Washington Tax Decisions

Taxpayer emailed a request for a binding tax ruling regarding the appropriate Washington B&O tax classification of its receipts. Taxpayer’s request stated that Taxpayer coordinates and conducts international youth exchange programs in the United States and a number of foreign countries. Students pay Taxpayer to participate in the exchange program. Taxpayer indicated that it partners with other organizations, who pay a portion of the program fees that students pay to participate in the exchange programs. Taxpayer argued that because it provides transportation, hotel lodging, and meal services, all of its income should be classified under the B&O tax rate for tour operators in RCW 82.04.260(5) and WAC 458-20-258. We deny the petition and affirm the tax ruling.

A commercial bank in the business of originating, managing, and servicing credit cards, as well as promoting a network for its cards, petitions for correction of two assessments of B&O tax. In regards to the first assessment, Taxpayer asserts that it did not have sufficient nexus with the state of Washington to subject it to the B&O tax prior to the state’s adoption of economic nexus. Alternatively, it asserts that the auditor’s use of a single factor apportionment formula as opposed to a three factor formula for this period was in error. Finally, Taxpayer argues that the assessment of penalties is inequitable because the Department itself did not believe that sufficient nexus existed to tax the activities of credit card companies prior to the adoption of economic nexus. In regards to the second assessment, Taxpayer argues that the Department’s failure to provide it with guidance regarding the proper treatment of cashback bonuses was a circumstance beyond its control that caused its underpayment of tax. We deny Taxpayer’s position as it relates to nexus and the assessment of penalties. However, we grant it as it relates to the apportionment formula.

A LLC protests the Department’s assessment of REET on its transfers of real properties to another LLC. Taxpayer argues that the transfers were exempt as mere changes in identity or form. We deny the petition.

A manufacturer of silicon materials protests the denial of refund of retail sales tax that Taxpayer paid to third parties. Taxpayer argues that despite filing its refund request in 2015, it qualifies for refund on purchases invoiced in 2010, more than four years prior to the beginning of the calendar year in which the refund application was made, when it paid the retail sales tax in 2011. We grant the petition in part, and deny the petition in part, subject to verification by the Audit Division.

A construction contractor protests the Department’s assessment of retail sales tax and retailing B&O tax. Taxpayer argues that a certain payment it received from its customer was a “commission,” and not a retail sale. Taxpayer also argues that its design fees were not retail sales. We deny the petition.

Taxpayers, a sole proprietorship retailing educational materials and a corporation providing training services for teachers and school districts, both owned by the same person, request cancellation of penalties and interest, alleging that their assessment payments were originally late due to errors made by the family member who handled the books and the extended illness of a second family member. Taxpayers also assert that the Department issued the assessments against the two registered businesses in error because they run the same business. We deny the petitions.

An out-of-state grower of carrots that also makes “baby” carrots from whole carrots, and sells such baby carrots, protests the assessment of B&O tax on such sales. Taxpayer argues that (1) it is entitled to “dissociate” its sales of baby carrots to customers in Washington, (2) the baby carrots were received by customers outside of Washington, and (3) Taxpayer’s sales of baby carrots are exempt from B&O tax because Taxpayer is a farmer. We deny Taxpayer’s petition . . . .