tax Guide

"Tax year," "taxable year."

Tax upon extractors.

Tax on manufacturers.

Tax on manufacturers and processors of various foods and by-products -- Research and development organizations -- Travel agents -- Certain international activities -- Stevedoring and associated activities -- Low-level waste disposers -- Insurance agents, brokers, and solicitors--Hospitals -- Commercial airplane activities -- Timber product activities -- Canned salmon processors.

Deductions -- Nontaxable business.

Credit -- Persons taxable on multiple activities.

Value of products, how determined.

Deficient tax or penalty payments -- Notice -- Interest -- Limitations

Records to be preserved -- Examination -- Estoppel to question assessment -- Unified business identifier account number records.

Multiple activities tax credits.

Eligibility of taxes for multiple activities tax credits (MATC)

Effective Date for Claiming MATC Credits - This document explains that the State Supreme Court held that the effective date for claiming all MATC credits is June 1, 1987. This information is no longer needed. Cancelled by ETA 2003 -23s 6/30/00.

ELIGIBILITY OF TAXES FOR MULTIPLE ACTIVITIES TAX CREDIT (MATC) Revised 2/2/09 See ETA 3085.2009

RCW 82.04.440 -- B&O TAX -- INTERSTATE BUSINESSES -- TWO-WAY CREDITS -- INTERIM PERIOD -- RETROACTIVITY.The 1987 credit law applies retroactively to the period between June 23, 1987, the date Tyler Pipe was issued, and August 11th, 1987, the date the Legislature passed the credit law.American National Can Corp. v. Department of Rev., 114 Wn.2d 236 (1990), cert. den. 59 U.S.L.W. 3250 ( 1990).

RCW 82.04.440 -- MULTIPLE ACTIVITIES EXEMPTION -- INVALIDATION -- TYLER PIPE -- PROSPECTIVE APPLICATION.Tyler Pipe Indus., Inc. v. Department of Rev., 483 U.S. 232, 107 S.Ct. 2810, 97 L.Ed. 2d 199 (1987), which invalidated the multiple activities exemption of Washington's B&O tax, applies prospectively only.No distinction exists between taxpayers who paid their taxes before the decision and sought refunds, taxpayers who had outstanding but unpaid assessments before the decision, and taxpayers who had outstanding tax liabilities but had not yet been assessed.

LANDOWNER -- SALES OF LOGS -- B&O TAX -- EXTRACTOR -- AMOUNT SUBJECT TO TAX.When a landowner retains ownership of timber until it is scaled, the landowner is the extractor and the wholesaler of the timber, and subject to B&O tax on its gross proceeds for the timber.It is allowed a credit for the lesser of the wholesaling or extracting tax under Rule 19301.Accord:ETB 541.

MATC -- B&O TAX -- TYLER PIPE -- CONSTITUTIONALITY.Taxpayers may not get a refund or a reduction of an assessment resulting from the Tyler Pipe decision.

B&O TAX -- MULTIPLE ACTIVITIES TAX CREDITS -- QUALIFYING TAXES -- ALASKA FISHERIES BUSINESS TAX.The Alaska Fisheries Business Tax qualifies for the Multiple Activities Tax Credits provided in RCW 82.04.440.

B&O TAXES -- INVALIDATION -- TYLER PIPE -- RETROACTIVITY -- POST DECISION ASSESSMENTS.Tyler Pipe Indus., Inc. v. Department of Rev., 483 U.S. 232, 107 S.Ct. 2810, 97 L.Ed.

B&O TAX -- MATC -- ALASKA OIL PRODUCTION TAX -- GROSS RECEIPTS TAX.MATC granted for amounts paid to the state of Alaska for oil production taxes to the extent the amounts due were computed and paid through the percentage-of-value method.

B&O TAX -- MATC -- ALASKA OIL PRODUCTION TAX -- GROSS RECEIPTS TAX.MATC granted for amounts paid to the state of Alaska for oil production taxes to the extent the amounts due were computed and paid through the percentage-of-value method even though the applicable tax rate was computed using an economic limit factor.

B&O TAXES -- TYLER PIPE -- RELIEF AVAILABLE -- NATIONAL CAN II.The holding by the Washington State Supreme Court in "National Can II" has not been effectively overruled by the United States Supreme Court in its recent line of cases.The relief available for Tyler Pipe-type litigants remains limited to prospective application and the credit fix.

B&O TAX -- MANUFACTURING AND SELLING IN WASHINGTON -- MATC.A Washington taxpayer manufacturing and selling the same in Washington will be liable for both the manufacturing and appropriate selling tax (retailing or wholesaling), with an entitlement for the Multiple Activities Tax Credit (MATC).

THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 01-006, 20 WTD 124 (1999)

MATC -- DEMONSTRATORS -- INTERVENING USE BETWEEN MANUFACTURE AND SALE.When a taxpayer manufactures a product for ultimate sale with intervening use as a sales demonstrator, it may avail itself of the RCW 82.04.440 multiple activities tax exemption/credit (as applicable).

MULTIPLE ACTIVITIES. The B&O tax is imposed on the privilege of engaging in virtually all business activities in Washington.

RCW 82.04.440:MULTIPLE ACTIVITIES TAX CREDIT -- EXTRACTING -- WHOLESALING.A taxpayer may take a credit against his wholesaling tax obligations to the extent that he has paid extracting taxes with respect to the extracting of products sold in this state.A taxpayer may not take a credit against his wholesaling tax obligations to the extent that he has paid extracting for hire taxes with respect to the extracting of products sold in this state.

RULE 19401; RCW 82.04.460, RCW 82.04.067: SERVICE AND OTHER ACTIVITIES B&O TAX – ENGINEERING AND REPAIR SERVICES – APPORTIONMENT. When a taxpayer cannot provide evidence that it paid business activities taxes outside of Washington, and fails to provide evidence that it has substantial nexus outside of Washington, the taxpayer is not entitled to apportion its income outside of Washington.

RULE 19401; RULE 19405; RCW 82.04.067: B&O TAX – SUBSTANTIAL NEXUS – PAYROLL THRESHOLD. During each calendar year at issue, Taxpayer paid more than the threshold amount in payroll expenses to its one Washington employee, and, therefore, created substantial nexus with Washington during those years.

B&O TAX -- MULTIPLE ACTIVITIES TAX CREDIT -- NATIONAL CAN.Effective June 1, 1987, Washington manufacturers selling outside this state may take a credit against their manufacturing B&O tax for "gross receipts taxes" paid to another state on the same products being taxed in Washington.

B&O TAX -- MULTIPLE ACTIVITIES EXEMPTION -- TYLER PIPE.The multiple activities exemption, RCW 82.04.440, which the Court declared unconstitutional in Tyler Pipe Industries, Inc. v. Department of Revenue, is not at issue when an out-of-state seller's only business activity is making wholesale sales.

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- INVALIDATION. The RCW 82.04.440 multiple activities exemption was ruled unconstitutional in Tyler Pipe Industries, Inc. v. Washington Department of Revenue, 483 U.S.___, 97 L.Ed.2d 199, 107 S. Ct. 2810 (1987).The issue of remedy was remanded to the Washington Supreme Court.

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- REFUNDS -- RETROACTIVITY. The Washington Supreme Court in National Can Corporation v. Department of Revenue, and Tyler Pipe Industries, Inc. v. Department ofRevenue, 109 Wn.2d 878 (1988) held that the U.S.

B&O TAX -- CREDIT -- MULTIPLE ACTIVITIES -- OUT-OF-STATE MANUFACTURING -- IN-STATE SALES. Credit amount claimed must be based on manufacturing gross receipts taxes paid in another jurisdiction on those products actually sold in Washington.The amount of the credit shall not exceed the Washington B&O tax liability with respect to the sale of those products, and the credit cannot be applied against the use tax due.

B&O TAX -- CREDIT -- MULTIPLE ACTIVITIES -- NATIONAL CAN.Effective June 1, 1987, Washington manufacturers selling outside this state may take a credit against their manufacturing B&O tax for "gross receipts taxes" paid to another state on the same products being taxed in Washington.

B&O -- CREDITS -- MULTIPLE ACTIVITIES. For periods beginning on or after June 23, 1987, taxpayers who are engaged in multiple business activities are entitled to take credits for similar taxes paid. F.I.D.

B&O -- EXEMPTION -- MULTIPLE ACTIVITIES -- INVALIDITY -- REFUND. For periods beginning before June 23, 1987, no refunds are granted. Tyler Pipe Indus. v. Washington Dep't of Rev., 483 U.S. ___, 97 L.Ed.2d 199, 107 S.Ct. 2810 (1987) (National Can). F.I.D.

B&O TAX -- CREDITS (MATC) -- MULTIPLE ACTIVITIES -- GROSS RECEIPT TAXES -- DEFINITION -- EXCLUSION OF INCOME TAX -- CONSTITUTIONALITY -- ADMINISTRATIVE POWER. The Department of Revenue is without power to declare a statute unconstitutional.Bare v. Gorton, 84 Wn.2d 380, 526 P.2d 379 (1974).

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- CONSTITUTIONALITY --TAXES DUE.The U.S. Supreme Court did not strike down the manufacturing tax or the selling tax; rather, it struck down the multiple activities exemption. Thus, after the decision on June 23, 1987, all taxes remained due and the remedy is to use the multiple activities tax credits (MATC).Tyler Pipe Indust., Inc. v. Washington Dept of Revenue, 483 U.S. ___, 97 L.Ed.2d 199, 107 S. Ct. 2810 (1987).

B&O TAX -- CREDIT -- MULTIPLE ACTIVITIES (MATC) -- CANADIAN TAX -- "SALES" -- DETERMINATION.

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- INVALIDATION -- POST-DECISION ASSESSMENTS.Assessments issued after the U.S.Supreme Court decision in Tyler Pipe on June 23, 1987 for taxes attributable to reporting periods prior to that time, are lawfully collectible by the state.National Can and Ashland cited.

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- INVALIDATION. The RCW 82.04.440 multiple activities exemption was ruled unconstitutional in Tyler Pipe Industries, Inc. v. Washington Department of Revenue, 483 U.S. ___, 97 L.Ed.2d 199, 107 S.Ct. 2810 (1987). The issue of remedy was remanded to the Washington Supreme Court.

B&O TAX -- EXEMPTION MULTIPLE ACTIVITIES -- NATIONAL CAN -- REFUNDS.Refunds of business and occupation tax paid prior to June 23, 1987 will not be granted if the basis for the refund request is Tyler Pipe v. Washington,483 U.S. ___, 97 L. Ed 2d 199, 107 S. Ct. 2810 (1987).

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- INVALIDATION -- PROSPECTIVE APPLICATION -- POST-NATIONAL CAN/TYLER PIPE ASSESSMENTS.Taxes for earlier reporting periods which were not assessed until after the multiple activities exemption was determined to be unconstitutional by the U.S. Supreme Court on June 23, 1987 still fall within the prospective application of Tyler Pipe and can be collected by the state. Affirming Det. No. 88-232.

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- INVALIDATION -- PROSPECTIVE APPLICATION -- POST-DECISION ASSESSMENTS. Taxes for earlier reporting periods which were not assessed until after the multiple activities exemption was determined to be unconstitutional by the U.S. Supreme Court on June 23, 1987 still fall within the prospective application of Tyler Pipe and can be collected by the state.

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- INVALIDATION. The RCW 82.04.440 multiple activities exemption was ruled unconstitutional in Tyler Pipe Industries, Inc. v. Washington Department of Revenue, 483 U.S.___, 97 L.Ed.2d 199, 107 S.Ct.2810 (1987). The issue of remedy was remanded to the Washington Supreme Court.

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- REFUNDS -- RETROACTIVITY. The Washington Supreme Court in Tyler Pipe Industries, Inc. v. Department of Revenue, 109 Wn.2d878, cert. denied, 56 U.S.L.W. 3828 (1988) held that the U.S. Supreme Court decision in Tyler Pipe, which invalidated the multiple activities exemption of the B&O tax, applied prospectively only, and that RCW 82.04.4286 and 82.32.060 did not require the State to refund taxes paid before the filing of a court decision invalidating a tax statute if the decision applies prospectively only.

MULTIPLE ACTIVITIES EXEMPTION -- INVALIDATION -- PROSPECTIVE APPLICATION -- POST-DECISION ASSESSMENTS. Assessments issued after the United States Supreme Court decision in Tyler Pipe on June 23, 1987, for taxes attributable to reporting periods prior to that time, are lawfully collectible by the state.Armco Steel v. Department of Treasury, Corporation Franchise Fee Division, 358 N.W.2d 839 (Mich. 1984);Snow's MobileHomes, Inc. v. Morgan 80 Wn.2d 283 (1972); State ex.rel.Matteson v. Luecke, 260 N.W. 206 (Minn 1935); Perk v. City of Euclid, 244 N.E. 2d 475 (Ohio, 1969).

B&O TAX -- EXEMPTION -- MULTIPLE ACTIVITIES -- UNCONSTITUTIONAL TAX -- PROSPECTIVE APPLICATION -- ASSESSMENTS ISSUED BUT NOT COLLECTED.The Washington Supreme Court in National Can Corporation v. Department of Revenue, and Tyler PipeIndustries, Inc. v. Department of Revenue, 109 Wn. 2d 878, cert. denied, 56 U.S. L. W. 3828, (1988), held that the U.S. Supreme Court decision in Tyler Pipe, which invalidated the multiple activities exemption of the B&O tax, applied to prospective taxes only.

MATC -- GROSS RECEIPTS TAX -- DEFINITION -- TAX SEPARATELY STATED.Because as a matter of custom, the New Mexico gross receipts tax is separately stated from the sales price, it does not meet the definition of a "Gross receipts tax" under the RCW 82.04.440. [Accord:ETB 543.04.19301]

Business and Occupation Tax -- Interstate Business -- Commerce Clause -- Apportionment -- Burden of Taxation.The increased cost of doing business attributable to state taxation of interstate business is not a violation of the commerce clause unless the tax fails to meet the 4-part Complete Auto Transit (430 U.S. 274) test.

Business and Occupation Tax -- Interstate Business -- Due Process -- Test.Due process requires that a local tax on interstate business have a minimal connection between the businesses and the state and that there be a rational relationship between the income taxed and the intrastate values of the businesses.

Business and Occupation Tax -- Interstate Business -- Commerce Clause -- Test.A state tax on interstate business is valid under the commerce clause of the United States Constitution when it meets the 4-part test of Complete Auto Transit, v. Brady, U.S. 274:(1) it must tax only those interstate activities having a sufficient connection to the state; (2) it must be fairly apportioned to the taxpayer's activities within the state; (3) it must not discriminate against interstate commerce; and (4) it must be fairly related to the services provided by the state.

Business and Occupation Tax -- Interstate Business -- Two-way Credits -- Validity. The scheme of 2-way credits available for interstate businesses under the 1987 amendment to the business and occupation tax (RCW 82.04.440) meets the requirements of the commerce, equal protection, and due process clauses.

Business and Occupation Tax -- Interstate Business -- Commerce Clause -- Discrimination -- Facial Discrimination.A taxing statute is facially discriminatory only if intrastate businesses benefit from a credit not available to interstate businesses.

Business and Occupation Tax -- Interstate Business -- Two-Way Credits -- Retroactivity.The scheme of 2-way credits established in the 1987 amendment to the business and occupation tax (RCW 82.04.440) applies retroactively. Such application does not violatethe separation of powers doctrine and does not convert the amendment into unconstitutional special legislation.

Business and Occupation Tax -- Interstate Business -- Commerce Clause -- Discrimination -- Internal Consistency.For purposes of analyzing the impact of a local tax on interstate commerce, a taxing scheme is internally consistent when imposition of an identical tax by every jurisdiction would not impermissibly burden interstate commerce.

Constitutional Law -- Equal Protection Classes of Taxpayers.A tax classification having a legitimate purpose to which the tax is rationally related meets equal protection standards.

Business and Occupation Tax -- Interstate Business -- Offsetting Credits.The Constitution does not require states to grant credits for dissimilar taxes.

Business and Occupation Tax -- Wholesalers -- Inter- and Intrastate Manufacturers -- Unequal Privileges. The privilege of wholesaling a product in this jurisdiction cannot be taxed by another jurisdiction and, under RCW 82.04, a business pays only one tax for that privilege.Whether the same business pays an additional tax for the privilege of manufacturing its product is irrelevant to the constitutionality of the wholesale tax.

Business and Occupation Tax -- Interstate Business -- Commerce Clause -- Legislative Intent -- Effect.The legislature's motive in enacting a tax statute is irrelevant to a determination of whether the statute is unconstitutional under the commerce clause of the United States Constitution.