Washington Tax Decisions

A portrait photography business protests the Department’s assessment of retail sales tax on its sales of digital photographs on the grounds that it provides “photography for hire” services, which are not subject to retail sales tax. However, the contract that the business has its customers sign before each transaction specifies that the sale includes edited images, which are produced and edited by the business before being electronically transferred to the customer. Because electronically transferred images are considered a “digital good,” and sales of digital goods are subject to retail sales tax, we conclude that the Department properly classified the business’s sales as retail sales. Petition denied.

A provider of consulting, client representation, general contracting, and construction management services (Taxpayer) protests the reclassification of receipts to the retailing business and occupation (B&O) tax classification and assessment of retail sales tax on grounds that the receipts are not from services with respect to construction. We deny the petition.

An out-of-state company that rents recreational vehicles (RVs) protests the inclusion of amounts it receives from customers when they damage vehicles in its gross income subject to the business and occupation (B&O) tax. We deny Taxpayer’s petition in part and grant it in part.

A provider of maintenance services (Taxpayer) petitions for review of the denial of its applications for Clean Alternative Fuel Commercial Vehicle (CAFCV) tax credits on grounds that its documentation was untimely due to delays caused by the Department. We deny the petition.

A company that manufactures and sells beverages at wholesale requests the Department waive its assessment of interest due to hardship caused by the COVID-19 pandemic. We deny the petition in part and grant it in part.

A biogas engineering and operations company protests the Department’s assessment of retail sales tax on certain sales the company made to a customer that operates a renewable energy facility. At the time of the sales, the company believed the sales were subject to a retail sales tax exemption offered to certain renewable energy producers and did not collect the tax from the customer. In fact, the subject exemption required eligible buyers to first pay the tax in full, then apply for a refund from the Department. The company argues that the Department should reduce the assessment by the amount of tax that the customer would have received as a refund. However, as the seller, the company is not eligible for the exemption and cannot be relieved of its duty to collect retail sales tax on the subject sales regardless of whether the buyer may have qualified for a refund under the subject exemption. Petition denied.

A company that operates a gym protests the Department’s assessment of retail sales tax on fees the company charged to a personal training business for the use of the gym to host fitness classes. The company argues that its relationship with the personal training business is a “partnership” and the fees it collected are not for use of the facility but a “partnership fee.” However, the contract between the parties specifically states that they did not intend to establish a partnership. Because fees charged to personal trainers by gym operators for using the operator’s facilities are subject to retail sales tax under RCW 82.04.050(3)(g)(i), we conclude that company is liable for retail sales tax on those amounts. Petition denied.