Washington Tax Decisions

An out-of-state corporation (Taxpayer) that reported wages in Washington as the employer of record for film crews working in Washington protests the assessment of service and other activities business and occupation (B&O) tax on Taxpayer’s full gross income, arguing that amounts it received for payroll and benefits from its Washington client are excludable reimbursements under WAC 458-20-111. Because Taxpayer failed to prove that it was not personally liable for the payment of payroll and benefits expenses associated with the film crews, we conclude those expenses were not excludable under WAC 458-20-111. The petition is denied.

A Taxpayer appeals a letter ruling classifying the transfer of real property from a personal residence trust to the grantor as a sale subject to Real Estate Excise Tax. Because there was consideration for the transfer we affirm the letter ruling. The Taxpayer’s petition is denied.

A nutritional products company disputes an assessment of retail sales tax resulting, in part, from the classification of its goji juice as “dietary supplements” and asserts its goji juice-based products are “food and food ingredients” exempt from retail sales tax because its products are not required to be labeled as a dietary supplement. Petition denied.

Taxpayer protests the Hazardous Substance Tax (“HST”) and Petroleum Products Tax (“PPT”) assessed on aviation fuel consumed in Washington, which was either purchased within Washington, or purchased elsewhere and brought into Washington in the fuel tanks of Taxpayer’s aircraft. Taxpayer maintained that it did not owe the tax because it was not the first possessor of the fuel. We sustain the tax assessed.

A software development company (Taxpayer) that serves certain customers in the aerospace industry protests the Audit Division’s reclassification of its income from various classifications to the service and other activities business and occupation (B&O) tax classification. Taxpayer argues that its business activity is properly classified under one of the preferential tax rates offered for certain aerospace-related activities. Taxpayer further protests the Audit Division’s assessment of use tax and/or deferred sales tax on certain purchases of computers, arguing that those purchases are exempt from retail sales tax and use tax under an aerospace-related exemption. We deny Taxpayer’s petition.

Taxpayer, an interest charge domestic international sales corporation (“DISC”) petitions for a refund of service and other activities business and occupation (“B&O”) tax paid for the period January 1, 2008, through May 31, 2010, claiming that it is entitled to apportion its commission income outside of Washington. Taxpayer’s petition is denied.

A seller of skydiving-related products and services (Taxpayer) appeals the reclassification of video sales from the service and other activities business and occupation (B&O) tax classification to the retailing B&O tax classification and the assessment of retail sales tax on these sales. Taxpayer also appeals instructions that it must begin collecting retail sales tax on sales of tandem skydiving packages and flights to higher elevation. We deny the petition.

Taxpayer, a renter of road signs, requests reconsideration of Determination No. 14-0008, which sustained an assessment of retailing business and occupation (“B&O”) tax and retail sales tax on the first lease payment of equipment rented at a Washington location and subsequently transported to an Oregon job site. Taxpayer’s petition is denied.

A limited liability company engaged in speculative building protests an Audit assessment of deferred sales and/or use tax on certain retail purchases. Taxpayer contends that certain purchases were exempt from retail sales tax because they were purchases either for the U.S. government or for public road construction. Taxpayer also contends that certain amounts it paid for mosaic tile work were for design services, and therefore exempt from retail sales tax. We deny the petition.

A provider of prescription benefit management (PBM) services (Taxpayer) seeks correction of a letter ruling on grounds that its measure of business and occupation (B&O) tax does not include receipts that it uses to pay pharmacies and that the Department is bound by a contrary letter ruling issued to its predecessor. We deny the petition.

A manufacturer appeals the assessment of business and occupation (B&O) tax on the value of by-product it sells to recycling companies. We deny the petition.

An out-of-state web development company (Taxpayer) appeals a letter ruling finding that Taxpayer established nexus in Washington in 2013 because Taxpayer had payroll of more than $53,000 in Washington during that year. Taxpayer argues that a portion of the amount of payroll it paid in 2013 was attributable to 2012. Taxpayer also argues for a waiver of any tax liability because its payroll was only slightly above the $53,000 threshold. We deny Taxpayer’s petition.