WAC 224

Proper Classification for Mere Cleaning of Fish Repealed 6/30/2000 - This document provides incorrect tax-reporting information.It explains that the service and other activities B&O tax applies to the cleaning of fish.RCW 82.04.2403 provides that the cleaning of fish is a manufacturing activity, though exempt of B&O tax.

Tour Operators Repealed 6/30/2000 - The information contained in this directive is incorrect. It explains that tour operators are generally taxable under the service classification. RCW 82.04.260 was amended in 1996 to impose the travel agency tax classification to tour operators

Beauticians Guide

A Podiatric Physician’s Guide to Washington Excise Taxes

Veterinarian Guide

Internet-based Businesses cancelled

Bail Bond Agency Guide to Excise Taxes

Horse Industry

Interior Decorators, Designers, and Consultants

Hospitals

Insurance Industry

"Sale at retail," "retail sale."

Tax on international investment management services or other business or service activities.

Tax on selected business services, financial businesses, or other business or service activities.

Business within and without state - Apportionment.

Sales in own name-Sales agent.

Tax imposed-Retail sales-Retail car rental.

Sales and use taxes authorized-Additional taxes authorized-maximum rates.

Service and other business activities.

LAYAWAY CHARGES Revised 2/2/09 See ETA 3031.2009

Layaway charges

"ART WORK" DISTINGUISHED Cancelled Effective 03/28/08. This document explains that sketches, designs, layouts, and other art work produced by artists for advertising agencies, printers, television broadcasters, and organizations planning advertising and publicity efforts are visual representations of the artists’ ideas and are invariably duplicated by the client in producing an end product for the client’s customers. The document also noted that the Code of Fair Practice for Commercial Artists provides that transfers of such work are only of reproduction rights.

Taxability of oil and chemical spill cleanup

Sales of drawings and plans

Apportionment of Income by Stockbrokers and Security Houses ETA 3161.2011 Apportionment of Income by Stockbrokers and Security Houses. This Excise Tax Advisory (ETA) explains how stockbrokers and security houses should apportion their income for B&O tax purposes. It discusses when and under what circumstances single factor receipts formula, cost apportionment, and the “60/40 convention” methods of apportionment apply.

AIR TAXI SERVICE, CHARTER FLIGHTS AND STUDENT TRAINING FEES. Much of the content of this document is either incorrect (e.g., tax-reporting instructions for air ambulance services and sightseeing), or addressed in other rules (e.g., WAC 458-20-179 and WAC 458-20-209). Cancelled by ETA 2004-4s 09/06/01 a new ETA 2006.16.179 was adopted to provide updated information on this area.

APPLICATION OF BUSINESS AND OCCUPATION TAX TO ROYALTY INCOME EARNED THROUGH GRANT OF PATENT PRIVILEGES - Cancelled effective 1/30/06

TAXABILITY OF OIL AND CHEMICAL SPILL CLEANUP Revised 2/2/09 See ETA 3088.2009

TAXABILITY OF INCOME FROM DAYCARE MONITORING This information was incorporated into the 1999 revision of WAC 458-20-167 (Educational institutions, school districts, student organizations, and private schools). Cancelled by ETA 2003 -0 6/30/99.

FOREIGN SALES CORPORATIONS Cancelled 1/29/09. This ETA addresses the taxation of foreign sales corporations (FSCs). FSCs were a status under the Internal Revenue Code and are no longer authorized. This ETA is obsolete.

SALES OF DRAWINGS AND PLANS Revised 2/2/09 See ETA 3094.2009

Sales and Use Tax Exemption to Farmers and Veterinarians for Animal Pharmaceuticals

Qualified Food Cooperatives

WashingtonFilmWorks Contributors B&O Tax Credit

Registered Out-of-state Businesses Currently not Reporting Income from Service Activities - New Apportionment for Certain Income

Use Tax Obligation of Architects

B&O Tax Deduction for Amounts Received for Providing Child Welfare Services

New Law Limits Property Management B&O Tax Exemption

Non-manufacturer Aerospace Tax Incentives

B&O Tax Credit Reinstated for Contributors to Washington Filmworks

Use Tax Reminder for Architects

Taxability Information for Providing Landscape Maintenance, Ecological Restoration, and Wetland Banking Activities

New Law Expands Property Management B&O Tax Exemption

New "Economic Nexus" in Washington State May Impact "Foreign Corporations"

Chemical Dependency Service Providers-Tax Change

B&O Tax Credit Reinstated for Contributors to Washington Filmworks

Use Tax Obligation of Accountants

Aircraft Excise Tax and Property Tax Exemption on Aircraft Used by Nonprofits as Air Ambulance

B&O Tax Deduction for Amounts Received for Providing Child Welfare Services

New "Economic Nexus" in Washington State May Impact Franchisors

Environmental Remedial Action Sunsets

Tax Attorneys and CPAs New "Economic Nexus" in Washington State May Impact Your Clients

Use Tax Reminder for Accountants

Director Fees are Subject to the Business and Occupation (B&O) Tax

B&O Tax Deduction for Amounts Received for Providing Mental Health Services

New Apportionment Method

Sales and Use Tax Exemption for Animal Phamaceuticals Sold to Farmers and Veterinarians (Update)

Paging Services Subject to Retail Sales Tax

B&O Tax Reporting Requirement Continues After Business Activity Stops (Trailing Nexus)

Temporary B&O Tax Rate Increase Small Business Credit Increase Active Non-Reporting Change

Use Tax Obligations of Providers of Business Services

Questions and Answers about the International Service Districts Business and Occupation Tax Credit

Economic Nexus in Washington State Applies to Securities Brokers/Dealers and Fund Managers

Businesses Engaged in Scientific Research and Development

Non-manufacturer Aerospace Tax Incentives

Use Tax Reminder for Veterinarians

Combined Excise Tax Return Classification Reporting Change

New Law Limits Property Management B&O Tax Exemption

WashingtonFilmWorks Contributors B&O Tax Credit - Modification

USE TAX - OUT-OF-STATE USE - INSTATE REPAIR -INSTATE STORAGE. Washington taxpayer operating amusement devices in both Oregon and Washington does not incur use tax liability in respect to Oregon-based amusement devices merely by sending them here for repair or storage if they are later returned to Oregon without actual use in Washington.

BUSINESS & OCCUPATION TAX -- SERVICES --AFFILIATES -- EMPLOYEES -- COMMON PAYMASTERS. Persons who carry employees on their payroll and perform all reporting of such employees to federal and state regulatory agencies are liable for Service business tax upon any amounts recovered from providing such employees for use by affiliated companies. Accord: Valley Cement Construction, Inc. v. Department of Revenue, BTADocket 71-70 (1973), affirmed.Court of Appeals, Division 1, No. 3302-1 (1976), unpublished.

SERVICE B&O -- COLLECTION SERVICES. Taxpayer's income received for coordinating and/or facilitation sales of credit reports and for providing collection services is subject to Service B&O tax.

SERVICE B&O TAX -- "SAFE HARBOR" ASSETS --APPORTIONMENT OF SALES -- SITUS. Amounts derived from outright sales of tax credits and benefits provided by ERTA 1981 are not from any services rendered and are not apportionable between states.Such sales of intangible rights are fully taxable by the state where such rights have their situs.

SERVICE B&O--MEDICAL CENTER.A medical center is not a separate taxable business if it has no employees and performs no management or other services. Use of the medical center name on a checking account for accounting purposes only does not give rise to separate business tax liability.

BUSINESS AND OCCUPATION TAX (SERVICE) -BUSINESS - ADULT FAMILY HOME PROVIDERS. Licensed Adult Family Home providers (Chapter 74.15 RCW) are engaging in the business of providing services which are taxable under RCW 82.04.290 measured by "gross income of the business" as defined by RCW 82.04.080.

SERVICE B&O TAX -- TRAVEL AGENT COMMISSIONS -- TOUR OPERATORS -- TOUR PACKAGES.Travel agents and tour operators provide identifiably different services for their clients/customers and are consequently liable for different business taxes.

SINCE THE ISSUANCE OF THIS DETERMINATION, THE DEPARTMENT HAS RESOLVED THE TAX CLASSIFICATION BY PROMULGATION OF WAC 458-20-258.RULE 258 NOW DESCRIBES THE CORRECT TAX CLASSIFICATION FOR SUCH ACTIVITIES.

SERVICE B&O TAX - AIRLINE CANCELLATION FEES - 49 USC 1513 - FEDERAL PREEMPTION. Airline cancellation fees are gross receipts derived from the sale of air transportation. As such, the state cannot subject such receipts to tax because of 49 USC 1513, in which the federal government has explicitly exempted such receipts from state taxation. Aloha Airlines, Inc., v. Director of Taxation of Hawaii, 464 U.S. 7 (1983).

SALES TAX -- USE TAX -- DENTAL PRACTICE -- PATIENT FILES -- PATIENT RECORDS --SALE OF.The sale of patient files and records by one dentist to another as part of the purchase of a dental practice is not a purchase of tangible personal property subject to sales or use tax.(Det. 90-139 overruled.)

SERVICE AND OTHER - INCOME OF NONPROFIT ORGANIZATION - BRING IN NEW BUSINESS -ARRANGING CONTRACTS BETWEEN A BUYER AND SELLER. A nonprofit organization created to promote business in a certain area, is subject to tax under the service and other category on amounts it receives from public agencies for bringing new business to the area. It is also subject to the tax on the amounts it receives for bringing together a buyer and potential supplier.

B&O TAX -GROSS INCOME-NO DEDUCTIONS FOR COSTS AND EXPENSES. Each physician/independent contractor must report 100% of his gross income for the medical services he renders under Service B&O tax without any deduction for his costs, taxes or other expenses, including those he pays to the company which provides him management, accounting and administrative services. Accord: Det. 88-377, 6 WTD 439 (1988).

B&O TAX - GROSS INCOME-AGENT - MANAGEMENT SERVICES. A taxpayer corporation which has agreements with affiliated physicians/independent contractors to provide management services is liable for Service B&O on amounts it receives, without any deduction for cost, taxes, or other expenses, whether the income is paid directly by the doctors or retained from their accounts receivables. The corporation is not liable for Service B&O on amounts collected for the physicians from patients if the money is collected only as agent for the doctors. Accord: Det. 88-377, 6WTD 439 (1988).

SALES TAX - USE TAX - CUSTOM FILMS OR VIDEOS. The production of a customized training film or video is a service activity as opposed to a retail sale.

TAXI CABS -- INDEPENDENT DRIVERS/LESSEES -- ADMINISTRATIVE AND DISPATCH SERVICES -- SERVICE B&O -- RETAILING B&O -- SALES TAX.Dispatching and administrative services provided to independent taxi drivers/lesseesfor a fee are not incidental to urban transportation business because the taxi company/dispatcher itself is not hauling for hire in these instances.Rather, income from dispatching when it is an optional service to the drivers and separately charged is taxable under Service B&O.By contrast, when dispatching is required as part of the car rental, such income is taxable under

SERVICE B&O TAX -- GROSS INCOME -- DEDUCTIONS --AGENT. Taxpayer acting as an agent who solicits subscription renewals on behalf of magazines is liable for Service B&O tax on amounts it receives from subscribers and retains as its commissions and on amounts, if any, it receives directly from publishers for its services.

SERVICE B&O TAX - GROSS INCOME - REFUNDS -DEDUCTIONS. Amounts taxpayer magazine subscription service refunds to subscribers due to overpayment are deductible if overpayments were reported as gross income. Overpayments are not gross income because they are not consideration for services rendered. Cancellation refunds in full or part are deductible because sales were not finally completed.

OIL & CHEMICAL SPILL CLEANUP. Receipts from site remediation contracts for removing contaminants from soil and water are taxable under the Service business and occupation tax classification. ETB 553.04.172/224.

B&O TAX - SERVICES-ERISA PREEMPTION OF STATE LAW. The Employee Retirement Income Security Act broadly preempts any state laws deemed to "relate" to qualified benefit plans. The activity of contributing to or receiving benefits from plans is not subject to Washington's B&O tax. However, income received by a plan administrator for its management activity is subject to service B&O tax.

SERVICE B&O TAX - TIME AND MATERIALS CONTRACT - PRIMARY BUSINESS ACTIVITY - BASIC ORDERING AGREEMENT. A basic ordering agreement that outlined the general scope and subject matter of the work to be done in addition to listing the standardized terms and conditions of work, but which contemplated that the actual tasks and compensation would be determined at a later time, did not constitute a lump sum contract.

B&O TAX -- SERVICE AND OTHER -- COMMISSION INCOME.Dealership that receives fees from banks for referrals is taxable on the fees as commission income under the Service and Other classification of the B&O tax.

B&O TAX -- SERVICE -- WRITERS AND SERVICE PROVIDERS. Royalties received for the sale of books represent income from engaging in a business activity. A corporation which is formed by writers to employ them, own the copyrights from their works, receive the royalties, engage in product management and render promotional services is subject to service B&O tax on the gross income of the business.

CHARGES FOR CROSSMATCHING - LABORATORY OPERATORS - SERVICE ACTIVITIES. When a hospital returns crossmatched blood to taxpayer, the charge made to the hospital for the crossmatching is subject to the service B&O tax.

B&O TAX -- RETAIL SALES TAX -- SERVICE AND OTHER CLASSIFICATION -- SALES OF "COUPON BOOKS" AND ENTERTAINMENT "MEMBERSHIPS." Where a transaction consists of elements of both a service and a retail sale, the taxability is determined by the "true object" of the transaction, i.e., what the buyer was objectively seeking in exchange for the amount paid to the seller. When the activity does not fall under any specific tax classification, it falls under the catch-all "service and other" classification of the B&O tax.

GROSS INCOME -- COURT COSTS.Recovery of costs awarded in court action are not subject to tax, because they are a type of indemnity not included within the definition of gross income of the business.

SERVICE PROVIDERS -- USE TAX. Taxpayer engaged in personneltraining business held not to be the seller of tangible personal property when the charge for taking the taxpayer's course of instruction is measured by the number course books purchased by customers. Course books used in training by customer employees held to be an extension of the training service provided by the taxpayer. The taxpayer is liable forretail sales tax on the printing cost of the course books based on the location of the printing activity.Accord: WAC 458-20-224 & RCW 82.04.190 (2).

INTANGIBLE PROPERTY -- COPYRIGHT --PHOTOGRAPHERS -- SERVICE B&O TAX. A sale by a photographer of only the right to reproduce photographs is a sale of intangible property and, as such, no retail sales tax is due on sales.The photographer must pay service B&O tax on income derived from such sales.

GROSS INCOME OF THE BUSINESS.Where a collection agency's fee is a fixed percentage of the amounts collected on behalf of its client, the collection agency is subject to B&O tax on the entire fee.This is true even though the collection agency contracts with a second collection agency to share in the work and agrees to pay the second agency a portion of the fee.

B&O TAX -- RETAIL SALES TAX -- SERVICE --DEMONSTRATION -- CATER -- TRUE OBJECT. Theclassification of receipts from manufacturers to demonstrate their products and provide samples to potential customers is determined by the true object of the transaction.If the true object is a marketing activity, the receipts are taxable under the catch-all "service and other" business and occupation tax classification.

RETAIL SALES TAX -- SERVICE B&O TAX -- CHARGES FOR RIGHT TO PURCHASE GOODS IN THE FUTURE.Charges for the mere opportunity to buy goods or services in the future for full consideration are subject to the service and other activities B&O tax.

FINANCE CHARGES -- CARRYING CHARGES -- USED CARS -- INSTALLMENT SALES -- SERVICE B&O.A used car dealer who charged installment buyers amounts that were disguised as insurance premiums was liable for service business and occupation tax because the amounts actually were payments for the right to purchase the vehicles over time.

SERVICE AND OTHER ACTIVITIES B&O --SKIPPERED CHARTERS FOR WEDDINGS, FUNERALS, CORPORATE MEETINGS AND PARTIES.The chartering of boats with a skipper for weddings, funerals, office meetings, or corporate social gatherings is classified under "service and other activities" B&O tax.

SERVICE B&O TAX COPYRIGHTS ALLOCATION -- COMMERCIAL DOMICILE.Fee income from licensing the use of copyrighted material in this state by a corporation with its commercial domicile located outside Washington is not subject to B&O tax.In general, intangible rights follow the situs of the commercial domicile of the owner.

B&O TAX -- SELECTED BUSINESS SERVICES CLASSIFICATION -- STENOGRAPHER -- MEDICAL TRANSCRIPTION.Transcribing medical recordings constitutes stenographic, secretarial, or clerical services taxable at the selected business services rate.

BUSINESS ACTIVITY DEFINED.The mere receipt of an intangible is an activity.When the receipt of an intangible is with object of gain, benefit, or advantage to someone, it is a business activity.Citing: Simpson Timber Co., v. State, Dept. of Rev., BTA Docket No. 30192A, B, C (1986).

INVESTMENTS.Only earnings from incidental investments of surplus funds by a qualifying business are eligible for the RCW 82.04.4281 deduction.Citing: OLeary v. Department of Rev., 105 Wn.2d 679, 717 P.2d 273 (1986).

ENGAGING IN BUSINESS DEFINED.All persons who are engaged in business in Washington are subject to excise taxes.Engaging in business is defined as continuing in business.The mere receipt by a composer of royalty payments for compulsory and performance licenses, and of a percentage of receipts from a merchandising contract, is a business activity subject to excise taxes.Therefore, the continuation of the receipt of those payments by the estate of the composer is an activity subject to excise taxes.

B&O TAX --PUBLIC UTILITY TAX -- FEDERAL PRE-EMPTION -- AIR COMMERCE -- AIR AMBULANCE SERVICE:Income earned by an air ambulance service from the carriage of patients in air commerce (including interstate flights and intrastate ones, fixed wing or helicopter) is exempt by federal law from gross receipts taxes, such as the B&O tax and the public utility tax.Income from interstate non-passenger flights where only body organs, supplies, equipment, or other freight is transported is exempt by state law from the B&O tax and the public utility tax.Income earned from purely intrastate no

SERVICE B&O TAX BUSINESS ACTIVITY GROSS INCOME SLOTTING FEES PLACEMENT ALLOWANCES SHELF SPACE.A grocer who provides shelf space for consideration is engaged in business.The grocer must include slotting fees or placement allowances for the shelf space in its gross income taxable under the service and other activities B&O tax classification.

B&O TAX -- SELECTED BUSINESS SERVICES; CANNED SOFTWARE TRAINING.Classroom training in the use of canned software is taxable under the service and other activities B&O tax classification, not under the selected business services classification.

SERVICE B&O TAX ROYALTY CONTRACT --ASSIGNMENT OF DUTIES AND OBLIGATIONS CONSIDERATION.Royalty payments received by Taxpayer for assuming Parents rights and obligations under a licensing contract with a third-party licensee are subject to Washingtons B&O tax

SERVICE B&O TAX - NEXUS APPORTIONMENT - SECURITIES DEALER.A Washington-based securities dealer is entitled to apportion its gross receipts between Washington and the numerous other states in which it markets securities through independent sales representatives that own and operate their own offices.The securities dealer has taxable nexus with those other states by entering their marketplaces to sell its services and products to customers in those states.Such out-of-state activities are more than incidental.

RETAIL SALES TAX RETAILING B&O TAX SERVICES IN RESPECT TO CONSTRUCTING CONSTRUCTION MANAGEMENT CONSULTING SERVICES.In general, supervisory, management, or other services that direct or control how or when constructing activity take place are directly related to the activity of constructing buildings and structures.In contrast, most design, contract administration, inspection, accounting, educational, or other related services--which may be related to the general process of construction--are not directly related to the physical activity of constructing itself.Accordingly, they would not

RETAIL SALES TAX RETAILING B&O TAX SERVICES IN RESPECT TO CONSTRUCTING CONSTRUCTION MANAGEMENT CONSULTING SERVICES.In addition to services that involve the actual physical construction of buildings and structures, services in respect to such constructing activity are subject to retail sales tax and retailing B&O tax.In general, services that are directly related to or in direct reference to the activity of constructing a building constitute services in respect to constructing activity.

RETAIL SALES TAX RETAILING B&O TAX SERVICES IN RESPECT TO CONSTRUCTING CONSTRUCTION MANAGEMENT CONSULTING SERVICES.Services that solely involve consulting with and educating owners on acting as their own general contractors do not constitute services in respect to constructing.

B&O TAX EXEMPTION CREDIT COUNSELING SERVICES BANKRUPTCY TRUSTEE.A bankruptcy trustees duties include advising and assisting debtors in performing under debt repayment plans.Accordingly, the trustee provides some services similar to the services provided by nonprofit consumer credit counselors.However, a bankruptcy trustees duties and activities are far broader than the services provided by such counselors.Because most of the trustees duties exceed the scope of the exemption, the trustee is not entitled to claim the exemption from B&O tax.

RETAILING VS. SERVICE SERVICES IN RESPECT TO CONSTRUCTING CONSTRUCTION MANAGEMENT SERVICES.Where the taxpayers construction management services were necessary for the timely completion of the renovation but did not entail the direction or management of the actual construction process or actual building activities, the taxpayer was not responsible for constructing.As such, the taxpayers gross income was subject to service, rather than retailing B&O tax .

B&O TAX GROSS INCOME SEWERAGE SERVICES PROPORTIONATE SHARE OF MAINTENANCE AND OPERATING EXPENSES.Where a city's sewerage disposal service contract with another municipality required the other municipality to a pay a percentage of operating and maintenance costs in addition to sewerage disposal fees, the additional proportionate share of costs was part of the city's gross income.

B&O TAX DEDUCTIONS SERVICE RENDERED AMOUNTS RECEIVED FROM ANOTHER POLITICAL SUBDIVISION.A Washington municipality was not allowed a deduction under RCW 82.04.4291 for amounts received for sewerage services rendered to a political subdivision of the State of Idaho.

B&O TAX - ADVANCE OR REIMBURSEMENT - ORAL UNDERSTANDING.An informal understanding between employee-placement consultants that an employer-client is liable for either consultants portion of a placement fee is not enough to support exclusion under Rule 111.Payments were not excludable where taxpayer and its co-consultants had understanding, sometimes oral and sometimes written, that the client alone would be liable; where co-consultants understood that failure of the client to pay would not result in the other consultant being liable for payment; but where co-consultants did not bill or c

SERVICE B&O TAX PASS-THROUGHS APPORTIONMENT PROPERTY MANAGEMENT SERVICES.A foreign corporation/taxpayer providing real property management services was subject to service B&O tax on its gross income without the right to deduct reimbursements it received from the owners for on-site personnel salaries and other expenses.The taxpayer did not meet all requirements of Rule 111 and ETA 90-1.However, the taxpayer was entitled to apportion its gross income because the taxpayer maintained places of business both within and without Washington that contributed to the rendition of services with

B&O TAX RETAIL SALES TAX MAILING SERVICES.Mailing services, meaning the mailing of packages for customers, are not retail sales.

RETAIL SALES TAX - SERVICE PROVIDER - CONSUMER - REIMBURSEMENTS. A person taxable under the Service classification is the "consumer" of items used in performing the taxable service. Payments made by the service provider's customer as reimbursements for the service provider's expenses are not subject to the retail sales or use tax.

B&O TAX - CLASSIFICATION - STATUTORY CONSTRUCTION - MAGAZINE SUBSCRIPTIONS. RCW 82.04.290 is narrowly construed, not ambiguous and therefore the meaning is derived from what the Legislature has said . Proper B&O Tax rate classification for seller of magazine subscriptions is Service and Other Activities. THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 01-006, 20 WTD 124 (2001).

COMMISSION INCOME MULTI-LEVEL MARKETERS.All commission income of a multi-level marketer must be included in its gross income for B&O tax purposes.

B&O TAX -- RETAIL SALES TAX JANITORIAL SERVICE.Pressure washing and roof clean-up are not janitorial services and are thus subject to the payment of retailing B&O tax and the collection of retail sales tax.

B&O TAX -- REAL ESTATE BROKERS -- DESK FEES.Amounts earned by a real estate broker from real estate associates for use of the brokers offices, equipment, and services are subject to the B&O tax rate specifically applicable to real estate brokers rather than the tax rate on royalties earned from granting intangible rights.

PARTNERSHIP ABILITY OF A GENERAL PARTNER TO BIND THE PARTNERSHIP.The action of a general partner who enters into an agreement within the scope of the partnerships business is the action of the partnership itself, binding the partnership, even if the general partner executes the agreement in his own name.

RCW 82.04.2907: SERVICE B&O TAX -- SALES OF RIGHTS TO PHOTOGRAPHS. Prior to July 1, 1998, income derived from a transfer or sale of a copyright or other intangible property interest is subject to service B&O tax. Effective July 1, 1998, RCW 82.04.2907 created a special classification for income from royalties or charges in the nature of royalties for the granting of intangible rights, such as copyrights, licenses, patents, or franchise fees.

RCW 82.04.250, RCW82.04.050, RCW 82.08.020:RETAIL SALES TAX RETAILING B&O TAX -- RETAIL SALE PHOTOGRAPHIC IMAGES The sale of an image on photographic paper is a retail sale (provided the buyer does not present a resale certificate) regardless of whether the taxpayer or its customer shoots the photograph.

RCW 82.04.290, RCW 82.04.250, RCW 82.04.050, RCW 82.08.020:RETAIL SALES TAX RETAILING B&O TAX SERVICE B&O TAX -- RETAIL SALE SITTING OR SHOOTING FEES.Taking photographs for a fee, without developing or printing, is a professional and artistic service subject to service B&O tax and is not subject to the retailing B&O or retail sales tax.However, a shooting fee is subject to retailing B&O tax and retail sales tax when the shooting is directly related to subsequent printing services, is performed by the same person, and is performed under a single contract or invoice or con

RCW 82.04.220; 82.12.020: SERVICE B&O TAX USE TAX - FOREIGN TRADE ZONE.Washingtons B&O tax is not an ad valorem tax, and federal law does not pre-empt Washington from assessing its B&O tax on gross income earned by the taxpayers activities associated with operating its foreign trade zone.Likewise, Washington is not barred from assessing use tax on tangible personal property used by the taxpayer to operate its foreign trade zone.

SERVICE B&O TAX INTERNET SERVICES APPORTIONMENT. Charges taxable under the other business or service activities classification for internet services provided from locations in Washington as well as places of business outside the state may be apportioned.

B&O TAX CREDIT HELP DESK SERVICES TO THIRD PARTIES INTERNET SERVICE PROVIDER.An internet service provider that provided help desk services to its own subscribers was not entitled to the help-desk services credit under RCW 82.04.4457 because it was not providing those services to third parties.

B&O TAX GROSS INCOME -- DEDUCTION -- BOAT BROKERS COMMISSIONS -- CO-BROKERING.A listing broker will be taxed on the entire commission earned on a co-brokered sale unless the boat owner and listing broker have previously agreed in a written listing agreement that a split commission should be paid directly to the individual co-brokers.

B&0 TAX RESEARCH AND DEVELOPMENT ("R&D) EXEMPTION DEVELOPMENT OF NEW DRUGS.Payments which a pharmaceutical company gives a physician for treating patients and recording the results as part of new drug trials do not qualify for the B&O tax exemption allowed for R&D.Taxpayers activities are neither the discovering technological information nor translating technological information into new or improved products, processes, techniques, formulas, inventions, or software.

B&O TAX -- GROSS INCOME -- EXCLUSION -- LOAN ORIGINATION FEES -- TRANSACTION FEES.Where a lending institution charges a loan applicant a loan origination fee, the amounts that the institution retains for transacting and processing the loan prior to paying the broker its commission are not included as income to the mortgage broker.

APPORTIONMENTNEXUSINCIDENTAL SERVICES PERFORMED OUTSIDE THE STATE.Taxpayers who provide services both within and without the state may, under certain circumstances, apportion their gross income.Maintenance of a place of business outside this state is not a prerequisite for apportionment, provided the services are more than incidental.In order for such activities to be more than incidental, the taxpayer must have taxable nexus where the services are performed.When a taxpayer incidentally works outside Washington while attending trade shows does not establish taxable nexus in such states, the

ADVERTISING AGENCY.A print advertising agency is subject to the business and occupation tax under the service and other activities classification.

ADVERTISING AGENCY MEASURE OF TAX.When an advertising agency charges its client a single fee for advertising services and amounts attributable to tangible personal property, the entire fee is subject to the service and other activities business and occupation tax classification.

B&0 TAX -- CONSULTING BUSINESS SUBSTANCE OVER FORM.Income in the nature of a retainer and reported as consulting income is subject to tax.Bare assertions that the income should, instead, be treated as deferred compensation, does not result in a change of treatment, and the taxpayer must accept the consequences of his chosen form.

SERVICE INCOME -- ROYALTIES -- INTERNET VENDORS.Income from referring customers to other internet vendors websites through the use of tabs or links on the taxpayers internet website and from enhancing the product selection and purchase processes is taxed as service income and not as royalty income.

SERVICE B&O TAX EXCLUSION ADVANCE OR REIMBURSEMENT CLINICAL COORDINATION SERVICES.A clinical research coordinator is not entitled to exclude from its gross income under Rule 111 receipts from pharmaceutical companies, which the taxpayer uses to pay physicians for their role in the research, test subjects for their participation in the research, labs for tests necessary for the research, and other expenses where:1)the payments were not customary reimbursements for advances made to procure a service for the client; 2) the payments involve services that the taxpayer could or did render; an

RULE 13501, RULE 224; RCW 82.04.280(3) RCW 82.04.220:SERVICE & OTHER BUSINESS ACTIVITIES B&O TAX - PROCESSING FOR HIRE SCALING OF LOGS SORTING YARD OPERATIONS REMOVAL OF BARK.Sorting yard operations including weighing, tagging, banding, appraising and sorting of logs, as well as the scaling of logs and the removal of bark are not manufacturing activities or processing for hire.They are service activities subject to service and other business activities B&O tax.

RCW 82.04.290, RCW 82.04.322, RCW 48.14.021:SERVICE B&O TAX EXEMPTION M+C RECEIPTS TAXABLE LEGISLATIVE INTENT.Even if the language in RCW 82.04.322 were unclear, legislative intent supports the conclusion that the M+C receipts are not exempt from B&O tax.The legislative history regarding RCW 82.32.322 and RCW 48.14.0201 indicates an intent to ensure taxation of amounts received for health care while avoiding double-taxation.

RCW 82.04.290, RCW 82.04.322, RCW 48.14.021:SERVICE B&O TAX EXEMPTION M+C RECEIPTS TAXABLE -- PLAIN LANGUAGE.Under the plain language in RCW 82.04.322, M+C receipts are not exempt from B&O tax because they are not taxable under RCW 48.14.0201.Specifically, M+C receipts are not capable of being taxed under RCW 48.14.0201 because section (6) of that statute exempts the M+C receipts from tax.

RCW 82.04.290, RCW 82.04.322, RCW 48.14.021:SERVICE B&O TAX EXEMPTION M+C RECEIPTS TAXABLE FEDERAL PREEMPTION.Because a federal statute preempts a Washington premiums tax on the M+C receipts, the receipts are not exempt from B&O tax because they are not taxable under the Washington premiums tax (RCW 48.14.0201).

RCW 82.04.220, RCW 82.04.080:SERVICE AND OTHER ACTIVITIES B&O TAX -- GROSS INCOME -- SUBSIDIES (CREDITS AGAINST ROYALTY PAYMENTS).Credits received by franchisee mini marts from their franchisor against royalty payments to promote the sales of selected products at prices set by the franchisor and the product manufacturers are part of the franchisees gross income, and subject to service and other activities B&O tax, when the credits are intended to cover the difference between the franchisees costs of the products and the below-cost sales prices of the products, plus a small profit on

RULE 168, RULE 151, RULE 18801, RULE 224; RCW 82.04.290, RCW 82.08.020: B&O TAX -- MEDICAL CLINIC -- PRESCRIPTION DRUGS -- TRUE OBJECT. A medical clinic that administers chemotherapy drugs is taxable under the Service & Other B&O tax classification. Under the true object test, the clinic is performing a medical service, rather than engaging in the sale of tangible personal property subject to retailing B&O tax.

RULE 168, RULE 151, RULE 18801, RULE 224; RCW 82.04.290, RCW 82.08.020: B&O TAX -- MEDICAL CLINIC -- PRESCRIPTION DRUGS -- TRUE OBJECT. A medical clinic that administers chemotherapy drugs is taxable under the Service & Other B&O tax classification. Under the true object test, the clinic is performing a medical service, rather than engaging in the sale of tangible personal property subject to retailing B&O tax.

RULE 224, RULE 211(2)(e); RCW 82.04.290(2), RCW 82.04.050(4), RCW 82.08.020(1): B&O TAX – WEDDING DJ – MUSIC SERVICE -- TRUE OBJECT. Taxpayer who provides wedding DJ services is taxable under the Service & Other B&O tax classification. Under the true object test, the Taxpayer’s wedding DJ services are a music service, rather being subject to the retail sales tax as the rental of sound equipment with an operator.

RULE 224, RULE 211(2)(e); RCW 82.04.290(2), RCW 82.04.050(4), RCW 82.08.020(1): B&O TAX – WEDDING DJ – MUSIC SERVICE -- TRUE OBJECT. Taxpayer who provides wedding DJ services is taxable under the Service & Other B&O tax classification. Under the true object test, the Taxpayer’s wedding DJ services are a music service, rather being subject to the retail sales tax as the rental of sound equipment with an operator.

SERVICE - RETAIL SALE - PIANO TUNING. Piano tuning is not a retail sale. Any alteration or improvement to tangible personal property is minor. The primary nature of the activity is service.

USE TAX -- INTERVENING USE -- CUSTOM SOFTWARE - INTERACTIVE COMPONENTS - INTEGRATED SYSTEM OF COMPUTER HARDWARE AND CUSTOM SOFTWARE. Use tax not due on computer systems and similar electronic hardware which is purchased for resale and becomes part of the manufactured product, even though the items also are used throughout the development process to store data, develop, test and modify the software that is incorporated into the final product.

B&O TAX -- SERVICE V. WHOLESALING -- CRANE SERVICES -- CONSTRUCTION PROJECT. Persons who rent or lease equipment with an operator for construction purposes to prime or subcontractors are deemed themselves to be subcontractors.A provider of a crane with an operator for construction projects is B&O taxable under Wholesaling. Use of the crane must be reasonably related to construction, but the actual installation/attachment requirement of previous determinations is rejected.

Rule 224; RCW 82.04.290: SERVICE AND OTHER ACTIVITIES B&O TAX. Portion of judgment corporation received in a lawsuit for compensation for services rendered, that it paid to its attorney as a contingent fee, is subject to Service and Other Activities B&O tax. This is irrespective of attorney's lien on that portion of judgment.

RCW 82.04.065; RCW 82.04.297; RCW 82.04.050(5); Title 47 U.S.C. Sec. 151: INTERNET SERVICE PROVIDER (ISP) “ DIGITAL SUBSCRIBER LINE INTERNET SERVICE (DSL) - An ISP selling DSL internet service is taxable as an ISP. It should pay Service & Other B&O tax on its income received as an ISP. For Washington State tax purposes, a DSL ISP's internet service charges should not be bifurcated into a Service & Other B&O internet service component, and a retailing telephone line transmission component

RCW 82.04.080: GROSS INCOME OF THE BUSINESS - FEES - NONPROFIT - WATER ASSOCIATION. Up-front fees paid by new members to a nonprofit water association that grant those new members voting rights and other membership rights, including the right to hook-up and receive water, constitute “gross income of the business” and are taxable to the nonprofit water association at the service and other activities business and occupation (“B&O”) tax.

RCW 82.04.290, RCW 82.04.050: SERVICE AND OTHER ACTIVITIES B&O TAX - RETAIL SALE - RENTAL CAR - OPTIONAL DAMAGE WAIVER OR ROADSIDE ASSISTANCE COVERAGE. A rental car agency’s charges for optional collision damage waiver or roadside assistance coverage are not considered retail sales under RCW 82.04.050 subject to retailing business and occupation (B&O) tax. The charges are not encompassed within any of the business activities specifically classified under chapter 82.04 RCW; therefore they are subject to service and other business activities B&O tax.

RCW 82.04.2907; RCW 82.04.290(2)(a): BUSINESS AND OCCUPATION TAX - CLASSIFICATION - VIRTUAL PRINT FEES. Income from virtual print fees collected from a movie distributor each time that distributor’s movie is exhibited using digital equipment is not income from royalties. Such income is properly classified as income from service and other activities.

RCW 82.04.290(2)(b); ETA 3036.2009: SERVICE AND OTHER ACTIVITIES B&O TAX - PEST CONTROL FUMIGATION OF CARGO CONTAINERS. Revenue from pest control fumigation of tangible personal property, as opposed to fumigation of buildings or other structures, is taxable under the service and other activities business and occupation (B&O) tax classification.

RCW 82.04.4298: HOUSEKEEPING FEES - TIMESHARE CONDOMINIUM - RESIDENTIAL STRUCTURES - COMMONLY HELD PROPERTY - CLEANING. Housekeeping fees collected for cleaning the interiors of timeshare condominium units are not collected for the maintenance of residential structures or commonly held property. The fees are used to pay for cleaning the interior space of each unit and not the edifice of the building itself.

B&O - SERVICE - APARTMENT MANAGEMENT. Income from managing apartments is taxable under Service B&O.

B&O TAX -- SERVICES -- PILOT CAR AND FLAGGING. Persons engaging in rendering services other than sales at retail and sales at wholesale, unless another statutory category exists, are taxed under the category "Service and Other Business Activities."Pilot car and flagging activities are properly taxed under this category.

B&O TAX -- SERVICE -- PYRAMIDING OF -- GOLF COURSE - MANAGEMENT OF -- DOUBLE TAXATION. Where the independent manager/operator of a city-owned golf course receives a percentage of greens fees for its services, such commission is service B&O taxable to the operator notwithstanding the fact that the city also owes Retailing B&O on the same fees.

SERVICE B&O TAX -- AFFILIATED CORPORATIONS --MANAGEMENT FEES. Amounts received by one corporation from an affiliated corporation for management fees are subject to the Service B&O tax.THIS DETERMINATION HAS BEEN OVERRULED OR MODIFIED IN WHOLE OR PART BY DET.NO. 98-218, 18 WTD 46 (1999).

B&O TAX -- SERVICE -- TRAVEL AGENT COMMISSION --T0UR OPERATOR -- TOUR PACKAGES. The amounts received by a tour operator on the sale of its own arranged tour packages where other persons provide the transportation, hotel accommodations, sightseeing, meals, etc. are subject to Service B&O tax. Amounts received by a tour operator as commissions from third party service providers are subject to Travel Agent Commission B&O tax.

B&O TAX - RETAIL SALES TAX - CLASSIFICATION -MACHINERY - REPAIR-ENGINEERING - SEPARATION. Where engineering services are readily separable from the repair of portable machinery, the two activities will be judged independently for purposes of the B&O and retail sales tax. Here, the basis for such separation is found in two different contracts.

B&O TAX -- GROSS INCOME -- AGENT -- BILLING FEE. A personal service corporation which had an agreement with an affiliate, a partnership, to do the billing for itself and the partnership and retain a portion of the amount collected on behalf of the partnership as a billing fee is liable for Service B&O on the amount received for its charges for services rendered and for the billing fees retained from the partnership's charges. The corporation is not liable for Service B&O on amounts collected for the partnership.

B&O TAX - SERVICE-STORAGE - FILTERING FERTILIZER - DRYING SOLVENTS. Storing and handling chlorinated solvents and storing, filtering, and bagging fertilizer found subject to Service B&O where the taxpayer's activities did not produce a new or different product.

B&O TAX -- CLASSIFICATION -- SERVICE -- GROSS INCOME -- ROYALTY INCOME -- PATENTS -- DOMICILE OF WASHINGTON. Royalties derived from granting the right to use a patented process are not taxable by Washington where the grantor's domicile, legal or commercial, is outside of Washington. Patents are intangible personal property whose situs is the domicile of the owner. ETB 355.04.194.

B&O TAX-SERVICES - HORSE TRAINERS - LIABILITY FOR TAX. Horse trainers report tax on the gross income from their business activities under the Services classification of the business and occupation tax. The fact that previously-unregistered horse trainers did not affect taxpayer's own liability for payment of tax on the privilege of engaging in business in this state.

A STATEMENT OF PURPOSE AND INTENT WITH RESPECT TO THE TAXABILITY OF HAZARDOUS WASTE CLEANUP CONTRACTS

SERVICE B&O TAX - AMOUNTS SHOW ON BOOKS AS INTEREST - AMOUNTS PAID TO JOINT VENTURER -CONTRIBUTIONS TO CAPITAL - DEBT V. EQUITY. Where a joint venturer advances money to a joint venturer, but the repayment is contingent on profitability of the enterprises, the amounts advanced by the venturer are a capital contribution and not debt. Amounts paid to the venturer are a preferred return on a sale of real property and are not subject to tax.

B&O TAX - MULTIPLE ACTIVITIES ENGAGED IN BY A SINGLE TAXPAYER - SERVICE AND RETAILING. Where taxpayer engages in the separate activities of rendering professional services to customers and retail selling of suppliesseparately from the services, the activities are taxable under different B&O tax rates if the taxpayer has shown that they are treated separately in its billing and accounting system.

RETAIL SALES TAX -- USE TAX -- ANALYSIS OF OIL --RETAIL SALE VERSUS NONTAXABLE SERVICE. The charge for the analysis of engine and transmission oil is not subject to retail sales tax or use tax. It is an activity similar to assaying which is held to be a professional service in Rule 224.

SERVICE PROVIDERS - AMBULANCE SERVICE - USE TAX ON CONSUMABLE SUPPLIES. Persons providing ambulance services are subject to use tax on all supplies consumed in the performance of their services where retail sales tax has not been paid at the source.No exemption exists for consumable supplies used by service providers in the performance of medically-related services. Accord: Det. No.87-333, 4 WTD 211 (1987).

SERVICE B&O TAX - DEDUCTIONS - RENTAL ADJUSTMENT - COMMISSIONS EARNED. Where taxpayer earns commissions on sales of gasoline, the gross commissions are subject to the B&O tax without any deduction for the amount of commissions paid over to the landlord/payer of thecommissions as a rental adjustment of the rent owed by the taxpayer on another premises rented from the same landlord.

RETAILING B&O TAX - SERVICE B&O TAX - AUTOMATIC SPRINKLER SYSTEM - INSPECTION. The inspection, testing and lubricating of automatic sprinkler systems, as an improvement of personal or real property, is held to be a Retailing B&O activity, not a Service B&O activity. ETB 425.08.107.

SERVICE B&O TAX -- SALES OF "SAFE HARBOR" ASSETS. Sales of Federal tax credits and benefits provided under the Economic Recovery Tax Act of 1981 constitute "business" and "engaging in business" under statutory definitions and amounts so derived are properly included within the Service B&O tax measure, "gross income of the business."