Washington Tax Decisions

A husband and wife request review of the Department’s denial of a refund of 50% of the REET paid on the sale of jointly owned real property to an LLC owned only by the husband. Taxpayer’s petition is granted under the provisions of WAC 458-61A-211(5).

A taxpayer disputes additional use tax and penalties assessed on his use of an aircraft in Washington state, arguing that use tax on the aircraft should be based on the local tax rate at the location where he first briefly landed, rather than the higher local tax rate in the home location where he regularly hangars the aircraft. . . . We deny the petition.

Taxpayer protests the Department’s assessment which included adjustments due to disallowed deductions. Taxpayer took deductions for sales of marijuana products exempt from taxation under RCW 82.08.9998, which exempts from retail sales tax sales of marijuana products to persons with recognition cards. Although Taxpayer did not keep copies of recognition cards, Taxpayer asserts it met the recordkeeping requirements of RCW 69.50.375(3)(e) and WAC 314-55-080 and argues the Department’s requirement to keep a copy of each buyer’s recognition card contravenes the statute and rule. RCW 69.50.375 and WAC 314-55-080 set forth the requirements a licensed marijuana retailer must comply with to be issued a medical marijuana endorsement, not the Department’s recordkeeping requirements for the tax exemption under RCW 82.08.9998. We deny the petition.

A business that provides insurance companies with water mitigation services via local service providers (Taxpayer) petitions for correction of assessments on grounds that Taxpayer provides insurance claims management to out-of-state insurers rather than providing retail construction services through subcontracts to insureds and lacks nexus with Washington. Taxpayer also protests the measure of its gross income as total proceeds from payments made by an insurer rather than merely fees earned. We deny the petition.

A pre-owned vehicle dealer protests the Department’s assessment of retailing B&O tax and retail sales tax. The dealer argues that certain exemptions for vehicle sales to nonresidents were improperly disallowed. We deny the petition.

A used automobile dealership disputes the Department’s decision to not accept its amended tax returns for the January through July, September, and October 2019, periods, which include a lesser retail sales tax and B&O tax liability than that initially reported. Taxpayer asserts that its amended returns correct its gross income and bad debt deductions for the covered periods because it asserts it qualifies for additional bad debt deductions due to vehicle repossessions that it did not previously claim. Taxpayer has not provided suitable records to support its amended returns and demonstrate that it qualifies for the additional deductions. We deny the petition.

Taxpayer protests the disallowance of a claimed REET exemption for gifts of membership interests that amount to a controlling interest transfer.[1] We deny Taxpayer’s petition with respect to the gift exemption, because the transfers included a proportionate amount of entity debt, and the transfer of such debt constitutes consideration.

An aerospace design and manufacturer protests imposition of tax following its late filing of annual tax performance reports ([Reports]) for its aerospace business preferential B&O tax rate and qualified aerospace development credits. Taxpayer requests an extension of the due date and waiver of tax imposed as a result of Taxpayer’s failure to timely file its [Report] for 2018. Taxpayer requests waiver of tax imposed when Taxpayer failed to timely file its 2019 and 2020 [Reports] based on circumstances beyond its control including the Department’s failure to discuss the liability prior to assessment, changes in ownership, loss of access to business records as a result of ownership changes and key personnel turnover. Taxpayer also requests an extension of time to file its 2019 and 2020 [Reports] and waiver of the resultant tax liability under Proclamation 20-20. We grant Taxpayer’s petition in part, deny in part and remand.