Washington Tax Decisions for 04/05/2021
|Det. No. 18-0298, 40 WTD 034 (2021)||04/05/2021||40WTD034.pdf||
An architectural firm that provides services to Washington clients, petitions for correction of an assessment of service and other activities B&O tax. Taxpayer claims that payments it received from its clients and paid to third-party consultants were non-taxable advances or reimbursements. Taxpayer further requests waiver of penalties. We deny Taxpayer’s petition.
|Det. No. 18-0300, 40 WTD 039 (2021)||04/05/2021||40WTD039.pdf||
A taxpayer that, in relevant part, provides support services to an affiliate that owns restaurants in Washington State disputes the assessment B&O tax on certain expenditures. First, Taxpayer contends that certain costs were erroneously duplicated in the audit, resulting in an overstatement of tax due. Second, Taxpayer argues that certain expenditures do not constitute gross income, because they were paid solely on behalf of its affiliate and constituted non-taxable advances and reimbursements.
Third, Taxpayer argues, alternatively, that it never actually received payment from its affiliates for the services it purchased, that journal entries were made solely for internal management purposes, and [the amounts posted] are “imputed income” not subject to B&O tax.
Finally, Taxpayer requests a waiver of delinquent penalties and substantial underpayment penalties. We grant the petition with regard to the issue of duplication errors in the audit and some charges that were billed solely to affiliates, and deny the petition as to the remaining issues.
|Det. No. 18-0301, 40 WTD 052 (2021)||04/05/2021||40WTD052.pdf||
An auto parts seller seeks review of an assessment issued by the Department. Taxpayer objects to the Department’s use of estimated sales amounts in calculating Taxpayer’s tax liability. Taxpayer also objects to the Department’s reclassification of income from the Wholesaling B&O Tax Classification to the Retailing B&O Tax Classification and retail sales tax, as well as the Department’s denial of tax exemptions for sales outside of Washington. We grant the petition in part, deny in part, and remand for adjustment to the tax assessment.
|Det. No. 18-0302, 40 WTD 064 (2021)||04/05/2021||40WTD064.pdf||
An affiliate company of an international clothing retailer challenges the B&O tax classification and apportionment to Washington of certain intercompany allocations received from its parent company and a sister company, and further maintains that commercially-generated sales reports more accurately capture the value of catalog and internet sales made by the affiliate Taxpayer into Washington than do the affiliate Taxpayer’s [51-State Apportionment Schedule]. Petition granted in part and denied in part.
|Det. No. 18-0307, 40 WTD 077 (2021)||04/05/2021||40WTD077.pdf||
A medical services provider protests the Department’s assessment of service and other activities B&O tax on federal incentive payments. Taxpayer argues the incentive payments are deductible from B&O tax as deductions or contributions. We deny the petition.