Washington Tax Decisions

The owner of a car rental facility contests a portion of a tax assessment reclassifying income for the sale of optional collision damage waivers and roadside assistance coverage from the retailing B&O tax classification to the service and other business activities B&O tax classification. Held: Rental car options for collision damage waivers and roadside assistance coverage added to a car rental purchase by election of the customer are not considered retail sales pursuant to RCW 82.04.050. The taxpayer’s petition is denied.

A computer data center appeals a letter ruling by the Department of Revenue’s Taxpayer Information and Education section advising that it is required to pay retailing business and occupation tax and collect retail sales tax on amounts received for performing “digital automated services.” The petition is denied.

A transferor of a real property interest appeals a REET assessment claiming that she transferred her interest in the property as a gift and pursuant to ending a committed intimate relationship with the joint owner of the property. The Department of Revenue assessed REET on the transferor’s relief of debt following the transfer. We uphold the assessment.

A Washington company developing a complex medical device protests the Department’s disallowance of the chapter 82.63 RCW High Technology Tax Deferral and the RCW 82.08.02565 M&E exemption for the materials it used to build the prototypes it used for product development. We uphold the assessment.

Taxpayer protests the reclassification of income derived from providing a mobile video arcade from the service and other activities B&O tax classification to the retailing B&O and retail sales tax classifications. Taxpayer also argues that if the arcade’s income must be reported as retail then a tax credit should be granted for the retail sales tax/use tax paid on the video game hardware and software when acquired. We conclude that: 1) Taxpayer’s video arcade’s income was correctly reclassified to retail; and 2) no retail sales tax refund is due on the purchase of game software or hardware.