Washington Tax Decisions

A business selling school themed items, disputes the assessment of additional retail sales tax and retailing business and occupation (B&O), asserting that the assessment both overstates the measure of underreported income and also mischaracterizes commission income as retail sales. The Taxpayer has not provided sufficient records to show that the assessment is in error. The Taxpayer’s petition is denied.

Taxpayer appeals the assessment of service Business and Occupation (B&O) tax on receipts from member licensees to cover local and national advertising expenses, contending that the receipts are [excludable] reimbursements for cooperative advertising expenses as described . . . . Taxpayer’s petition is denied.

An Internet marketing business appeals a tax assessment asserting that the assessment should be waived because, when it reported and paid its excise taxes, it relied on oral advice from a Department representative regarding the proper application of the apportionment methodology set forth in WAC 458-20-19402 (Rule 19402). The taxpayer’s petition is denied.

An out-of-state manufacturer and seller of custom sportswear protests the determination that its contacts with Washington solely through visits to trade shows are sufficient to establish taxing nexus. We affirm the existence of taxing nexus. Taxpayer’s petition is denied.

A hotel disputes use tax assessed on the purchase price of food and beverages used to provide complimentary meals to its guests. We conditionally grant the petition.

A vendor of medical equipment protests the assessment of retail sales tax on its sales of programmable drug infusion pumps. Because the pumps were reused as durable medical equipment, and not worn in or on the patient’s body as a prosthetic device, their sale was not exempt under current Washington statutes. Petition denied.

A corporation (Taxpayer) that purchases raw logs and then further cuts those logs to specific specifications and grade qualities, contends that its gross income from such activity should be taxable under the preferential tax rate for manufacturing and selling of timber products under RCW 82.04.260(12) because its activity qualifies as “manufacturing.” We deny the petition in part and grant in part.

Taxpayer, a club that offers live music and dining, petitions for the correction of assessment of an assessment of retail sales tax, retailing business and occupation (“B&O”) tax, and deferred sales tax. We hold that Taxpayer is required to charge retail sales tax on its mandatory gratuities, is liable for deferred sales tax on construction services related to a remodel of its club, and is responsible to remit over-collected retail sales tax it collected in error. Taxpayer’s petition is denied.