Miscellaneous income

While miscellaneous fees and charges aren't directly associated with a broker or vessel dealer's primary business, they may still constitute taxable income. Identified below are some examples of broker or dealer activities that may create miscellaneous income that is taxable.

Marine survey fees

Income received for providing a marine survey only, with no repairs, is subject to B&O tax under the service and other activities classification. If a repair is performed with the survey, the entire amount received is subject to retailing B&O tax and sales tax. Repairs performed for a customer providing a valid reseller permit are reported as wholesale sales, subject to B&O tax under the wholesaling classification.

Advances and reimbursements

An advance or reimbursement deduction from gross sales applies when the customer alone is liable for the payment of the fees or costs and when the broker/dealer making the payment has no personal liability for these payments, either primarily or secondarily, other than as agent for the customer. Examples would include title or conveyance fees, registration fees and license fees.

Reference: WAC 458-20-111

Freight and delivery charges

Generally, freight and delivery charges are part of the selling price and therefore subject to tax in the same manner as the vessel being sold. See WAC 458-20-110.

Financing fees, penalties and interest

Charges for interest, late payments or penalties are subject to the B&O tax under the service and other activities classification.

References: WAC 458-20-109, WAC 458-20-211

Finder fees

Finder fees are subject to B&O tax under the service and other activities classification. This fee is taxable even though the other broker/dealer may have reported the gross commission received.

The selling broker generally reports the full commission received and cannot deduct the portion paid to the "finder" for the referral. The finder making the referral must report the fee they receive from the selling broker/dealer.

Joint or multi-state finder fees

If the selling broker is located in another state or country and does not render services in Washington, the commission earned by the selling broker is not taxable in Washington. However, if the referring broker is located in Washington and provided services contributing to the sale in Washington, the referring broker's portion of the commission is taxable.

Launch fees

Fees for the use of a boat launch facility or ramp are subject to B&O tax under the service and other activities classification.

Moorage and dry stack storage

The taxability of moorage and storage fees is dependent on the rental agreement contract. The rental of a boat designated exclusive use moorage slip is considered to be a rental of real estate (exempt from retail sales tax and B&O tax) if a specific space, slip or site is assigned and the rental is for a period of 30 days or longer. Rental fees for less than 30 days or unassigned moorage for any time period are subject to B&O tax under the service and other activities classification. The same applies to a mini-storage.

Income received from dry stack storage is subject to B&O tax under the Warehousing classification.

Reference: WAC 458-20-118 and Excise Tax Advisory 3165.

Consumables

Charges to customers for supplies and other consumable items are subject to sales tax even though the dealer paid sales or use tax at the time of purchase or acquisition. Since the items are used before sale to the customer, they do not qualify for the resale exemption.

Casual sales

A casual sale is a sale of tangible personal property by a registered taxpayer who does not normally sell the type of property involved.

B&O tax does not apply to casual sales. On sales to consumers, the amount of the sale must be reported under the B&O tax, but a deduction may be taken on the deduction detail for casual sales.

Sales tax must be collected on all casual sales made to consumers by businesses registered with the Department of Revenue.

Example: A vessel dealer upgrades their computer system and sells the old computer to an employee. The dealer is not in the business of selling computers, therefore, no B&O tax is due. The dealer must charge the employee sales tax on the selling price of the computer.

References: RCW 82.04.040, WAC 458-20-106