Washington Tax Decisions

A LLC with real property in Washington appeals the assessment of REET on the controlling interest sale of the LLC obtained pursuant to an auction ordered by a bankruptcy court. The LLC contends that the sale is not subject to REET pursuant to a number of exemptions provided in RCW 82.45.010(3). We deny the petition.

A building contractor and four of its apartment complex clients protest assessments of retail sales tax for disallowed agricultural employee housing exemptions taken in error, claiming the exemption applies to the percentage of housing set aside for farm workers under a federal low income housing credit program. The petitions are denied.

A company that blends and sells biodiesel fuels petitions for correction of the assessment of tax on the sale of renewable energy identification numbers, asserting that they should be exempt from tax under RCW 82.04.4334 . . . or alternatively, asserts that tax on all sales for prior periods is precluded by a 2006 letter ruling. The Taxpayer also asserts that the audit exceeded the statute [limiting the time for assessments] due to use of a calendar year rather than the Taxpayer’s fiscal year, which ends in September. We conclude that the letter ruling did not specifically address the sale of renewable energy identification numbers or equipment used in processing, and therefore, does not preclude taxation. We also conclude that the deduction from retail sales tax for the sales of biofuels, provided by 82.04.4334, does not apply to the sales of renewable energy identification numbers. . . . Finally, we note that the Taxpayer had not requested or received permission to report on a fiscal year, and accordingly, the calendar year audit was proper and authorized. We sustain the assessments and deny the Taxpayer’s petitions.

A commercial bank in the business of originating, managing, and servicing credit cards protests an assessment, asserting that it lacks substantial nexus with Washington. Alternatively, it asserts that the private label card business is distinct and separate from its general credit card business so income was incorrectly apportioned. We conclude that the Taxpayer has taxing nexus with Washington, and that the Taxpayer has failed to provide sufficient detail to support adjustment to the apportionment approach applied during the audit and, accordingly, deny the Taxpayer’s petition.

A nonprofit organization disputes an assessment of service and other activities B&O tax on its sales of environmental commodity products to Washington customers and asserts that such sales constitute “fund-raising activities” that are exempt from B&O tax. The organization also disputes assessments of interest and penalties because it asserts it did not report and pay B&O tax under the advice of legal counsel. Petition denied.

A seller of used cars protests an estimated tax assessment that included an evasion penalty. Taxpayer maintains that the basis for the estimate used by the Department was flawed, and that the apparent underreporting of tax liability was not the result of an intent to evade. We deny Taxpayer’s petition.

Two affiliated entities that operate retail stores in Washington protest the assessment of service and other activities B&O tax on certain amounts received from a third-party retailer with which Taxpayers contracted. Taxpayers argue that the amounts received from the third-party were for a lease of real property and not subject to B&O tax. Taxpayers further protest the assessment of retailing B&O tax on sales of the third-party’s merchandise that Taxpayers completed in their stores on behalf of the third-party retailer. Finally, Taxpayers protest future reporting instructions in which they were instructed to remit directly to the Department – as opposed to the third-party retailer – all retail sales tax they collected on their sales of the third-party’s merchandise. We deny Taxpayers’ petition on all issues.

An asphalt products manufacturer asks us to reconsider Determination No. 15-0307 sustaining Audit’s calculation of the value of asphalt products used in public road construction, and asserts that Audit overestimated the value of such asphalt products because Audit failed to account for a volume discount. Petition remanded for adjustment and denied in part.