Washington Tax Decisions

An airline appeals the Department’s assessment of service and other activities B&O tax on compensation for collecting passenger facility charges, . . .deferred sales tax on upgrades to its boarding facilities at two airports in Washington, and [use tax on] complimentary non-alcoholic beverages provided to customers in Washington. We grant the petition as to [passenger facility charges], concluding federal law preempts the taxation of such revenues, but deny the remainder of the petition.

Naturopathic clinic protests assessment of service and other activities B&O tax on amounts disallowed as deductions under independent contractor arrangements for provision of natural health services. Taxpayer’s petition is denied.

A dentist objects to the assessment of use tax paid on equipment he purchased from the prior occupant of his dental office, contending that the amount paid exceeded its value. We deny the petition.

A used vehicle dealer disputes the Department’s denial of a credit for sales and use tax it previously paid on bad debts for vehicles it subsequently repossessed. We deny the petition.

A Washington automobile dealer protests B&O tax assessed on incentives paid by a car manufacturer. Because the dealer performs services for the incentives, the dealer owes B&O tax on the payments.

An importer of motor vehicles manufactured in Asia protests the assessment of wholesaling B&O tax on the sale of vehicles it asserts were in the process of import transportation until received by the buyers in Washington. Taxpayer asserts that all activities undertaken at other United States ports outside Washington where the vehicles are unloaded from a ship are related to shipping needs, which does not interrupt import transportation. We conclude the processing and handling involves a business purpose, rather than a direct shipping need, and thus results in a break in import transportation. We affirm the vehicles are subject to wholesaling tax.

A taxpayer that engages in custom construction and speculative construction, where its subcontractors and vendors maintained its reseller permit on file, did not pay retail sales tax on purchases related to its speculative construction projects. The Department assessed deferred retail sales tax on the speculative construction purchases and imposed a penalty for improper use of the reseller permit, under RCW 82.32.291. The taxpayer sought review of the penalty, asserting that it did not affirmatively provide its reseller permit in making the purchases; therefore, it did not improperly use its reseller permit and the penalty does not apply. The taxpayer’s petition is denied.

An out-of-state corporation that manufactures and sells natural ingredients and botanical extracts to Washington customers protests the Department’s tax assessment, arguing that it does not have substantial nexus with Washington State. We deny the petition.