Washington Tax Decisions

Taxpayer, the operator of a motel in Washington, protests the assessment of retail sales tax on sales of lodging to Federal Government employees. The issue is remanded to the Audit Division to allow Taxpayer to provide documentation to support its claim that the motel room charges were paid for by the Federal Government.

A contractor protests the assessment of retailing B&O tax and retail sales tax on unreported income received from its subsidiaries for construction services performed on land owned by the subsidiaries. The taxpayer argues it is the owner of the land under the attributes of ownership test in WAC 458-20-170 (Rule 170). Accordingly, the taxpayer asserts it is a speculative builder and does not owe retail sales tax on its own labor. We conclude the taxpayer is not the owner of the land under Rule 170, and deny the petition.

A provider of catering and a venue for weddings appeals the assessment of retail sales tax and business and occupation tax on grounds that its income includes rent, which it asserts is exempt from tax, and in the alternative, that the Department of Revenue (Department) is estopped from assessing the taxes because Taxpayer relied on incorrect oral advice from the Department. We deny the petition.

Taxpayer, a dog breeder, petitions for correction of an assessment of retail sales tax and retailing business and occupation tax assessed on the sale of dogs for breeding purposes. We hold that dogs are not considered “livestock” for purposes of the retail sales tax exemption and, for that reason, the sale of dogs for breeding is taxable. Taxpayer’s petition is denied.

A business that builds, repairs, and sells customized marine engines, generators, and related products, objects to the classification of its activities as manufacturing, as defined in RCW 82.04.120(1), and the assessment of manufacturing business and occupation tax on the manufacture of its products. The taxpayer’s petition is denied.

A taxpayer petitions for waiver of the late payment penalties imposed because it failed to file and pay its excise taxes electronically and also objects to the Department’s disallowance of a waiver from the electronic filing requirements. Taxpayer’s petition is denied.

A taxpayer engaged in manufacturing wood products requests a correction of use tax assessed on five equipment purchases in 2007, claiming that the purchased equipment qualifies for the machinery and equipment (“M&E”) exemption. Taxpayer’s petition is granted primarily on the basis of prior written instructions, but, in the future, Taxpayer’s equipment must satisfy the majority use test to qualify for the M&E exemption.