Washington Tax Decisions

A special purpose district purchased industrial real property, and, as part of the consideration, agreed to allow the seller to use vehicle parking and storage on a portion of the property for a certain number of years. The Department of Revenue’s Special Programs Division assessed leasehold excise tax on the value assigned to the above consideration. The taxpayer appeals this assessment claiming that the arrangement is not a lease subject to the leasehold excise tax. We deny taxpayer’s petition and conclude that this arrangement is a lease subject to the leasehold excise tax.

Taxpayer, a retailer and wholesaler of cigars and tobacco related products, seeks a refund of Other Tobacco Products (OTP) tax, arguing that the OTP tax structure prior to July 1, 2005, suffers from several constitutional defects. We find that taxpayer failed to provide the Department with sufficient substantiation under RCW 82.32.060 and WAC 458-20-229 regarding its refund request, and therefore the Department is unable to consider taxpayer’s arguments. Accordingly, we deny taxpayer’s petition.