Washington Tax Decisions

[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.]

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.