Washington Tax Decisions

2022
Title Date Document Description
Det. No. 20-0045, 41 WTD 126 (2022) 41WTD126.pdf

A broker-dealer that timely filed each of its required excise tax returns, but reported no business in every instance, protests the imposition of late payment and assessment penalties in connection with its annual reconciliation of apportionable income (ARAI) returns, arguing that the Department lacks the authority to impose such penalties in such cases. Petition denied.

Det. No. 20-0158, 41 WTD 149 (2022) 41WTD149.pdf

An operator of a retirement community protests the imposition of retail sales tax on its sales of prepared meals to independent senior residents and on its sales of spare rooms to guests of its residents. The petition is denied.

Det. No. 19-0164, 41 WTD 112 (2022) 41WTD112.pdf

An information technology company that specializes in project management services and customization of preprogrammed business management software for clients protests the Department’s disallowance of a business and occupation (“B&O”) tax credit offered to companies engaged in “qualified research and development.” The company argues that because its business activities involve “translating technical and nonroutine activities into new or improved processes and software,” it was engaged in the type of research and development for which the credit is available. In fact, the company’s activities do not satisfy the Department’s definition of the term “nonroutine,” thus the activities cannot be considered “research and development” and the company does not qualify for the credit. Petition denied.

Det. No. 20-0281, 41 WTD 181 (2022) 41WTD181.pdf

A former owner of real estate protests the Department’s denial of a refund request of real estate excise tax (“REET”) paid. The former owner argues that the Department should allow its claimed exclusion from REET for a sale made by a receiver. We deny the petition.

Det. No. 20-0059, 41 WTD 133 (2022) 41WTD133.pdf

A Washington company whose owner resides . . . [outside of the United States] protests the Department’s assessment of retail sales tax and retailing business and occupation (“B&O”) tax on retail sales made to Washington consumers. The company argues that despite the fact that it was formed in Washington, it did not establish nexus with Washington during the relevant periods because it had no physical presence in the state. We conclude that the company did indeed have a physical presence in Washington because its owner/sole employee was present in the state as the company’s registered agent and the company owned a bank account in Washington, maintained a physical mailbox in Washington, and used a Washington-based answering service to interact with its Washington customers. For those reasons, we find that the company did have nexus with Washington throughout the subject periods and is subject to Washington retail sales tax and B&O tax as assessed. Petition denied.

Det. No. 20-0165, 41 WTD 160 (2022) 41WTD160.pdf

A corporation that provided various services to its affiliates, which the parties group into three broad categories (credit card services, administrative services, and database services), protests the assessment of service and other activities business and occupation (B&O) tax on these services. The corporation argues that none of its gross income is attributable to Washington and, therefore, it should have no tax liability in Washington. We deny the petition.

Det. No. 19-0284R, 41 WTD 118 (2022) 41WTD118.pdf

A company providing [electronic] account access services to credit unions seeks reconsideration of our determination affirming the assessment of tax on digital automated services (DAS), asserting that the services fit within a number of exclusions from DAS and that the taxation of these services is prohibited by the Internet Tax Freedom Act. We affirm our decision that the activities at issue were properly classified as DAS and that the taxation of the services at issue is not prohibited by the Internet Tax Freedom Act. The Taxpayer’s petition is denied.

Det. No. 20-0290, 41 WTD 188 (2022) 41WTD188.pdf

An individual seeks cancellation of an assessment of real estate excise tax levied as the result of its sale of real property. The individual objects to the Department’s use of the county market value property tax assessment as the selling price of the real property at the time of sale. We grant the petition in part.

Det. No. 20-0107, 41 WTD 142 (2022) 41WTD142.pdf

A port district protests the Department’s tax ruling dated October 30, 2019. The port argues that the Department’s Taxpayer Information and Education (“TI&E”) section erroneously concluded that the port would be responsible for leasehold excise tax (“LET”) on leases it will assume when it purchases a building with existing tenants. We deny the petition.

Det. No. 20-0175, 41 WTD 173 (2022) 41WTD173.pdf

The operator of a . . . restaurant (Taxpayer) protests an estimated assessment of retailing business and occupation (B&O) tax and retail sales tax on grounds that it provided adequate records to demonstrate the measure of its sales and that the estimated assessment is unreasonable and should be adjusted. We deny the petition.

Det. No. 20-0100, 41 WTD 73 (2022) 41WTD73.pdf

Taxpayer disputes the assessment of REET on its purchase of certain real property located in Washington, arguing that the Department overstated the fair market value of the property for REET purposes, because it used the county assessed value on the tax rolls rather than the sale price that was negotiated between the parties. We deny the petition.

Det. No. 20-0127, 41 WTD 95 (2022) 41WTD95.pdf

A taxpayer protests imposition of the REET on a transaction it claims was exempt as a mere change in identity. Taxpayer’s petition is denied.

Det. No. 20-0087, 41 WTD 61 (2022) 41WTD61.pdf

A taxpayer disputes the assessment of use tax and penalties on his purchase of a travel trailer claiming that, because the trailer was purchased in another state and was subsequently sold to a nonresident company from [out of state], the purchase should be exempt from use tax in Washington. . . . The taxpayer also claims that [we should waive penalties because] he relied on incorrect information obtained from an internet website. We deny the petition.

Det. No. 20-0108, 41 WTD 82 (2022) 41WTD82.pdf

A construction company disputes its tax assessment, arguing that the audit should have been based on cash basis rather than accrual basis accounting, and that its claimed wholesale sales should not have been reclassified as retail sales. The taxpayer also asserts that it had a client that paid subcontractors directly for certain services they performed on a construction project where taxpayer acted as the prime contractor, and it never received these payments. We deny the petition.

Det. No. 20-0128, 41 WTD 100 (2022) 41WTD100.pdf

An out-of-state wholesaler protests an assessment of business and occupation tax. The wholesaler argues that it did not have nexus sufficient for Washington to assert tax on its business. We deny the petition.

Det. No. 20-0097, 41 WTD 67 (2022) 41WTD67.pdf

A LLC that owns property in Washington protests the assessment of REET on one of its members’ acquisition of a controlling interest in the company. It asserts: that the transfer was exempt from REET under RCW 82.45.010(3)(j) and WAC 458-61A-208(5) as an execution of a judgment, that there was no sale price upon which to assess REET, and that there was no consideration. We conclude that REET is due on the transfer. The taxpayer’s petition is denied.

Det. No. 20-0120, 41 WTD 90 (2022) 41WTD90.pdf

Taxpayer disputes the Department of Revenue’s denial of a VETC against B&O tax. We deny the taxpayer’s petition.

Det. No. 20-0136, 41 WTD 108 (2022) 41WTD108.pdf

A mill operator claims payments made to a janitorial company for sweeping its facility are not subject to retail sales tax . . . . We grant taxpayer’s petition for refund, in part, limited to the amount of [deferred sales] . . . tax imposed on its purchase of janitorial services.

Det. No. 20-0074, 41 WTD 55 (2022) 41WTD55.pdf

A LLC seeks cancellation of an assessment of REET levied as the result of its owner’s acquisition of a controlling interest in the company. The company objects to the Department’s use of the county market value property tax assessment as the selling price of the real property it held at the time of sale. We deny the petition.

Det. No. 20-0072, 41 WTD 49 (2022) 41WTD49.pdf

A dental laboratory protests the Department’s assessment of use tax, arguing that its dental models should be subject to retail sales tax, not use tax. Alternatively, the laboratory argues that if they are subject to use tax then the Department should use the laboratory’s cost valuation methodology as a basis for the measure of use tax. Taxpayer also argues that its refractory die labor and material are exempt from use tax as a prosthetic device. We deny the petition.

Det. No. 19-0307, 41 WTD 09 (2022) 41WTD09.pdf

A company that managed a parking garage protests the Department’s denial of the company’s request for a refund of retail sales tax and B&O tax. The company collected the retail sales tax from a customer on sales of reserved parking spaces, the prices for which the company listed as inclusive of retail sales tax, and remitted the taxes to the Department. The company also remitted retailing B&O tax on the income it generated from the same sales. The company later discovered that such sales are considered rentals of real estate and are exempt from retail sales tax. We find that the company is not entitled to a refund of the sales tax because it was the customer, not the company, that paid the tax, and the company has not refunded the taxes to the customer. However, the company is entitled to a refund of the B&O tax it paid on its income from those sales because such sales are specifically exempt from B&O tax. The petition is denied in part, granted in part, and remanded to the operating division for adjustment.

Det. No. 20-0019, 41 WTD 33 (2022) 41WTD33.pdf

An individual disputes the DOR’s denial of a partial refund of use tax the individual paid to the DOL to title and register a sailboat in his name. The individual asserts that the price at which he purchased the sailboat, which is less than one quarter of DOL’s valuation, is the proper basis for calculating the use tax and he is entitled to a refund of use tax paid in excess of this. We grant the petition.

Det. No. 20-0009, 41 WTD 20 (2022) 41WTD20.pdf

A taxpayer disputes the Department of Revenue’s denial of a . . . B&O tax credit [for employers of veterans]. We deny the taxpayer’s petition.

Det. No. 20-0051, 41 WTD 42 (2022) 41WTD42.pdf

A cruise line offering cruises to [out of state] from Washington disputes the Department’s assessment of retail sales tax for certain optional tours [ . . .] lasting less than 24 hours that it provided to its customers. [The cruise line asserts] that it is a tour operator and that all of its gross income, including the revenue received from the tours at issue, is subject to a preferential tax rate and not retail sales subject to retail sales tax. We deny the petition.

Det. No. 19-0300, 41 WTD 01 (2022) 41WTD01.pdf

A taxpayer that operates an automotive repair and maintenance business disputes the assessment of deferred sales tax on certain purchases of capital assets and consumables used in its services. The taxpayer says it has additional documents to support adjustments to tax imposed on those purchases, and asserts that the Department erroneously counted a large invoice twice in the audit.

The taxpayer also contests the assessment of use tax on certain transactions where it alleges it provided substantially discounted services to customers who redeemed certain coupons, rather than providing those services for free. The taxpayer argues that the services were not promotions subject to use tax, but were instead retail sales taxable only on the cash surrender value of the coupon and the customer’s goodwill. Alternatively, the taxpayer argues that deferred sales tax, not use tax, is the proper tax, and tax should be based on its purchase price from its vendor. We deny the petition in part, grant it in part, and remand to the operating division to make adjustments accordingly.

Det. No. 20-0015, 41 WTD 29 (2022) 41WTD29.pdf

An online retailer protests the disallowance of exemptions taken on retail sales of prescription pet medications. The retailer also protests the estimate of uncollected retail sales tax. The petition is denied.

Det. No. 19-0308, 41 WTD 15 (2022) 41WTD15.pdf

A cigarette retailer requests the adjustment of an assessment for unstamped cigarettes because it returned the unstamped cigarettes to the original wholesaler to be correctly stamped. We grant Taxpayer’s petition in part and deny it in part.

Det. No. 20-0041, 41 WTD 37 (2022) 41WTD37.pdf

A telecommunications company disputes the assessment of B&O tax on gross income it received from certain co-location services, arguing that the income is real property lease revenue that is exempt from B&O tax.

Det. No. 20-0012, 41 WTD 24 (2022) 41WTD24.pdf

Taxpayer disputes the denial of its amended excise tax returns wherein it sought to change the classification of its revenue that had previously been reported as retail sales. Taxpayer argues its hot tub cleaning services are janitorial services subject to the service and other activities B&O tax classification and not subject to retail sales tax. Taxpayer’s petition is denied.

2021
Title Date Document Description
Det. No. 19-0185R, 40 WTD 231 (2021) 40WTD231.pdf

Taxpayer seeks reconsideration of Determination No. 19-0185, which affirmed the disallowance of the M&E exemption from retail sales tax and use tax on plastic injection molds it purchased and provided to a vendor that used the molds to create plastic housing units for Taxpayer’s “[Hardware System]” device. We find, on reconsideration, that Taxpayer is not a “manufacturer” of the plastic housing, because Taxpayer does not produce the plastic housing from its own materials or ingredients. . . . Taxpayer provided plastic injection molds to a vendor, so that the vendor could produce plastic housing units for Taxpayer. Taxpayer has provided no proof that it provided any material to the vendor other than the plastic injection molds. On these facts, Taxpayer was not the manufacturer of the plastic housing units. Stated differently, on these facts, the only entity who could be considered the manufacturer of the plastic housing units is the vendor. We sustain the holding in Det. No. 19-0185. Taxpayer’s petition is denied.

Det. No. 19-0253, 40 WTD 260 (2021) 40WTD260.pdf

An environmental remediation business protests the Department’s tax ruling, arguing that the Department’s TI&E section erroneously concluded that its activities do not qualify for the Cleanup of Radioactive Waste for the United States Government B&O Tax Classification. We deny the petition.

Det. No. 19-0201, 40 WTD 242 (2021) 40WTD242.pdf

Three affiliated entities that provide services related to investments and investment management petition for review of their assessments with regard to the common issue of whether certain monies transferred between affiliated but separate legal entities constitute gross income to each entity for Washington excise tax purposes. We deny the petitions.

Det. No. 19-0179, 40 WTD 226 (2021) 40WTD226.pdf

A Washington property owner objects to the Department of Revenue’s disallowance of [a] harvest cost deduction and revised assessment of timber excise tax (Timber Tax) on the sale of harvested timber.1 Taxpayer argues that the value he negotiated and paid for standing timber, during the purchase of a parcel of forest property in 2015, should be accepted by the Department as a deductible harvesting and marketing cost against the gross receipts from sale for calculating timber tax due upon harvest and sale in 2018. We deny Taxpayer’s petition.

Det. No. 19-0246, 40 WTD 255 (2021) 40WTD255.pdf

A company that provides maintenance and restoration services during apartment cleanouts argues that these services prove tantamount to janitorial services and, thus, are not subject to retail sales tax. Petition denied.

Det. No. 19-0187, 40 WTD 236 (2021) 40WTD236.pdf

A taxpayer protests the Department’s denial of his request for a refund of real estate excise tax paid on two transfers of real property. The taxpayer argues that the transfers were not subject to real estate excise tax because no consideration passed, and they should be treated as gifts. Taxpayer’s petition is denied.

Det. No. 19-0283, 40 WTD 265 (2021) 40WTD265.pdf

A business that operates a convenience store seeks a refund of its payment of an assessment of cigarette taxes, penalties, and interest on the grounds that it unknowingly purchased from its wholesale tobacco supplier cigarettes that lacked the required Washington stamp. Because the business possessed unstamped cigarettes, we find that the Department correctly imposed the subject taxes, penalties, and interest. Furthermore, because the business failed to present evidence that it possessed the unstamped cigarettes due to “external circumstances,” we find that the Department lacks “good reason” to waive the subject penalties. Petition denied.

Det. No. 19-0156, 40 WTD 219 (2021) 40WTD219.pdf

A now-dissolved Washington company (“Taxpayer”) that owned the real property assets of a dairy farm protests the Department’s assessment of [deferred sales] tax on purchases of upgrades to a livestock nutrient management system. Taxpayer argues that because an affiliated company operates the dairy farm and other state agencies treat both companies as “dairy operators,” Taxpayer qualifies as an “eligible person” and the purchases are tax-exempt under RCW [82.08.890]. Because Taxpayer does not meet the definition of an “eligible person” and we treat separately-organized companies individually for tax purposes, Taxpayer is not entitled to the [sales] tax exemption. Petition denied.

Det. No. 19-0211, 40 WTD 252 (2021) 40WTD252.pdf

An owner of real estate protests the imposition of REET on the disposition of property by an “exchange facilitator” after having paid REET on a separate transfer of its property to the “exchange facilitator” as part of an integrated transaction treated as deferred under 26 U.S.C. § 1031. We deny Taxpayer’s petition.

Det. No. 19-0085, 40 WTD 188 (2021) 40WTD188.pdf

A Washington hunting guide protests the Department’s assessment of retail sales tax and penalties on the grounds that hunting guide services were not subject to retail sales tax until January 1, 2016, and, regardless, the guide was unaware that it was required to collect sales tax. We find that hunting guide services were indeed subject to retail sales tax throughout the audit period and the guide’s lack of knowledge regarding its tax liability is not a valid basis for a penalty waiver. Petition denied.

Det. No. 19-0152, 40 WTD 216 (2021) 40WTD216.pdf

A former owner of real estate protests the Department’s assessment of REET. The former owner argues the Department did not properly value the long-term leaseback of the property, and therefore over-assessed REET. We deny the petition.

Det. No. 19-0070, 40 WTD 174 (2021) 40WTD174.pdf

A non-profit research and development organization protests assessments of use/deferred sales tax on purchases made under its High Technology Sales and Use Tax Certificate on grounds that the assessments are outside the four-year statutory time period. We deny the petition.

Det. No. 19-0109, 40 WTD 200 (2021) 40WTD200.pdf

A museum protests the Department’s disallowance of a refund of retail sales tax. The museum argues that certain purchases should be exempt from sales tax as artistic and cultural objects. The museum also argues that a portion of its costs should be considered public road construction. We grant the petition in part and deny it in part.

Det. No. 19-0083, 40 WTD 183 (2021) 40WTD183.pdf

An [Out-of-State] development company protests the Department’s assessment of retail sales tax and B&O tax on the grounds that the Department failed to provide the company with timely notice that the Department had issued the assessment, thus rendering the assessment invalid. The company also argues that, even if the assessment is valid, the associated delinquency penalty was improperly assessed because the company filed and paid its monthly tax returns on time. Because the Department’s secure messaging system shows that the Department timely transmitted the assessment to the company, we find that the Department complied with its statutory duty to provide notice and the assessment is valid. We also find that the delinquent penalty was properly assessed. Taxpayer’s petition is denied.

Det. No. 19-0151, 40 WTD 211 (2021) 40WTD211.pdf

Taxpayer, a provider of digital automated services, requests a refund of retail sales tax paid on the purchase of servers used to provide its customers computer-related services. We conclude Taxpayer does not resell the actual servers in its provision of retail services. Finding Taxpayer does not resell the servers, we deny Taxpayer’s refund request.

Det. No. 18-0228, 40 WTD 169 (2021) 40WTD169.pdf

A utility company in the business of generating and selling electrical power protests the classification of certain revenue streams. The company argues money received for licensing space on its utility poles is not subject to tax. . . . The petition is granted in part and denied in part.

Det. No. 19-0105, 40 WTD 195 (2021) 40WTD195.pdf

A for-profit [human tissue] bank petitions for review of the Department’s adjustment of Taxpayer’s monthly excise tax returns, which reclassified certain income from . . . tissue related services from the Retailing B&O Tax Classification and subject to retail sales tax to the Service and Other Activities B&O Tax Classification and denied deductions to retail sales tax for sales of prosthetic devices. Taxpayer’s petition is denied.

Det. No. 19-0073, 40 WTD 178 (2021) 40WTD178.pdf

A company that provides piloting and flight training services protests assessment of use tax on its aircraft, arguing that the aircraft was used solely for leasing in the regular course of business and that there was no intervening personal use of the aircraft. The petition is denied.

Det. No. 19-0120, 40 WTD 207 (2021) 40WTD207.pdf

Two individuals protest the Department’s assessment of REET on their transfer of real property to a limited liability company. The individuals argue that the transfer was exempt from REET as a mere change in identity or form. Alternatively, the individuals argue that the transfer was exempt from REET as the clearing of title. We deny the petition.

Det. No. 20-0277, 40 WTD 165 (2021) 40WTD165.pdf

A business protests the denial of a request for a refund of retail sales tax. The business collected the retail sales tax from clients on sales of personal training services, and remitted said taxes to the Department. The business later discovered that such services are not subject to retail sales tax. We find that the business is not entitled to a refund of the retail sales tax because it was the client, not the business, that paid the tax, and the business has not provided any evidence that it has refunded the taxes to the client. The petition is denied.

Det. No. 19-0024, 40 WTD 127 (2021) 40WTD127.pdf

An individual petitions for refund of the Department’s assessed REET on a transfer of land in exchange for consideration made to settle a boundary line dispute. The individual asserts that the transfer is not subject to the tax because it was made solely to settle a boundary line dispute. We deny the petition.

Det. No. 18-0330, 40 WTD 083 (2021) 40WTD083.pdf

A taxpayer protests the Department’s use of the county’s assessed market value to determine the “selling price” for real estate excise purposes. The taxpayer argues that the selling price should be the price paid for the property. We grant the petition in part, deny it in part, and remand for adjustment.

Det. No. 19-0052, 40 WTD 150 (2021) 40WTD150.pdf

A manufacturer of cancer treatment drugs protests imposition of hazardous substance tax on personalized brachytherapy radiation products that Taxpayer makes from [radioisotope], a hazardous substance. We grant Taxpayer’s petition and remand the case to the Audit Division for adjustment.

Det. No. 19-0011, 40 WTD 109 (2021) 40WTD109.pdf

A distributor of giftware, restaurant supplies, and other goods protests the assessment of retail sales tax on certain transactions where the customer did not have a reseller permit. The distributor argues, based on facts and circumstances, that the transactions were properly classified as wholesale sales. We grant the petition.

Det. No. 19-0037, 40 WTD 137 (2021) 40WTD137.pdf

A married couple protests the Department’s assessment of REET. The couple argues it is eligible for the clearing title exemption for a quitclaim deeded transfer to their son. We deny the petition.

Det. No. 19-0003, 40 WTD 093 (2021) 40WTD093.pdf

An out-of-state corporation engaging in online sales to customers in Washington State through a third-party online marketplace facilitation service and through their own website disputes assessments by the Department based on lack of nexus. Taxpayer contends it has no physical presence or inventory storage in Washington, and it has never maintained a stock of goods in Washington. We deny Taxpayer’s petition.

Det. No. 19-0064, 40 WTD 157 (2021) 40WTD157.pdf

An automotive maintenance and repair company protests the Department’s assessment of retail sales tax on certain sales of auto parts on the grounds that it sold the parts to a nonresident. The company also seeks a refund of retail sales tax collected from Washington customers on sales that occurred while both the company and the customer were outside the state. We find that because the company charged the nonresident more than the company’s costs for the parts and failed to provide adequate documentation regarding the nonresident’s residency, an adjustment of the assessment is not warranted. We also find that the company is not entitled to a refund of the allegedly erroneously-collected sales tax because it did not first refund the taxes to its customers. Petition denied.

Det. No. 19-0021, 40 WTD 117 (2021) 40WTD117.pdf

A taxpayer that plans to offer custom round trip sightseeing tours via water from Washington to [out-of-state] seeks review of a binding letter ruling that: (1) its purchase of a vessel was not exempt from retail sales tax under RCW 82.08.0262 because the taxpayer would be offering sightseeing tours; and (2) its purchases of fuel to be consumed outside of Washington are not exempt from retail sales tax under RCW 82.08.0261. We grant the petition.

Det. No. 19-0049, 40 WTD 144 (2021) 40WTD144.pdf

Taxpayer, a bottler of soft drinks, appeals the disallowance of the M&E retail sales and use tax exemption for equipment and labor spent on a bottling line located within Washington. The Department denied the exemption because of the delay in putting the line into full production. We grant Taxpayer’s petition finding the M&E exemption does not contain a time requirement in using the equipment at full capacity.

Det. No. 19-0009, 40 WTD 105 (2021) 40WTD105.pdf

Taxpayer requests a refund for the assessment of REET paid on his transfer of interest in real property, by quitclaim deed, to his two sons. Taxpayer asserts that the transfer is not subject to REET because he purchased the property as his sons’ nominee. The Department denies the petition.

Det. No. 19-0027, 40 WTD 131 (2021) 40WTD131.pdf

A for-profit . . . college protests the assessment of B&O on tuition fees on grounds that the fees were deductible from its gross receipts. We deny the petition.

Det. No. 18-0336, 40 WTD 087 (2021) 40WTD087.pdf

A solid waste collection business appeals the Department’s classification of part of its waste disposal activities as the rental of waste containers, subject to retail sales tax and retailing B&O tax. The business argues that those activities should instead be subject to the service and other activities B&O tax. The business also argues for waiver of interest and penalties. We grant the petition in part, deny it in part, and remand it in part.

Det. No. 19-0060, 40 WTD 154 (2021) 40WTD154.pdf

A real estate development company protests the Department’s denial of its request for a refund of REET paid on the sale of real property from the company to purchasers. The parties later rescinded the sale and the purchasers returned the property to the company in return for a refund of all consideration the purchasers had paid. We find that the transfer of the property back to the company following the rescission is an independent transaction and a rescission does not alter the fact that the initial sale to the buyers was subject to REET. Taxpayer’s petition is denied.

Det. No. 19-0016, 40 WTD 113 (2021) 40WTD113.pdf

An individual protests the imposition of REET on two transfers of real property from the individual to a LLC owned in part by the individual. Because the LLC paid the mortgage debt from the origination of the mortgage and continued to do so after the individual transferred the real property to the LLC, there was no consideration for the transfer. The petition is granted.

Det. No. 19-0042, 40 WTD 140 (2021) 40WTD140.pdf

A property owner claims that the amount listed as the sale price on a sales agreement and a REET affidavit is not the true and fair value of property conveyed for the purpose of imposing REET because he already owned a portion of the property and did not pay for the portion he already owned. We grant Taxpayer’s petition.

Det. No. 19-0005, 40 WTD 100 (2021) 40WTD100.pdf

An out-of-state manufacturer of industrial enclosure and cooling solution products protests inclusion of special price agreement rebates in its measure of selling price subject to wholesaling B&O tax. Taxpayer contends that the special price agreement rebates are bona fide discounts excluded from the definition of selling price and, therefore, the measure of gross proceeds subject to B&O tax. We . . . deny Taxpayer’s petition . . . .

Det. No. 18-0301, 40 WTD 052 (2021) 40WTD052.pdf

An auto parts seller seeks review of an assessment issued by the Department. Taxpayer objects to the Department’s use of estimated sales amounts in calculating Taxpayer’s tax liability. Taxpayer also objects to the Department’s reclassification of income from the Wholesaling B&O Tax Classification to the Retailing B&O Tax Classification and retail sales tax, as well as the Department’s denial of tax exemptions for sales outside of Washington. We grant the petition in part, deny in part, and remand for adjustment to the tax assessment.

Det. No. 18-0307, 40 WTD 077 (2021) 40WTD077.pdf

A medical services provider protests the Department’s assessment of service and other activities B&O tax on federal incentive payments. Taxpayer argues the incentive payments are deductible from B&O tax as deductions or contributions. We deny the petition.

Det. No. 18-0300, 40 WTD 039 (2021) 40WTD039.pdf

A taxpayer that, in relevant part, provides support services to an affiliate that owns restaurants in Washington State disputes the assessment B&O tax on certain expenditures. First, Taxpayer contends that certain costs were erroneously duplicated in the audit, resulting in an overstatement of tax due. Second, Taxpayer argues that certain expenditures do not constitute gross income, because they were paid solely on behalf of its affiliate and constituted non-taxable advances and reimbursements.

Third, Taxpayer argues, alternatively, that it never actually received payment from its affiliates for the services it purchased, that journal entries were made solely for internal management purposes, and [the amounts posted] are “imputed income” not subject to B&O tax.

Finally, Taxpayer requests a waiver of delinquent penalties and substantial underpayment penalties. We grant the petition with regard to the issue of duplication errors in the audit and some charges that were billed solely to affiliates, and deny the petition as to the remaining issues.

Det. No. 18-0302, 40 WTD 064 (2021) 40WTD064.pdf

An affiliate company of an international clothing retailer challenges the B&O tax classification and apportionment to Washington of certain intercompany allocations received from its parent company and a sister company, and further maintains that commercially-generated sales reports more accurately capture the value of catalog and internet sales made by the affiliate Taxpayer into Washington than do the affiliate Taxpayer’s [51-State Apportionment Schedule]. Petition granted in part and denied in part.

Det. No. 18-0298, 40 WTD 034 (2021) 40WTD034.pdf

An architectural firm that provides services to Washington clients, petitions for correction of an assessment of service and other activities B&O tax. Taxpayer claims that payments it received from its clients and paid to third-party consultants were non-taxable advances or reimbursements. Taxpayer further requests waiver of penalties. We deny Taxpayer’s petition.

Det. No. 18-0280, 40 WTD 013 (2021) 40WTD013.pdf

Taxpayer protests the assessment of use tax/deferred sales tax [imposed by] the Audit Division of the Department, [which] determined that Taxpayer’s construction of a building did not qualify for a high unemployment county tax deferral because construction of the building began before the Department issued the tax deferral certificate. The assessment is affirmed.

Det. No. 18-0295, 40 WTD 028 (2021) 40WTD028.pdf

A logger protests the assessment of use tax on the purchase of a bulldozer used in its logging operations. The logger argues the bulldozer qualifies for the M&E use tax exemption because it is “used directly” in a manufacturing operation by providing physical support for manufacturing equipment. However, the logger also uses the bulldozer for non-manufacturing purposes and we find that the logger failed to prove that the bulldozer meets the “majority use” requirement of the M&E exemption. Taxpayer’s petition is denied.

Det. No. 18-0276, 40 WTD 007 (2021) 40WTD007.pdf

A Washington-based business engaging in aerospace product development argues that it qualifies for certain aerospace incentive B&O tax rates, and the B&O tax credit for aerospace product development. We grant the petition in part and deny it in part.

Det. No. 18-0294, 40 WTD 016 (2021) 40WTD016.pdf

A Washington corporation petitions seeking correction of an audit assessment by the Department. In its petition, Taxpayer asserts that amounts it received from an affiliated business were not taxable income but were instead owner investment funds. Taxpayer argues that these amounts were previously taxed as income to the affiliated business and this represents a double tax on the same amounts. Taxpayer also contests the Department’s coding of this income for local sales tax purposes, contending that, if it is recognizable as income, the related taxable activity should be coded to a different location. We deny Taxpayer’s petition.

Det. No. 16-0361, 40 WTD 001 (2021) 40WTD001.pdf

Taxpayer designs, develops, and operates automated cold storage warehouses within the United States and Europe. These “high-bay” warehouses store and retrieve palletized chilled and frozen goods mechanically via an advanced automated system. Taxpayer provided information regarding its plans to construct a new cold storage warehouse in . . . Washington. Taxpayer asked the Department “to determine if Taxpayer qualifies for the warehouse exemption remittance for retail sales tax purposes pursuant to RCW 82.08.820,” and, if so, “to confirm the application of the exemption to each item shown in the proposed investment budget attached to the Ruling request as Exhibit A.”

2020
Title Date Document Description
Det. No. 18-0293, 39 WTD 215 (2020) 39WTD215.pdf

An operator of mobile snack stands protests the assessment of service and other activities B&O tax on grounds that it was engaged in a retailing joint venture that paid the appropriate retailing B&O tax and retail sales tax, and the measure of tax assessed includes Taxpayer’s share of joint venture profits in error. We deny the petition.

Det. No. 18-0088, 39 WTD 198 (2020) 39WTD198.pdf

A company selling restaurant supplies and other packaging products protests the reclassification of sales reported as wholesale to retail due to the lack of reseller permits. We affirm the adjusted assessments as issued, because the Taxpayer has not provided sufficient documentation to substantiate the nature of the contested sales. The Taxpayer’s petition is denied.

Det. No. 18-0284, 39 WTD 208 (2020) 39WTD208.pdf

A Washington corporation seeks cancellation of an assessment of REET imposed as the result of its sale of a business. Taxpayer objects to the Department’s use of the county market value property tax assessment as the selling price of the real property after Taxpayer provided an asset allocation made under IRC § 1060. Taxpayer asserts that the value determined under its IRC § 1060 asset allocation represents the true and fair value of the real property for the purpose of calculating REET, and therefore the Department is precluded from using the county market value property tax assessment for this purpose. We deny Taxpayer’s petition.

Det. No. 15-0036, 39 WTD 191 (2020) 39WTD191.pdf

An out-of-state video game development company protests a tax assessment in which it was assessed retailing B&O tax and retail sales tax. Taxpayer argued that it was not subject to taxation in Washington because its only in-state activity, participation at an annual three-day trade show in [Washington], did not create substantial nexus with Washington. We deny the petition.

Det. No. 18-0283, 39 WTD 204 (2020) 39WTD204.pdf

A retailer protests the denial of its application for remittance of retail sales tax paid in connection with purchases of material-handling and racking equipment for use in its Washington warehousing facility. The retailer argues that its facility constitutes a distribution center for purposes of RCW 82.08.820 and amounts spent to purchase materials for use in the facility are qualifying purchases for purposes of the exemption set forth in that provision. We deny the petition.

Det. No. 20-0040, 39 WTD 188 (2020) 39WTD188.pdf

A business that was previously assigned to report it taxes on a quarterly basis asks the Department to reconsider its recent decision requiring [the business] to now report its taxes on a monthly basis, asserting that the change in reporting frequency would present a costly burden. We deny the petition.

Det. No. 18-0272, 39 WTD 175 (2020) 39WTD175.pdf

The purchaser of a hotel and furnishings at a sheriff’s sale protests the measure of TPP subject to use tax using comparison sales prices instead of values reported by taxpayer on its REET Affidavit. We deny taxpayer’s petition.

Det. No. 18-0255, 39 WTD 156 (2020) 39WTD156.pdf

An out of state corporation engaging in online sales to customers in Washington State through a third-party online marketplace facilitation service disputes assessments by the Department based on lack of substantial nexus. Taxpayer contends it has no physical presence or inventory storage in Washington, and it has never maintained a stock of goods in Washington. Taxpayer argues that the digital assignment of third-party inventory located in Washington to Taxpayer by Facilitator’s electronic inventory management system, for purpose of Facilitator’s delivery of orders to Taxpayer’s Washington customers, does not provide sufficient basis for substantial nexus with Washington. We deny Taxpayer’s petition.

Det. No. 18-0280, 39 WTD 185 (2020) 39WTD185.pdf

Taxpayer protests the assessment of use tax/deferred sales tax [imposed by] the Audit Division of the Department, [which] determined that Taxpayer’s construction of a building did not qualify for a high unemployment county tax deferral because construction of the building began before the Department issued the tax deferral certificate. The assessment is affirmed.

Det. No. 18-0267, 39 WTD 171 (2020) 39WTD171.pdf

Taxpayer seeks review of the partial denial of its request for refund of 75% of the retail sales tax paid on the purchase and installation of a solar energy system. Taxpayer asserts that the Department improperly denied its refund request, allowable under RCW 82.08.962 and WAC 458-20-263 (“Rule 263”), of tax paid on charges for the design, engineering, and permitting for a solar system that generates electrical energy. Taxpayer’s petition is denied.

Det. No. 18-0254, 39 WTD 152 (2020) 39WTD152.pdf

The sole member of a now-defunct construction company petitions for the correction of TFAA . . . . During the company’s life, it collected retail sales tax from its customers, but failed to remit the taxes to the Department. Prior to the company’s dissolution, the Department issued four tax warrants. . . . [W]hen the company was dissolved, the Department pursued the member personally for the outstanding balances pursuant to RCW 82.32.145. The member argues that the company was unable to pay its tax debt due to financial hardship caused by its customers failing to pay for work the company performed. Petition denied.

Det. No. 18-0276, 39 WTD 179 (2020) 39WTD179.pdf

A Washington-based business engaging in aerospace product development argues that it qualifies for certain aerospace incentive B&O tax rates, and the B&O tax credit for aerospace product development. We grant the petition in part and deny it in part.

Det. No. 18-0256, 39 WTD 166 (2020) 39WTD166.pdf

A LLC protests the Department’s rescission of the company’s High Unemployment County Sales and Use Tax Deferral certificate because the company did not construct the qualified building included in the approved application. Taxpayer argues that its failure to construct the qualified building should not be a basis for rescinding the deferral because its abandonment of construction of the qualified building was due to an unforeseeable condition. We deny the Taxpayer’s petition.

Det. No. 18-0252, 39 WTD 145 (2020) 39WTD145.pdf

A construction company contests an assessment, arguing the assessment is based on inaccurate and incomplete information, and wrongly reclassified expenditures made in furtherance of non-governmental projects as government contracting expenses for purposes of the use tax/deferred retail sales tax. We deny the petition.

Det. No. 18-0232, 39 WTD 130 (2020) 39WTD130.pdf

A person who transferred a 50% interest in property that he recently purchased at auction and remitted REET based on the sales price protests the assessment of additional tax based on the higher value for the property recorded on the county assessor’s rolls. The Special Programs Division asserted that the transfer was not an arm’s length transaction; however, no evidence has been presented [by the Special Programs Division,] that the sales price (which was based on half of the auction price) did not establish the fair market value of the property at the time of transfer or that there was any relationship or agreement between the parties that would support characterizing the subsequent transfer as anything other than an arm’s length transaction. We find that tax was remitted based on the most recent selling price for the property and grant the Taxpayer’s petition.

Det. No. 16-0207, 39 WTD 111 (2020) 39WTD111.pdf

A provider of nursing services seeks review of a tax assessment of use tax and/or deferred sales tax on various medical “kits” Taxpayer purchased and used in the course of its services without paying retail sales tax or use tax. Taxpayer argues that the kits in question are exempt from retail sales tax and use tax. We deny the petition.

Det. No. 18-0248, 39 WTD 139 (2020) 39WTD139.pdf

Taxpayer conducts bowling tournaments. The tournament fee consists of an entry fee, lineage fee, and prize money. Taxpayer challenges the Department’s issuance of Balance Due adjustments. We sustain the Balance Due adjustments.

Det. No. 18-0187, 39 WTD 126 (2020) 39WTD126.pdf

An in-state seller of vehicle repair machines and equipment protests the Department’s assessment of retailing and wholesaling B&O tax and retail sales tax. Taxpayer argues that the Department incorrectly [assessed tax on sales of tangible personal property that was received by the purchaser outside the state. We deny Taxpayer’s petition.

Det. No. 15-0030, 39 WTD 103 (2020) 39WTD103.pdf

A company that processes credit and debit transactions for merchants and banks protests the assessment of service and other activities B&O tax on interchange fees paid to card-issuing banks for each credit card transaction. We hold that the company is responsible for paying the interchange fees, that the interchange fees are includable in its merchant discount revenues, and that the interchange fees are therefore part of its taxable gross income. Taxpayer’s petition is denied.

Det. No. 18-0246, 39 WTD 134 (2020) 39WTD134.pdf

A construction contractor protests the Department’s assessment of retail sales tax and retailing B&O tax assessed on the amount of the total construction project cost instead of contract sum. Taxpayer further asserts it is entitled to additional “tax paid at source” deductions. We grant Taxpayer’s petition in part and deny in part.

Det. No. 16-0341, 39 WTD 122 (2020) 39WTD122.pdf

A warehousing goods provider protests use tax assessed by the Department on a . . . tractor, claiming retail sales tax was paid when a private party provided the funds to purchase the tractor several years prior. The petition is granted.

Det. No. 18-0211, 39 WTD 096 (2020) 39WTD096.pdf

A mortgage products and services provider protests apportionment of certain services fees to the state of Washington. Taxpayer contends that document review fees and closing charges are not “loan service fees” and should be apportioned as “receipts from services” using an alternative calculation of its costs of performance. We deny Taxpayer’s petition.

Det. No. 17-0148, 39 WTD 072 (2020) 39WTD072.pdf

An employer of record disputes the assessment of service and other activities B&O tax on amounts received from affiliates to compensate for the employer of record’s payment of the affiliates’ employee expenses. The employer of record asserts it qualifies as a paymaster and such amounts are excluded from gross income under WAC 458-20-111 and RCW 82.04.43393. Alternatively, should we find these payments are included in gross income, the employer of record asserts these payments should be sourced to the locations of the affiliates’ properties being managed by the employees and apportioned outside Washington. Petition denied.

Det. No. 18-0209, 39 WTD 090 (2020) 39WTD090.pdf

A property management company that failed to pay B&O tax seeks a refund of penalties because it asserts the Department should have known Taxpayer was reporting its business activities improperly and notified Taxpayer of the error. Taxpayer argues that it made the error in “good faith” and, had it been notified, it would have paid the tax on time. Taxpayer’s petition is denied.

Det. No. 17-0083, 39 WTD 068 (2020) 39WTD068.pdf

A manufacturer and wholesaler of bulk sanitary products petitions for correction of an assessment of litter tax contending that sales of bulk paper products to commercial customers do not fall within the ambit of the litter tax. We grant the petition.

Det. No. 18-0197, 39 WTD 086 (2020) 39WTD086.pdf

A service provider protests the reclassification of receipts from the warehousing B&O tax classification to the service and other activities B&O tax classification. We deny the petition.

Det. No. 16-0285, 39 WTD 060 (2020) 39WTD060.pdf

Seller of vehicle extended warranty contracts protests assessment of Retailing B&O Tax and Retail Sales Tax on sales of extended warranty service contracts by dealer directly to Washington consumers as part of a vehicle purchase transaction. Taxpayer also protests sampling methodology for estimated tax liability. Taxpayer’s petition is denied.

Det. No. 18-0229, 39 WTD 044 (2020) 39WTD044.pdf

A gas and electric utility company seeks adjustment of use tax paid and retail sales tax assessed on vendor invoices on grounds that it paid for gas turbine inspection services or services to real property not subject to tax. Taxpayer’s petition is denied.

Det. No. 16-0202, 39 WTD 026 (2020) 39WTD026.pdf

A business that provides dog waste pick up services to its residential customers’ petitions for review of a Department assessment of retail sales tax, arguing that the services it provides are not subject to retail sales tax. We grant the petition.

Det. No. 18-0245, 39 WTD 055 (2020) 39WTD055.pdf

A developer of online gaming platforms appeals the Department’s partial denial of refund. Taxpayer contends that the Department erred in finding Taxpayer’s refund application was incomplete. We grant Taxpayer’s petition.

Det. No. 18-0125, 39 WTD 034 (2020) 39WTD034.pdf

A real estate acquisition and land development company protests the Department’s assessment of retail sales tax and retailing B&O tax on several sources of income. First, regarding development fees, the company argues it did not provide services in respect to construction, and so the income was not from a retail activity. Second, the company argues that income it received from a stormwater connection fee it paid was excludable as a reimbursement. . . .We deny the petition.

Det. No. 18-0231, 39 WTD 051 (2020) 39WTD051.pdf

A retailer of marijuana and marijuana-related products disputes the Department’s estimated assessment of OTP tax on products referred to as cigar wraps or blunts. Taxpayer asserts that the products . . . do not contain tobacco. We find that the . . . cigar wraps contain tobacco and are subject to OTP tax. We deny Taxpayer’s petition.

Det. No. 16-0234, 39 WTD 030 (2020) 39WTD030.pdf

A business that collects and disposes of dog waste protests the reclassification of its income from the service and other activities B&O tax classification to the retailing B&O tax classification and retail sales tax classifications. We grant Taxpayer’s petition.

Det. No. 18-0070, 39 WTD 001 (2020) 39WTD001.pdf

Taxpayer, a subsidiary of a specialty retailer, protests the denial of its application to the Voluntary Disclosure Program because an affiliated entity doing business in Washington was being audited by the Department. The Taxpayer disputes that the audit of an affiliated entity constitutes a prohibited contact for purposes of the Voluntary Disclosure Program. We hold that because there was contact with an affiliated entity, the Taxpayer did not meet the requirements to participate in the Voluntary Disclosure Program. The Taxpayer’s petition is denied.

Det. No. 18-0148, 39 WTD 010 (2020) 39WTD010.pdf

A corporation protests the estimated cigarette tax and penalties imposed on the sale of RYO cigarettes, asserting that the tax and penalties are not due and, if due, the estimate of sales is too high. Taxpayer’s petition is denied.

Det. No. 18-0162, 39 WTD 021 (2020) 39WTD021.pdf

Taxpayers appeal the Department’s disallowance of a credit adjustment to sales for retail sales tax remitted. Taxpayers argue that the Department erred in assessing retail sales tax on food sales without backing out an amount equal to the retail sales tax that was separately stated in receipts and collected on food sales. Taxpayers also argue that retail sales tax was included in the price of alcoholic beverages. We deny the petition.

Det. No. 18-0147, 39 WTD 006 (2020) 39WTD006.pdf

[Taxpayer] protests the assessment of retail sales tax on charges for parking lot reconstruction, on grounds that it paid the appropriate tax to the construction contractor in accordance with the contract. We deny the petition.

Det. No. 18-0158, 39 WTD 017 (2020) 39WTD017.pdf

The sole principal and managing member of a used car dealer petitions for correction of a TFAA on grounds that (1) the assessments against the used car dealer do not show a failure to remit trust funds, and (2) the 50% evasion penalty is inapplicable because there is no showing that Taxpayer himself evaded payment. We deny the petition.

2019
Title Date Document Description
Det. No. 18-0202, 38 WTD 266 (2019) 38WTD266.pdf

An out-of-state producer and supplier of enzyme reagents for use in life sciences research argues that, since the Department did not use a sampling methodology in assessing unreported retail sales tax, and associated penalties, the Department acted unreasonably. Petition denied.

Det. No. 18-0208, 38 WTD 278 (2019) 38WTD278.pdf

Operators of 4-D rides protest the Department’s denial of their requests for refunds of retail sales tax remitted from ticket sales. The petitions for refund are denied.

Det. No. 18-0194, 38 WTD 261 (2019) 38WTD261.pdf

A Washington-based aerospace manufacturing business argues that it has shown that certain activities qualify for the B&O tax classification applicable to manufacturers or sellers of commercial airplane components manufactured by the seller. We remand the petition for an adjustment based upon Taxpayer’s timely submission of proof to the operating division which substantiates its qualification for the aerospace manufacturing B&O tax rate on the disputed transactions, consistent with the holding in this determination.

Det. No. 18-0205, 38 WTD 272 (2019) 38WTD272.pdf

A construction contractor protests the Department’s disallowance of a retail sales tax exemption certificate that Taxpayer accepted for a contract to build agricultural employee housing. We grant Taxpayer’s petition in part and deny the petition in part.

Det. No. 18-0180, 38 WTD 253 (2019) 38WTD253.pdf

A restaurant business seeks review of an assessment of retail sales tax, retailing B&O tax, and evasion penalty. The taxpayer asserts that unreported sales were unreasonably estimated and the Department has not established the requirements for the imposition of the evasion penalty. The Department holds that the taxpayer failed to maintain suitable records and that the Audit Division reasonably estimated unreported sales and tax liability. The Department also holds that clear, cogent and convincing evidence established that the taxpayer intentionally evaded payment of tax and required imposition of the evasion penalty. The Department denied the taxpayer’s petition.

Det. No. 18-0150, 38 WTD 238 (2019) 38WTD238.pdf

A retailer selling roll-your-own cigarettes protests estimated assessments of tax on untaxed roll-your-own cigarette sales. The Taxpayer was provided the opportunity to provide records and detail to substantiate actual sales, but no records were received. We therefore sustain the assessments as issued and deny the Taxpayer’s petition.

Det. No. 18-0100, 38 WTD 220 (2019) 38WTD220.pdf

An S corporation disputes an assessment REET on property transferred to one of its shareholders and asserts the transfer is exempt from REET under RCW 82.45.010(3)(p) (and WAC 458-61A-211) as a mere change in identity or form. Petition denied.

Det. No. 18-0224, 38 WTD 248 (2019) 38WTD248.pdf

An individual protests REET assessed on the transfer of property to her son, claiming the transfer was exempt from REET as a mere clearing of title or addition of co-signor. We deny the petition in part and grant it in part.

Det. No. 18-0149, 38 WTD 229 (2019) 38WTD229.pdf

An automotive finance and insurance company contests the B&O tax reclassification of its commission income on two grounds. First, Taxpayer contends that its gross income from automotive financing and insurance was not correctly reclassified to the service and other activities B&O tax rate and, second, Taxpayer argues that it was entitled to rely on the results of an earlier audit when classifying its income. Taxpayer’s petition is denied.

Det. No. 17-0302, 38 WTD 212 (2019) 38WTD212.pdf

A payroll processing services provider protests the assessment of service and other activities B&O tax on amounts that Taxpayer claims are excluded from the measure of B&O tax. For a part of the relevant time period, Taxpayer also claims it is eligible to deduct those same amounts from its gross income. We deny the petition.

Det. No. 18-0184, 38 WTD 242 (2019) 38WTD242.pdf

An employer of record disputes taxes assessed on amounts received from affiliates to compensate for the employer of record’s payment of the affiliates’ employee expenses. The employer asserts it met the requirements of RCW 82.04.43393, and alternatively that it was entitled to rely on written instructions from the Department. The petition is denied.

Det. No. 18-0146, 38 WTD 224 (2019) 38WTD224.pdf

A wholesale and retail print shop objects to the reclassification of its business activities to the Printing and Publishing B&O Tax Classification and the amount of its tax assessment [asserting that its main business activity is duplicating materials provided by customers]. Taxpayer’s petition is denied.

Det. No. 16-0374, 38 WTD 208 (2019) 38WTD208.pdf

A retailer of recorded movies and music seeks a refund of use tax paid on services purchased from an application service provider. We deny the petition.

Det. No. 18-0109, 38 WTD 189 (2019) 38WTD189.pdf

A provider of software and data hosting services, in conjunction with help desk and other IT support services, protested an assessment of retail sales tax on its receipts from these services. The taxpayer asserted that the transaction meets the definition of a “bundled transaction,” [and] should be taxed as a non-retail service under statutory exclusions in RCW 82.08.190(4). The Department concludes that the software and data hosting services are retail DAS under RCW 82.04.050(8)(a) and that the IT support services provided exclusively in connection with the software and data hosting DAS were included in the retail sale of DAS under RCW 82.04.050(8)(b). The Department denies the taxpayer’s petition.

Det. No. 17-0315, 38 WTD 141 (2019) 38WTD141.pdf

A seller of cleaning and maintenance products at retail and wholesale protests a tax assessment based on unreported sales. Taxpayer argues that the amounts at issue were the result of price adjustments that either (1) did not constitute part of Taxpayer’s gross proceeds of sale, or (2) constituted bona fide discounts that are deductible from Taxpayer’s taxable income. We deny the petition.

Det. No. 18-0060, 38 WTD 175 (2019) 38WTD175.pdf

An out-of-state active duty U.S. Army officer and his spouse, husband and wife, who reside in Washington under military orders, petition for correction of an assessment of use tax on two private motor vehicles, issued by the Compliance Division of the Department. We deny Taxpayers’ petition.

Det. No. 16-0334, 38 WTD 115 (2019) 38WTD115.pdf

A financial institution that receives income from subservicing mortgage loans petitions for correction of an assessment that apportioned its loan servicing income based on the location of the borrower. Taxpayer maintained that the subservicing income should be attributed to where the services are performed. We conclude that Taxpayer’s loan servicing income should be apportioned based on the location of the borrower as provided in WAC 458-20-19404[A]. The assessment is sustained.

Det. No. 18-0017, 38 WTD 203 (2019) 38WTD203.pdf

A plat development company protests the inclusion of an evasion penalty for failure to timely remit collected retail sales tax, attributing the failure to lack of familiarity with the invoicing system. We sustain the inclusion of the evasion penalty as ongoing and consistent underreporting of collected retail sales tax and willful alteration of the electronic records is a sufficient basis to support the imposition of the evasion penalty.

Det. No. 18-0041, 38 WTD 158 (2019) 38WTD158.pdf

A national title insurer protests the Department’s assessment of retail sales tax, retailing B&O tax, and service and other activities B&O tax. Taxpayer argues that the Department overstated its income by erroneously (1) using insurance premium reporting documents to estimate Taxpayer’s income, and (2) using an estimated percentage to calculate its income from certain sales. We deny the petition in part, grant it in part, and remand it for additional records.

Det. No. 18-0076, 38 WTD 185 (2019) 38WTD185.pdf

A container transporter protests the Department assessment of PUT under the motor transportation classification. Taxpayer argues that his container transporting qualifies for full deduction as interstate and foreign sales. We deny the petition.

Det. No. 17-0197, 38 WTD 126 (2019) 38WTD126.pdf

A loan servicer disputes the calculation of its apportionable income and the resulting assessment of service and other activities B&O tax on several grounds. We deny in part . . . .

Det. No. 18-0044, 38 WTD 170 (2019) 38WTD170.pdf

An OTP retailer disputes an estimated assessment of tobacco products tax on unlicensed purchases of OTP. With its petition for review, the retailer provided additional records that it claims to be purchase invoices for all of its unlicensed OTP purchases and asks the Department to recalculate tax due based upon these records. We remand this matter to the operating division to determine whether Taxpayer is entitled to an adjustment based on the records it provided with its petition.

Det. No. 16-0107, 38 WTD 106 (2019) 38WTD106.pdf

An out-of-state company that sells computer software to resellers or end users and provides online computer support services to customers in Washington could be liable for Washington’s wholesaling B&O tax, retailing B&O tax, retail sales or use tax, and service and other activities B&O tax, if the company had nexus with Washington pursuant to RCW 82.04.067. The TI&E tax ruling correctly informed Taxpayer on its potential tax liability for Washington state excise taxes and is affirmed.

Det. No. 18-0116, 38 WTD 197 (2019) 38WTD197.pdf

An online reservation service disputes the assessment of delinquent penalties on additional tax due. The business filed corrected tax returns for three tax periods to report and pay tax on previously unreported apportionable income. However, the business filed the corrected returns after October 31st of the year following the current year for each tax period. We grant the petition in part and deny it in part.

Det. No. 18-0006, 38 WTD 149 (2019) 38WTD149.pdf

A Washington-based corporation that owns and operates a convenience store that makes retail sales of . . . tobacco products . . . , disputes the assessment of [the tobacco products] tax on certain purchases it admittedly made from unlicensed tobacco distributors for which it did not pay [the] tax. Taxpayer argues that the estimate that served as the basis for the tax assessment is manifestly unreasonable. We deny the petition.

Det. No. 18-0062, 38 WTD 181 (2019) 38WTD181.pdf

A broker/dealer that distributes exchange-traded funds and underwrites mutual funds protests the assessment of penalties on the grounds that it is was unaware of the requirement to file annual reconciliations and that it qualifies for waiver under the 24-month rule. We deny the petition.

Det. No. 17-0008R, 38 WTD 121 (2019) 38WTD121.pdf

A vendor of medical devices and equipment requests reconsideration of Det. No. 17-0008 denying that portion of its requested review of an assessment of retail sales tax on gross proceeds from sales to health care facilities of adaptive servo-ventilation devices on the basis that they are prosthetic devices. We deny Taxpayer’s petition.

Det. No. 18-0043, 38 WTD 165 (2019) 38WTD165.pdf

A LLC disputes an assessment of REET on a transfer of real property to one of its members. The company asserts that the transfer of such real property was a liquidating distribution under 26 U.S.C. § 731, where neither the member nor company recognized gain or loss, and such a transfer is exempt from REET under RCW 82.45.010(3)(q)(i). Petition granted.

Det. No. 17-0248, 38 WTD 082 (2019) 38WTD082.pdf

A seller and lessor of vehicles petitions for review of . . . , retail sales tax assessed on purchases of car wash services . . . and rental car tax on rentals of unassigned cars to employees. Taxpayer’s petition is denied.

Det. No. 18-0032, 38 WTD 097 (2019) 38WTD097.pdf

A dairy operation protests the assessment of use tax/deferred retail sales tax. Taxpayer argues that the subject sales are exempt from taxation as improvements to qualifying livestock nutrient management facilities. We deny the petition.

Det. No. 16-0132, 38 WTD 079 (2019) 38WTD079.pdf

A company that provides rental of water treatment systems equipment to construction companies, disputes a Tax Ruling that assumed the company was using the equipment at the construction site to provide consultation services, claiming that it does not monitor nor analyze the water being treated. Taxpayer asks for a ruling based on the fact that it strictly rents the equipment to its customers. The ruling is modified.

Det. No. 18-0021, 38 WTD 087 (2019) 38WTD087.pdf

An internet-based company that matches music teachers and potential students within and outside Washington disputes the Department calculation of “throw-out” income when apportioning its income for B&O tax purposes. Taxpayer also requests attorney’s fees, claiming it was required to hire counsel in order to resolve its dispute with the Department. The petition is granted in part, denied in part, and remanded for adjustment.

Det. No. 18-0036, 38 WTD 101 (2019) 38WTD101.pdf

A residential and commercial solid waste collection service company petitions for review of the denial of its application for CAFCV tax credits. The Department denied its application after concluding that the company failed to submit the final documentation required to qualify for the credit within fifteen days of receiving the vehicles included in its application as required by statute. The company asserts that the Department should accept its application because it submitted the final documentation within fifteen business days from receiving the vehicles . . . . We deny the petition.

Det. No. 17-0229, 38 WTD 46 (2019) 38WTD46.pdf

Taxpayer, an internet retailer, challenges assessment of B&O tax and retail sales tax. Taxpayer disputes that it had sufficient physical presence within Washington to create the substantial nexus to allow Washington to tax its sales. Taxpayer also maintains that certain of its sales should be dissociated from its Washington activity. Taxpayer’s petition is denied.

Det. No. 18-0040, 38 WTD 71 (2019) 38WTD71.pdf

A payroll processing services provider protests the Department’s assessment of service and other activities B&O tax. Taxpayer argues that all of its receipts are excluded from the measure of B&O tax. We deny the petition.

Det. No. 14-0307R, 38 WTD 29 (2019) 38WTD29.pdf

A provider of cloud-based services [asserts] . . . that its services . . . constitute nontaxable “internet access” under the ITFA. [In Det. No. 14-0307, the Department held to the contrary. On reconsideration, the Taxpayer] argues that the Department should instead follow the broader interpretation of "internet access" by the [Out-of-State 1] and [Out-of-State 2] tax authorities that rendered rulings to the contrary. Taxpayer’s petition is denied.

Det. No. 17-0239, 38 WTD 57 (2019) 38WTD57.pdf

A residential mortgage lender protests inclusion in gross income of the business certain fees required by federal government-sponsored enterprises upon purchase of residential mortgages when determining its service and other activities B&O tax liability. We deny taxpayer’s petition.

Det. No. 17-0173, 38 WTD 38 (2019) 38WTD38.pdf

A buffet restaurant disputes assessments of tax and penalties resulting from an estimate of cash sales. The restaurant asserts that the Department erred in estimating the percentage of cash sales by observing customer payments and calculating an average percentage of the frequency at which customers paid in cash, instead of selecting an industry average percentage. The restaurant also asserts the Department has not shown that it intended to evade paying taxes. Petition denied.

Det. No. 18-0018R, 38 WTD 64 (2019) 38WTD64.pdf

A Washington State corporation engaged in log hauling to destinations in and out of Washington seeks reconsideration of Determination No. 18-0018, which held that Taxpayer was not eligible for claimed deductions to gross income for hauling logs to export yards taxable under the Log Hauling Over Public Highways PUT classification. During the audit, the Department’s auditor reportedly told Taxpayer if it obtained an export facility exemption certificate from qualifying export yards, then hauls made to those yards might qualify for the deduction. Taxpayer obtained the certificate from one export yard covering March 2016, and on that basis sought refund of tax assessed on all hauls covered by the certificate. Taxpayer’s petition for reconsideration is denied.

Det. No. 17-0233, 38 WTD 52 (2019) 38WTD52.pdf

A distributor that sells pre-packaged snacks to retailer customers protests the disallowance of cash and trade discount deductions Taxpayer originally claimed for “off invoice” discounts that it gave to its retailer customers when selling products to such customers. Taxpayer argues that the discounts were given to its customers without the expectation of anything in return from those customers. We deny the petition.

Det. No. 18-0124, 38 WTD 75 (2019) 38WTD75.pdf

An individual petitions for correction of an assessment of use tax. The individual argues she is exempt from use tax because she bought the vehicle while she was not a resident of Washington. The petition is denied.

Det. No. 16-0231, 38 WTD 35 (2019) 38WTD35.pdf

An out-of-state company disagrees with the Tax Ruling it received from the Department, informing Taxpayer that it provides a dating service, which is a retail business activity subject to Washington’s Retailing B&O tax under RCW 82.04.050(3), and that it must charge retail sales tax on the charges its Washington customers pay for that service under RCW 82.08.020. We affirm the Tax Ruling.

Det. No. 17-0249, 38 WTD 60 (2019) 38WTD60.pdf

A corporation protests the amount of estimated cigarette remedial penalty imposed for sale of single-stick cigarettes, asserting that the sales estimated by the LCB are too high. Taxpayer’s petition is denied.

Det. No. 16-0122, 38 WTD 008 (2019) 38WTD008.pdf

A medical marijuana management company protests the Department’s assessment of retail sales tax and retailing B&O tax arguing that it is a management company providing management services to a collective garden only, and that neither party is making retail sales. It also argues that even if it is making retail sales, those sales are exempt either as sales of drugs pursuant to a prescription or sales of medicines of a botanical origin. We deny the petition.

Det. No. 17-0190, 38 WTD 023 (2019) 38_WTD_023.pdf

A manufacturer of precision hard metal and titanium parts petitions for a correction of use tax assessed on grinding machines it purchased that it uses to sharpen tools for customers, to sharpen its own tools, and to manufacture new tools. It asserts that the purchased machinery qualifies for the M&E exemption. We deny the petition.

Det. No. 16-0031, 38 WTD 001 (2019) 38WTD001.pdf

A provider of electronic payment processing solutions for eCommerce merchants protests the attribution method employed by the Department’s Audit Division to determine Taxpayer’s taxable income. . . . Taxpayer argues that, for the period beginning June 1, 2010, the attribution method used should have been based on the merchant billing address. We deny the petition.

Det. No. 16-0340, 38 WTD 017 (2019) 38WTD017.pdf

Taxpayer was informed that its sales of nutritional supplements to its clients are subject to retail sales tax and retailing B&O tax. We affirm the Tax Rulings issued to Taxpayer on November 2 and 18, 2015 in their entirety.

2018
Title Date Document Description
Det. No. 18-0139, 37 WTD 254 (2018) 37WTD254.pdf

A former president . . . of a disbanded corporation petition[s] for review a TFAA against [him] . . . . The petition is denied.

Det. No. 18-0017, 37 WTD 237 (2018) 37_WTD_237.pdf

A Washington construction company protests the assessment of retailing B&O tax and retail sales tax on grounds that the Department of Revenue Audit Division erroneously classified Taxpayer as a prime contractor rather than a speculative builder. Taxpayer also contends that, if it is a prime contractor, it is eligible for tax paid at source deductions. We deny the petition in part and grant the petition in part.

Det. No. 17-0309, 37 WTD 218 (2018) 37WTD218.pdf

An out-of-state franchisor of . . . yogurt stores protests the assessment of B&O tax on grounds that the assessment discriminates against interstate commerce in violation of the Commerce Clause of the U.S. Constitution. We deny the petition.

Det. No. 18-0138, 37 WTD 249 (2018) 37WTD249.pdf

Taxpayer seeks waiver of late payment penalties on annual returns for 2015 and 2016 asserting that the late filing was due to a former accountant’s fraudulent conduct and mismanagement. As the Taxpayer has not sufficiently substantiated the assertion of fraud or established that reasonable safeguards were in place, we find the requirements for a waiver under WAC 458-20-228 are not met and deny the Taxpayer’s petition.

Det. No. 18-0016, 37 WTD 231 (2018) 37WTD231.pdf

A municipal corporation protests the imposition of leasehold excise tax on street obstruction permits issued to persons needing to obstruct the public’s right of way during construction projects. Because the municipal corporation has a real property interest in the public’s right of way, and because the permits allow the permit holder to exercise dominion and control over a specific location, the street obstruction permits create a taxable leasehold interest. The petition is denied.

Det. No. 16-0026, 37 WTD 201 (2018) 37WTD201.pdf

An out-of-state ATM card transaction processor protests the assessment of B&O tax in Washington on various grounds, including (1) that some of its gross income should have been classified under the royalties tax classification; (2) the Department’s taxation of Taxpayer’s gross income is unconstitutional; and (3) if constitutional, the Department’s taxation of Taxpayer’s gross income was based on an improper attribution method. The petition is denied.

Det. No. 18-0049, 37 WTD 243 (2018) 37WTD243.pdf

An individual domiciled [out-of-state] protests the assessment of use tax on a motor vehicle purchased in Washington and registered [out-of-state]. Because the individual owned property in Washington, worked in Washington, and spent significant time in Washington during the period in which the motor vehicle was purchased, he maintained sufficient ties to Washington to categorize him as a dual resident of Washington and [another state]. Therefore, he is not eligible for the nonresident use tax exemption for the motor vehicle in question and the assessment is affirmed.

Det. No. 18-0014, 37 WTD 224 (2018) 37WTD224.pdf

A business that provides “crossfit” training disputes re-classification of its income from the service and other activities B&O tax classification to the retailing B&O tax classification and the resulting assessment of [retail sales] tax. The business asserts the services it offers are primarily instructional in nature and distinguishable from retail physical fitness services offered by regular gyms. The business also requests waiver of penalties and interest because its owner was on active duty participating in an armed conflict when the tax liability accrued. The petition is denied in part and granted in part.

Det. No. 17-0305, 37 WTD 197 (2018) 37WTD197.pdf

A Washington dentist petitions for the correction of an assessment of service and other activities B&O tax on payments received for a tenant’s portion of shared building insurance and building utilities . . . . Taxpayer’s petition is denied.

Det. No. 18-0010, 37 WTD 183 (2018) 37WTD183.pdf

A Washington resident requests a refund of use tax paid on a boat the resident asserts was never used in Washington. Because there is no evidence that the Washington resident ever used the boat in Washington, the petition is granted.

Det. No. 17-0211, 37 WTD 165 (2018) 37WTD165.pdf

A credit card processor protests B&O tax imposed on interchange fees paid to its sponsoring bank on the grounds that it never actually receives the interchange fees and that the interchange fees are excludible from gross income as an advance or reimbursement under WAC 458-20-111. The petition is denied.

Det. No. 18-0135, 37 WTD 192 (2018) 37WTD192.pdf

A provider of . . . services appeals the assessment of evasion penalties on grounds that it did not intentionally evade its tax liability, and delinquent penalties on grounds that its failure to pay was due to circumstances beyond its control. We deny the petition.

Det. No. 18-0007, 37 WTD 177 (2018) 37WTD177.pdf

Taxpayer protests an assessment of successorship liability. We hold that Taxpayer was a successor because Taxpayer received more than 50% of the predecessor’s assets.

Det. No. 18-0127, 37 WTD 187 (2018) 37WTD187.pdf

A LLC protests the Department’s denial of its annual report filing extension for the preferential aerospace B&O tax rate arguing that the reports were due when it became eligible to claim the tax preference when it filed its tax returns with the Department. We deny the petition.

Det. No. 17-0234, 37 WTD 171 (2018) 37WTD171.pdf

A telecommunications company sought review of an assessment of service and other activities B&O tax imposed on receipts of USF support distributions. The taxpayer asserted that the Department cannot tax those receipts because the taxpayer previously paid B&O tax on the revenue it used to contribute to the USF. The taxpayer also asserted that the assessment should be waived based on the Department’s silence on the issue in prior audits. The Department denies the taxpayer’s petition.

Det. No. 17-0289, 37 WTD 153 (2018) 37WTD153.pdf

Taxpayer emailed a request for a binding tax ruling regarding the appropriate Washington B&O tax classification of its receipts. Taxpayer’s request stated that Taxpayer coordinates and conducts international youth exchange programs in the United States and a number of foreign countries. Students pay Taxpayer to participate in the exchange program. Taxpayer indicated that it partners with other organizations, who pay a portion of the program fees that students pay to participate in the exchange programs. Taxpayer argued that because it provides transportation, hotel lodging, and meal services, all of its income should be classified under the B&O tax rate for tour operators in RCW 82.04.260(5) and WAC 458-20-258. We deny the petition and affirm the tax ruling.

Det. No. 17-0269, 37 WTD 130 (2018) 37WTD130.pdf

Taxpayers, a sole proprietorship retailing educational materials and a corporation providing training services for teachers and school districts, both owned by the same person, request cancellation of penalties and interest, alleging that their assessment payments were originally late due to errors made by the family member who handled the books and the extended illness of a second family member. Taxpayers also assert that the Department issued the assessments against the two registered businesses in error because they run the same business. We deny the petitions.

Det. No. 17-0285, 37 WTD 147 (2018) 37WTD147.pdf

A construction contractor protests the Department’s assessment of retail sales tax and retailing B&O tax. Taxpayer argues that a certain payment it received from its customer was a “commission,” and not a retail sale. Taxpayer also argues that its design fees were not retail sales. We deny the petition.

Det. No. 17-0251, 37 WTD 126 (2018) 37WTD126.pdf

A LLC protests the Department’s assessment of REET on its transfers of real properties to another LLC. Taxpayer argues that the transfers were exempt as mere changes in identity or form. We deny the petition.

Det. No. 17-0294, 37 WTD 161 (2018) 37WTD161.pdf

A manufacturer of silicon materials protests the denial of refund of retail sales tax that Taxpayer paid to third parties. Taxpayer argues that despite filing its refund request in 2015, it qualifies for refund on purchases invoiced in 2010, more than four years prior to the beginning of the calendar year in which the refund application was made, when it paid the retail sales tax in 2011. We grant the petition in part, and deny the petition in part, subject to verification by the Audit Division.

Det. No. 17-0277, 37 WTD 136 (2018) 37WTD136.pdf

A commercial bank in the business of originating, managing, and servicing credit cards, as well as promoting a network for its cards, petitions for correction of two assessments of B&O tax. In regards to the first assessment, Taxpayer asserts that it did not have sufficient nexus with the state of Washington to subject it to the B&O tax prior to the state’s adoption of economic nexus. Alternatively, it asserts that the auditor’s use of a single factor apportionment formula as opposed to a three factor formula for this period was in error. Finally, Taxpayer argues that the assessment of penalties is inequitable because the Department itself did not believe that sufficient nexus existed to tax the activities of credit card companies prior to the adoption of economic nexus. In regards to the second assessment, Taxpayer argues that the Department’s failure to provide it with guidance regarding the proper treatment of cashback bonuses was a circumstance beyond its control that caused its underpayment of tax. We deny Taxpayer’s position as it relates to nexus and the assessment of penalties. However, we grant it as it relates to the apportionment formula.

Det. No. 17-0243, 37 WTD 112 (2018) 37WTD112.pdf

An out-of-state grower of carrots that also makes “baby” carrots from whole carrots, and sells such baby carrots, protests the assessment of B&O tax on such sales. Taxpayer argues that (1) it is entitled to “dissociate” its sales of baby carrots to customers in Washington, (2) the baby carrots were received by customers outside of Washington, and (3) Taxpayer’s sales of baby carrots are exempt from B&O tax because Taxpayer is a farmer. We deny Taxpayer’s petition . . . .

Det. No. 18-0052, 37 WTD 108 (2018) 37WTD108.pdf

An out-of-state transportation company protests penalties assessed when it failed to timely pay REET on its controlling interest transfer. The taxpayer alleges that the Department should waive the penalties because it did not know it was subject to REET and that it is eligible for the twenty-four month waiver provision in RCW 82.32.105. The petition is denied.

Det. No. 18-0013, 37 WTD 103 (2018) 37WTD103.pdf

An out-of-state limited liability company engaging in the business of manufacturing carbon fiber in Washington State seeks extension of the deadline to file its required annual tax preference survey following denial by TAA of the Department. Taxpayer does not dispute the facts leading to the initial denial, but requests waiver of the deadline because Taxpayer was simultaneously preparing for its first Washington tax deferral audit, and it showed good faith effort to comply by filing its completed survey only two days after the deadline. We deny Taxpayer’s petition.

Det. No. 17-0300, 37 WTD 099 (2018) 37WTD099.pdf

A company that failed to timely pay an assessment of interest for additional tax owed on its reconciliation return and was subsequently assessed an additional penalty, requests refund of the penalty on the basis that the assessment was mailed to its sales office and not timely routed to the person, in its corporate tax office, responsible for filing and paying excise taxes. We deny Taxpayer’s petition

Det. No. 15-0043, 37 WTD 095 (2018) 37WTD095.pdf

An out-of-state corporation protests the Department’s assessment made more than four years after the close of the tax year in which the tax was incurred. Taxpayer argues that it was a registered taxpayer under RCW 82.32.050(4)(a) and WAC 458-20-230(3) (Rule 230) because it registered with the Department in 1999, notwithstanding that it asked the Department to close its account prior to the Department’s contact. We deny the petition.

Det. No. 17-0210, 37 WTD 076 (2018) 37WTD076.pdf

A parent company that provides a variety of “general and administrative services” to various affiliated companies protests the method used by the Department’s Audit Division to calculate an assessment of B&O tax. Specifically, Taxpayer argues that (1) the Audit Division included amounts that do not constitute gross income in Taxpayer’s tax base, (2) the Audit Division used an unreasonable method of proportionally attributing Taxpayer’s income from certain categories of services, and (3) it is entitled to a waiver of penalties. We grant the petition in part, deny in part, and remand for adjustment to the tax assessment.

Det. No. 17-0060, 37 WTD 064 (2018) 37WTD064.pdf

A provider of information technology services protests a tax assessment of additional service and other activities B&O tax from attributing additional gross income from two service contracts to Washington. Taxpayer argues that the gross income should be attributed to multiple states where the parties to the contracts allegedly contemplated the benefits from such contracts would be received. Taxpayer also argues that the Department should attribute the gross income from a third contract differently than Taxpayer originally attributed the gross income from that contract. We remand for application of a reasonable method of proportionally attributing gross income from the first two contracts, but deny the petition as it pertains to the third contract.

Det. No. 17-0231, 37 WTD 088 (2018) 37WTD088.pdf

A Washington couple acting as one single independent distributor selling nutritional supplements for an incorporated [out-of-state] direct seller organization seeks refund of taxes assessed when the Department reclassified their reported gross income. Taxpayers dispute a decision by the Department to reclassify their income to the service and other activities B&O tax classification resulting in additional tax liability. Taxpayers state they relied on oral instructions from the Department to report their income as wholesaling, and contend they properly reported their income under the retailing, wholesaling, and royalties B&O tax classifications throughout the review period. We deny the petition.

Det. No. 16-0185, 37 WTD 057 (2018) 37WTD057.pdf

A Washington corporation . . . protests the assessment of retail sales tax and retailing B&O tax based on an estimate of cash sales. While conceding the inaccuracy of electronic records, the business asserts that handwritten records provided are complete and accurate, and alternatively argues that the estimate used by the Audit Division is too high. [W]e affirm the conclusion that these records are not accurate and that the Audit Division reasonably exercised its authority to use an estimate. We also find that the estimate was reasonably calculated and find no evidence to establish that estimate rests on untenable grounds or constitutes an abuse of discretion. The Taxpayer also asserts that non-business income was incorrectly treated as business income. Because insufficient detail was provided to substantiate a non-business source for the remaining items, we affirm their categorization as business income. We affirm the assessment as issued and deny the Taxpayer’s petition.

Det. No. 17-0168, 37 WTD 042 (2018) 37WTD042.pdf

A retailer of OTP disputes an estimated assessment of tobacco products tax, moist snuff tax, and cigar tax on unlicensed purchases of OTP resulting from a WSLCB investigation. The retailer asserts that the Department overestimated the tax due for the audit period by failing to account for the age of the OTP found during the investigation. Taxpayer also asserts that the Department disclosed its successor’s confidential tax information by sending [Taxpayer] the assessment.

Det. No. 16-0366, 37 WTD 021 (2018) 37_WTD021.pdf

A real estate broker, that is authorized to arrange third-party vendors to perform maintenance work on properties owned by a bank, appeals the assessment of retail sales tax and retailing B&O tax on the maintenance expenses paid to the third-party vendors directly by the bank. The petition for correction of assessment is denied.

Det. No. 17-0196, 37 WTD 053 (2018) 37WTD053.pdf

Taxpayer protests the assessment of additional REET, based on the assessed value of the property, and contends that REET was correctly paid on the total consideration received. We conclude that the sale at a 66% discount was not at the true and fair value and affirm REET assessed on the assessed value of the property. The Taxpayer’s refund petition is denied.

Det. No. 17-0146, 37 WTD 036 (2018) 37WTD036.pdf

A taxpayer that renovated a facility to relocate a laboratory objected to the disallowance of the high technology retail sales and use tax deferral for portions of the project. The taxpayer asserted that an unfinished area should have been excluded in apportioning common area costs. The taxpayer also asserted that the area used for developing a new type of nuclear reactor qualifies for the deferral as development of an alternative energy source. The Department denies the petition.

Det. No. 16-0337, 37 WTD 015 (2018) 37WTD015.pdf

A Washington state corporation disputes the Department’s assessment of successorship liability for the unpaid taxes of a defunct business, based on Taxpayer’s acquisition of the business’s assets. We conclude that Taxpayer is a successor and is liable for the unpaid taxes of its predecessor. We further conclude that Taxpayer has not met its burden of proving that the fair market value of the assets it acquired from its predecessor is less than $50,000. Therefore, Taxpayer may not limit its successorship liability to the fair market value of the acquired assets. We deny the petition.

Det. No. 17-0169, 37 WTD 049 (2018) 37WTD049.pdf

A firm in the business of providing bed and breakfast services and venues for events protests the imposition of retail sales tax and retailing B&O tax on its income. . . . The petition is denied.

Det. No. 17-0106, 37 WTD 028 (2018) 37WTD028.pdf

A construction company objects to reclassification of its design services as services rendered in respect to construction and retail sales under RCW 82.04.051. The taxpayer asserts that at the time it executed the design contract it was not contemplated by the parties that the taxpayer would be awarded the subsequent construction contract. . . . The taxpayer’s petition is denied.

Det. No. 16-0230, 37 WTD 001 (2018) 37WTD001.pdf

An asphalt and aggregate manufacturer and road paver protests the Department’s assessment of use tax and manufacturing B&O tax arguing the Department incorrectly valued asphalt and aggregate products it manufactured and used in public road construction projects. Taxpayer also disputes the Department’s disallowance of the manufacturers’ M&E exemption for a canvas covering it purchased to shelter recycled asphalt. We remand the petition in part and deny it in.

2017
Title Date Document Description
Det. No. 17-0127, 36 WTD 601 (2017) 36_WTD601.pdf

A former member of a closed LLC seeks a refund of money the member paid arising out of a trust fund assessment based on the closed LLC’s unpaid retail sales taxes, asserting that he was not a responsible person for the closed LLC. The former member also contests the Department collecting money to satisfy the liability out of a bank account owned jointly by the former member and an unrelated third party. The former member is a former chief executive and is liable for the retail sales taxes assessed in the tax warrant against the closed LLC for the portion of the audit period where the former member was the chief executive. The petition is granted in part and denied in part.

Det. No. 17-0155, 36 WTD 613 (2017) 36_WTD613.pdf

A restaurant protests the Department’s assessment of retail sales tax and B&O) tax under the retailing classification. Taxpayer argues the Department erroneously estimated cash sales. We deny the petition.

Det. No. 17-0075, 36 WTD 592 (2017) 36_WTD592.pdf

A company that retails and wholesales custom glassware, tableware, lighting and home décor, petitions for correction of an assessment of retail sales tax, retailing B&O tax, wholesaling B&O tax, and penalties and interest contending that it lacked substantial nexus with Washington during the relevant years. The company also requests a waiver of interest and penalties. In regards to the tax, interest, unregistered business penalty, and delinquent penalty, we deny the petition. In regards to the assessment penalty, we deny the petition in part and grant it in part.

Det. No. 17-0151, 36 WTD 607 (2017) 36_WTD607.pdf

A business that rents portable horse-stalls protests an assessment resulting from the reclassification of its rentals from wholesale to retail, claiming that all of its customers re-rent the stalls at competitive horse events. Taxpayer also asserts that at some point a Department employee orally advised it to report its stall rentals as “wholesale sales.” We deny Taxpayer’s petition.

Det. No. 15-0343, 36 WTD 547 (2017) 36WTD547.pdf

A grocery store with pharmacies in a number of its retail stores, that made sales of prescription drugs, seeks a refund of retailing B&O tax paid on these sales asserting that this tax is a prohibited indirect tax on the insurance carriers participating in the FEHBA, Medicare Advantage, and TRICARE, federal health insurance programs, from whom it received payment. We conclude that the B&O tax is not preempted and affirm the denial of the request for refund.

Det. No. 17-0142, 36 WTD 583 (2017) 36WTD583.pdf

The purchaser of a motor vehicle requests a partial refund of retail sales tax paid on the purchase of a new motor vehicle. The purchaser asserts that he is entitled to a reduction in the “selling price” of the new motor vehicle because he traded in another motor vehicle as consideration for the new motor vehicle, and his motor vehicle broker served to umbrella the transactions. Petition denied.

Det. No. 17-0021, 36 WTD 563 (2017) 36WTD563.pdf

Taxpayer sold an office building and paid REET on the total consideration paid. Taxpayer now petitions for a partial refund of the REET, claiming that the amount it paid exceeded the property’s “true and fair value.” We conclude that Taxpayer’s initial REET Refund Request was timely filed, but that it failed to rebut the presumption that the total consideration actually paid was the property’s true and fair value. We deny Taxpayer’s petition.

Det. No. 15-0328R, 36 WTD 538 (2017) 36WTD538.pdf

A healthcare services provider petitions for reconsideration of Det. No. 15-00328, which held that the provider was liable for use tax on a contract for information technology and software support services, because neither the de minimis exclusion nor the true object exclusion from the definition of a bundled transaction applied. The petition for reconsideration is denied.

Det. No. 17-0119, 36 WTD 579 (2017) 36WTD579.pdf

Taxpayer protests the Department of Revenue’s denial of Taxpayer’s application for a CTRC, arguing that its late application submission was caused by its internal personnel changes that prevented Taxpayer from gathering the information needed to timely complete its CTRC application. We deny Taxpayer’s petition.

Det. No. 16-0409, 36 WTD 556 (2017) 36WTD556.pdf

A Washington publishing company that provides services within and outside Washington disputes retail sales tax assessed on receipts for products purchased by customers outside of Washington. The company also protests the Department’s calculation of “throw-out” income when apportioning its income for B&O tax purposes. The petition is granted in part, denied in part, and remanded for adjustment.

Det. No. 17-0147, 36 WTD 588 (2017) 36WTD588.pdf

A jewelry gallery protests an assessment of service and other B&O on the gallery’s commission income. The gallery argues it does not have to pay taxes on amounts received as commission for sales of goods sold on consignment. We conclude that Taxpayer has not overcome the presumption that it is selling goods in its own name, is subject to retailing B&O tax and retail sales tax on the proceeds of the sales, and remand the assessment to the Operating Division to adjust it accordingly.

Det. No. 17-0041, 36 WTD 572 (2017) 36WTD572.pdf

A limited liability company that owns a 38.14 percent interest in an apartment complex protests the assessment of REET on 38.14 percent of the assessed value of that apartment complex as a result of Taxpayer’s two members selling their combined one hundred percent interest in Taxpayer to a third party. Taxpayer argues that the amount of consideration that the third party paid for the one hundred percent interest in Taxpayer should be treated as the true and fair value of the 38.14 percent interest that Taxpayer owns in the apartment complex. We deny the petition.

Det. No. 17-0057, 36 WTD 529 (2017) 36WTD529.pdf

An out-of-state wholesaler protests the assessment of wholesaling B&O tax on sales of its goods to Washington retailers, claiming it lacked nexus with the State of Washington prior to September 2015. We conclude Taxpayer has nexus with Washington and B&O tax, interest, and penalties were properly assessed. Taxpayer’s petition is denied.

Det. No. 14-0283, 36 WTD 509 (2017) 36WTD509.pdf

A business that made purchases under the Rural County Investment Project Tax Deferral under RCW 82.60.070, but never finished the investment project, appeals assessments of use tax/deferred retail sales tax, interest, and penalties. The business asserts the . . . purchases of machinery and equipment [that initially] qualified for the M&E exemption in RCW 82.08.02565 and 82.12.02565, are subject to use tax measured by the items’ values once such items failed to qualify for the exemption. If liable for deferred retail sales tax, Taxpayer argues that WAC 458-20-24001A(108)(b)(i) requires a waiver of interest and penalties. Petition denied in part and granted in part.

Det. No. 17-0003, 36 WTD 524 (2017) 36WTD524.pdf

Two affiliated Washington state auto dealerships located in . . . County and . . . County, respectively, petition for adjustment of their assessments as follows: 1) both dealerships dispute the assessment of use tax and/or deferred sales tax on certain “service kits” they purchased, arguing that the purchase price of the kits can be bifurcated between retail and wholesale components and should not be taxed as bundled transactions; [and] 2) both dealerships dispute the assessment of use tax and/or deferred sales tax on car wash services they purchased, arguing that the purchases were for resale. . . . We grant the petitions as to the issue of the service kits and remand to the Audit Division, and deny the petitions as to the remaining issue.

Det. No. 17-0071, 36 WTD 533 (2017) 36WTD533.pdf

A dairy farm protests retail sales tax assessed on construction of a farmhouse, claiming the structure is exempt from retail sales tax under RCW 82.08.02745 as it houses agricultural employees. The petition is granted.

Det. No. 16-0282, 36 WTD 516 (2017) 36WTD516.pdf

A vehicle restoration business disputes the denial of Interstate and Foreign Sales deductions, and resulting assessment of retail sales tax, on income it derived from progress payments paid for restoration work performed on vehicles for nonresidents. The vehicles were located in this state when the progress payments were made, prior to out-of-state delivery to nonresidents, or delivery of the vehicles to common or bona fide carriers consigned to out-of-state delivery to nonresidents. Because the payments were made for interstate sales to nonresidents, we conclude that the business is allowed to take the Interstate and Foreign Sales deduction for income derived from such progress payments during the audit period.

However, if Taxpayer is later unable to show that completed sales meet the statutory requirements to qualify for the nonresident sales tax exemption, Taxpayer will be liable for any unpaid sales tax on those sales. We grant the petition, and remand to the operating division for adjustments to the assessment

Det. No. 17-0033, 36 WTD 496 (2017) 36WTD496.pdf

A LLC with real property in Washington appeals the assessment of REET on the controlling interest sale of the LLC obtained pursuant to an auction ordered by a bankruptcy court. The LLC contends that the sale is not subject to REET pursuant to a number of exemptions provided in RCW 82.45.010(3). We deny the petition.

Det. No. 16-0243, 36 WTD 467 (2017) 36WTD467.pdf

Two affiliated entities that operate retail stores in Washington protest the assessment of service and other activities B&O tax on certain amounts received from a third-party retailer with which Taxpayers contracted. Taxpayers argue that the amounts received from the third-party were for a lease of real property and not subject to B&O tax. Taxpayers further protest the assessment of retailing B&O tax on sales of the third-party’s merchandise that Taxpayers completed in their stores on behalf of the third-party retailer. Finally, Taxpayers protest future reporting instructions in which they were instructed to remit directly to the Department – as opposed to the third-party retailer – all retail sales tax they collected on their sales of the third-party’s merchandise. We deny Taxpayers’ petition on all issues.

Det. No. 15-0291, 36 WTD 444 (2017) 36WTD444.pdf

A commercial bank in the business of originating, managing, and servicing credit cards protests an assessment, asserting that it lacks substantial nexus with Washington. Alternatively, it asserts that the private label card business is distinct and separate from its general credit card business so income was incorrectly apportioned. We conclude that the Taxpayer has taxing nexus with Washington, and that the Taxpayer has failed to provide sufficient detail to support adjustment to the apportionment approach applied during the audit and, accordingly, deny the Taxpayer’s petition.

Det. No. 16-0408, 36 WTD 490 (2017) 36WTD490.pdf

A seller of used cars protests an estimated tax assessment that included an evasion penalty. Taxpayer maintains that the basis for the estimate used by the Department was flawed, and that the apparent underreporting of tax liability was not the result of an intent to evade. We deny Taxpayer’s petition.

Det. No. 16-0010, 36 WTD 461 (2017) 36WTD461.pdf

A company that blends and sells biodiesel fuels petitions for correction of the assessment of tax on the sale of renewable energy identification numbers, asserting that they should be exempt from tax under RCW 82.04.4334 . . . or alternatively, asserts that tax on all sales for prior periods is precluded by a 2006 letter ruling. The Taxpayer also asserts that the audit exceeded the statute [limiting the time for assessments] due to use of a calendar year rather than the Taxpayer’s fiscal year, which ends in September. We conclude that the letter ruling did not specifically address the sale of renewable energy identification numbers or equipment used in processing, and therefore, does not preclude taxation. We also conclude that the deduction from retail sales tax for the sales of biofuels, provided by 82.04.4334, does not apply to the sales of renewable energy identification numbers. . . . Finally, we note that the Taxpayer had not requested or received permission to report on a fiscal year, and accordingly, the calendar year audit was proper and authorized. We sustain the assessments and deny the Taxpayer’s petitions.

Det. No. 17-0038, 36 WTD 502 (2017) 36WTD502.pdf

A nonprofit organization disputes an assessment of service and other activities B&O tax on its sales of environmental commodity products to Washington customers and asserts that such sales constitute “fund-raising activities” that are exempt from B&O tax. The organization also disputes assessments of interest and penalties because it asserts it did not report and pay B&O tax under the advice of legal counsel. Petition denied.

Det. No. 16-0304, 36 WTD 481 (2017) 36WTD481.pdf

A building contractor and four of its apartment complex clients protest assessments of retail sales tax for disallowed agricultural employee housing exemptions taken in error, claiming the exemption applies to the percentage of housing set aside for farm workers under a federal low income housing credit program. The petitions are denied.

Det. No. 15-0307R, 36 WTD 455 (2017) 36WTD455.pdf

An asphalt products manufacturer asks us to reconsider Determination No. 15-0307 sustaining Audit’s calculation of the value of asphalt products used in public road construction, and asserts that Audit overestimated the value of such asphalt products because Audit failed to account for a volume discount. Petition remanded for adjustment and denied in part.

Det. No. 16-0403, 36 WTD 435 (2017) 36WTD435.pdf

A computer sales and repair shop petitions for correction of an assessment of retail sales and B&O tax, contending that it properly paid tax on amounts net of the retail sales tax collected from its customers because its prices were advertised as “tax included.” The weight of the evidence supports Taxpayer’s position that all sales were advertised as tax-included. Accordingly, Taxpayer’s petition is granted.

Det. No. 16-0169, 36 WTD 419 (2017) 36WTD419.pdf

A store developer disputes an assessment that stems, in large part, from a finding that the store developer provided “services rendered in respect to” construction when it accepted responsibility for assembling and building-out store fixtures. The store developer asserts that, at most, it assembled light shelving and attached slat walling – both of which activities constitute less than 1% of its services. Petition denied.

Det. No. 16-0380, 36 WTD 429 (2017) 36WTD429.pdf

An equipment financing company seeks review of an assessment of retail sales tax on leases and sales of equipment and vehicles . . . . First, the company claims that third-party loan servicers collected and remitted the applicable retail sales tax on equipment leases. Second, the company claims that although it did not collect retail sales tax when selling used vehicles at auction, purchasers of the used vehicles should have paid use tax when registering the vehicles with other state agencies. . . . The petition is denied in part, granted in part, and remanded for adjustment based on records provided.

Det. No. 17-0050, 36 WTD 439 (2017) 36WTD439.pdf

A Washington retailer protests the imposition of retail sales tax on sales the retailer alleges were made to non-Washington residents for use outside Washington, arguing it properly documented sales of tangible personal property made to nonresidents for use outside of Washington. We deny the petition.

Det. No. 16-0365, 36 WTD 425 (2017) 36WTD425.pdf

A seller of propane and propane accessories to residential and commercial customers protests the assessment of use tax on two propane tanks Taxpayer acquired from a third party. Taxpayer argues that it acquired the propane tanks at issue for the purpose of reselling them and, therefore, has not “used” the tanks [as a consumer]. We grant the petition and remand for appropriate adjustment.

Det. No. 16-0141R, 36 WTD 394 (2017) 36WTD394.pdf

Taxpayer requests reconsideration of Det. No. 16-0141. Taxpayer requests correction of an assessment of retailing [B&O tax] and retail sales tax on income received from providing customers digital certificates, maintaining that its service is excluded from the definition of DAS as a service that “primarily involves the application of human effort by the seller.” We affirm the assessment.

Det. No. 15-0128, 36 WTD 368 (2017) 36WTD368.pdf

Health care providers appeal the denials of their requests for refund of B&O tax paid on: (i) receipts from insurance carriers that participate in federal health insurance programs, asserting that Washington’s tax is preempted by federal law; and (ii) receipts from certain prescription infusions or injections. Taxpayers’ petitions are denied.

Det. No. 16-0345, 36 WTD 403 (2017) 36WTD403.pdf

A speculative builder petitions for correction of an assessment of use tax and/or deferred sales tax on materials and subcontractor services used in the construction of speculatively built homes. The assessment of tax is sustained.

Det. No. 16-0117, 36 WTD 384 (2017) 36WTD384.pdf

Taxpayer, a medical marijuana business, protests an estimated assessment of retailing B&O tax and retail sales tax. Taxpayer maintains it was a collective garden that does not conduct taxable transactions. In the alternative, Taxpayer maintains the sales of marijuana qualify for the retail sales tax exemption afforded prescription drugs. The assessment is affirmed.

Det. No. 16-0399, 36 WTD 412 (2017) 36WTD412.pdf

A taxpayer objects to the reclassification of its income from the retailing B&O tax classification to the wholesaling B&O tax classification. If the reclassification stands, the Taxpayer also objects to the measure of the tax being the income it received from the retail price of the goods.

Det. No. 16-0289, 36 WTD 399 (2017) 36WTD399.pdf

An LLC that owns real property in Washington protests the assessment of REET on the transfer by one of its two members of a fifty-percent interest in Taxpayer to the other member. Taxpayer argues that the Department’s Special Programs Division used an incorrect amount as the “selling price” of the fifty-percent interest, and also should have assessed REET proportional to the interest percentage transferred. We grant in part and deny in part Taxpayer’s petition, and remand to Special Programs.

Det. No. 15-0130, 36 WTD 379 (2017) 36WTD379.pdf

A provider of gantry cranes to the [United States agency] appeals the assessment of government contracting B&O tax and use tax on grounds that it is a seller of tangible personal property liable only for retailing B&O tax, rather than a government contractor liable for government contracting B&O tax and use tax on materials incorporated into the work. We deny the petition.

Det. No. 16-0350, 36 WTD 406 (2017) 36WTD406.pdf

A LLC, that owns real property in the state, petitions for correction of an assessment of REET on the transfer of a controlling interest in the LLC asserting that the transfer of interest was a gift where there had been no change in the parties responsible for the debt on the property or in the source of funds used to make monthly mortgage payments. Taxpayer’s petition is denied.

Det. No. 15-0321, 36 WTD 330 (2017) 36WTD330.pdf

An out-of-state online retailer of brand name apparel and accessories (and its successor) appeals assessments of retailing B&O and retail sales tax, asserting that the Washington activities of its wholesaling affiliate are insufficient to establish taxable nexus. Held: A wholesaling affiliate’s promotion to third-party retailers of the same brand name products sold by an online retailer affiliate, wholesale product packaging containing the online retailer affiliate’s website, and the existence of a retail “store locater” on the online retailer affiliate’s website, are insufficient activities to create taxable nexus for the online retailer. The taxpayer’s petition is granted.

Det. No. 16-0244, 36 WTD 352 (2017) 36WTD352.pdf

An out-of-state company that generates revenue from digital media programmatic ad buying (classified as internet advertising services) objects to the Department’s use of internet user population, rather than general population, to represent the relative population in its customers’ market in proportionally attributing its Washington receipts. . . . . The taxpayer’s petition is . . . denied in part.

Det. No. 14-0072, 36 WTD 315 (2017) 36WTD315.pdf

A grocery store business protests an assessment of retail sales tax, retailing B&O tax, and evasion penalty, asserting that the auditor overestimated its retail sales based on its bank records and that it did not intentionally underreport its tax liability. The taxpayer’s petition is denied.

Det. No. 16-0088, 36 WTD 338 (2017) 36WTD338.pdf

Taxpayer, a supplier of telecommunications equipment, protests the assessment of wholesaling B&O tax. Taxpayer claims that the Department failed to properly deduct income from wholesale transactions of sales performed outside of Washington, and that it is entitled to deduct certain discounts from its taxable sales income. We conclude that the taxpayer has failed to provide adequate documentation of its claims that its Washington sales are overstated, and further conclude that the discounts it seeks are not bona fide and are not deductible. Taxpayer’s petition is denied and the assessment is upheld.

Det. No. 16-0278, 36 WTD 358 (2017) 36WTD358.pdf

The operator of a motel disputes the disallowance of its claimed partial exemption from retailing B&O tax and retail sales tax for gross income that Taxpayer claims it received from “nontransient” tenants. Taxpayer also claims that it does not owe TPA charges for certain transactions. Based on additional records provided by Taxpayer, we remand the assessment for possible adjustment of the retailing B&O and retail sales tax assessed on room rentals. We deny Taxpayer’s petition with regard to collected and unremitted TPA charges.

Det. No. 14-0409, 36 WTD 323 (2017) 36WTD323.pdf

The purchaser of the assets of Washington businesses objects to the imposition of use tax/deferred retail sales tax. The assessment is upheld.

Det. No. 16-0226, 36 WTD 344 (2017) 36WTD344.pdf

A Washington LLC that provides services in and outside Washington objects to the Department calculation of “throw-out income” for purposes of apportioning its income. Taxpayer’s petition is denied.

Det. No. 17-0014, 36 WTD 364 (2017) 36WTD364.pdf

[Taxpayer] petitions for review of the Department’s denial of its request for a waiver of the interest and penalties assessed on its late payment of a tax assessment. Taxpayer asserts that the fact that the USPS did not postmark its payment on the same day it was placed in the mail is a circumstance beyond its control that caused its late payment. Taxpayer’s petition is denied.

Det. No. 16-0011, 36 WTD 282 (2017) 36WTD282.pdf

An importer of motor vehicles manufactured in Asia protests the assessment of wholesaling B&O tax on the sale of vehicles it asserts were in the process of import transportation until received by the buyers in Washington. Taxpayer asserts that all activities undertaken at other United States ports outside Washington where the vehicles are unloaded from a ship are related to shipping needs, which does not interrupt import transportation. We conclude the processing and handling involves a business purpose, rather than a direct shipping need, and thus results in a break in import transportation. We affirm the vehicles are subject to wholesaling tax.

Det. No. 16-0330, 36 WTD 296 (2017) 36WTD296.pdf

A dentist objects to the assessment of use tax paid on equipment he purchased from the prior occupant of his dental office, contending that the amount paid exceeded its value. We deny the petition.

Det. No. 13-0254, 36 WTD 265 (2017) 36WTD265.pdf

A Washington automobile dealer protests B&O tax assessed on incentives paid by a car manufacturer. Because the dealer performs services for the incentives, the dealer owes B&O tax on the payments.

Det. No. 16-0295, 36 WTD 286 (2017) 36WTD286.pdf

Naturopathic clinic protests assessment of service and other activities B&O tax on amounts disallowed as deductions under independent contractor arrangements for provision of natural health services. Taxpayer’s petition is denied.

Det. No. 16-0342, 36 WTD 301 (2017) 36WTD301.pdf

An out-of-state corporation that manufactures and sells natural ingredients and botanical extracts to Washington customers protests the Department’s tax assessment, arguing that it does not have substantial nexus with Washington State. We deny the petition.

Det. No. 14-0298, 36 WTD 271 (2017) 36WTD271.pdf

An airline appeals the Department’s assessment of service and other activities B&O tax on compensation for collecting passenger facility charges, . . .deferred sales tax on upgrades to its boarding facilities at two airports in Washington, and [use tax on] complimentary non-alcoholic beverages provided to customers in Washington. We grant the petition as to [passenger facility charges], concluding federal law preempts the taxation of such revenues, but deny the remainder of the petition.

Det. No. 16-0307, 36 WTD 291 (2017) 36WTD291.pdf

A taxpayer that engages in custom construction and speculative construction, where its subcontractors and vendors maintained its reseller permit on file, did not pay retail sales tax on purchases related to its speculative construction projects. The Department assessed deferred retail sales tax on the speculative construction purchases and imposed a penalty for improper use of the reseller permit, under RCW 82.32.291. The taxpayer sought review of the penalty, asserting that it did not affirmatively provide its reseller permit in making the purchases; therefore, it did not improperly use its reseller permit and the penalty does not apply. The taxpayer’s petition is denied.

Det. No. 16-0360, 36 WTD 308 (2017) 36WTD308.pdf

A used vehicle dealer disputes the Department’s denial of a credit for sales and use tax it previously paid on bad debts for vehicles it subsequently repossessed. We deny the petition.

Det. No. 13-0394, 36 WTD 217 (2017) 36WTD217.pdf

A company protests assessment of service and other activities B&O tax on income received for the grant of rights to remove minerals, rock sand, or other natural resource products, asserting that the income is exempt as amounts derived from the rental of real estate. We conclude that the income at issue is not exempt from B&O tax and deny the Taxpayer’s petition.

Det. No. 16-0248, 36 WTD 236 (2017) 36WTD236.pdf

A Washington taxpayer objects to the assessment by the Department of use tax on transportation charges associated with the transport and delivery of materials the taxpayer used in a government contracting project completed in Washington. . . . The taxpayer contends that the Department improperly included transportation costs in the measure of use tax. Taxpayer’s petition is denied . . . . [T]ransport charges are included in the measure of use tax in addition to the value of the goods or materials purchased.

Det. No. 10-0183, 36 WTD 201 (2017) 36WTD201.pdf

A Taxpayer protests the assessment of REET on saw mill equipment sold in conjunction with the sale of real property. It asserts that the equipment was tangible personal property not subject to REET. We conclude that this equipment is tangible personal property rather than fixtures subject to REET and, accordingly, grant the Taxpayer’s petition and remand to the Special Programs Division to adjust the assessment.

Det. No. 16-0296, 36 WTD 255 (2017) 36WTD255.pdf

A shooting sports products distributor protests the Department’s assessment of wholesaling B&O tax and argues that it did not have contacts with Washington sufficient to constitute nexus during the audit period. We deny the petition.

Det. No. 15-0302, 36 WTD 222 (2017) 36WTD222.pdf

A limited liability company that sells non-prescription dietary supplements and health foods through its internet website requests a refund for the taxes it paid to the Department, arguing that it does not have nexus with Washington State, and that the taxes imposed on it violate the fourth prong of the test in Complete Auto Transit v. Brady, 430 U.S. 274, 97 S. Ct. 1076, 51 L.Ed.2d 326 (1977) by not being fairly related to the services provided by this State. We deny the petition.

Det. No. 16-0264, 36 WTD 239 (2017) 36WTD239.pdf

A mechanical engineering and product development services provider protests the assessment of use tax and/or deferred retail sales tax on the materials it used to produce prototypes as part of its mechanical engineering and product design services, asserting that it is a manufacturer and entitled to purchase the materials at wholesale under RCW 82.04.050(1)(a)(iii). In the alternative, the taxpayer asserts that its purchases of materials used to produce prototypes are exempt from tax under the [M&E] exemption, RCW 82.08.02565, because it purchased the materials as a processor for hire and agent of its manufacturer clients. The taxpayer’s petition is denied.

Det. No. 13-0291, 36 WTD 209 (2017) 36WTD209.pdf

Movie theatres object to the Department’s assessment of retail sales tax on popcorn they sell to customers. We deny the petition.

Det. No. 16-0297, 36 WTD 259 (2017) 36WTD259.pdf

A seller of marijuana products contests an assessment resulting from reclassification of certain sales from wholesale to retail, asserting that it has established facts and circumstances that the transactions at issue were properly reported as wholesale sales, under RCW 82.04.470(5) and WAC 458-20-102(7)(h). The taxpayer’s petition is denied.

Det. No. 16-0029, 36 WTD 229 (2017) 36WTD229.pdf

A building contractor disputes retail sales tax and B&O tax assessed on permit fees and other charges from a city, which it contends were excludable as reimbursements from the landowner. Because the taxpayer was liable to pay the city, other than as agent, the charges were not excludable. We deny the petition.

Det. No. 16-0294, 36 WTD 248 (2017) 36WTD248.pdf

A provider of services associated with “supply chain management” protests a tax assessment of use tax and/or deferred sales tax on the purchase of certain consumable supplies on various grounds. Taxpayer further protests future reporting instructions requiring Taxpayer to refrain from reporting any of its gross income under the stevedoring and associated activities B&O tax classification, and to report its gross income on various other tax classifications instead. Taxpayer argues that it should be entitled to report under the stevedoring and associated B&O tax classification because Taxpayer’s services occur within a foreign trade zone. We deny Taxpayer’s petition on all counts.

Det. No. 12-0023, 36 WTD 139 (2017) 36WTD139.pdf

A nonprofit physicians association protests a tax assessment that disallowed deduction of a portion of their dues under RCW 82.04.4282. We hold that the portion of the dues received for the value of significant services rendered to its members through its Coordinated Quality Improvement Program is disqualified from the bona fide dues deduction. We affirm the assessment.

Det. No. 16-0054, 36 WTD 190 (2017) 36WTD190.pdf

Two individuals dispute TFAAs on the basis that the TFAAs include uncollected retail sales tax and the individuals did not willfully fail to pay or cause collected retail sales tax not to be paid to the Department. Petition denied in part and granted in part.

Det. No. 13-0290, 36 WTD 160 (2017) 36WTD160.pdf

A company, specializing in concrete underlayment work, protests the assessment of use tax on materials used in government contracting. The Taxpayer asserts that it had no direct contractual relationship with the government entity, and acted as a subcontractor and reported tax based on instructions and information provided by the prime contractor on the projects. The Taxpayer’s petition is denied.

Det. No. 15-0352, 36 WTD 179 (2017) 36WTD179.pdf

An out-of-state taxpayer providing mutual fund investment management services appeals the assessment of B&O tax, under the service and other business activities classification, on income the Department [attributed] to Washington. The taxpayer contends none of its income should be [attributed] to Washington because its sole customer, a financial services company, receives the benefit of the taxpayer’s services [out-of-state], where the customer is located. The taxpayer’s petition is denied. We conclude that the individual investors in the mutual funds managed by the taxpayer are the ultimate benefit recipients of the taxpayer’s investment management services...

Det. No. 12-0034, 36 WTD 148 (2017) 36WTD148.pdf

A Washington manufacturer disputes B&O tax assessed on receipts from patent licenses, payroll receipts for employees who worked for affiliates, and use/deferred sales tax assessed on building improvements for a building that was used to transfer fuel to rail cars and later used to blend fuel. Because receipts from the patents were not casual or isolated, they were subject to B&O tax. Through its employees, the manufacturer provided services to the affiliates and was subject to tax on the affiliates’ payment for those services. The building improvements do not qualify for the M&E exemption. Petition denied, but remanded to reclassify licensing income

Det. No. 16-0150, 36 WTD 195 (2017) 36WTD195.pdf

A collective garden disputes the assessment of retail sales tax on medical cannabis products and asserts that no taxable transactions occurred, but if they did, such products are exempt from retail sales tax as a prescription drug and/or medicine of botanical origin. Petition is denied.

Det. No. 15-0196, 36 WTD 164 (2017) 36WTD164.pdf

A business that sells savory pies, sausage rolls, and sweet pastries, objects to assessment of retail sales tax on sales of those items, contending they are tax-exempt bakery items, and argues that the Department improperly disallowed an exempt food tax deduction. The business further argues that it is entitled to relief because it allegedly relied to its detriment on a Special Notice issued by the Department. Taxpayer’s petition is granted in part and denied in part. We remand to Audit for possible adjustment.

Det. No. 15-0353, 36 WTD 183 (2017) 36WTD183.pdf

A trucking company objects to the assessment of retail sales tax on (1) lease payments it made to related companies that exceeded the equipments’ purchase price, and (2) the denial of the interstate/foreign deduction from PUT on hauls it made of imported goods between Washington ports and Washington destinations. It further asserts that the Department is [precluded] from assessing these taxes because the Audit did not assert them in prior audits. The assessment is sustained.

Det. No. 13-0255R, 36 WTD 155 (2017) 36WTD155.pdf

Taxpayer requests reconsideration of Det. No. 13-0255. Taxpayer is a health care insurance company. Taxpayer’s affiliated companies provide services to Taxpayer. Similarly, Taxpayer provides services to its affiliates. Taxpayer paid service and other B&O tax on the amount it received for services provided to the affiliates, which was offset by the amount Taxpayer owed the affiliates for services they provided to Taxpayer. Audit assessed service and other activities B&O tax on total consideration Taxpayer received, which was the amount received from the affiliates plus the value of the services provided by the affiliates. We sustain Det. No. 13-0255, which sustained the assessment and deny the refund of tax paid.

Det. No. 15-0294, 36 WTD 174 (2017) 36WTD174.pdf

A road contractor, that did not pay a cement vendor retail sales tax on materials used for a county road project, appeals the improper use of its reseller permit penalty imposed on the materials purchased.... [W]e grant the petition.

Det. No. 16-0263, 36 WTD 114 (2017) 36WTD114.pdf

A contractor engaged in construction petitions for the correction of assessment, contending the Department is barred by statute from assessing taxes for certain prior tax periods and, for the open tax periods, Taxpayer’s tax liability should be offset by a tax paid at source deduction. Taxpayer’s petition is denied.

Det. No. 15-0093, 36 WTD 080 (2017) 36WTD080.pdf

A company engaged in the business of providing proxy voting services to brokerage houses and banks petitions for correction of assessment of retail sales tax and retailing B&O tax on the processing fees and intermediary fees it charges its customers. We hold that the company’s proxy voting services are taxable under the service and other activities B&O tax classification for periods prior to July 26, 2009. However, we hold that the company’s proxy voting services are taxable as digital automated services for periods after July 26, 2009, and are therefore, subject to the retail sales tax and retailing B&O tax for those periods. . . . Taxpayer’s petition is granted in part and denied in part.

Det. No. 16-0324, 36 WTD 135 (2017) 36WTD135.pdf

A company that claimed a fruit and vegetable manufacturer [B&O] tax exemption, but failed to timely submit the required annual tax incentive survey, seeks review of the denial of its request for an extension to file the survey. The basis for the company’s Petition is that it experienced a significant departure of employees around the time of the due date for filing the survey due to a VSIP. We conclude that the significant loss of employees to a VSIP does not amount to circumstances beyond the control of the taxpayer pursuant to WAC 458-20-228 (“Rule 228”). Petition denied.

Det. No. 16-0111, 36 WTD 103 (2017) 36WTD103.pdf

A taxpayer protests the assessment, by the Department, of REET on the transfer of a controlling interest in a Washington corporation. The taxpayer contends the corporation did not own real property in Washington at the time of the transfer. Taxpayer’s petition is denied.

Det. No. 16-0277, 36 WTD 121 (2017) 36WTD121.pdf

A [taxpayer] sought review of the partial denial of its request for refund of 75 percent of the retail sales tax paid on the purchase and installation of a solar energy system. The taxpayer asserts that the Department improperly denied its refund, allowable under RCW 82.08.962 and WAC 458- 20-263, of tax paid on charges for electrical and structural engineering, electrical and building permits, a construction bond, plan review, project management and coordination, equipment rental, and a weather station with solar radiation monitoring. The taxpayer’s petition is denied.

Det. No. 15-0093R, 36 WTD 089 (2017) 36WTD089.pdf

Taxpayer petitions for a reconsideration of the holdings in Determination No. 15-0093. On reconsideration, we reverse [one of] the holdings in Det. No. 15-0093, and hold that Taxpayer is entitled to deduct its separately stated direct mail delivery charges before calculating its B&O and retail sales tax liability. . . .

Det. No. 16-0233, 36 WTD 108 (2017) 36WTD108.pdf

An out-of-state corporation that provides apartment listing services to property owners and property management companies protests the Department’s assessment [of] use tax/deferred sales tax on the toll-free number service purchased from a vendor. Taxpayer argues that the sales are not retail sales because the primary purpose of its purchases is to collect the data from the callers and, thus, the sales qualify for the data processing and information services [exclusion] under RCW 82.04.065(27)(a). We deny the petition.

Det. No. 06-0245R, 36 WTD 072 (2017) 36WTD072.pdf

A company that sold a complete vegetable processing plant petitioned for reconsideration of Det. No. 06-0245, which denied the taxpayer’s request for refund of REET on the portion of the sales price attributable to M&E. In dispute is whether the items of M&E are real property fixtures or tangible personal property for purposes of REET. We grant in part and deny in part.

Det. No. 16-0283, 36 WTD 126 (2017) 36WTD126.pdf

Taxpayer sold a two-story concrete Class B office building and paid REET based on the total consideration paid. Taxpayer now petitions for a partial refund of the REET, claiming that the amount it paid exceeded the property’s “true and fair value.” We conclude that Taxpayer has failed to rebut the presumption that the total consideration actually paid was the property’s true and fair value. We deny Taxpayer’s petition.

Det. No. 15-0285, 36 WTD 095 (2017) 36WTD095.pdf

A physician group protests the denial of its request for refund of service and other activities B&O tax paid on receipts from the FEHBA and Medicare Advantage MA, federal insurance programs, which it asserts are preempted from taxation by federal law. We conclude that the Taxpayer has not established that Washington tax is preempted and deny the Taxpayer’s petition.

Det. No. 16-0209, 36 WTD 052 (2017) 36WTD052.pdf

A LLC that sells medical marijuana and marijuana-related products protests the Department’s assessment of retail sales tax and retailing B&O tax arguing that it is a collective garden and it does not sell or provide medical marijuana to consumers in exchange for donations. Taxpayer also argues that even if there were retail sales, those sales are exempt either as sales of drugs pursuant to a prescription or as sales of medicines of a botanical origin. We deny the petition.

Det. No. 16-0158, 36 WTD 038 (2017) 36WTD038.pdf

Taxpayer appeals the taxation of intercompany charges. Taxpayer’s petition is denied.

Det. No. 14-0359R, 36 WTD 016 (2017) 36WTD016.pdf

A company, engaged in the manufacture and installation of custom casework, seeks reconsideration of a decision that use tax was due on value of cabinets installed rather than on the cost of component materials. We affirm our decision that, because the company was the “consumer” of the materials it manufactured for installation under RCW 82.04.190(6), it owed use tax on the value of the cabinets under RCW 82.12.010(1)(a) and WAC 458-20-17001(7)-(9) rather than just on value of the component parts. We sustain the assessment as issued and deny the Taxpayer’s petition.

Det. No. 16-0218, 36 WTD 063 (2017) 36WTD063.pdf

A taxpayer protests the assessment of B&O taxes and retail sales taxes based off of bank records and argues taxes were assessed against the wrong entity. The taxpayer’s petition is denied.

Det. No. 08-0306ER, 36 WTD 001 (2017) 36WTD001.pdf

An automobile dealership seeks executive level reconsideration of Determination 08-0306 in which we concluded that dealer cash incentive program awards are income to the business and subject to B&O tax under the other business or service activities classification. We affirm our decision in Det. No. 08-0306 as Taxpayer has not proved that dealer cash incentive program awards qualifies as discounts to or reductions on the selling prices of the vehicles.

Det. No. 16-0190, 36 WTD 042 (2017) 36WTD042.pdf

A cable television distribution company petitions for the refund of leasehold excise tax paid on the utility pole contract charges it paid to public entities in Washington. At issue is whether the utility pole contracts convey the requisite “possession and use” to constitute a taxable leasehold interest under RCW 82.29A.020. Taxpayer’s petition is denied.

Det. No. 14-0402, 36 WTD 021 (2017) 36WTD021.pdf

A manufacturer of wire and cable products, protests the Department’s Audit Division’s disallowance of the M&E use tax exemption it took on reels it used to store and ship cable. We sustain the tax assessed concluding the reels are not part of the manufacturing process and do not qualify for the M&E use tax exemption.

Det. No. 16-0276, 36 WTD 069 (2017) 36WTD069.pdf

A wind farm seeks administrative review of a denial of its request to refund retail sales tax, asserting the tax was paid on tax exempt machinery and equipment used in generating electricity. We deny the petition.

Det. No. 15-0281, 36 WTD 028 (2017) 36WTD028.pdf

A berry wholesaler protests the assessment of wholesaling B&O tax, interest, and resulting penalties on its Washington sales. We conclude that the Department’s assessment was proper because the taxpayer’s customers received taxpayer’s goods in Washington. We also conclude that the Department was not bound by a previous letter ruling because the facts upon which the letter ruling was based did not reflect Taxpayer’s actual business practices. Finally, we find that the Department was not barred by the statute of limitations because Taxpayer was an unregistered business. Taxpayer’s petition for correction of assessment is denied.

Det. No. 13-0317, 36 WTD 010 (2017) 36WTD010.pdf

Quarry operator protests use tax/deferred sales tax assessed on the value of M&E on the grounds that (i) its screening and washing activities take place in conjunction with crushing and blending; (ii) it satisfies the majority use test. The petition is denied.

2016
Title Date Document Description
Det. No. 16-0154, 35 WTD 619 (2016) 35WTD619.pdf

A taxpayer protests the denial of a High Technology Sales and Use Tax Deferral because either the otherwise qualifying machinery and equipment was used at a location not specified in the deferral application or the expenses were for tenant improvements, which were also not specified in the original application. Taxpayer’s petition is denied.

Det. No. 13-0095, 35 WTD 582 (2016) 35WTD582.pdf

A [retail] store chain protests the assessment of retail sales tax and retailing B&O tax due on disallowed bad debt deductions. Holding: The taxpayer is not entitled to the bad debt deductions. Petition denied.

Det. No. 16-0188, 35 WTD 630 (2016) 35WTD630.pdf

Taxpayer petitions for the correction of a REET assessment, claiming that the change in ownership in a LLC, which resulted from the distribution of an inheritance, did not constitute a REET-taxable transaction. Taxpayer's petition is granted.

Det. No. 16-0139, 35 WTD 609 (2016) 35WTD609.pdf

A taxpayer appeals the assessment by the Department of REET on the quit claim transfer of his 50 percent ownership in residential property to his former spouse who owned the other 50 percent. The taxpayer contends that the transfer was between tenants in common and pursuant to a court order, exempting the transfer from REET. Taxpayer's petition is denied.

Det. No. 16-0225, 35 WTD 639 (2016) 35WTD639.pdf

A taxpayer seeks an extension to file its annual survey to qualify for a high technology tax credit after the Department disallowed the taxpayer’s use of the credit and issued an assessment. Taxpayer also requests the penalties imposed in the assessment be waived. Taxpayer's petition is denied in part and granted in part.

Det. No. 16-0174, 35 WTD 624 (2016) 35WTD624.pdf

A married couple protests the assessment of REET on the transfer of real property to the parents of one of the spouses in exchange for forgiveness of a loan. We conclude that the forgiveness of a loan is consideration and the transfer constitutes a sale for REET purposes. The assessment is affirmed.

Det. No. 16-0052, 35 WTD 589 (2016) 35WTD589.pdf

A firm that provides legal services to a parent petitions for correction of an assessment of B&O tax on payments received as personnel expense reimbursements from its parent on the grounds that the employees were employed by the parent company. . . . Taxpayer's petition is denied.

Det. No. 16-0210, 35 WTD 634 (2016) 35WTD634.pdf

A former . . . manufacturer that claimed the Washington Customized Employment Training Credit on its combined excise tax returns, but then failed to file the required annual survey by the due date, protests the Department's assessment of B&O tax to recover the amount of the tax credit claimed. We deny Taxpayer's petition.

Det. No. 16-0149, 35 WTD 613 (2016) 35WTD613.pdf

An out-of-state bakery objected to the imposition of B&O tax on sales of baked goods delivered to its Washington customers, arguing that it lacked nexus and that its goods were not received in Washington. The assessment is sustained.

Det. No. 16-0136, 35 WTD 597 (2016) 35WTD597.pdf

A medical marijuana management company protests the Department's assessment of retail sales tax and retailing B&O tax arguing that it was a management company only providing management services to a collective garden, and that neither party made retail sales. Taxpayer also argues that even if there were retail sales, those sales are exempt either as sales of drugs pursuant to a prescription or sales of medicines of a botanical origin. We deny the petition.

Det. No. 16-0066, 35 WTD 540 (2016) 35WTD540.pdf

A Washington construction contractor disputes the evasion penalty assessed on retail sales taxes that the contractor collected and used to meet its payroll, but did not remit to the Department. The contractor modified its QuickBooks records prior to an audit so that the invoices showed wholesale sales without sales tax, rather than the separately stated retail sales tax originally billed. Because the taxpayer knew the tax was due and altered its records to escape detection, we deny the petition but remand the assessment to adjust the amount due.

Det. No. 16-0091, 35 WTD 553 (2016) 35WTD553.pdf

A homeowner appeals the denial of a request for refund of retail sales tax paid on the purchase of metal roofing for his home, asserting that the roofing qualifies as M&E as a support facility that is integral and necessary for the solar energy system’s generation of electricity. The taxpayer has not established that the roofing is integral and necessary for the solar energy system’s generation of electricity; therefore, the roofing does not qualify as M&E exempt from retail sales tax under RCW 82.08.963 and WAC 458-20-263. The taxpayer’s petition is denied.

Det. No.16-0131, 35 WTD 573 (2016) 35WTD573.pdf

A small harvester, that retained an affiliated entity to harvest and market timber, objects to the disallowance of its harvesting and marketing cost deduction of 50 percent of the timber sale price in determining the measure of forest excise tax due. Where the taxpayer provides minimal documentation of harvesting and marketing costs, in addition to the absence of an arm’s length transaction to verify the taxpayer’s asserted costs, the Forest Tax Section appropriately applied the standard 35 percent cost deduction, as required by RCW 84.33.074(3)(b) and WAC 458-40-610(11). The taxpayer’s petition is denied.

Det. No. 16-0074, 35 WTD 545 (2016) 35WTD545.pdf

A manufacturer, who deferred paying retail sales tax in a CEZ, appeals the tax assessed after the Department concluded that the manufacturer did not hire the requisite number of qualified employment positions based on the law in effect when the manufacturer applied for the deferral. In the alternative, the taxpayer asks to prorate the deferred tax for the qualified employment position it did hire. Because the manufacturer did not hire the requisite number of qualified employment positions, and there is no authority to prorate for the single qualified employment position, we deny the petition.

Det. No.16-0094, 35 WTD 557 (2016) 35WTD557.pdf

An out of state limited liability holding company that provided payroll and benefits services to a subsidiary corporation, and that reported wages in this state as the employer of record, protests the assessment of B&O tax under the services and other activities classification on payroll expenses, arguing that amounts received for payroll and benefits are excluded reimbursements under WAC 458-20-111 (Rule 111). Because Taxpayer did not prove it had solely agent liability to pay the employer obligations, we conclude the amounts received are not excludible reimbursements. The petition is denied.

Det. No. 16-0048, 35 WTD 537 (2016) 35WTD537.pdf

A small business appeals the Department’s denial of its request for a waiver of the electronic filing and electronic payment requirements for its quarterly excise tax returns. Because the business has shown statutory good cause, we grant the petition.

Det. No. 16-0135, 35 WTD 577 (2016) 35WTD577.pdf

A LLC that owns real property in Washington protests the assessment of REET on the value of the property upon the transfer of two one-third shares in the company to the holder of the remaining one-third share. We conclude that the sole remaining owner of the company acquired a controlling interest, causing imposition of REET on the full value of real property owned by the company. The assessment is affirmed.

Det. No. 16-0089, 35 WTD 549 (2016) 35WTD549.pdf

A rescue vessel operator appeals a portion of an assessment of PUT, and asserts such tax was improperly assessed on towing adrift, undamaged vessels because such vessels were in peril and the assistance activity was actually salvage. Petition denied.

Det. No.16-0097, 35 WTD 568 (2016) 35WTD568.pdf

A Washington nonprofit corporation disputes an assessment of retail sales tax on receipts from its customers in exchange for marijuana. Because the marijuana was exchanged for money, a sale occurred. Because the corporation did not provide records of nontaxable transactions, retail sales tax was properly assessed on total sales. We deny the petition.

Det. No. 16-0095, 35 WTD 564 (2016) 35WTD564.pdf

A seller of vehicle tires protests the assessment of tire fees that Taxpayer failed to collect from its customers. Taxpayer argues that it received incorrect oral instructions from a Department employee, who reportedly advised Taxpayer that the tire fee requirement expired on June 30, 2010. Because it relied on this alleged incorrect information, Taxpayer argues it should not be liable for the tax assessment. We deny the petition.

Det. No. 16-0045, 35 WTD 520 (2016) 35WTD520.pdf

A wildfire suppression private contractor seeks a refund of tax, penalties, and interest paid to the Department for an assessment of service and other B&O tax, claiming that its activities are properly classified under the wholesaling B&O tax classification . . . . The petition is . . . denied . . . .

Det. No. 15-0075, 35 WTD 482 (2016) 35WTD482.pdf

A chiropractor protests the assessment of retail sales tax on nutrition products that he sold to patients. Because the products were dietary supplements, which the chiropractor could not prescribe, the chiropractor’s sales of the supplements were not exempt from retail sales tax. We deny the petition.

Det. No. 15-0256, 35 WTD 494 (2016) 35WTD494.pdf

A yacht owner protests the Department’s assessment of WET on its yacht arguing that the value the Department used in assessing WET was overstated. We deny the petition.

Det. No. 15-0354, 35 WTD 504 (2016) 35WTD504.pdf

A private educational institution that provides educational programs solely through the internet, disputes the assessment of retail sales tax and B&O tax on certain charges to its students, arguing that fees for online educational programs are specifically excluded from the definition of “digital automated service” and not subject to taxation as retail sales. We conclude that Taxpayer’s fees for its online educational programs are not taxable as retail sales, and that Taxpayer’s library and resource fees, science lab fees, and nursing program fees are tuition fees not subject to tax as retail sales. However, Taxpayer may owe use tax on certain property it used in this state as a consumer, for which sales tax was not paid. We grant the petition, but raise the issue of possible use tax liability and remand to the operating division for further findings and adjustments.

Det. No. 16-0049, 35 WTD 524 (2016) 35WTD524.pdf

A building foundation repair contractor argues that it is not a successor, claiming it acquired less than 50 percent of the predecessor’s intangible assets. We find the contractor is a successor and uphold the assessment of successorship liability.

Det. No. 15-0187, 35 WTD 487 (2016) 35WTD487.pdf

A securities broker-dealer entity appeals the denial of a refund request and contends that it is entitled to the lower B&O tax rate provided for “international investment management services” under RCW 82.04.290. We conclude a broker-dealer does not provide investment management services and, therefore, does not qualify for the rate. Petition denied.

Det. No. 15-0344, 35 WTD 497 (2016) 35WTD497.pdf

A speculative and custom builder protests the assessment of the reseller permit misuse penalty with regard to items purchased for consumption by the business, arguing that it was not aware that it improperly used its permit. Taxpayer also asserts that its lack of knowledge of its retail sales tax liability and the serious illness of Taxpayer’s member’s family are circumstances beyond Taxpayer’s control for waiver of penalties and interest. We deny the petition.

Det. No. 16-0016, 35 WTD 515 (2016) 35WTD515.pdf

Owner of several sandwich franchise locations, which sell bagged chips both individually and as part of single price meal options with other prepared foods, challenges an assessment of retail sales tax on the sale of bagged chips. We deny the petition.

Det. No. 16-0058, 35 WTD 531 (2016) 35WTD531.pdf

Two corporate officers of a now defunct computer installation and repair business protest a TFAA issued against them as individuals, stating that the amount assessed against the defunct business was in error. We conclude that the corporate officers are responsible for the corporation’s collected and unremitted retail sales tax and may not challenge the amount assessed against the underlying corporation. The assessment is affirmed.

Det. No. 16-0015, 35 WTD 512 (2016) 35WTD512.pdf

Owner of a firearms store and gun range petitions for correction of an assessment of retail sales tax on replica silver bullets, contending they are exempt sales of precious metal bullion. Petition is granted.

Det. No. 15-0349, 35 WTD 477 (2016) 35WTD477.pdf

An out-of-state seller of goods challenges the various penalties assessed in a tax assessment, arguing primarily that (1) that the delinquent penalty should have been assessed at a lower rate . . . . As to Taxpayer’s . . . argument, we deny the petition. . . .

Det. No. 14-0243, 35 WTD 426 (2016) 35WTD426.pdf

Information technology firm protests retail sales tax imposed on subscription-based access to its proprietary research library and other related services on the grounds that access to the proprietary research library is not a digital automated service because it primarily involves the application of human effort. The petition is denied in part and remanded in part.

Det. No. 15-0340, 35 WTD 467 (2016) 35WTD467.pdf

An out-of-state LLC that sells gluten free bread products to Washington customers protests the Department’s tax assessment arguing that it does not have substantial nexus with Washington State. We deny the petition.

Det. No. 15-0314, 35 WTD 451 (2016) 35WTD451.pdf

A computer service provider petitions for correction of an assessment and a refund, arguing that the Department erred when reclassifying certain separately stated charges as retail sales. Petitioner alleges that the charges were de minimis relative to the business’s primary activity of providing help desk and consulting services, or were in relation to network-based services not subject to retail sales tax. Because the Department reclassified only line items on Taxpayer’s own invoices that indicated retail sales activity, and because Taxpayer has not shown that the activities should be classified differently, we deny the petition.

Det. No. 15-0297, 35 WTD 443 (2016) 35WTD443.pdf

An insurance company and its wholly owned broker/dealer . . . appeal assessments of service and other activities B&O tax on grounds that the receipts are exempt as functionally related to insurance business. We deny the petitions.

Det. No. 15-0345, 35 WTD 472 (2016) 35WTD472.pdf

A sightseeing tour operator disputes the value the Department used in a use tax assessment against its crew vessel arguing that the Department should have used the value listed on the appraisal it provided. We deny the petition.

Det. No. 15-0255, 35 WTD 436 (2016) 35WTD436.pdf

Members of a now defunct LLC, that operated an automobile dealership, protest a TFAA against them, stating that the LLC effected a timely EFT of the tax due and owing. The Department’s bank received the transfer, but subsequently returned the transferred funds because the LLC’s bank swept the LLC’s account of funds. We conclude that [Member A] and [Member B] are responsible for the LLC’s collected and unremitted retail sales tax. We find that [Member C] is not.

Det. No. 15-0299, 35 WTD 448 (2016) 35WTD448.pdf

A Washington LLC appeals the assessment of use tax on a motor vehicle it purchased, registered, and licensed [out-of-state]. Petition denied. We conclude that the company is liable for use tax on the vehicle it purchased and licensed in another state, but uses in Washington.

Det. No. 15-0327, 35 WTD 462 (2016) 35WTD462.pdf

A Pilates studio appeals an assessment of retailing B&O tax and retail sales tax, asserting that its Pilates classes are not physical fitness services classified as retail activities because the primary focus of the classes is instructional. The taxpayer’s petition is denied.

Det. No. 15-0315, 35 WTD 457 (2016) 35WTD457.pdf

A management company objects to assessments of tax for its transactions with a holding company that is commonly-owned, and further objects to the inclusion of certain amounts in the taxable measure for which it has provided no documented evidence that they should be exempt. The assessments are upheld.

Det. No. 15-0259, 35 WTD 414 (2016) 35WTD414.pdf

An industrial engineering company protests the assessment of [deferred sales] tax on construction. . . . Taxpayer claims it should receive a credit for retail sales tax it previously paid to subcontractors for some of those materials and costs on behalf of the prime contractor. We remand Taxpayer’s petition.

Det. No. 14-0317, 35 WTD 382 (2016) 35WTD382.pdf

A road construction subcontractor appeals the assessment of use/deferred sales tax on materials purchased for public road construction and seeks waiver of the reseller permit misuse penalty. We deny the petition.

Det. No. 15-0147, 35 WTD 400 (2016) 35WTD400.pdf

A business that organizes and hosts [vehicle] races protests the reclassification of rider participation/entry fee and comingled general admission/camping fees from the service and other B&O classification to the retailing business B&O and retail sales tax classifications. We affirm the assessment as issued. [U]nder RCW 82.04.050, WAC 458-20-183 [and ETA 3167.2011], the rider participation/entry fee allows for the participation in the sporting activity of [vehicle] racing and . . . is taxable as a retail activity. [Also,] the mingling of the service taxable general admission fees with the retail camping fees subjects the charge to the retail classification. The Taxpayer’s petition is denied.

Det. No. 15-0276, 35 WTD 419 (2016) 35WTD419.pdf

Taxpayer appeals the assessment of service and other activities B&O tax on income derived from the rental of indoor space in a building where a swap meet is held. We conclude that the income is derived from granting a B&O taxable license to use realty and not a B&O exempt rental of real estate. While we sustain the future reporting instructions on a prospective basis, we grant Taxpayer’s request for cancellation of the assessment based on erroneous previous written reporting instructions contained in a prior audit report.

Det. No. 13-0227, 35 WTD 366 (2016) 35WTD366.pdf

A Washington corporation in the construction business protests an assessment of retail sales tax and retailing B&O tax, asserting that the Department erroneously classified Taxpayer as a prime contractor rather than as a speculative builder. Taxpayer’s petition is denied.

Det. No. 14-0330R, 35 WTD 388 (2016) 35WTD388.pdf

A singles club that offers organized activities for its customers seeks reconsideration of Determination No. 14-0330, which affirmed the disallowance of a claimed deduction of [initiation] fees and dues from [its] measure of B&O tax. We deny Taxpayer’s request for reconsideration.

Det. No. 15-0155, 35 WTD 406 (2016) 35WTD406.pdf

An out-of-state computer software corporation petitions for correction of an assessment, claiming that the sponsorship revenue it received for holding software conferences outside of Washington is not taxable in Washington. The company also seeks a credit for collected and unremitted sales taxes that it claims it refunded to its customers and a waiver of the 5% assessment penalty. Taxpayer’s petition is granted with respect to the convention sponsorship revenue, but denied on all other issues. The matter is remanded to the Audit Division for adjustments consistent with this determination.

Det. No. 14-0219, 35 WTD 372 (2016) 35WTD372.pdf

A manufacturer protests the Department’s denial of Taxpayer’s request for refund, in which Taxpayer claimed that it overpaid BNG use tax. Taxpayer argued that it should not have included (1) certain service fees or (2) the value of “lost and unaccounted-for” natural gas in the measure for determining the amount of BNG tax owed. We deny Taxpayer’s petition.

Det. No. 15-0143, 35 WTD 393 (2016) 35WTD393.pdf

A fresh fruit packer petitions for refund of use tax paid on its rental of pooled pallets, on the grounds that the pooled pallets were purchased for resale and are exempt from use tax as packing materials. We deny the petition.

Det. No. 15-0301, 35 WTD 344 (2016) 35WTD344.pdf

A company protests the assessment of retail sales tax on its Washington sales of hyperbaric chamber systems. Because the primary use of the hyperbaric chamber is not to generate or store medically prescribed oxygen, the company’s sales of the chambers are subject to retail sales tax. We uphold the assessment.

Det. No. 15-0333, 35 WTD 361 (2016) 35WTD361.pdf

Taxpayer petitioned for the correction of an assessment, claiming it was entitled to a larger B&O tax credit, because certain deductions for prescription drugs were improperly disallowed by the Audit Division of the Department of Revenue. Taxpayer’s petition is granted.

Det. No. 15-0031, 35 WTD 311 (2016) 35WTD311.pdf

An out-of-state manufacturer and seller of bedding products protests the assessment of B&O tax and retail sales tax on sales of its products in Washington, contending it did not have sufficient nexus with Washington. We deny Taxpayer’s petition.

Det. No. 15-0171, 35 WTD 330 (2016) 35WTD330.pdf

A corporation engaged in selling, renting, and repairing heavy equipment; selling aggregate; and providing hauling for hire appeals the assessment of retail sales tax on grounds that the measure of tax should be reduced by credit memos. Taxpayer also appeals the negligent penalty on grounds that it did not disregard specific reporting instructions. We deny the petition.

Det. No. 15-0324, 35 WTD 348 (2016) 35WTD348.pdf

Health care provider appeals the denial of its request for refund of service and other activities B&O tax paid on receipts from insurance carriers that participate in the FEHB and MA programs, asserting the tax is preempted by federal law. The taxpayer’s petition is denied.

Det. No. 15-0183, 35 WTD 337 (2016) 35WTD337.pdf

A contracting company petitions for the correction of assessment of retail sales tax on acquired capital assets from its predecessor company arguing that it received the capital assets in a business reorganization. Taxpayer’s petition is denied.

Det. No. 15-0329, 35 WTD 355 (2016) 35WTD355.pdf

A LLC that owns real property in Washington, appeals the assessment of REET on its transfer of a controlling interest, asserting that the transfer is exempt from REET because it was nontaxable under federal law, or was a mere change in form or identity. Taxpayer alternatively asserts that if REET is due on the transfer, the value of the LLC’s real property is significantly less than that asserted by the Department. We conclude that REET is due on the transfer, but the assessment must be adjusted to remove liability for a second parcel assessed in error, and to reflect a professional appraisal later submitted by Taxpayer. We grant the petition in part, deny it in part.

Det. No. 14-0360, 35 WTD 305 (2016) 35WTD305.pdf

A Washington corporation objects to the classification of asphalt production as manufacturing for B&O tax purposes. Taxpayer’s petition is denied.

Det. No. 15-0065R, 35 WTD 319 (2016) 35WTD319.pdf

A firm that provides medical imaging services petitions for reconsideration of Det. No. 15-0065, which sustained assessment of B&O tax on fees received from patients that were subsequently paid to physicians who interpreted the medical images. We deny Taxpayer’s petition, finding that Taxpayer neither acted as a billing agent for the physicians nor as an agent of the patients.

Det. No. 15-0350, 35 WTD 291 (2016) 35WTD291.pdf

A company operating a restaurant protests an assessment estimating unreported cash sales, asserting that the records provided were sufficient and all sales were reported. We affirm the assessment because the Audit Division has established that business records were insufficient and reasonably exercised its authority to arrive at an estimate of cash sales. We deny the Taxpayer’s petition.

Det. No. 15-0261, 35 WTD 280 (2016) 35WTD280.pdf

A sole proprietor of an auto body shop protests the assessment of successorship liability. We find the taxpayer is not a successor and conclude that he is not liable for the tax in the outstanding warrants filed against the defunct business. Taxpayer’s petition is granted.

Det. No. 15-0355, 35 WTD 296 (2016) 35WTD296.pdf

Timberland owner disputes an assessment of FET, contending that he did not harvest as much timber as the estimated assessment reflects. Because the owner failed to provide suitable records to substantiate the amount of tax due, we deny the petition.

Det. No. 14-0098, 35 WTD 267 (2016) 35WTD267.pdf

[Taxpayer] appeals the assessment of manufacturing B&O tax and retail sales tax on sales of yacht design and engineering services. Taxpayer contends the sales income was properly reported under the service and other activities B&O classification. We conclude that the income at issue is properly included in the gross proceeds of sales and selling price and is subject to manufacturing B&O tax and retail sales tax. Taxpayer’s petition is denied.

Det. No. 15-0288, 35 WTD 286 (2016) 35WTD286.pdf

A married couple domiciled [out-of-state] seeks a refund of use tax paid on a vehicle purchased and registered [out-of-state], and subsequently brought into Washington during weekend excursions to a vacation home. The petition is granted.

Det. No. 14-0001, 35 WTD 263 (2016) 35WTD263.pdf

Beverage manufacturer petitions for refund of sales tax on its rental of pallets, on the grounds that they were purchased for resale as packing materials under WAC 458-20-115. The petition is denied.

Det. No. 16-0039, 35 WTD 301 (2016) 35WTD301.pdf

Taxpayer requests refund of the extension interest and late-payment penalty paid on a tax assessment that was paid late. Taxpayer maintains that the assessment would have been paid timely and no extension interest or late-payment would have been assessed had the audit report and assessment been sent by United States Postal Service (“USPS”) rather than transmitted over the internet to his secure Department of Revenue [(Department)] account. Taxpayer’s petition for refund is denied.

Det. No. 15-0240, 35 WTD 272 (2016) 35WTD272.pdf

[A husband and wife are the former members of a now defunct LLC. The wife protests a TFAA against her and the marital community of her and her husband, contending that she was not involved in the day-to-day affairs of the business, was not responsible during the disputed period for collecting and remitting retail sales taxes, and that she did not willfully fail to pay those taxes.] We conclude that the former member was not personally liable for the TFAA because she did not have control or supervision of the collected funds or the responsibility of filing returns or paying the taxes to the Department during the period at issue, but that her husband and the marital community are liable. We grant the petition in part and deny it in part.

Det. No. 15-0262, 35 WTD 241 (2016) 35WTD241.pdf

A manufacturer objects to an assessment after it acquired the assets of a predecessor that had a high-technology sales and use tax deferral. The manufacturer argues that the contract between the parties indemnified the manufacturer from any potential tax liability for taxes deferred on the qualified buildings portion of the investment project . . . . We deny the petition.

Det. No. 15-0095, 35 WTD 213 (2016) 35WTD213.pdf

A LLC protests the disallowance of a REET exemption. Taxpayer argues the transaction met the requirements of the nominee exemption. We deny the petition

Det. No. 15-0277, 35 WTD 246 (2016) 35WTD246.pdf

An out-of-state company that provided marketing services for a Washington insurance company, protests additional B&O taxes assessed under the service and other activities classification when its deduction for marketing materials was disallowed. The company contends that its income should be taxed under the lower B&O tax rate for the activities of insurance producers or agents. Because the company provided marketing services for the insurer, rather than insurance services for the policy holders, its income was properly taxed under the service and other activities B&O tax classification. In the alternative, the company seeks to deduct payments to a foreign affiliate, under a transfer pricing agreement. We deny the petition.

Det. No. 15-0251, 35 WTD 230 (2016) 35WTD230.pdf

A German pharmaceutical company with no physical presence in Washington objects to the assessment of Washington’s B&O tax on royalties it received that were based on the sales of its products in this state. Taxpayer’s petition is denied.

Det. No. 15-0223, 35 WTD 217 (2016) 35WTD217.pdf

A winery objects to the assessment of use tax on wine it provided free of charge for wine tasting and on items it gave free of charge to its wine-making class participants. The winery also protests the disallowance of the sales tax exemption it took for sales of wine to qualified nonresidents. The winery further asserts that tax should be waived because it relied on the erroneous tax advice and services of its accountant. We grant the petition in part and deny it in part.

Det. No. 15-0308, 35 WTD 251 (2016) 35WTD251.pdf

A flooring company disputes the assessment of retail sales tax arguing that the Department erred when calculating tax liability, and further, contests the assessment of a misuse of reseller permit penalty on certain purchases from Washington State businesses contending that it made the purchases as a subcontractor or government contractor, and therefore, did not owe retail sales tax. Taxpayer also requests the waiver of interest and a late-payment of return penalty on the grounds that they are excessive and unnecessary. We conclude that the business has not shown that the Department erred when calculating and assessing retail sales tax or when the Department imposed the misuse of reseller permit penalty. We further determine that the business has not shown a basis for a waiver of interest or penalties. Accordingly, we deny the petition.

Det. No. 15-0252, 35 WTD 236 (2016) 35WTD236.pdf

A grantor of a 50% interest in real property protests the REET assessed on a quit claim transfer where the grantee had paid 100% of the mortgage payments on the property for a period of ten months prior to the transfer. We deny the petition.

Det. No. 15-0249, 35 WTD 225 (2016) 35WTD225.pdf

A non-profit organization that operates a martial arts training center appeals the denial of the RCW 82.04.4282 deduction it claimed for its membership dues income, asserting that the dues are deductible donations. The taxpayer’s petition is denied.

Det. No. 15-0205, 35 WTD 202 (2016) 35WTD202.pdf

Home manufacturer protests instructions that it must report periodic payments when received, rather than when the contract is complete. The petition is denied.

Det. No. 14-0259, 35 WTD 160 (2016) 35WTD160.pdf

Provider of training services petitions for correction of a letter ruling in which the Department instructed it to attribute income earned from its in-person and online training workshops to the location of each individual workshop participant at the time the training is provided. We revise the letter ruling. With respect to in-person workshops, a reasonable method of proportionally attributing income is to the location where the workshops take place. With respect to online workshops, income should be attributed to the participant’s permanent office location because a reasonable method of proportionally attributing receipts is not available.

Det. No. 15-0190, 35 WTD 192 (2016) 35WTD192.pdf

An out-of-state corporation appeals B&O taxes assessed on sales of its products delivered into Washington. The corporation contends that, because it had no property or employees in Washington, it was not obligated to pay Washington B&O taxes. Because independent businesses demonstrated the corporation’s products and solicited orders here on the corporation’s behalf, the corporation had sufficient activity in Washington (nexus), and is liable for B&O tax on its receipts and income. Petition denied.

Det. No. 15-0218, 35 WTD 206 (2016) 35WTD206.pdf

An out-of-state web development company appeals the denial of its request for a refund of taxes. Taxpayer contends that it should not be liable for excise taxes in Washington in 2014 because it was only marginally over the nexus threshold for 2013. We deny Taxpayer’s petition.

Det. No. 15-0042, 35 WTD 169 (2016) 35WTD169.pdf

[Taxpayer] appeals an Assessment of Successorship Liability imposed after it acquired all of the assets of a business from [Predecessor], against which the Department made an assessment within six months after receiving the taxpayer’s written notice of the sale. We deny the petition.

Det. No. 15-0107, 35 WTD 178 (2016) 35WTD178.pdf

A taxpayer appeals the assessment of service and other activities B&O tax, penalties, and interest on income the Department disallowed as deductible advances. The taxpayer’s petition is denied.

Det. No. 15-0202, 35 WTD 198 (2016) 35WTD198.pdf

An out-of-state company that hires audio and visual independent contractor technicians to perform services for clients on a temporary basis in Washington protests the Department’s assessment of B&O tax claiming it lacks sufficient contacts with Washington to be subject to B&O tax. We deny the petition.

Det. No. 15-0246, 35 WTD 209 (2016) 35WTD209.pdf

A business that operates a vocational school in Washington petitions for refund of B&O tax on grounds that it qualifies for the tuition fees deduction in RCW 82.04.4282. Taxpayer’s petition is denied.

Det. No. 15-0042R, 35 WTD 174 (2016) 35WTD174.pdf

[Taxpayer] petitions for reconsideration of Det. No.. 15-0042, 34 WTD 169 (2016), which affirmed an Assessment of Successorship Liability imposed on Taxpayer after it acquired all of the assets of a business, against which the Department made an assessment within six months after receiving Taxpayer’s written notice of the sale. In Det. No. 15-0042 we concluded that Taxpayer was a successor to predecessor’s liability. Taxpayer timely filed for reconsideration. We deny Taxpayer’s petition for reconsideration.

Det. No. 15-0151, 35 WTD 182 (2016) 35WTD182.pdf

A previously unregistered, out-of-state, party supplies wholesaler and retailer disputes assessments of retail sales tax, retailing B&O tax, wholesaling B&O tax, litter tax, interest, and penalties on the basis that it did not have nexus with Washington, internet sales should be dissociated from those originating from a representative’s visits to Washington, and it relied – to its detriment – on incorrect oral advice allegedly received from a Department agent. In addition, Taxpayer requests abatement of penalties because it acted in good faith in relying on the alleged oral advice and did not intend to defraud. Petition denied.

Det. No. 15-0135, 35 WTD 135 (2016) 35WTD135.pdf

A firm providing both architectural design and construction services protests reclassification of design work from the service and other B&O classification to the retailing business B&O and retail sales tax classifications on projects where it also acted as contractor. Because there is evidence that the parties contemplated that the Taxpayer would provide both services, we affirm the classification of the design work as a retail service. The Taxpayer’s petition is denied.

Det. No. 14-0276, 35 WTD 97 (2016) 35WTD097.pdf

A seller of interactive web-based computer programs, that assists lenders in evaluating the credit risks of potential borrowers, objects to the assessment of retail sales taxes and penalties. We deny Taxpayer’s petition.

Det. No. 12-0166ER, 35 WTD 82 (2016) 35WTD082.pdf

A company protests B&O tax assessed on payments it received from affiliates for payroll. Because it had no liability other than as agent of the affiliates, we grant the petition subject to verification.

Det. No. 15-0185, 35 WTD 159 (2016) 35WTD159.pdf

An interpreter . . . service (Taxpayer) protests the denial of its requests for refund for taxes it claims it overpaid by not properly reducing its reported gross income by amounts it paid to individual interpreters for interpreter services. Taxpayer claims that such amounts were not part of its income because Taxpayer served as agent for the individual interpreters in collecting payment from the various organizations. We deny Taxpayer’s petition.

Det. No. 14-0410, 35 WTD 126 (2016) 35WTD126.pdf

A building contractor protests retail sales tax assessed when it over-billed its Washington customers for sales tax by including its business and occupation (B&O) tax in the sales tax billed to its customers. [The] contractor must remit over-collected sales tax as retail sales tax (not B&O tax) to the Department of Revenue (Department). The contractor must also include permit fees for which it was financially liable in its measure of tax, even though the owner was liable to pay the contractor for the fees. We deny the taxpayer’s petition.

Det. No. 15-0138, 35 WTD 140 (2016) 35WTD140.pdf

Taxpayers’ petition for the correction of a REET assessment claiming that the change in ownership in LLCs, which resulted from the redemption of other members’ ownership interests, did not constitute a REET-taxable transaction. Taxpayer’s petition is denied.

Det. No. 14-0310, 35 WTD 105 (2016) 35WTD105.pdf

Retail services provider argues that (i) the Department’s assessment is barred by the statute of limitations; (ii) the installation of promotional displays inside retail stores is not a retail sale on the grounds that its customers are not “consumers”; [(iii)] the performance of architectural site surveys is a professional service not subject to retail sales tax; and (iv) travel expense reimbursements are not subject to retail sales tax. The petition is denied.

Det. No. 14-0207, 35 WTD 90 (2016) 35WTD090.pdf

Is an out-of-state lessee liable for use tax under RCW 82.32.730(10) when the leased property is primarily located outside of Washington?

Det. No. 15-0109, 35 WTD 132 (2016) 35WTD132.pdf

A taxpayer appeals a delinquent payment penalty resulting from sending payment timely, but to another Washington Government Agency. We grant Taxpayer’s refund request.

Det. No. 15-0184, 35 WTD 149 (2016) 35WTD149.pdf

A political subdivision of the State of Washington (Taxpayer) protests a tax assessment, in which Taxpayer was assessed service and other B&O tax on “tip fees” collected from individuals that paid the fee to deposit their solid waste at a central transfer station owned and operated by a third party, but leased by Taxpayer. Taxpayer argues that its activity in relation to the central transfer station was an “exclusively governmental activity” and, therefore, exempt from B&O tax. We conclude that the activity at issue is an “enterprise activity” subject to B&O tax. Accordingly, we deny Taxpayer’s petition.

Det. No. 15-0179, 35 WTD 145 (2016) 35WTD145.pdf

A construction company petitions for refund of use tax paid on its acquisition of six vehicles, asserting the transfer of such vehicles was a non-taxable transfer of capital assets between wholly-owned subsidiaries of the same corporation. Petition denied.

Det. No. 14-0329, 35 WTD 113 (2016) 35WTD113.pdf

A taxpayer bank petitions for the correction of an assessment of service and other activities B&O taxes on “shared-loss” payments it received from the FDIC. The FDIC took over three failing banks and sold those banks to Taxpayer under an agreement where the FDIC would compensate Taxpayer when a certain threshold number of loans Taxpayer acquired from the failing banks went into default. Taxpayer argues that the shared-loss payments it received from the FDIC were not taxable in Washington. Taxpayer’s petition is denied.

Det. No. 14-0307, 35 WTD 51 (2016) 35WTD051.pdf

A company that offers cloud-based services that automate the creation and delivery of customized outbound high volume faxes and emails for its customers, objects to a Department ruling that its activities are taxable as telecommunications and digital automated services. Taxpayer contends that it is providing data processing services taxable under the service and activities classification of the B&O tax, or, in the alternative, that its email activities are entirely exempt under the ITFA. Taxpayer’s petition is denied.

Det. No. 15-0167, 35 WTD 71 (2016) 35WTD071.pdf

A [credit bureau] protests the Department’s assessment of retail sales tax and B&O tax under the retailing and wholesaling classifications. The taxpayer argues that its sales were either exempt as digital goods used solely for a business purpose or were predominantly wholesale sales, and that they should not be sourced to Washington. We deny the petition.

Det. No. 14-0195, 35 WTD 46 (2016) 35WTD046.pdf

A fitness and training facility designed for athletic performance enhancement appeals an assessment of retail sales tax on the basis that it provides specialized coaching in running and movement, and not simply personal training. Petition denied.

Det. No. 15-0089, 35 WTD 62 (2016) 35WTD062.pdf

A [taxpayer] appeals a tax ruling that its purchase of LOX for use in its wastewater treatment process is subject to retail sales tax. The [taxpayer] appealed the ruling, asserting that its ruling request did not contain sufficient facts regarding its use of LOX in the manufacture of a mulch-like biosolids product, and that its purchase of LOX for this purpose is exempt from retail sales tax, pursuant RCW 82.04.050(1)(a)(iii) and WAC 458-20-113 (Rule 113) because it is used in manufacturing a new product for sale and becomes an ingredient or component of the product. The taxpayer’s petition is granted.

Det. No. 15-0125, 35 WTD 66 (2016) 35WTD066.pdf

An aerospace manufacturer appeals the Department’s denial of its refund request, based on reclassification of its business activities in a prior tax period to the preferential aerospace manufacturing B&O tax classification and the allowance of an aerospace B&O tax credit for that period. The Department denied the refund request on the basis that the manufacturer had failed to timely file its required annual report for the disputed period, and was therefore, not entitled to the tax benefits for that period. We conclude that the annual report was not timely filed and deny the petition.

Det. No. 15-0181, 35 WTD 16 (2016) 35WTD16.pdf

A seller of medical related products protests an assessment of retail sales tax asserting that, pursuant to RCW 82.08.050(7), its acceptance of blanket exemption certificates specific to RCW 82.08.0281 and RCW [82.08.0283] tax-exempt sales relieves it of personal liability for retail sales tax due on sales of items not exempt under those statutory exemptions. The taxpayer’s petition is denied.

Det. No. 15-0305, 35 WTD 37 (2016) 35WTD37.pdf

A taxpayer appeals the refund denial of a late payment penalty, contending that payment of the assessment was late because the taxpayer worked with the Department in good faith to correct the amount of tax due. The taxpayer’s petition is denied. We conclude that the taxpayer’s circumstances in this case do not meet the statutory qualifications for waiver of a late payment penalty.

Det. No. 15-0279, 35 WTD 27 (2016) 35WTD27.pdf

An out-of-state wholesaler of commercial vehicle chassis protests a tax assessment for B&O tax on sales Taxpayer claims are not subject to B&O tax. Specifically, Taxpayer argues that it lacks nexus in Washington to subject it to taxation here, and further argues that the vhicle chassis at issue were received by the purchasers outside of Washington. We grant Taxpayer’s petition in part, finding the [Vehicle 1] chassis were received outside the state, and remand for adjustment of the tax assessment.

Det. No. 15-0186, 35 WTD 24 (2016) 35WTD24.pdf

A wholesaler of meat objects to the assessment of litter tax because it does not create any litter . . . . We uphold the assessment.

Det. No. 15-0323, 35 WTD 41 (2016) 35WTD41.pdf

The operator of a motel protests the disallowance of its claimed partial exemption from retailing B&O tax and retail sales tax for gross income Taxpayer claims it received from “nontransient” occupants. Because we conclude Taxpayer has failed to provide adequate evidence that any occupants were “nontransient,” we deny the petition.

Det. No. 15-0141, 35 WTD 6 (2016) 35WTD6.pdf

A provider of physician services and seller of food and dietary supplements appeals the assessment of retail sales tax on grounds that the sales are exempt as dietary supplements dispensed pursuant to a prescription. We deny Taxpayer’s petition.

Det. No. 15-0132, 35 WTD 1 (2016) 35WTD1.pdf

A business engaged in providing rotary brush cutting services and making sales of brush cutter parts and equipment protests the assessment of reseller permit misuse penalty with regard to items purchased for consumption by the business. Taxpayer argues it was not aware that it improperly used its permit. We deny the petition.

Det. No. 15-0148, 35 WTD 10 (2016) 35WTD10.pdf

Service affiliates object to the imposition of B&O tax on amounts represented by credits to expenses they allocated to their affiliated entities, asserting that the credits do not constitute gross income as defined in RCW 82.04.080(1). [Taxpayers] also assert that the Audit Division employed faulty methodology in determining their use tax or deferred sales tax liabilities. The taxpayers’ petitions are denied.

2015
Title Date Document Description
Det. No. 14-0285, 34 WTD 557 (2015) 34WTD557.pdf

Private golf and country club protests the exclusion of six nine-hole golf courses from its market comparison for purposes of determining the taxable amount of its membership fees and dues under the actual usage of facilities method pursuant to WAC 458-20-183 and ETA 3080.2009. The petition is granted in part and denied in part.

Det. No. 15-0027, 34 WTD 577 (2015) 34WTD577.pdf

The owner of a mobile home park protests the Department denial of a refund request based on the Department’s finding that Taxpayer did not qualify as a “financial business” and, therefore, could not deduct from the measure of its tax liability certain amounts it received from interest on mortgage loans. Taxpayer argued that it was a “financial business” because it was the lender on such loans similar to other types of financial businesses. We deny the petition.

Det. No. 15-0283, 34 WTD 591 (2015) 34WTD591.pdf

A taxpayer alleges she was a victim of embezzlement and petitions for a correction of assessment based upon the wrongful acts of her employee. Taxpayer’s petition is denied.

Det. No. 14-0286, 34 WTD 563 (2015) 34WTD563.pdf

Tennis club petitions for correction of tax ruling in which the Department ruled that mandatory member assessments used to make capital improvements are subject to retail sales tax and retailing B&O tax. We revise the ruling. A portion of the assessments paid by members is deductible as bona fide dues in accordance with the tennis club’s prior determination, Det. No. 07-0254, [28 WTD 1 (2009)].

Det. No. 15-0284, 34 WTD 595 (2015) 34WTD595.pdf

A Washington company that provides communication services, and designs voice and data networks, appeals a penalty for misuse of its reseller permit. Some of the company’s vendors delivered products to the company at out-of-state locations, and did not charge the company sales tax, while others did not charge sales tax after they obtained the company’s reseller permit. We uphold the penalty assessed on sales of deliveries into Washington from vendors that may have obtained the company’s reseller permit. However, the penalty was not applicable to products the company picked up at out-of-state locations, and later brought into Washington. We grant the petition in part, deny it in part, and remand the assessment for adjustment.

Det. No. 14-0387, 34 WTD 571 (2015) 34WTD571.pdf

Out-of-state [companies protest] the imposition of [late payment of assessment penalties] on the grounds that such late [payments were] the result of employee fraud. The [petitions are] denied.

Det. No. 15-0156, 34 WTD 586 (2015) 34WTD586.pdf

A logger protests a use tax and/or deferred sales tax assessment on his purchase of a feller-buncher used to cut trees. Because the logger did not use the feller-buncher in a manufacturing operation, we deny the petition.

Det. No. 15-0153, 34 WTD 583 (2015) 34WTD583.pdf

A taxpayer seeks waiver of an assessment of B&O tax issued in the amount of the taxpayer’s previously asserted credit for R&D spending after the taxpayer failed to timely file the required annual survey. The taxpayer claims the late survey filing was the result of [its] employee[‘s] mistake. The taxpayer’s petition is denied.

Det. No. 15-0112, 34 WTD 533 (2015) 34WTD533.pdf

A forest harvester protests timber tax assessed on the scaled volume of logs sold to a chipwood processor. Because the buyer’s facility was not an approved chipwood destination when the logs were delivered, the harvester could not pay the tax based on the weight of the wood. We deny the petition.

Det. No. 15-0188, 34 WTD 545 (2015) 34WTD545.pdf

An electrician protests reclassification of sales from wholesale to retail where valid reseller permit information was not available. Because no records were provided to substantiate any additional wholesale sales, we sustain the assessment and deny the Taxpayer’s petition.

Det. No. 15-0028, 34 WTD 520 (2015) 34WTD520.pdf

An individual grantor, who transferred Washington real estate to a grantee who agreed to pay $ . . . to the grantor’s revocable trust secured by the property, protests REET assessed on the transfer. The grantor alleges that he was acting as trustee on behalf of the grantee, who was a beneficiary of the trust. Because the grantor could revoke the trust and receive the payments from the grantee under the deed of trust, the transfer was subject to REET measured by the amount due under the deed of trust.

Det. No. 15-0215, 34 WTD 553 (2015) 34WTD553.pdf

A seller of liquor and wine appeals the assessment of service and other activities B&O tax on grounds that it relied on advice from the Department in not reporting its commission income. Taxpayer also appeals the assessment of spirits sales tax on grounds that Audit erred by not deducting the 17 percent LCB fee from the measure of the tax and assessing the tax on beverages with less than 37% alcohol content. We deny the petition.

Det. No. 15-0127, 34 WTD 541 (2015) 34WTD541.pdf

A [Taxpayer] appeals a letter ruling that improvements to its combined sewer and storm water system do not qualify as public road construction. We sustain the letter ruling.

Det. No. 15-0088, 34 WTD 524 (2015) 34WTD524.pdf

Health care providers appeal the denials of their requests for refund of B&O tax paid on receipts from insurance carriers that participate in federal health insurance programs, asserting that Washington’s tax is preempted by federal law. Taxpayers’ petitions are denied.

Det. No. 15-0212, 34 WTD 549 (2015) 34WTD549.pdf

The owner of a now defunct used car dealership appeals a TFAA on the basis that he was not responsible for the collection and payment of trust fund amounts and had no control over trust fund amounts. Petition denied.

Det. No. 14-0237R, 34 WTD 515 (2015) 34WTD515.pdf

A lessor of employees to affiliated companies petitions for reconsideration of Det. No. 14-0237, which held that Taxpayer cannot exclude amounts received for payroll and employee expenses from its measure of B&O tax, and the Department can assess Taxpayer for tax periods 2004 through 2006 when it was previously registered but not registered when audited by the Department. Taxpayer’s petition is denied

Det. No. 15-0115, 34 WTD 537 (2015) 34WTD537.pdf

The managing member of a now defunct restaurant and lounge protests a TFAA against her, stating that the amount assessed against the defunct business was in error. We conclude that Taxpayer is responsible for the LLC’s collected and unremitted retail sales tax and may not challenge [the amount assessed against] the defunct business. Accordingly, we affirm the assessment.

Det. No. 15-0058, 34 WTD 497 (2015) 34WTD497.pdf

The chairman of a defunct nonprofit corporation petitions for cancellation of his TFAA, challenging the accuracy of the underlying corporate assessment that was never appealed. The petition is denied.

Det. No. 15-0166, 34 WTD 511 (2015) 34WTD511.pdf

A company that claimed a B&O tax credit, but failed to timely submit the required annual tax incentive survey, appeals the denial of its request for an extension to file the survey on the basis that notification of the survey was mailed to the incorrect office and not timely routed to [the] person responsible for filing the survey and the company’s record of timely filing and paying excise taxes. Petition denied.

Det. No. 13-0319, 34 WTD 452 (2015) 34WTD452.pdf

[A technical] publication services company protests B&O tax on the grounds that none of its income should be attributed to Washington under RCW 82.04.462. The petition is denied.

Det. No. 14-0373, 34 WTD 479 (2015) 34WTD479.pdf

Taxpayer objects to Department’s assessment of retail sales tax on the full contract price of a home it built for its corporate president and his wife, and further asserts that the assessment did not take into consideration all amounts of retail sales taxes that it paid to it its vendors and subcontractors. The assessment is upheld.

Det. No. 14-0244, 34 WTD 460 (2015) 34WTD460.pdf

A Washington manufacturer, retailer, and wholesaler of pet supplies objects to the assessment of retailing B&O tax and retail sales taxes on its sales to out of state consumers and to other pet supply stores and retailers. We uphold the assessment.

Det. No. 15-0060, 34 WTD 500 (2015) 34WTD500.pdf

The taxpayer objects to the assessment of Retailing B&O tax and retail sales tax for delivery charges it paid to third-party shippers and later billed back to buyers of its equipment. We determine that Taxpayer does not show it had no liability, either primarily or secondarily, for the delivery charges. Taxpayer’s petition is denied

Det. No. 15-0099, 34 WTD 505 (2015) 34WTD505.pdf

Taxpayer derives income from the sale of garden supplies. Taxpayer protests the retailing B&O and retail sales tax assessed on Washington sales based on a claimed lack of nexus. Taxpayer also protests a late-payment penalty assessed on the late payment of two assessments based on a delay in receiving the assessments. Taxpayer’s petition is denied.

Det. No. 15-0034, 34 WTD 492 (2015) 34WTD492.pdf

A taxpayer appeals a letter ruling wherein the Department instructed the taxpayer that its sales constitute sales of prewritten computer software subject to Retailing B&O tax and retail sales tax. As set forth below, we conclude that the correct taxation classification of a particular sale is dependent on the elements of the transaction and how those elements are billed to the customer. The letter ruling issued to Taxpayer is modified accordingly.

Det. No. 14-0260, 34 WTD 467 (2015) 34WTD467.pdf

[Taxpayer] appeals the assessment of service and other activities B&O tax on payments received for allowing a related entity to use real property and improvements located at [the Port]. The Department issued the assessment based on its opinion that the related entity’s use of the property and improvements constituted a taxable license to use real estate. Taxpayer contends the use constituted the tax-exempt rental of real estate . . . . We deny Taxpayer’s petition . . . .

Det. No. 15-0001, 34 WTD 484 (2015) 34WTD484.pdf

[Taxpayer] protests an assessment of deferred sales tax on charges for a water line reconstruction and for a paved section in a parking lot, claiming that the purchases qualify for the public road construction retail sales tax exception under RCW 82.04.050(10). In addition, Taxpayer claims that the Department is estopped from assessing the tax because the Department issued it a certificate stating that all taxes are paid in full. We grant the petition in part and deny in part.

Det. No. 13-0050, 34 WTD 443 (2015) 34WTD443.pdf

A syrup manufacturer protests a syrup tax assessment alleging that it is not required to collect the syrup tax for sales to the federal government . . . in Washington. Taxpayer also contests the wholesaling B&O tax assessment arguing that it should be allowed to deduct from its gross income as volume discounts certain payments to its customers. We deny . . . the petition.

Det. No. 14-0350, 34 WTD 474 (2015) 34WTD474.pdf

Taxpayer, the sole corporate officer of a defunct corporation, appeals a TFAA. Because we find that Taxpayer was the chief executive and chief financial officer during the time the trust fund liability accrued, the TFAA is sustained and Taxpayer’s petition is denied.

Det. No. 15-0083, 34 WTD 380 (2015) 34WTD380.pdf

A towing company disputes the results of an audit on the basis that its records were not correct at the time of the audit and it is in the process of reconciling income to produce correct records. Petition denied

Det. No. 14-0416, 34 WTD 358 (2015) 34WTD358.pdf

A recipient of [a tax deferral under] the rural county sales and use tax deferral program (“Rural County Deferral”) protests the Department of Revenue’s (“Department”) assessment of the amount of the tax deferral, claiming that it is not liable for the tax because the sale of the real property where the tax deferred activity took place [was] under threat of eminent domain, or that the governmental entity that threatened eminent domain and purchased the property is the recipient’s successor, and is liable for the deferral. We deny the petition.

Det. No. 15-0007, 34 WTD 364 (2015) 34WTD364.pdf

[Taxpayers] appeal a real estate excise tax (REET) assessment, claiming they transferred their interest in the subject real property as a tax-exempt gift. The Department of Revenue (the Department) assessed REET based on the value of Taxpayers’ relief of debt following the transfer. We uphold the assessment.

Det. No. 14-0224, 34 WTD 340 (2015) 34WTD340.pdf

Taxpayers protest the service and other activities business and occupation (“B&O”) tax assessed on amounts collected from franchisees for local and national advertising. We conclude that the amounts are received for providing advertising services, and are not excludable from tax under WAC 458-20-111 (“Rule 111”). Taxpayer’s petition is denied.

Det. No. 15-0026, 34 WTD 373 (2015) 34WTD373.pdf

An out-of-state property management company (Taxpayer) protests the Department’s denial of a refund request in which Taxpayer claimed (1) it should have been allowed to exclude from its measure of business and occupation (B&O) tax amounts that it received from its customers to cover Taxpayer’s own payroll expenses, and (2) protests the classification of a portion of [its] income to retail sales. We deny Taxpayer’s petition

Det. No. 14-0242, 34 WTD 353 (2015) 34WTD353.pdf

A heating and air conditioning company objects to the disallowance of “discounts” booked in the “Finance Company Buy Downs” and “Coupons and Discounts” accounts that reflected the short pay of customer invoices by customers’ retail financing companies. Taxpayer’s petition is denied.

Det. No. 15-0009, 34 WTD 369 (2015) 34WTD369.pdf

A flagging services company (“Taxpayer”) protests the Department of Revenue’s (“Department”) reclassification of income from the public road construction and wholesaling business and occupation (“B&O”) tax classifications to the service & other activities B&O tax classification. We deny the petition.

Det. No. 14-0238, 34 WTD 346 (2015) 34WTD346.pdf

Taxpayer, the controller of a defunct corporation, appeals a trust fund accountability assessment (TFAA). Because we find that the Taxpayer held himself out to be and was acting in the capacity of a chief financial officer at the time a portion of the trust fund liability accrued, the assessment is sustained with respect to the unpaid sales taxes that accrued while Taxpayer was acting as chief financial officer. Taxpayer is not liable for the unpaid sales taxes that accrued after his position was terminated. Taxpayer’s petition is granted in part and denied in part.

Det. No. 14-0353, 34 WTD 302 (2015) 34WTD302.pdf

Two out-of-state companies providing extended warranties to vehicle purchasers in Washington protest a letter ruling that their sales of the warranties were subject to business and occupation (B&O) tax. One of the entities also appeals an assessment of B&O tax on these sales. They claim that their receipts were gross premiums in respect to insurance business upon which a premiums tax was paid. . . . Petitions denied.

Det. No. 14-0356, 34 WTD 308 (2015) 34WTD308.pdf

A hospital appeals the assessment of use tax and/or deferred sales tax on purchases of various medical equipment and other medical items in cases where it had not paid retail sales tax at the time of purchase from the vendors. The Taxpayer asserts that a list of 45 purchases represent items that are tax exempt under various statutes for medical items, or exempt as a service. As the Taxpayer’s claims of exemption are mainly based on statutes that were amended before the audit period, and an outdated administrative rule, the appeal is denied except as to eight specified items.

Det. No. 14-0397, 34 WTD 332 (2015) 34WTD332.pdf

A taxpayer, who applied for a Voluntary Disclosure Agreement (VDA), protests the imposition of late payment penalties imposed after the Department of Revenue (Department) [cancelled] the VDA.

Det. No. 14-0344, 34 WTD 288 (2015) 34WTD288.pdf

Two [out of state] nonprofit hospitals seek a refund of business and occupation (B&O) tax paid on . . . Medicaid payments and . . . Children’s Health Insurance Program (CHIP) for medical care provided in Washington. They also seek a refund of B&O tax on medical services that they provided to their employees covered by the hospitals’ self-insurance plans. Because no exclusion applies to payments from . . . Medicaid and CHIP, and the medical services provided to the hospitals’ employees were taxable activities, we deny their petitions.

Det. No. 14-0358, 34 WTD 320 (2015) 34WTD320.pdf

Taxpayer operates a consulting service that acts as an owner’s representative during the design and construction process of large commercial projects. Taxpayer requested a ruling affirming that it provided a professional service subject to the service and other activities B&O tax and the income could be apportioned. Taxpayer protested the Department’s ruling that it provided services “in respect to construction” that was not apportionable and subject to either the wholesaling B&O tax or retailing B&O and retail sales tax classifications. We grant Taxpayer’s petition.

Det. No. 14-0404, 34 WTD 337 (2015) 34WTD337.pdf

A Taxpayer, acting as a subcontractor on a federal government dock building contract, incorrectly used its reseller permit when making purchases of materials. As a result it did not pay any retail sales tax on this project, and it also did not subsequently pay any use tax. Because the Taxpayer’s basis for requesting a waiver of the reseller permit misuse penalty was that it was unaware of its proper usage in this type of contract, there is no basis under RCW 82.32.291 for waiver of the penalty.

Det. No. 14-0345, 34 WTD 294 (2015) 34WTD294.pdf

An out-of-state student loan servicer (Taxpayer) appeals a tax assessment, contending that because it has no physical presence and does not solicit business to establish a market in Washington, it has no nexus with Washington. Taxpayer further contends that the income it received from loan lenders for “servicing” loans cannot constitute “receipts” from Washington. We conclude Taxpayer has adequate nexus with Washington under the Commerce Clause and the Due Process Clause of the U.S. Constitution, and that a portion of Taxpayer’s income from lenders may constitute receipts attributable to Washington, thereby subjecting Taxpayer to taxation in Washington. Taxpayer’s petition is denied.

Det. No. 14-0378, 34 WTD 326 (2015) 34WTD326.pdf

A financing company (“Taxpayer”) petitioned for waiver of delinquent and substantial underpayment penalties in an Audit assessment claiming that the late payment of tax resulted from Taxpayer’s reliance on incorrect written instructions contained in a Department of Revenue (the “Department”) form. We deny the petition.

Det. No. 14-0126, 34 WTD 278 (2015) 34WTD278.pdf

Two shopping malls protest business and occupation (B&O) tax assessed on promotional dues that they collected from their retailers. Because the payments booked as promotional dues were exempt from B&O tax as derived from the rental of real property, we grant the petition.

Det. No. 14-0216, 34 WTD 282 (2015) 34WTD282.pdf

A Taxpayer, who prepares meals for a fraternity organization at a Washington [educational institution], appeals her retail sales tax refund request denial. Taxpayer argues that income from the services she provides is subject to the service and other activities business and occupation (“B&O”) tax classification and she remitted the retail sales tax in error. We grant the petition and remand the case back to the Taxpayer Account Administration (TAA) for refund of uncollected retail sales tax and an adjustment regarding Taxpayer’s service and other activities B&O tax.

Det. No. 14-0386, 34 WTD 273 (2015) 34WTD273.pdf

A non-profit, collective medical garden appeals a ruling that it must collect retail sales tax when it sells medical marijuana to patients who present written authorization from a health care professional that the patient may benefit from the medical use of cannabis. Because the authorization is not a prescription, the transfer of medical marijuana is not exempt from retail sales tax, and we deny the petition.

Det. No. 14-0159, 34 WTD 257 (2015) 34WTD257.pdf

Two affiliated limited liability companies, Taxpayer A and Taxpayer B, operate two restaurants. Taxpayers protest the retail sales tax and retailing business and occupation (B&O) tax assessed by the Department. Taxpayers contend that its records do not accurately reflect (1) the amount of retail sales tax actually collected from their customers and (2) the amount of Taxpayers’ actual gross proceeds of sales. Taxpayers also contend that they are entitled to a larger cash and trade discount deduction than allowed by the Department. We [deny] Taxpayer A’s petition. We deny Taxpayer B’s petition.

Det. No. 14-0383, 34 WTD 265 (2015) 34WTD265.pdf

The Taxpayer, an [out-of-state] manufacturer and wholesaler of prefabricated buildings, protests the assessment of wholesaling B&O tax on sales made to Washington State customers.

Det. No. 14-0175, 34 WTD 210 (2015) 34WTD210.pdf

An out of state corporation that provides payroll and benefits services to a parent corporation, and that reported wages in this state as the employer of record, protests the assessment of B&O tax under the services classification on estimated income, arguing amounts received for payroll and benefits are excluded reimbursements under WAC 458-20-111 (Rule 111). Because the taxpayer did not prove it has solely agent liability to pay the employer obligations, we conclude the amounts received are not excludible reimbursements. The petition is denied.

Det. No. 14-0335, 34 WTD 231 (2015) 34WTD231.pdf

A retailer of tobacco products disputes an assessment of tobacco products tax. The taxpayer’s petition is denied.

Det. No. 14-0229, 34 WTD 216 (2015) 34WTD216.pdf

A ship building company claimed improvements and repairs it made to a customer’s vessel were exempt from retail sales tax on the basis that the taxpayer delivered the completed vessel to a nonresident purchaser at a point outside of Washington State. Because the taxpayer failed to meet its burden of proof to show it qualified for the exemption under RCW 82.08.0265, we uphold the assessment and deny taxpayer’s petition.

Det. No. 14-0156, 34 WTD 196 (2015) 34WTD196.pdf

An internet marketing research company challenges Audit’s denial of its several applications for refund, on the basis that the nonclaim period had not run on some claims, that unusual items in a non-statistical block sample should be excluded from the sample, that panelist costs should be treated as representative third party costs, and two refund requests were improperly denied for lack of substantiation. Petition denied.

Det. No. 14-0340, 34 WTD 244 (2015) 34WTD244.pdf

An individual objects to his liability under a trust fund accountability assessment (TFAA), the amount of the assessment, and the additional amount added to it when corporate records became available. The petition is denied.

Det. No. 14-0233, 34 WTD 220 (2015) 34WTD220.pdf

An LLC owning real property appeals a Real Estate Excise Tax Assessment (REET) on a controlling interest transfer, asserting that assessed value of the property or the selling price of the interest represents the true and fair value of the property in light of a permanent conservation easement, which significantly limits the use of the property. As the assessed value of the property on the county tax rolls reflects the true and fair value of the land under RCW 84.34.060, we conclude this value should have been used. Taxpayer’s petition is granted.

Det. No. 14-0099, 34 WTD 188 (2015) 34WTD188.pdf

A Washington manufacturer of high power semiconductor diode lasers and components appeals a ruling that it is ineligible for the preferential manufacturing B&O tax rate for the manufacture of semiconductor materials, and the retail sales and use tax exemption for gases and chemicals used in the manufacture of semiconductor materials. Taxpayer’s petition is denied for the B&O tax preferential rate, and granted as to the retail sales tax/use tax exemption.

Det. No. 14-0338, 34 WTD 234 (2015) 34WTD234.pdf

A contractor, engaged in the custom construction of concrete structures, walkways, and roads, challenges an assessment of retail sales tax, retailing business and occupation (B&O) tax on unreported income, and use tax and/or deferred sales tax on construction materials. Because the contractor has not provided records documenting its unreported income or receipts proving it paid retail sales tax on materials used in its public road construction jobs, we deny the petition.

Det. No. 14-0342, 34 WTD 250 (2015) 34WTD250.pdf

An out-of-state web hosting company requests that the Department cancel an assessment of service and other activities business and occupation (B&O) tax, interest, and penalties, because it argues that it does not have substantial nexus. We deny Taxpayer’s petition.

Det. No. 14-0168, 34 WTD 205 (2015) 34WTD205.pdf

Sellers of firewood, ([Taxpayer A], succeeded by [Taxpayer B], collectively referred to as “Taxpayers”) appeal assessments of retail sales tax, retailing business and occupation (B&O) tax, and the evasion penalty, on grounds that the estimated measure of taxes are unreasonable and they were unaware of their tax liabilities. We deny the petitions.

Det. No. 14-0325, 34 WTD 225 (2015) 34WTD225.pdf

A state-run community college (Taxpayer) located in . . . Washington, protests a tax assessment of uncollected retail sales tax on sales to purported nonresidents, asserting that its documentation of the nonresident sales substantially complied with the statutory requirements. Taxpayer further challenges written reporting instructions issued by the Department, which instructed Taxpayer to collect retail sales tax from nonresident students on purchases of tangible personal property at Taxpayer’s bookstore. Taxpayer’s petition is denied.

Det. No. 14-0152, 34 WTD 193 (2015) 34WTD193.pdf

A taxpayer engaged in the business of providing sunless tanning services and selling beauty products petitions for correction of assessment, asserting that she should not be assessed sales tax on her sunless tanning services because she did not collect retail sales tax from her customers for those services . . . Taxpayer’s petition is denied

Det. No. 14-0339, 34 WTD 238 (2015) 34WTD238.pdf

The recipient of a trust fund accountability assessment (TFAA) objects to an additional amount added. He alleges that he was not a “responsible individual” because the Department did not assist him in obtaining records from another corporate officer, and was not provided the corporate records when they became available. The petition is denied.

Det. No. 13-0175, 34 WTD 144 (2015) 34WTD144.pdf

[Taxpayer] petitions the Department of Revenue (Department) for correction of an assessment for use tax associated with the use, by a nonresident member of the armed forces, of a motor vehicle purchased outside of Washington but registered in Washington. Taxpayer’s petition is denied

Det. No. 14-0319, 34 WTD 182 (2015) 34WTD182.pdf

A business performing carpet cleaning and related services for multi-family housing complexes, protests an assessment of retailing business and occupation (B&O) tax and retail sales tax on income from carpet cleaning for water damage, carpet repair, and deck cleaning, asserting the services constitute janitorial services excluded from the definition of “retail sale” pursuant to RCW 82.04.050(2)(d) and WAC 458-20-172. The petition is denied.

Det. No. 14-0095R, 34 WTD 155 (2015) 34WTD155.pdf

A taxpayer that collected and transported hazardous waste from Washington customers to its own hazardous waste disposal site [out-of-state] petitions for reconsideration. The taxpayer requests the Department rule that the costs of certain chemicals and binding reagents it uses to bind and dry hazardous waste before depositing that hazardous waste in its [out-of-state] landfill be allocated to [that state]. Taxpayer’s petition for reconsideration is denied

Det. No. 14-0305, 34 WTD 175 (2015) 34WTD175.pdf

Three community solar projects (CSPs) object to a ruling that they must register, report, and possibly pay business and occupation (B&O) tax on incentive payments they receive from public utility districts (PUDs). Because they are engaged in business, the CSPs must register and report the incentive payments as gross income subject to B&O tax. We deny the petitions.

Det. No. 13-0389R, 34 WTD 147 (2015) 34WTD147.pdf

A taxpayer engaged in the furniture rental business petitions for reconsideration of a determination remanding the matter to Audit Division for adjustments to taxes arising from the disallowance of retail sales tax exemptions on rentals to Native Americans . . . . Taxpayer’s petition for reconsideration is denied and the post-audit adjustment (PAA) issued by the Audit Division after the remand is affirmed.

Det. No. 14-0125, 34 WTD 160 (2015) 34WTD160.pdf

Taxpayer, a natural pet food retailer, appeals an assessment of retail sales taxes it over-collected on sales of goods where its point-of-sale system mistakenly charged sales tax on the full retail price of goods sold to customers at a discount. Taxpayer also appeals retail sales tax assessed on manufacturer discounts that Taxpayer deducted from the retail sales price of goods it sold to its customers. Finally, Taxpayer protests the assessment on the grounds that the State of Washington receives a windfall by collecting over-collected sales taxes. Taxpayer’s petition is denied.

Det. No. 13-0171R, 34 WTD 138 (2015) 34WTD138.pdf

A corporation (“Taxpayer”) [petitions for reconsideration of a determination sustaining the assessment of use tax and/or deferred sales tax on] dredging services it purchased for its anaerobic lagoons, because the services are not exempt from [retail sales tax under RCW 82.08.02565] and WAC 458-20-13601 (Rule 13601). . . . [We grant the petition in part.]

Det. No. 14-0314, 34 WTD 179 (2015) 34WTD179.pdf

A limited liability company (LLC) that was assessed retail sales tax, business and occupation (B&O) tax, penalties, and interest, protests the assessment on the grounds that its current owners purchased the LLC from a prior owner during the audit period. The LLC’s current owners claim that they should not be held accountable for periods when the LLC was owned by someone else. Because the LLC was engaged in business as a separate legal entity for the entire audit period, we hold that the change in ownership of the LLC is immaterial, and that the LLC owes the tax, penalties, and interest that it accrued through its business activities. Taxpayer’s petition is denied.

Det. No. 14-0081, 34 WTD 151 (2015) 34WTD151.pdf

Taxpayer operates a bar and derives income from the sale of food and beverages. Taxpayer petitions for correction of assessment of additional retail sales tax and retailing business and occupation (“B&O”) tax on beverage sales where sales tax was not separately stated on sales receipts. Taxpayer’s petition is denied.

Det. No. 14-0240, 34 WTD 172 (2015) 34WTD172.pdf

A truck detailing business appeals an assessment of use tax and/or deferred retail sales tax on its purchase of polishing compound supplies used in performing its detailing services, asserting that the specialty polishing compounds are resold to the customer as part of the detailing service. The taxpayer’s petition is denied.

Det. No. 14-0226, 34 WTD 164 (2015) 34WTD164.pdf

A private golf club (Taxpayer) appeals the Department of Revenue’s (Department’s) estimated assessment of deductible member dues. We grant the petition in part, and remand to the Department’s Audit Division for adjustments consistent with this determination.

Det. No. 14-0301, 34 WTD 120 (2015) 34WTD120.pdf

A software development company (Taxpayer) that serves certain customers in the aerospace industry protests the Audit Division’s reclassification of its income from various classifications to the service and other activities business and occupation (B&O) tax classification. Taxpayer argues that its business activity is properly classified under one of the preferential tax rates offered for certain aerospace-related activities. Taxpayer further protests the Audit Division’s assessment of use tax and/or deferred sales tax on certain purchases of computers, arguing that those purchases are exempt from retail sales tax and use tax under an aerospace-related exemption. We deny Taxpayer’s petition.

Det. No. 14-0008R, 34 WTD 84 (2015) 34WTD84.pdf

Taxpayer, a renter of road signs, requests reconsideration of Determination No. 14-0008, which sustained an assessment of retailing business and occupation (“B&O”) tax and retail sales tax on the first lease payment of equipment rented at a Washington location and subsequently transported to an Oregon job site. Taxpayer’s petition is denied.

Det. No. 14-0247, 34 WTD 109 (2015) 34WTD109.pdf

Taxpayer protests the Hazardous Substance Tax (“HST”) and Petroleum Products Tax (“PPT”) assessed on aviation fuel consumed in Washington, which was either purchased within Washington, or purchased elsewhere and brought into Washington in the fuel tanks of Taxpayer’s aircraft. Taxpayer maintained that it did not owe the tax because it was not the first possessor of the fuel. We sustain the tax assessed.

Det. No. 14-0094, 34 WTD 92 (2015) 34WTD92.pdf

Taxpayer, an interest charge domestic international sales corporation (“DISC”) petitions for a refund of service and other activities business and occupation (“B&O”) tax paid for the period January 1, 2008, through May 31, 2010, claiming that it is entitled to apportion its commission income outside of Washington. Taxpayer’s petition is denied.

Det. No. 13-0371, 34 WTD 70 (2015) 34WTD70.pdf

A seller of skydiving-related products and services (Taxpayer) appeals the reclassification of video sales from the service and other activities business and occupation (B&O) tax classification to the retailing B&O tax classification and the assessment of retail sales tax on these sales. Taxpayer also appeals instructions that it must begin collecting retail sales tax on sales of tandem skydiving packages and flights to higher elevation. We deny the petition.

Det. No. 14-0302, 34 WTD 127 (2015) 34WTD127.pdf

A manufacturer appeals the assessment of business and occupation (B&O) tax on the value of by-product it sells to recycling companies. We deny the petition.

Det. No. 14-0313, 34 WTD 133 (2015) 34WTD133.pdf

An out-of-state corporation (Taxpayer) that reported wages in Washington as the employer of record for film crews working in Washington protests the assessment of service and other activities business and occupation (B&O) tax on Taxpayer’s full gross income, arguing that amounts it received for payroll and benefits from its Washington client are excludable reimbursements under WAC 458-20-111. Because Taxpayer failed to prove that it was not personally liable for the payment of payroll and benefits expenses associated with the film crews, we conclude those expenses were not excludable under WAC 458-20-111. The petition is denied.

Det. No. 14-0142, 34 WTD 96 (2015) 34WTD96.pdf

A nutritional products company disputes an assessment of retail sales tax resulting, in part, from the classification of its goji juice as “dietary supplements” and asserts its goji juice-based products are “food and food ingredients” exempt from retail sales tax because its products are not required to be labeled as a dietary supplement. Petition denied.

Det. No. 14-0292, 34 WTD 114 (2015) 34WTD114.pdf

A provider of prescription benefit management (PBM) services (Taxpayer) seeks correction of a letter ruling on grounds that its measure of business and occupation (B&O) tax does not include receipts that it uses to pay pharmacies and that the Department is bound by a contrary letter ruling issued to its predecessor. We deny the petition.

Det. No. 14-0306, 34 WTD 129 (2015) 34WTD129.pdf

An out-of-state web development company (Taxpayer) appeals a letter ruling finding that Taxpayer established nexus in Washington in 2013 because Taxpayer had payroll of more than $53,000 in Washington during that year. Taxpayer argues that a portion of the amount of payroll it paid in 2013 was attributable to 2012. Taxpayer also argues for a waiver of any tax liability because its payroll was only slightly above the $53,000 threshold. We deny Taxpayer’s petition.

Det. No. 14-0004, 34 WTD 79 (2015) 34WTD79.pdf

A Taxpayer appeals a letter ruling classifying the transfer of real property from a personal residence trust to the grantor as a sale subject to Real Estate Excise Tax. Because there was consideration for the transfer we affirm the letter ruling. The Taxpayer’s petition is denied.

Det. No. 14-0177, 34 WTD 102 (2015) 34WTD102.pdf

A limited liability company engaged in speculative building protests an Audit assessment of deferred sales and/or use tax on certain retail purchases. Taxpayer contends that certain purchases were exempt from retail sales tax because they were purchases either for the U.S. government or for public road construction. Taxpayer also contends that certain amounts it paid for mosaic tile work were for design services, and therefore exempt from retail sales tax. We deny the petition.

Det. No. 14-0006R, 34 WTD 016 (2015) 34WTD016.pdf

A seller of loose tobacco, tubes, and the use of its facilities to roll cigarettes (Taxpayer) petitions for reconsideration of Det. No. 14-0006 on grounds that its purchase of roll-your-own cigarette machines is exempt from use/deferred sales tax as machinery and equipment (M&E) used in a manufacturing operation. We deny the petition.

Det. No. 14-0245, 34 WTD 048 (2015) 34WTD048.pdf

An individual petitions for refund of sales tax paid on a geothermal heat pump on the grounds that the heat pump is machinery and equipment used directly in generating electricity using geothermal resources. The petition is denied.

Det. No. 14-0288, 34 WTD 061 (2015) 34WTD061.pdf

A limited liability company (LLC) protests the Department of Revenue’s (Department) use of an appraised value to determine the selling price of real property owned by the LLC for real estate excise tax (REET) purposes. The LLC also protests the assessment of a delinquency penalty for failing to report the REET-taxable controlling interest taxable transfer until six months after the date of transfer. Taxpayer’s petition . . . is denied.

Det. No. 14-0236, 34 WTD 042 (2015) 34WTD042.pdf

A seller of floral greenery and seasonal wreaths and garland (Taxpayer) requests a correction of use tax and/or deferred sales tax assessed on various purchases of machinery and equipment, and on payments for repairs on certain machinery and equipment. Taxpayer claims that the purchases at issue qualify for the machinery and equipment (M&E) exemption from retail sales tax and use tax. We deny Taxpayer’s petition.

Det. No. 13-0312, 34 WTD 006 (2015) 34WTD006.pdf

A motor carrier protests the assessment of use tax on trucks and trailers (“rolling stock”) that no longer qualified for a use tax exemption and contends the assessment is barred by RCW 82.32.050(3), which provides a statutory limitation on the time period that the Department of Revenue (“Department”) can issue an assessment. Taxpayer’s petition is granted.

Det. No. 14-0073, 34 WTD 019 (2015) 34WTD019.pdf

A corporation (“Taxpayer”) protests the disallowed deductions it took from the gross income it received for the services it provided to its affiliated entities, claiming the deductions were reimbursements for advances under WAC 458-20-111 (“Rule 111”). We deny the petition.

Det. No. 14-0277, 34 WTD 051 (2015) 34WTD051.pdf

A business that provides exterior maintenance services for commercial building owners seeks a refund of retail sales tax and retailing business and occupation (B&O) tax, asserting that its services should not be classified as a retailing activity because they constitute janitorial services taxable as a service activity. The taxpayer’s petition is denied.

Det. No. 14-0318, 34 WTD 066 (2015) 34WTD066.pdf

A retailer appeals the assessment of retail sales tax on grounds that the measure of tax includes sales to qualified nonresidents. We deny the petition.

Det. No. 14-0196, 34 WTD 036 (2015) 34WTD036.pdf

A Washington public port district appeals an assessment of public utility tax on its dockage revenue, asserting that it correctly reported its dockage revenue from charges for vessel berthing for the purpose of moving goods and commodities in waterborne interstate or foreign commerce, under the stevedoring business and occupation (B&O) tax classification, pursuant to RCW 82.04.260(7). The taxpayer’s petition is granted.

Det. No. 13-0370, 34 WTD 012 (2015) 34WTD012.pdf

General contractor protests retail sales tax imposed on amounts paid to subcontractors for which sales tax was included in the contract price. The petition is denied in part and remanded in part.

Det. No. 14-0088R, 34 WTD 27 (2015) 34WTD027.pdf

A construction company petitions for reconsideration of a determination affirming an assessment of tax for failing to report tax on outstanding invoices when it converted from cash to accrual method of accounting. The Taxpayer asserts tax was remitted on a number of the invoices at issue. Because the Taxpayer has not been able to substantiate tax was remitted on the invoices at issue, we sustain the assessment as issued and deny the Taxpayer’s petition.

Det. No. 14-0170, 34 WTD 030 (2015) 34WTD030.pdf

A contractor specializing in ceiling construction appeals an assessment of retail sales tax, retailing and wholesaling business and occupation (“B&O”) tax, penalties, and interest, on the basis that it worked as a sub-contractor on several jobs and has been unable to secure resale certificates and/or reseller permits because many general contractors have closed their businesses, monetary gifts from a relative were improperly assessed retailing B&O and retail sales tax, and it did its best in reporting and paying taxes. We deny the petition.

Det. No. 14-0281, 34 WTD 056 (2015) 34WTD056.pdf

A business objects to the assessment of tax for custom construction activities asserting the company was a non-operating corporation and did not engage in business. As the Taxpayer has not provided any records or information to contest the audit, we sustain the assessment as issued.

Det. No. 13-0306, 34 WTD 001 (2015) 34WTD001.pdf

[Taxpayer] appeals the assessment of use tax and/or deferred sales tax, plus penalties and interest, resulting from sales reclassified from wholesaling to government contracting where Taxpayer received resale certificates or reseller permits from prime contractors, and where Taxpayer did not understand its tax liability as a government contractor. Taxpayer’s petition is denied in part but remanded for possible adjustment based on additional documents provided on appeal. [Taxpayer’s petition is denied in part and remanded in part.]

2014
Title Date Document Description
Det. No. 13-0367, 33 WTD 578 (2014) 33WTD578.pdf

Following the federal government’s seizure of cigarettes from a residence in Washington, the Department of Revenue (“Department”) assessed Taxpayer cigarette tax, and a ten-dollar per-pack penalty on those cigarettes. Taxpayer objects to the assessment. We deny the petition.

Det. No. 14-0133, 33 WTD 594 (2014) 33WTD594.pdf

A taxpayer petitions for the correction of a real estate excise tax (REET) assessment claiming that the change in ownership in a limited liability company (LLC), which resulted from the extinguishment of a fifty percent owner’s membership interest under the terms of the LLC agreement due to the member’s insolvency, did not constitute a “transfer” or “acquisition” of a controlling interest in the LLC and that a REET-taxable transaction did not take place. Taxpayer’s petition is denied.

Det. No. 14-0217, 33 WTD 623 (2014) 33WTD623.pdf

Two affiliated limited liability companies (Taxpayers) engage in construction services. Taxpayers protest the Department of Revenue’s (Department) disallowance of bad debt deductions taken against retailing business and occupation (B&O) tax and retail sales tax. Taxpayers argue that they were eligible to claim the bad debt deductions for federal income tax purposes and, therefore, qualified for the deduction on their Washington combined excise tax returns. We disagree and deny Taxpayers’ petition accordingly.

Det. No. 13-0263, 33 WTD 562 (2014) 33WTD562.pdf

Affiliated entities (“Taxpayers”) that sell new and used video games, video game controllers, video game consoles, and other miscellaneous items protest retail sales tax and retailing business and occupation (B&O) tax assessed on disallowed deductions it had claimed for like kind trade-ins. We deny the petitions.

Det. No. 14-0201, 33 WTD 612 (2014) 33WTD612.pdf

A taxpayer that charged customers to play in its basketball tournaments and leagues disputes the assessment of additional tax, penalties, and interest that resulted from reclassification of taxpayer’s tournament and league revenue from the Service & Other Activities business and occupation (B&O) tax classification to the Retailing B&O tax classification. The taxpayer argues that RCW 82.04.050 and WAC 458-20-183 are unclear on their faces, that the taxpayer reasonably relied on the substantive tax advice of its professional accountant, and that Taxpayer has always filed its returns timely and accurately. We deny the petition.

Det. No. 14-0005R, 33 WTD 583 (2014) 33WTD583.pdf

Three LLCs that transferred real property for consideration that included the grantees taking the property subject to non-recourse mortgages, petition for reconsideration of a determination sustaining REET (Real Estate Excise Tax) assessed on the non-recourse debt included in the sales price. Because the WAC 458-61A-103(2) REET exemption applies only to transfers involving solely non-recourse debt, and no other consideration, we affirm the assessment of additional REET.

Det. No. 14-0178, 33 WTD 600 (2014) 33WTD600.pdf

A mutual fund advisor appeals a ruling that its gross income could not be taxed at the preferential rate for international [investment management] services. When the proportion of the advisor’s income from investment management services to total income exceeds 50%, and 10% of their income comes from qualified clients, the advisor can pay business and occupation (B&O) tax on its income from investment management services multiplied by the preferential rate. We revise the ruling subject to verification.

Det. No. 14-0268, 33 WTD 637 (2014) 33WTD637.pdf

The taxpayer, a building contractor on an active nonreporting status, collected retail sales tax from customers and did not remit it for several years. It appeals the 50% tax evasion penalty imposed on the amount of retail sales tax it collected but did not remit. Because the failure to remit these retail sales tax trust funds was intentional, we uphold the penalty.

Det. No. 13-0302R, 33 WTD 572 (2014) 33WTD572.pdf

A company operating a restaurant protests an adjusted assessment of tax for unreported cash sales, asserting that all sales were reported. We affirm the adjusted assessment because business records were insufficient and the Audit Division reasonably exercised its authority to arrive at an estimate of cash sales. We deny the Taxpayer’s petition.

Det. No. 14-0104, 33 WTD 591 (2014) 33WTD591.pdf

An out-of-state company protests the denial of a request for refund of Business and Occupation (B&O) tax for the period of October 1, 2007 through May 31, 2010, because it did not maintain a place of business in Washington during that time. We affirm the denial, because until 2006 the company employed a sales representative who visited Washington on its behalf, establishing nexus under RCW 82.06.067 and WAC 458-20-194.

Det. No. 14-0257, 33 WTD 632 (2014) 33WTD632.pdf

A joint owner of real estate quitclaimed his one-half interest in the real estate to the other owner. Prior to the transfer the grantor was paying 50% of the mortgage payment but, after the transfer, the grantee began paying 100% of the mortgage payment on the property. The grantor petitions for refund of real estate excise tax (REET) paid on 50% of the outstanding debt on the property at the time of transfer. We deny the petition for refund, because the grantee relieved the grantor of his monthly mortgage payment, which constitutes consideration.

Det. No. 13-0207, 33 WTD 554 (2014) 33WTD554.pdf

Public hospital district protests future reporting instructions and denial of refund request on the grounds that the Department of Revenue (the “Department”) improperly calculated its leasehold excise tax credit under RCW 82.29A.120. The petition is denied

Det. No. 14-0191, 33 WTD 607 (2014) 33WTD607.pdf

A motor vehicle dealer protests an assessment of retail sales tax, asserting that it met the documentation requirements for tax-exempt sales of motor vehicles for use outside the state, set forth in RCW 82.08.0264 and WAC 458-20-177 (Rule 177), by providing proof of motor vehicle registration in the nonresident buyer’s state of residence subsequent to the sale. The taxpayer’s petition is denied.

Det. No. 14-0153, 33 WTD 534 (2014) 33WTD534.pdf

A taxpayer appeals a successorship assessment after it assumed the debts of an insolvent company in exchange for most of the company’s assets. Because the taxpayer was a successor of the company, it was liable for the company’s unpaid taxes. We deny the petition.

Det. No. 14-0179, 33 WTD 551 (2014) 33WTD551.pdf

Taxpayer, a federal records management contractor, protests the assessment of Business & Occupation (B&O) tax on income earned in Washington State where the work was performed by a subcontractor. Because the advice that it did not owe tax came from the subcontractor and a federal agency, and not the Department of Revenue, the Taxpayer owes the taxes as assessed.

Det. No. 12-0157, 33 WTD 516 (2014) 33WTD516.pdf

A taxpayer in the business of fumigating shipping cargo containers and their contents for extermination and pest control purposes appeals an assessment reclassifying its gross income from the retailing B&O tax classification to the services and other activities tax classification. We affirm the assessment.

Det. No. 14-0157, 33 WTD 539 (2014) 33WTD539.pdf

Out-of-state nutritional supplement manufacturer and wholesaler protests business and occupation (“B&O”) tax imposed on the grounds that [the buyer does not receive the goods] in Washington. The petition is granted.

Det. No. 14-0063, 33 WTD 528 (2014) 33WTD528.pdf

Cosmetology schools appeal assessments of service and other activities business and occupation (B&O) tax on tuition fee income, contending that the income is deductible from gross income under RCW 82.04.4282 and WAC 458-20-167. The taxpayers’ petitions are denied

Det. No. 14-0165, 33 WTD 545 (2014) 33WTD545.pdf

A Washington-based firm providing engineering and repair services on [tangible personal property] requests a refund of service and other activities business and occupation (“B&O”) tax, interest, and additional assessment penalties, contending its income should be apportioned and that it had no notice of the change in nexus law. We deny the petition.

Det. No. 12-0040ER, 33 WTD 506 (2014) 33WTD506.pdf

A company (“Taxpayer”) primarily engaged in the business of collecting construction, demolition, and land clearing debris (CDL) and hauling it to third-party recycling facilities petitions for Executive Reconsideration of a determination concluding that: 1) Taxpayer’s income from the collection and hauling of CDL to third-party recycling facilities for compensation is subject to the Service & Other Activities business and occupation (B&O) tax classification, rather than the Motor Transportation or Urban Transportation public utility tax (PUT) classification; 2) Taxpayer’s rental of a trackhoe for use at its recycling facility does not qualify for the manufacturer’s machinery and equipment retail sales tax exemption (M&E exemption); and 3) Taxpayer failed to establish that it paid retail sales tax on recycling containers at the time of purchase. Taxpayer’s petition is granted with regard to the first issue, but denied as to the remaining issues; however, with regard to the third issue, the Department will adjust the measure of the retail sales tax on the recycling containers to reflect the actual purchase price.

Det. No. 13-0265, 33 WTD 522 (2014) 33WTD522.pdf

A timeshare association management company petitions for the correction of an assessment of service and other activities business and occupation (B&O) tax collected on housekeeping fees it charged to timeshare owners after their stay to clean the residences before the next timeshare owner takes possession of the unit. We hold that only the fees collected for the cleaning of common areas are deductible from Taxpayer’s B&O tax base, which means that the housekeeping fees collected for the cleaning of the residences themselves are not deductible. Taxpayer’s petition is denied

Det. No. 14-0105, 33 WTD 486 (2014)