Washington Tax Decisions

Sellers of digital signature and document workflow services (“Taxpayers”) protest the reclassification of receipts for telephone support and training and seminars from the wholesaling business and occupation (B&O) tax classification to the retailing B&O tax classification, and the assessment of retail sales tax, on grounds that these receipts are for services not subject to retailing B&O tax and retail sales tax. Taxpayers also assert that the Department incorrectly assessed retail sales tax on sales to customers exempt from retail sales tax, and that the measure of taxes erroneously includes receipts for out-of-state seminar sponsorship. Taxpayers’ petition is denied in part and granted in part. We deny the petition with respect to Taxpayers’ claim that receipts for telephone support and training and seminars are not subject to retailing B&O tax and retail sales tax. We grant the petition to the extent Taxpayers have provided records showing that retail sales tax was assessed on sales to customers exempt from retail sales tax and taxes were assessed on receipts from seminar sponsorship not subject to Washington taxes. We remand this matter to the Audit Division for adjustment.

A business that operates a hotel in Washington seeks a refund of retail sales tax it paid to a water treatment company on charges related to servicing the water in the hotel’s HVAC system. The business argues that the water treatment company provided consulting, testing, and analysis services, which are professional services not subject to retail sales tax. However, because the water treatment company was hired to service the water in the HVAC system, and the water in the system is tangible personal property, we conclude that the services are, indeed, subject to retail sales tax. As such, the business is not entitled to a refund of the tax. Petition denied.

A[n out-of-state] corporation (“Taxpayer”) that sells digital advertising space through its online exchange protests an assessment by the Department. The Department disallowed deductions from Taxpayer’s gross income subject to Washington’s B&O tax. Taxpayer contends it is a marketplace facilitator and only the income it classifies as commissions is subject to tax. We deny the petition.

A Taxpayer’s erroneous belief that the OTP tax was the responsibility of the seller of the product and lack of knowledge about the taxes applicable to the sale of these products does not excuse liability for the OTP tax.

A Taxpayer’s mistake about the due date resulted in initiating a payment on the day after the actual due date. This late payment was the result of a misunderstanding or lack of knowledge, which is expressly defined as a circumstance that is not considered to be beyond the control of a taxpayer and so will not support a waiver of penalties.
 

An out-of-state corporation engaging in online retail sales to customers in Washington and wholesale sales to retailers in Washington disputes the assessment of B&O tax and retail sales tax based on lack of nexus. We deny the taxpayer’s petition.

The owner of an apartment building protests the Department of Revenue’s (Department) assessment of Real Estate Excise Tax (REET), arguing that the transfer of the real property was exempt from REET as a mere change in form or identity. Alternatively, Taxpayer argues that the transfer is exempt as a distribution to a partner. We deny the petition.

An out-of-state limited liability company that leased railroad cars protests the retail sales tax and retailing business and occupation tax assessment on its income from leasing its railroad cars to private companies that used them to transport their own goods. The leasing company argues that its income is not subject to Washington taxes because its customers received the railroad cars outside of Washington. We grant in part and deny in part the petition.

The scope of a manufacturing operation is site-specific, and the activities and qualifying use of the equipment must occur at a site that qualifies as a manufacturing operation. To be eligible for exemption the taxpayer must establish that the activities at a specific location constituted a qualifying manufacturing operation. Packaging activities at a separate facility were not substantiated as constituting a qualifying manufacturing operation and so were not eligible for exemption.
 

An owner of real estate protests the Department’s assessment of real estate excise tax (“REET”). The owner argues that the Department improperly denied his prior REET refund request because the real property at issue was transferred as part of an excluded marital dissolution. We deny the petition.

A [retail] store franchisor (Taxpayer) protests (1) the assessment of service and other activities business and occupation (B&O) tax on grounds that it was assessed the tax on income related to real property leases, and (2) the assessment of delinquent penalty for failure to file a reconciliation return on grounds that Taxpayer exercised due diligence. We deny the petition.

A limited liability company formed to acquire and lease an aircraft contests the assessment of use tax on the purchase price of the aircraft and a reseller permit misuse penalty. We grant the petition.

A Washington company that engages in stevedoring and associated activities exclusively in the state of Washington disputes the Department’s denial of its refund request to apportion its gross income under the stevedoring business and occupation (B&O) tax classification to states other than Washington. The petition is denied.

A restaurant disputes an estimated percentage of cash sales (and the resulting tax assessment) and an assessment of the evasion penalty. The restaurant asserts that the Department erred in estimating based on multiple observations of cash and credit or debit card sales entered into the point-of-sale system and should have based its estimate on industry averages. The restaurant also asserts the Department has not shown that it intended to evade paying taxes. Petition denied.

A company distributing [tangible personal property], disputes tax assessments covering a period when it was a subsidiary of a national [retailer] and a subsequent period after it merged into its parent entity. The company disputes the sufficiency of taxing nexus for pre-merger periods and disputes the taxation of internal transfers for post-merger periods. Additionally, the company asserts that a number of wholesale sales were improperly classified as retail sales. We find that the company established substantial nexus for pre-merger periods based on its relationship with and use of its parent company’s Washington retail locations. We also find that the company has not provided sufficient records to characterize disputed transactions as wholesale sales, and we sustain these portions of the assessments. However, for post-merger periods we conclude that the company ceased to exist as a separate legal entity and became part of the parent entity and, therefore, there was no longer a basis to tax accounting entries as if they were still taxable intercompany transfers. The Taxpayer’s petitions are granted in part and denied in part.

An out-of-state corporation engaged in the buying and selling of . . . [tangible personal property] (Taxpayer) contests the imposition of wholesaling B&O tax on certain amounts it processed on behalf of others. Taxpayer asserts that in certain transactions it acted as purchasing agent for third-party sales between outside manufacturers and member purchasers. Taxpayer argues that, as a matter of law, it was neither a purchaser nor reseller in those transactions, that it was therefore not engaging in wholesaling, and it should be charged service and other activities B&O tax on the fees charged for its purchase agent service, not wholesaling B&O tax on the sale price. We deny Taxpayer’s petition.

A company that acts as a pharmacy benefit manager disputes the inclusion of certain items in gross income of the business and the resulting assessment of service and other activities B&O tax, along with the assessment of annual reconciliation penalties. The company asserts that payments received from customers—intended to cover certain payments the company made to pharmacies on behalf of the customers—are either not included in gross income of the business or excluded from gross income of the business as an advance or reimbursement. The company also asserts that certain rebates from pharmaceutical manufacturers constitute bona fide discounts that reduce the company’s gross income of the business, and that an annual reconciliation penalty was erroneously assessed because the company did not apportion its gross income during the period at issue. We deny the petition.

. . . (“Taxpayer”) protests the Department’s imposition of REET on the fair market value of real property according to the county tax roll instead of the value assigned by Taxpayer. We find that the Department’s Audit Division (“Audit”) correctly valued the transfer using the property’s value as recorded on . . . County property tax rolls. Taxpayer’s petition is denied.

An audio equipment rental company protests the Department’s disallowance of a retail sales tax exemption the company claimed in relation to its rentals of audio equipment to artistic or cultural organizations. The subject exemption applies only to qualified buyers on sales of certain objects, and the Department determined that the company provides a service–not a rental of an object–when an operator accompanies the rented equipment. We conclude that the company is not entitled to the exemption on rentals of audio equipment that include an operator, but is entitled to the exemption on rentals of bare equipment. The company also argues that it is not liable for retail sales tax it failed to collect on non-qualifying equipment rentals if it accepted a certification of tax-exempt status from the buyer. We agree with the company on this second issue. We deny the petition in part and grant it in part, and remand the matter to the operating division for adjustment subject to verification of the exemption certificates the company provided.

A Washington construction company seeks a refund of amounts it paid towards an assessment of B&O tax and use tax following two partial audits. The Department assessed the subject B&O tax because it found the company reported certain income under the wrong tax classification and failed to report other income. The Department assessed the use tax on the estimated value of materials the company installed on public road construction and government contracting jobs because the company did not provide documentation showing that the materials were previously subject to retail sales tax. We conclude that the company has failed to provide suitable documentation to support its argument that the B&O and use tax assessments should be adjusted and, therefore, there is no basis for granting the refund the company seeks. Petition denied.

A Washington limited liability company and online seller of personalized pet products, such as tags, collars, and leashes, protests the DOR’s assessment of manufacturing B&O 20-tax on its sales of personalized and non-personalized products. We grant Taxpayer’s petition in part and deny it in part.

A port district municipal corporation engaged in renting real property to tenants on long-term leases protests the classification of certain revenue streams. The port argues that amounts received from tenants to pay for certain utilities provided by third parties are not subject to either the PUT or the B&O tax. The taxpayer’s petition is granted.

A check risk management services provider (“Taxpayer”) protests the DOR’s assessment of retailing B&O tax and retail sales tax on Taxpayer’s income, arguing that its services provided are data processing services, which are subject to the service and other activities B&O tax. We deny the petition.

A provider of parkour classes protests the DOR’s assessment of retail sales tax and retailing B&O tax on income received from charges made for parkour classes, claiming that parkour is not a physical fitness activity, and the classes are not offered at a physical fitness facility. We deny the petition.

A manufacturer of replacement components for industrial equipment, which also incorporates replacement components in repairs of industrial equipment, seeks review of the Department’s disallowance of the manufacturing machinery and equipment sales and use tax exemption. The taxpayer asserts that the Department incorrectly concluded that only fabricating components for sale independent of repair constitutes manufacturing and qualifies for the exemption. The Department concludes that the taxpayer’s fabrication of components for both purposes—to incorporate during repair and for sale independent of repair—is manufacturing in a manufacturing operation, qualifying for the machinery and equipment sales and use tax exemption. The Department grants the petition.

An individual protests the Department’s denial of a refund request for retail sales tax paid to an out-of-state seller on the purchase of an EV which qualifies for an exemption from the tax. We deny the petition.

A real property owner that harvested timber from his property disputes the Department’s disallowance of claimed harvesting and marketing deductions, and assessment of additional timber tax liability, delinquent penalty, and interest. The owner asserts that the Department incorrectly disallowed the claimed deductions as charges for land clearing or stump removal. Because the owner did not provide records from which the Department may separate Taxpayer’s costs for qualifying and non-qualifying activities, the Department correctly determined that the owner was eligible to claim a 35 percent deduction for harvesting and marketing costs. We deny in part and grant in part, the petition.

Taxpayers that [facilitate third-party merchant sales] dispute the assessment of delinquent penalties related to their failure to timely file annual reconciliation returns to correct reporting of their apportionable income. Taxpayers say they initially did not believe they had apportionable income, so they did not report apportionable income on their original excise tax returns. Because they did not report apportionable income on their original returns, Taxpayers assert, there was no apportionable income to later reconcile, and thus no duty to file annual reconciliations. Absent a duty to file annual reconciliations, Taxpayers argue, penalties associated with failure to timely file annual reconciliations do not apply to them.

Taxpayers argue alternatively that penalties should be waived on the asserted grounds that Taxpayers entered into certain managed audit agreements with the Department, where the parties agreed on set amounts of tax, interest, and total penalties, which did not include delinquent penalties related to untimely filed annual reconciliations. We deny the petitions.

A manufacturer, wholesaler, and retailer of medical supplies petitions for refund of retail sales tax under the warehouse remittance incentive on grounds that it qualifies for the incentive as a wholesaler. We deny the petition.

A landscaping business protests an assessment by the Department. The Department estimated sales to arrive at Taxpayer’s gross income using Taxpayer information and industry averages. Taxpayer asserts that the estimates do not take into consideration the circumstances of his business but did not provide source documents to verify income. We deny the petition.

A financial institution argues that it is entitled to deduct interest income earned on certain investments from its gross income for the purposes of calculating its business and occupation tax liability. We deny the petition.

An out-of-state law firm protests the assessment of tax, asserting that it does not have substantial nexus with Washington, and that the Department incorrectly apportioned its income to Washington. Taxpayer further contests the assessment of interest and penalties on the basis that the Department delayed in explaining its position and issuing the tax assessment. We deny Taxpayer’s petition in part and grant Taxpayer’s petition in part.

A farmer disputes the Department’s assessment of business and occupation tax on the harvesting and cultivation services it provided, claiming that its services are exempt from the tax as custom farming services. The farmer also disputes the Department’s assessment of use tax on its purchases of equipment . . . that it used in performing its services. The petition is granted in part, and denied in part.

A business providing residential real estate property tax payment services protests the Department of Revenue’s (Department) assessment of service and other activities business and occupation (B&O) tax, arguing that it does not provide services related to real property and its customers are the beneficiaries of its services. We deny the petition.

A business (Taxpayer) that provides aircraft-related ground services, equipment rental, fuel sales, and fueling services, disputes its assessment on several grounds. First, Taxpayer argues that it paid fuel tax on certain purchases of fuel it sold or used, so it should not also be assessed sales or use tax on the same fuel. Alternatively, Taxpayer argues that if use tax is due, fuel usage for 2014 was overestimated. Next, Taxpayer argues that it collected and remitted retail sales tax on certain rental sales that was not taken into consideration in the audit. Finally, Taxpayer disputes the inclusion of its refueling service income in the retail sales price of its related fuel sales, arguing that the fueling services were charged in line items separate from the charges for fuel. On those grounds, Taxpayer contends that the fueling services are not subject to sales tax. We deny the petition

An out-of-state genealogical research company protests the assessment of tax, asserting that it does not have substantial nexus with Washington, and that the Department incorrectly apportioned its income to Washington. Taxpayer further contests the assessment of penalties on the basis that it acted in good faith. We deny the petition.

A vehicle owner protests the Department’s denial of his refund request for the use tax paid on a vehicle he purchased from an out-of-state auto dealer. The vehicle owner argues that the vehicle qualifies for the electric vehicles use tax exemption. We deny the petition.

A company protests the assessment of real estate excise tax on machinery and equipment sold as part of a controlling interest transfer, arguing the machinery and equipment were not fixtures and therefore not subject to the real estate excise tax. We deny the petition.

A construction business protests the penalty portion of an assessment issued by the Department following an audit. The subject penalties include an evasion penalty, delinquent payment penalties, and a substantial underpayment penalty. Taxpayer argues that it did not intend to evade payment of its tax liabilities and, instead, the underpayments were the result of its owner’s lack of understanding of Washington’s tax laws. We conclude that the Department has established by clear, cogent, and convincing evidence that the business knew of the subject tax liabilities, but sought to evade paying the liabilities through deceit, fraud, or intentional wrongdoing. We also conclude that the business is ineligible for a penalty waiver because the circumstances that led to the penalties were not beyond the control of the business. Petition denied.

A business that sells cannabis and cannabis-related products disputes the assessment of retail sales tax and retailing business and occupation (B&O) tax on certain debit card processing fees, arguing that the fees are not part of the gross retail selling price. We deny the petition [in part and remand it in part].

A franchise restaurant owner protests the assessment of successorship liability for the taxes owed by an owner of the same franchise that immediately preceded it in the same location under the same lease. We deny Taxpayer’s petition.

A Washington individual protests the use tax assessment on vehicles and watercraft that he used in Washington, claiming that the vehicles and watercraft were his out-of-state auto dealer’s inventory. The individual also argues the Department should waive the penalties and interest assessed because he was not aware of Washington tax laws. We deny the petition.

Operators of a full-service advertising agency (Taxpayers) contest the assessment of retail sales tax and business and occupation (B&O) tax on grounds that the measure of assessed taxes includes non-taxable advances and reimbursements. Taxpayers also contest assessment of the evasion penalty on grounds that Taxpayers did not intend to evade their tax liabilities. We deny the petitions.

A mental health medical group protests assessment of service and other activities business and occupation tax on amounts received from third-party payors on behalf of patients for the services the group members provide to the patients. The medical group argues that the payments should be excluded from the measure of its gross income as a collection agent. We grant the petition.

Two individuals protest the assessment of real estate excise tax, asserting the transfer was not a “sale of real property” under RCW 82.45.010 because the transfer was a partition of property among tenants in common or a mere change in identity. The petition is denied.

Taxpayer disputes the assessment of additional REET on the transfer of a low-income housing development, arguing the enacting legislation for RCW 82.45.010(3)(s) was retroactive and applied to its property transfer. We grant Taxpayer’s petition.

Two pharmacy benefit managers protest B&O tax assessed on their business activities on multiple grounds. First, they argue that amount received from affiliated entities should be exempted from B&O tax under RCW 82.04.320 as gross income from “insurance business” upon which a gross premiums tax has been paid to the state. The pharmacy benefit managers also argue the Department is bound by the holding of an unpublished Washington Court of Appeals opinion that RCW 82.04.320 is not limited to insurance companies under the doctrine of collateral estoppel. Next, they argue that payments received as “reimbursement” for amounts paid to pharmacies for dispensing prescription drugs should be excluded from gross income as “pass-through payments” under WAC 458-20-111. Finally, the two taxpayers assert that the Department improperly reclassified amounts they derived from the sale of prescription drugs as subject to B&O tax under the “service and other activities” tax classification. We deny the petition in part, grant it in part, and remand it for adjustment to the tax assessments.

A . . . company that produces aluminum ingots from recyclable aluminum disputes the Department’s tax assessment because the company asserts that it is an aluminum smelter and qualifies for the preferential B&O tax rate. The company further asserts that its nexus with Washington ended on December 31, 2015. . . . We deny the petition because the company is not a direct service industrial customer, it does not process alumina into aluminum, and its wholesale sales are subject to economic nexus standards.

An operator of a passenger railway protests the assessment of retail sales tax on its revenue, arguing it does not offer day trips for sightseeing purposes. We deny the petition.

An out-of-state valve manufacturer protests the Department’s assessment of wholesaling B&O tax. The manufacturer argues that its valves were received outside of Washington, and therefore are not subject to Washington’s B&O tax. We deny the petition.

A software developer protests imposition of the reseller [permit] misuse penalty on purchases made without the imposition of retail sales tax while holding both a reseller permit and a [high technology tax] deferral certificate [that it used for machinery and equipment purchases]. We deny Taxpayer’s petition.

A distributor of grocery items asserts that its approved refund claim was improperly subject to offset amounts arising in a concurrent audit of the company’s Washington tax liability. The company asserts that any offsets should be limited to the type of tax at issue in the refund and by the nonclaim period that would apply to the assessment of the taxes used for the offset. We find that there is no basis to limit the offsets to the specific type of tax at issue in the refund request. As to the offset, because the provisions of WAC 458-20-229 specifically anticipate the review of new information to reduce a refund claim, we find the offset at issue was proper. The Taxpayer’s petition is denied.

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.

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 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 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.

An information technology company that specializes in project management services and customization of preprogrammed business management software for clients protests the Department’s disallowance of a business and occupation (“B&O”) tax credit offered to companies engaged in “qualified research and development.” The company argues that because its business activities involve “translating technical and nonroutine activities into new or improved processes and software,” it was engaged in the type of research and development for which the credit is available. In fact, the company’s activities do not satisfy the Department’s definition of the term “nonroutine,” thus the activities cannot be considered “research and development” and the company does not qualify for the credit. Petition denied.

A broker-dealer that timely filed each of its required excise tax returns, but reported no business in every instance, protests the imposition of late payment and assessment penalties in connection with its annual reconciliation of apportionable income (ARAI) returns, arguing that the Department lacks the authority to impose such penalties in such cases. Petition denied.

A port district protests the Department’s tax ruling dated October 30, 2019. The port argues that the Department’s Taxpayer Information and Education (“TI&E”) section erroneously concluded that the port would be responsible for leasehold excise tax (“LET”) on leases it will assume when it purchases a building with existing tenants. We deny the petition.

A corporation that provided various services to its affiliates, which the parties group into three broad categories (credit card services, administrative services, and database services), protests the assessment of service and other activities business and occupation (B&O) tax on these services. The corporation argues that none of its gross income is attributable to Washington and, therefore, it should have no tax liability in Washington. We deny the petition.

A former owner of real estate protests the Department’s denial of a refund request of real estate excise tax (“REET”) paid. The former owner argues that the Department should allow its claimed exclusion from REET for a sale made by a receiver. We deny the petition.

A company providing [electronic] account access services to credit unions seeks reconsideration of our determination affirming the assessment of tax on digital automated services (DAS), asserting that the services fit within a number of exclusions from DAS and that the taxation of these services is prohibited by the Internet Tax Freedom Act. We affirm our decision that the activities at issue were properly classified as DAS and that the taxation of the services at issue is not prohibited by the Internet Tax Freedom Act. The Taxpayer’s petition is denied.

A Washington company whose owner resides . . . [outside of the United States] protests the Department’s assessment of retail sales tax and retailing business and occupation (“B&O”) tax on retail sales made to Washington consumers. The company argues that despite the fact that it was formed in Washington, it did not establish nexus with Washington during the relevant periods because it had no physical presence in the state. We conclude that the company did indeed have a physical presence in Washington because its owner/sole employee was present in the state as the company’s registered agent and the company owned a bank account in Washington, maintained a physical mailbox in Washington, and used a Washington-based answering service to interact with its Washington customers. For those reasons, we find that the company did have nexus with Washington throughout the subject periods and is subject to Washington retail sales tax and B&O tax as assessed. Petition denied.

An operator of a retirement community protests the imposition of retail sales tax on its sales of prepared meals to independent senior residents and on its sales of spare rooms to guests of its residents. The petition is denied.

The operator of a . . . restaurant (Taxpayer) protests an estimated assessment of retailing business and occupation (B&O) tax and retail sales tax on grounds that it provided adequate records to demonstrate the measure of its sales and that the estimated assessment is unreasonable and should be adjusted. We deny the petition.

An individual seeks cancellation of an assessment of real estate excise tax levied as the result of its sale of real property. The individual objects to the Department’s use of the county market value property tax assessment as the selling price of the real property at the time of sale. We grant the petition in part.

A taxpayer disputes the assessment of use tax and penalties on his purchase of a travel trailer claiming that, because the trailer was purchased in another state and was subsequently sold to a nonresident company from [out of state], the purchase should be exempt from use tax in Washington. . . . The taxpayer also claims that [we should waive penalties because] he relied on incorrect information obtained from an internet website. We deny the petition.

Taxpayer disputes the assessment of REET on its purchase of certain real property located in Washington, arguing that the Department overstated the fair market value of the property for REET purposes, because it used the county assessed value on the tax rolls rather than the sale price that was negotiated between the parties. We deny the petition.

Taxpayer disputes the Department of Revenue’s denial of a VETC against B&O tax. We deny the taxpayer’s petition.

An out-of-state wholesaler protests an assessment of business and occupation tax. The wholesaler argues that it did not have nexus sufficient for Washington to assert tax on its business. We deny the petition.

A LLC seeks cancellation of an assessment of REET levied as the result of its owner’s acquisition of a controlling interest in the company. The company objects to the Department’s use of the county market value property tax assessment as the selling price of the real property it held at the time of sale. We deny the petition.

A LLC that owns property in Washington protests the assessment of REET on one of its members’ acquisition of a controlling interest in the company. It asserts: that the transfer was exempt from REET under RCW 82.45.010(3)(j) and WAC 458-61A-208(5) as an execution of a judgment, that there was no sale price upon which to assess REET, and that there was no consideration. We conclude that REET is due on the transfer. The taxpayer’s petition is denied.

A construction company disputes its tax assessment, arguing that the audit should have been based on cash basis rather than accrual basis accounting, and that its claimed wholesale sales should not have been reclassified as retail sales. The taxpayer also asserts that it had a client that paid subcontractors directly for certain services they performed on a construction project where taxpayer acted as the prime contractor, and it never received these payments. We deny the petition.

A taxpayer protests imposition of the REET on a transaction it claims was exempt as a mere change in identity. Taxpayer’s petition is denied.

A mill operator claims payments made to a janitorial company for sweeping its facility are not subject to retail sales tax . . . . We grant taxpayer’s petition for refund, in part, limited to the amount of [deferred sales] . . . tax imposed on its purchase of janitorial services.

A dental laboratory protests the Department’s assessment of use tax, arguing that its dental models should be subject to retail sales tax, not use tax. Alternatively, the laboratory argues that if they are subject to use tax then the Department should use the laboratory’s cost valuation methodology as a basis for the measure of use tax. Taxpayer also argues that its refractory die labor and material are exempt from use tax as a prosthetic device. We deny the petition.

A telecommunications company disputes the assessment of B&O tax on gross income it received from certain co-location services, arguing that the income is real property lease revenue that is exempt from B&O tax.

An online retailer protests the disallowance of exemptions taken on retail sales of prescription pet medications. The retailer also protests the estimate of uncollected retail sales tax. The petition is denied.

A taxpayer disputes the Department of Revenue’s denial of a . . . B&O tax credit [for employers of veterans]. We deny the taxpayer’s petition.

A company that managed a parking garage protests the Department’s denial of the company’s request for a refund of retail sales tax and B&O tax. The company collected the retail sales tax from a customer on sales of reserved parking spaces, the prices for which the company listed as inclusive of retail sales tax, and remitted the taxes to the Department. The company also remitted retailing B&O tax on the income it generated from the same sales. The company later discovered that such sales are considered rentals of real estate and are exempt from retail sales tax. We find that the company is not entitled to a refund of the sales tax because it was the customer, not the company, that paid the tax, and the company has not refunded the taxes to the customer. However, the company is entitled to a refund of the B&O tax it paid on its income from those sales because such sales are specifically exempt from B&O tax. The petition is denied in part, granted in part, and remanded to the operating division for adjustment.

A cruise line offering cruises to [out of state] from Washington disputes the Department’s assessment of retail sales tax for certain optional tours [ . . .] lasting less than 24 hours that it provided to its customers. [The cruise line asserts] that it is a tour operator and that all of its gross income, including the revenue received from the tours at issue, is subject to a preferential tax rate and not retail sales subject to retail sales tax. We deny the petition.

An individual disputes the DOR’s denial of a partial refund of use tax the individual paid to the DOL to title and register a sailboat in his name. The individual asserts that the price at which he purchased the sailboat, which is less than one quarter of DOL’s valuation, is the proper basis for calculating the use tax and he is entitled to a refund of use tax paid in excess of this. We grant the petition.

Taxpayer disputes the denial of its amended excise tax returns wherein it sought to change the classification of its revenue that had previously been reported as retail sales. Taxpayer argues its hot tub cleaning services are janitorial services subject to the service and other activities B&O tax classification and not subject to retail sales tax. Taxpayer’s petition is denied.

A cigarette retailer requests the adjustment of an assessment for unstamped cigarettes because it returned the unstamped cigarettes to the original wholesaler to be correctly stamped. We grant Taxpayer’s petition in part and deny it in part.

A taxpayer that operates an automotive repair and maintenance business disputes the assessment of deferred sales tax on certain purchases of capital assets and consumables used in its services. The taxpayer says it has additional documents to support adjustments to tax imposed on those purchases, and asserts that the Department erroneously counted a large invoice twice in the audit.

The taxpayer also contests the assessment of use tax on certain transactions where it alleges it provided substantially discounted services to customers who redeemed certain coupons, rather than providing those services for free. The taxpayer argues that the services were not promotions subject to use tax, but were instead retail sales taxable only on the cash surrender value of the coupon and the customer’s goodwill. Alternatively, the taxpayer argues that deferred sales tax, not use tax, is the proper tax, and tax should be based on its purchase price from its vendor. We deny the petition in part, grant it in part, and remand to the operating division to make adjustments accordingly.

A business that operates a convenience store seeks a refund of its payment of an assessment of cigarette taxes, penalties, and interest on the grounds that it unknowingly purchased from its wholesale tobacco supplier cigarettes that lacked the required Washington stamp. Because the business possessed unstamped cigarettes, we find that the Department correctly imposed the subject taxes, penalties, and interest. Furthermore, because the business failed to present evidence that it possessed the unstamped cigarettes due to “external circumstances,” we find that the Department lacks “good reason” to waive the subject penalties. Petition denied.

A company that provides maintenance and restoration services during apartment cleanouts argues that these services prove tantamount to janitorial services and, thus, are not subject to retail sales tax. Petition denied.

Three affiliated entities that provide services related to investments and investment management petition for review of their assessments with regard to the common issue of whether certain monies transferred between affiliated but separate legal entities constitute gross income to each entity for Washington excise tax purposes. We deny the petitions.

Taxpayer seeks reconsideration of Determination No. 19-0185, which affirmed the disallowance of the M&E exemption from retail sales tax and use tax on plastic injection molds it purchased and provided to a vendor that used the molds to create plastic housing units for Taxpayer’s “[Hardware System]” device. We find, on reconsideration, that Taxpayer is not a “manufacturer” of the plastic housing, because Taxpayer does not produce the plastic housing from its own materials or ingredients. . . . Taxpayer provided plastic injection molds to a vendor, so that the vendor could produce plastic housing units for Taxpayer. Taxpayer has provided no proof that it provided any material to the vendor other than the plastic injection molds. On these facts, Taxpayer was not the manufacturer of the plastic housing units. Stated differently, on these facts, the only entity who could be considered the manufacturer of the plastic housing units is the vendor. We sustain the holding in Det. No. 19-0185. Taxpayer’s petition is denied.

A now-dissolved Washington company (“Taxpayer”) that owned the real property assets of a dairy farm protests the Department’s assessment of [deferred sales] tax on purchases of upgrades to a livestock nutrient management system. Taxpayer argues that because an affiliated company operates the dairy farm and other state agencies treat both companies as “dairy operators,” Taxpayer qualifies as an “eligible person” and the purchases are tax-exempt under RCW [82.08.890]. Because Taxpayer does not meet the definition of an “eligible person” and we treat separately-organized companies individually for tax purposes, Taxpayer is not entitled to the [sales] tax exemption. Petition denied.

An environmental remediation business protests the Department’s tax ruling, arguing that the Department’s TI&E section erroneously concluded that its activities do not qualify for the Cleanup of Radioactive Waste for the United States Government B&O Tax Classification. We deny the petition.

An owner of real estate protests the imposition of REET on the disposition of property by an “exchange facilitator” after having paid REET on a separate transfer of its property to the “exchange facilitator” as part of an integrated transaction treated as deferred under 26 U.S.C. § 1031. We deny Taxpayer’s petition.

A taxpayer protests the Department’s denial of his request for a refund of real estate excise tax paid on two transfers of real property. The taxpayer argues that the transfers were not subject to real estate excise tax because no consideration passed, and they should be treated as gifts. Taxpayer’s petition is denied.

A Washington property owner objects to the Department of Revenue’s disallowance of [a] harvest cost deduction and revised assessment of timber excise tax (Timber Tax) on the sale of harvested timber.1 Taxpayer argues that the value he negotiated and paid for standing timber, during the purchase of a parcel of forest property in 2015, should be accepted by the Department as a deductible harvesting and marketing cost against the gross receipts from sale for calculating timber tax due upon harvest and sale in 2018. We deny Taxpayer’s petition.

Taxpayer, a provider of digital automated services, requests a refund of retail sales tax paid on the purchase of servers used to provide its customers computer-related services. We conclude Taxpayer does not resell the actual servers in its provision of retail services. Finding Taxpayer does not resell the servers, we deny Taxpayer’s refund request.

A museum protests the Department’s disallowance of a refund of retail sales tax. The museum argues that certain purchases should be exempt from sales tax as artistic and cultural objects. The museum also argues that a portion of its costs should be considered public road construction. We grant the petition in part and deny it in part.

A Washington hunting guide protests the Department’s assessment of retail sales tax and penalties on the grounds that hunting guide services were not subject to retail sales tax until January 1, 2016, and, regardless, the guide was unaware that it was required to collect sales tax. We find that hunting guide services were indeed subject to retail sales tax throughout the audit period and the guide’s lack of knowledge regarding its tax liability is not a valid basis for a penalty waiver. Petition denied.

A company that provides piloting and flight training services protests assessment of use tax on its aircraft, arguing that the aircraft was used solely for leasing in the regular course of business and that there was no intervening personal use of the aircraft. The petition is denied.

A utility company in the business of generating and selling electrical power protests the classification of certain revenue streams. The company argues money received for licensing space on its utility poles is not subject to tax. . . . The petition is granted in part and denied in part.

A former owner of real estate protests the Department’s assessment of REET. The former owner argues the Department did not properly value the long-term leaseback of the property, and therefore over-assessed REET. We deny the petition.

Two individuals protest the Department’s assessment of REET on their transfer of real property to a limited liability company. The individuals argue that the transfer was exempt from REET as a mere change in identity or form. Alternatively, the individuals argue that the transfer was exempt from REET as the clearing of title. We deny the petition.

A for-profit [human tissue] bank petitions for review of the Department’s adjustment of Taxpayer’s monthly excise tax returns, which reclassified certain income from . . . tissue related services from the Retailing B&O Tax Classification and subject to retail sales tax to the Service and Other Activities B&O Tax Classification and denied deductions to retail sales tax for sales of prosthetic devices. Taxpayer’s petition is denied.

An [Out-of-State] development company protests the Department’s assessment of retail sales tax and B&O tax on the grounds that the Department failed to provide the company with timely notice that the Department had issued the assessment, thus rendering the assessment invalid. The company also argues that, even if the assessment is valid, the associated delinquency penalty was improperly assessed because the company filed and paid its monthly tax returns on time. Because the Department’s secure messaging system shows that the Department timely transmitted the assessment to the company, we find that the Department complied with its statutory duty to provide notice and the assessment is valid. We also find that the delinquent penalty was properly assessed. Taxpayer’s petition is denied.

A non-profit research and development organization protests assessments of use/deferred sales tax on purchases made under its High Technology Sales and Use Tax Certificate on grounds that the assessments are outside the four-year statutory time period. We deny the petition.

A business protests the denial of a request for a refund of retail sales tax. The business collected the retail sales tax from clients on sales of personal training services, and remitted said taxes to the Department. The business later discovered that such services are not subject to retail sales tax. We find that the business is not entitled to a refund of the retail sales tax because it was the client, not the business, that paid the tax, and the business has not provided any evidence that it has refunded the taxes to the client. The petition is denied.

A real estate development company protests the Department’s denial of its request for a refund of REET paid on the sale of real property from the company to purchasers. The parties later rescinded the sale and the purchasers returned the property to the company in return for a refund of all consideration the purchasers had paid. We find that the transfer of the property back to the company following the rescission is an independent transaction and a rescission does not alter the fact that the initial sale to the buyers was subject to REET. Taxpayer’s petition is denied.

Taxpayer, a bottler of soft drinks, appeals the disallowance of the M&E retail sales and use tax exemption for equipment and labor spent on a bottling line located within Washington. The Department denied the exemption because of the delay in putting the line into full production. We grant Taxpayer’s petition finding the M&E exemption does not contain a time requirement in using the equipment at full capacity.

A married couple protests the Department’s assessment of REET. The couple argues it is eligible for the clearing title exemption for a quitclaim deeded transfer to their son. We deny the petition.

An individual petitions for refund of the Department’s assessed REET on a transfer of land in exchange for consideration made to settle a boundary line dispute. The individual asserts that the transfer is not subject to the tax because it was made solely to settle a boundary line dispute. We deny the petition.

An individual protests the imposition of REET on two transfers of real property from the individual to a LLC owned in part by the individual. Because the LLC paid the mortgage debt from the origination of the mortgage and continued to do so after the individual transferred the real property to the LLC, there was no consideration for the transfer. The petition is granted.

Taxpayer requests a refund for the assessment of REET paid on his transfer of interest in real property, by quitclaim deed, to his two sons. Taxpayer asserts that the transfer is not subject to REET because he purchased the property as his sons’ nominee. The Department denies the petition.

An out-of-state corporation engaging in online sales to customers in Washington State through a third-party online marketplace facilitation service and through their own website disputes assessments by the Department based on lack of nexus. Taxpayer contends it has no physical presence or inventory storage in Washington, and it has never maintained a stock of goods in Washington. We deny Taxpayer’s petition.

A taxpayer protests the Department’s use of the county’s assessed market value to determine the “selling price” for real estate excise purposes. The taxpayer argues that the selling price should be the price paid for the property. We grant the petition in part, deny it in part, and remand for adjustment.

An automotive maintenance and repair company protests the Department’s assessment of retail sales tax on certain sales of auto parts on the grounds that it sold the parts to a nonresident. The company also seeks a refund of retail sales tax collected from Washington customers on sales that occurred while both the company and the customer were outside the state. We find that because the company charged the nonresident more than the company’s costs for the parts and failed to provide adequate documentation regarding the nonresident’s residency, an adjustment of the assessment is not warranted. We also find that the company is not entitled to a refund of the allegedly erroneously-collected sales tax because it did not first refund the taxes to its customers. Petition denied.

A manufacturer of cancer treatment drugs protests imposition of hazardous substance tax on personalized brachytherapy radiation products that Taxpayer makes from [radioisotope], a hazardous substance. We grant Taxpayer’s petition and remand the case to the Audit Division for adjustment.

A property owner claims that the amount listed as the sale price on a sales agreement and a REET affidavit is not the true and fair value of property conveyed for the purpose of imposing REET because he already owned a portion of the property and did not pay for the portion he already owned. We grant Taxpayer’s petition.

A for-profit . . . college protests the assessment of B&O on tuition fees on grounds that the fees were deductible from its gross receipts. We deny the petition.

A taxpayer that plans to offer custom round trip sightseeing tours via water from Washington to [out-of-state] seeks review of a binding letter ruling that: (1) its purchase of a vessel was not exempt from retail sales tax under RCW 82.08.0262 because the taxpayer would be offering sightseeing tours; and (2) its purchases of fuel to be consumed outside of Washington are not exempt from retail sales tax under RCW 82.08.0261. We grant the petition.

A distributor of giftware, restaurant supplies, and other goods protests the assessment of retail sales tax on certain transactions where the customer did not have a reseller permit. The distributor argues, based on facts and circumstances, that the transactions were properly classified as wholesale sales. We grant the petition.

An out-of-state manufacturer of industrial enclosure and cooling solution products protests inclusion of special price agreement rebates in its measure of selling price subject to wholesaling B&O tax. Taxpayer contends that the special price agreement rebates are bona fide discounts excluded from the definition of selling price and, therefore, the measure of gross proceeds subject to B&O tax. We . . . deny Taxpayer’s petition . . . .

A solid waste collection business appeals the Department’s classification of part of its waste disposal activities as the rental of waste containers, subject to retail sales tax and retailing B&O tax. The business argues that those activities should instead be subject to the service and other activities B&O tax. The business also argues for waiver of interest and penalties. We grant the petition in part, deny it in part, and remand it in part.

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.

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.

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.

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.

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.

A logger protests the assessment of use tax on the purchase of a bulldozer used in its logging operations. The logger argues the bulldozer qualifies for the M&E use tax exemption because it is “used directly” in a manufacturing operation by providing physical support for manufacturing equipment. However, the logger also uses the bulldozer for non-manufacturing purposes and we find that the logger failed to prove that the bulldozer meets the “majority use” requirement of the M&E exemption. Taxpayer’s petition is denied.

Taxpayer protests the assessment of use tax/deferred sales tax [imposed by] the Audit Division of the Department, [which] determined that Taxpayer’s construction of a building did not qualify for a high unemployment county tax deferral because construction of the building began before the Department issued the tax deferral certificate. The assessment is affirmed.

Taxpayer designs, develops, and operates automated cold storage warehouses within the United States and Europe. These “high-bay” warehouses store and retrieve palletized chilled and frozen goods mechanically via an advanced automated system. Taxpayer provided information regarding its plans to construct a new cold storage warehouse in . . . Washington. Taxpayer asked the Department “to determine if Taxpayer qualifies for the warehouse exemption remittance for retail sales tax purposes pursuant to RCW 82.08.820,” and, if so, “to confirm the application of the exemption to each item shown in the proposed investment budget attached to the Ruling request as Exhibit A.”

A Washington corporation petitions seeking correction of an audit assessment by the Department. In its petition, Taxpayer asserts that amounts it received from an affiliated business were not taxable income but were instead owner investment funds. Taxpayer argues that these amounts were previously taxed as income to the affiliated business and this represents a double tax on the same amounts. Taxpayer also contests the Department’s coding of this income for local sales tax purposes, contending that, if it is recognizable as income, the related taxable activity should be coded to a different location. We deny Taxpayer’s petition.

A Washington-based business engaging in aerospace product development argues that it qualifies for certain aerospace incentive B&O tax rates, and the B&O tax credit for aerospace product development. We grant the petition in part and deny it in part.

A Washington corporation seeks cancellation of an assessment of REET imposed as the result of its sale of a business. Taxpayer objects to the Department’s use of the county market value property tax assessment as the selling price of the real property after Taxpayer provided an asset allocation made under IRC § 1060. Taxpayer asserts that the value determined under its IRC § 1060 asset allocation represents the true and fair value of the real property for the purpose of calculating REET, and therefore the Department is precluded from using the county market value property tax assessment for this purpose. We deny Taxpayer’s petition.

A company selling restaurant supplies and other packaging products protests the reclassification of sales reported as wholesale to retail due to the lack of reseller permits. We affirm the adjusted assessments as issued, because the Taxpayer has not provided sufficient documentation to substantiate the nature of the contested sales. The Taxpayer’s petition is denied.

An operator of mobile snack stands protests the assessment of service and other activities B&O tax on grounds that it was engaged in a retailing joint venture that paid the appropriate retailing B&O tax and retail sales tax, and the measure of tax assessed includes Taxpayer’s share of joint venture profits in error. We deny the petition.

A retailer protests the denial of its application for remittance of retail sales tax paid in connection with purchases of material-handling and racking equipment for use in its Washington warehousing facility. The retailer argues that its facility constitutes a distribution center for purposes of RCW 82.08.820 and amounts spent to purchase materials for use in the facility are qualifying purchases for purposes of the exemption set forth in that provision. We deny the petition.

An out-of-state video game development company protests a tax assessment in which it was assessed retailing B&O tax and retail sales tax. Taxpayer argued that it was not subject to taxation in Washington because its only in-state activity, participation at an annual three-day trade show in [Washington], did not create substantial nexus with Washington. We deny the petition.

A business that was previously assigned to report it taxes on a quarterly basis asks the Department to reconsider its recent decision requiring [the business] to now report its taxes on a monthly basis, asserting that the change in reporting frequency would present a costly burden. We deny the petition.

A Washington-based business engaging in aerospace product development argues that it qualifies for certain aerospace incentive B&O tax rates, and the B&O tax credit for aerospace product development. We grant the petition in part and deny it in part.

Taxpayer seeks review of the partial denial of its request for refund of 75% of the retail sales tax paid on the purchase and installation of a solar energy system. Taxpayer asserts that the Department improperly denied its refund request, allowable under RCW 82.08.962 and WAC 458-20-263 (“Rule 263”), of tax paid on charges for the design, engineering, and permitting for a solar system that generates electrical energy. Taxpayer’s petition is denied.

An out of state corporation engaging in online sales to customers in Washington State through a third-party online marketplace facilitation service disputes assessments by the Department based on lack of substantial nexus. Taxpayer contends it has no physical presence or inventory storage in Washington, and it has never maintained a stock of goods in Washington. Taxpayer argues that the digital assignment of third-party inventory located in Washington to Taxpayer by Facilitator’s electronic inventory management system, for purpose of Facilitator’s delivery of orders to Taxpayer’s Washington customers, does not provide sufficient basis for substantial nexus with Washington. We deny Taxpayer’s petition.

Taxpayer protests the assessment of use tax/deferred sales tax [imposed by] the Audit Division of the Department, [which] determined that Taxpayer’s construction of a building did not qualify for a high unemployment county tax deferral because construction of the building began before the Department issued the tax deferral certificate. The assessment is affirmed.

The purchaser of a hotel and furnishings at a sheriff’s sale protests the measure of TPP subject to use tax using comparison sales prices instead of values reported by taxpayer on its REET Affidavit. We deny taxpayer’s petition.

A LLC protests the Department’s rescission of the company’s High Unemployment County Sales and Use Tax Deferral certificate because the company did not construct the qualified building included in the approved application. Taxpayer argues that its failure to construct the qualified building should not be a basis for rescinding the deferral because its abandonment of construction of the qualified building was due to an unforeseeable condition. We deny the Taxpayer’s petition.

The sole member of a now-defunct construction company petitions for the correction of TFAA . . . . During the company’s life, it collected retail sales tax from its customers, but failed to remit the taxes to the Department. Prior to the company’s dissolution, the Department issued four tax warrants. . . . [W]hen the company was dissolved, the Department pursued the member personally for the outstanding balances pursuant to RCW 82.32.145. The member argues that the company was unable to pay its tax debt due to financial hardship caused by its customers failing to pay for work the company performed. Petition denied.

A construction company contests an assessment, arguing the assessment is based on inaccurate and incomplete information, and wrongly reclassified expenditures made in furtherance of non-governmental projects as government contracting expenses for purposes of the use tax/deferred retail sales tax. We deny the petition.

A construction contractor protests the Department’s assessment of retail sales tax and retailing B&O tax assessed on the amount of the total construction project cost instead of contract sum. Taxpayer further asserts it is entitled to additional “tax paid at source” deductions. We grant Taxpayer’s petition in part and deny in part.

An in-state seller of vehicle repair machines and equipment protests the Department’s assessment of retailing and wholesaling B&O tax and retail sales tax. Taxpayer argues that the Department incorrectly [assessed tax on sales of tangible personal property that was received by the purchaser outside the state. We deny Taxpayer’s petition.

A provider of nursing services seeks review of a tax assessment of use tax and/or deferred sales tax on various medical “kits” Taxpayer purchased and used in the course of its services without paying retail sales tax or use tax. Taxpayer argues that the kits in question are exempt from retail sales tax and use tax. We deny the petition.

Taxpayer conducts bowling tournaments. The tournament fee consists of an entry fee, lineage fee, and prize money. Taxpayer challenges the Department’s issuance of Balance Due adjustments. We sustain the Balance Due adjustments.

A person who transferred a 50% interest in property that he recently purchased at auction and remitted REET based on the sales price protests the assessment of additional tax based on the higher value for the property recorded on the county assessor’s rolls. The Special Programs Division asserted that the transfer was not an arm’s length transaction; however, no evidence has been presented [by the Special Programs Division,] that the sales price (which was based on half of the auction price) did not establish the fair market value of the property at the time of transfer or that there was any relationship or agreement between the parties that would support characterizing the subsequent transfer as anything other than an arm’s length transaction. We find that tax was remitted based on the most recent selling price for the property and grant the Taxpayer’s petition.

A warehousing goods provider protests use tax assessed by the Department on a . . . tractor, claiming retail sales tax was paid when a private party provided the funds to purchase the tractor several years prior. The petition is granted.

A company that processes credit and debit transactions for merchants and banks protests the assessment of service and other activities B&O tax on interchange fees paid to card-issuing banks for each credit card transaction. We hold that the company is responsible for paying the interchange fees, that the interchange fees are includable in its merchant discount revenues, and that the interchange fees are therefore part of its taxable gross income. Taxpayer’s petition is denied.

A mortgage products and services provider protests apportionment of certain services fees to the state of Washington. Taxpayer contends that document review fees and closing charges are not “loan service fees” and should be apportioned as “receipts from services” using an alternative calculation of its costs of performance. We deny Taxpayer’s petition.

A service provider protests the reclassification of receipts from the warehousing B&O tax classification to the service and other activities B&O tax classification. We deny the petition.

A manufacturer and wholesaler of bulk sanitary products petitions for correction of an assessment of litter tax contending that sales of bulk paper products to commercial customers do not fall within the ambit of the litter tax. We grant the petition.

A property management company that failed to pay B&O tax seeks a refund of penalties because it asserts the Department should have known Taxpayer was reporting its business activities improperly and notified Taxpayer of the error. Taxpayer argues that it made the error in “good faith” and, had it been notified, it would have paid the tax on time. Taxpayer’s petition is denied.

An employer of record disputes the assessment of service and other activities B&O tax on amounts received from affiliates to compensate for the employer of record’s payment of the affiliates’ employee expenses. The employer of record asserts it qualifies as a paymaster and such amounts are excluded from gross income under WAC 458-20-111 and RCW 82.04.43393. Alternatively, should we find these payments are included in gross income, the employer of record asserts these payments should be sourced to the locations of the affiliates’ properties being managed by the employees and apportioned outside Washington. Petition denied.

Seller of vehicle extended warranty contracts protests assessment of Retailing B&O Tax and Retail Sales Tax on sales of extended warranty service contracts by dealer directly to Washington consumers as part of a vehicle purchase transaction. Taxpayer also protests sampling methodology for estimated tax liability. Taxpayer’s petition is denied.

A developer of online gaming platforms appeals the Department’s partial denial of refund. Taxpayer contends that the Department erred in finding Taxpayer’s refund application was incomplete. We grant Taxpayer’s petition.

A gas and electric utility company seeks adjustment of use tax paid and retail sales tax assessed on vendor invoices on grounds that it paid for gas turbine inspection services or services to real property not subject to tax. Taxpayer’s petition is denied.

A business that collects and disposes of dog waste protests the reclassification of its income from the service and other activities B&O tax classification to the retailing B&O tax classification and retail sales tax classifications. We grant Taxpayer’s petition.

A retailer of marijuana and marijuana-related products disputes the Department’s estimated assessment of OTP tax on products referred to as cigar wraps or blunts. Taxpayer asserts that the products . . . do not contain tobacco. We find that the . . . cigar wraps contain tobacco and are subject to OTP tax. We deny Taxpayer’s petition.

A real estate acquisition and land development company protests the Department’s assessment of retail sales tax and retailing B&O tax on several sources of income. First, regarding development fees, the company argues it did not provide services in respect to construction, and so the income was not from a retail activity. Second, the company argues that income it received from a stormwater connection fee it paid was excludable as a reimbursement. . . .We deny the petition.

A business that provides dog waste pick up services to its residential customers’ petitions for review of a Department assessment of retail sales tax, arguing that the services it provides are not subject to retail sales tax. We grant the petition.

Taxpayers appeal the Department’s disallowance of a credit adjustment to sales for retail sales tax remitted. Taxpayers argue that the Department erred in assessing retail sales tax on food sales without backing out an amount equal to the retail sales tax that was separately stated in receipts and collected on food sales. Taxpayers also argue that retail sales tax was included in the price of alcoholic beverages. We deny the petition.

A corporation protests the estimated cigarette tax and penalties imposed on the sale of RYO cigarettes, asserting that the tax and penalties are not due and, if due, the estimate of sales is too high. Taxpayer’s petition is denied.

Taxpayer, a subsidiary of a specialty retailer, protests the denial of its application to the Voluntary Disclosure Program because an affiliated entity doing business in Washington was being audited by the Department. The Taxpayer disputes that the audit of an affiliated entity constitutes a prohibited contact for purposes of the Voluntary Disclosure Program. We hold that because there was contact with an affiliated entity, the Taxpayer did not meet the requirements to participate in the Voluntary Disclosure Program. The Taxpayer’s petition is denied.

The sole principal and managing member of a used car dealer petitions for correction of a TFAA on grounds that (1) the assessments against the used car dealer do not show a failure to remit trust funds, and (2) the 50% evasion penalty is inapplicable because there is no showing that Taxpayer himself evaded payment. We deny the petition.

[Taxpayer] protests the assessment of retail sales tax on charges for parking lot reconstruction, on grounds that it paid the appropriate tax to the construction contractor in accordance with the contract. We deny the petition.

A construction contractor protests the Department’s disallowance of a retail sales tax exemption certificate that Taxpayer accepted for a contract to build agricultural employee housing. We grant Taxpayer’s petition in part and deny the petition in part.

A Washington-based aerospace manufacturing business argues that it has shown that certain activities qualify for the B&O tax classification applicable to manufacturers or sellers of commercial airplane components manufactured by the seller. We remand the petition for an adjustment based upon Taxpayer’s timely submission of proof to the operating division which substantiates its qualification for the aerospace manufacturing B&O tax rate on the disputed transactions, consistent with the holding in this determination.

Operators of 4-D rides protest the Department’s denial of their requests for refunds of retail sales tax remitted from ticket sales. The petitions for refund are denied.

An out-of-state producer and supplier of enzyme reagents for use in life sciences research argues that, since the Department did not use a sampling methodology in assessing unreported retail sales tax, and associated penalties, the Department acted unreasonably. Petition denied.

A restaurant business seeks review of an assessment of retail sales tax, retailing B&O tax, and evasion penalty. The taxpayer asserts that unreported sales were unreasonably estimated and the Department has not established the requirements for the imposition of the evasion penalty. The Department holds that the taxpayer failed to maintain suitable records and that the Audit Division reasonably estimated unreported sales and tax liability. The Department also holds that clear, cogent and convincing evidence established that the taxpayer intentionally evaded payment of tax and required imposition of the evasion penalty. The Department denied the taxpayer’s petition.

An individual protests REET assessed on the transfer of property to her son, claiming the transfer was exempt from REET as a mere clearing of title or addition of co-signor. We deny the petition in part and grant it in part.

A retailer selling roll-your-own cigarettes protests estimated assessments of tax on untaxed roll-your-own cigarette sales. The Taxpayer was provided the opportunity to provide records and detail to substantiate actual sales, but no records were received. We therefore sustain the assessments as issued and deny the Taxpayer’s petition.

A wholesale and retail print shop objects to the reclassification of its business activities to the Printing and Publishing B&O Tax Classification and the amount of its tax assessment [asserting that its main business activity is duplicating materials provided by customers]. Taxpayer’s petition is denied.

A payroll processing services provider protests the assessment of service and other activities B&O tax on amounts that Taxpayer claims are excluded from the measure of B&O tax. For a part of the relevant time period, Taxpayer also claims it is eligible to deduct those same amounts from its gross income. We deny the petition.

An employer of record disputes taxes assessed on amounts received from affiliates to compensate for the employer of record’s payment of the affiliates’ employee expenses. The employer asserts it met the requirements of RCW 82.04.43393, and alternatively that it was entitled to rely on written instructions from the Department. The petition is denied.

An automotive finance and insurance company contests the B&O tax reclassification of its commission income on two grounds. First, Taxpayer contends that its gross income from automotive financing and insurance was not correctly reclassified to the service and other activities B&O tax rate and, second, Taxpayer argues that it was entitled to rely on the results of an earlier audit when classifying its income. Taxpayer’s petition is denied.

An S corporation disputes an assessment REET on property transferred to one of its shareholders and asserts the transfer is exempt from REET under RCW 82.45.010(3)(p) (and WAC 458-61A-211) as a mere change in identity or form. Petition denied.

A retailer of recorded movies and music seeks a refund of use tax paid on services purchased from an application service provider. We deny the petition.

A plat development company protests the inclusion of an evasion penalty for failure to timely remit collected retail sales tax, attributing the failure to lack of familiarity with the invoicing system. We sustain the inclusion of the evasion penalty as ongoing and consistent underreporting of collected retail sales tax and willful alteration of the electronic records is a sufficient basis to support the imposition of the evasion penalty.

A provider of software and data hosting services, in conjunction with help desk and other IT support services, protested an assessment of retail sales tax on its receipts from these services. The taxpayer asserted that the transaction meets the definition of a “bundled transaction,” [and] should be taxed as a non-retail service under statutory exclusions in RCW 82.08.190(4). The Department concludes that the software and data hosting services are retail DAS under RCW 82.04.050(8)(a) and that the IT support services provided exclusively in connection with the software and data hosting DAS were included in the retail sale of DAS under RCW 82.04.050(8)(b). The Department denies the taxpayer’s petition.

A broker/dealer that distributes exchange-traded funds and underwrites mutual funds protests the assessment of penalties on the grounds that it is was unaware of the requirement to file annual reconciliations and that it qualifies for waiver under the 24-month rule. We deny the petition.

An OTP retailer disputes an estimated assessment of tobacco products tax on unlicensed purchases of OTP. With its petition for review, the retailer provided additional records that it claims to be purchase invoices for all of its unlicensed OTP purchases and asks the Department to recalculate tax due based upon these records. We remand this matter to the operating division to determine whether Taxpayer is entitled to an adjustment based on the records it provided with its petition.

A national title insurer protests the Department’s assessment of retail sales tax, retailing B&O tax, and service and other activities B&O tax. Taxpayer argues that the Department overstated its income by erroneously (1) using insurance premium reporting documents to estimate Taxpayer’s income, and (2) using an estimated percentage to calculate its income from certain sales. We deny the petition in part, grant it in part, and remand it for additional records.

A seller of cleaning and maintenance products at retail and wholesale protests a tax assessment based on unreported sales. Taxpayer argues that the amounts at issue were the result of price adjustments that either (1) did not constitute part of Taxpayer’s gross proceeds of sale, or (2) constituted bona fide discounts that are deductible from Taxpayer’s taxable income. We deny the petition.

A vendor of medical devices and equipment requests reconsideration of Det. No. 17-0008 denying that portion of its requested review of an assessment of retail sales tax on gross proceeds from sales to health care facilities of adaptive servo-ventilation devices on the basis that they are prosthetic devices. We deny Taxpayer’s petition.

An out-of-state company that sells computer software to resellers or end users and provides online computer support services to customers in Washington could be liable for Washington’s wholesaling B&O tax, retailing B&O tax, retail sales or use tax, and service and other activities B&O tax, if the company had nexus with Washington pursuant to RCW 82.04.067. The TI&E tax ruling correctly informed Taxpayer on its potential tax liability for Washington state excise taxes and is affirmed.

An online reservation service disputes the assessment of delinquent penalties on additional tax due. The business filed corrected tax returns for three tax periods to report and pay tax on previously unreported apportionable income. However, the business filed the corrected returns after October 31st of the year following the current year for each tax period. We grant the petition in part and deny it in part.

A container transporter protests the Department assessment of PUT under the motor transportation classification. Taxpayer argues that his container transporting qualifies for full deduction as interstate and foreign sales. We deny the petition.

An out-of-state active duty U.S. Army officer and his spouse, husband and wife, who reside in Washington under military orders, petition for correction of an assessment of use tax on two private motor vehicles, issued by the Compliance Division of the Department. We deny Taxpayers’ petition.

A LLC disputes an assessment of REET on a transfer of real property to one of its members. The company asserts that the transfer of such real property was a liquidating distribution under 26 U.S.C. § 731, where neither the member nor company recognized gain or loss, and such a transfer is exempt from REET under RCW 82.45.010(3)(q)(i). Petition granted.

A Washington-based corporation that owns and operates a convenience store that makes retail sales of . . . tobacco products . . . , disputes the assessment of [the tobacco products] tax on certain purchases it admittedly made from unlicensed tobacco distributors for which it did not pay [the] tax. Taxpayer argues that the estimate that served as the basis for the tax assessment is manifestly unreasonable. We deny the petition.

A loan servicer disputes the calculation of its apportionable income and the resulting assessment of service and other activities B&O tax on several grounds. We deny in part . . . .

A financial institution that receives income from subservicing mortgage loans petitions for correction of an assessment that apportioned its loan servicing income based on the location of the borrower. Taxpayer maintained that the subservicing income should be attributed to where the services are performed. We conclude that Taxpayer’s loan servicing income should be apportioned based on the location of the borrower as provided in WAC 458-20-19404[A]. The assessment is sustained.

A dairy operation protests the assessment of use tax/deferred retail sales tax. Taxpayer argues that the subject sales are exempt from taxation as improvements to qualifying livestock nutrient management facilities. We deny the petition.

A seller and lessor of vehicles petitions for review of . . . , retail sales tax assessed on purchases of car wash services . . . and rental car tax on rentals of unassigned cars to employees. Taxpayer’s petition is denied.

A residential and commercial solid waste collection service company petitions for review of the denial of its application for CAFCV tax credits. The Department denied its application after concluding that the company failed to submit the final documentation required to qualify for the credit within fifteen days of receiving the vehicles included in its application as required by statute. The company asserts that the Department should accept its application because it submitted the final documentation within fifteen business days from receiving the vehicles . . . . We deny the petition.

An internet-based company that matches music teachers and potential students within and outside Washington disputes the Department calculation of “throw-out” income when apportioning its income for B&O tax purposes. Taxpayer also requests attorney’s fees, claiming it was required to hire counsel in order to resolve its dispute with the Department. The petition is granted in part, denied in part, and remanded for adjustment.

A company that provides rental of water treatment systems equipment to construction companies, disputes a Tax Ruling that assumed the company was using the equipment at the construction site to provide consultation services, claiming that it does not monitor nor analyze the water being treated. Taxpayer asks for a ruling based on the fact that it strictly rents the equipment to its customers. The ruling is modified.

An individual petitions for correction of an assessment of use tax. The individual argues she is exempt from use tax because she bought the vehicle while she was not a resident of Washington. The petition is denied.

A Washington State corporation engaged in log hauling to destinations in and out of Washington seeks reconsideration of Determination No. 18-0018, which held that Taxpayer was not eligible for claimed deductions to gross income for hauling logs to export yards taxable under the Log Hauling Over Public Highways PUT classification. During the audit, the Department’s auditor reportedly told Taxpayer if it obtained an export facility exemption certificate from qualifying export yards, then hauls made to those yards might qualify for the deduction. Taxpayer obtained the certificate from one export yard covering March 2016, and on that basis sought refund of tax assessed on all hauls covered by the certificate. Taxpayer’s petition for reconsideration is denied.

A residential mortgage lender protests inclusion in gross income of the business certain fees required by federal government-sponsored enterprises upon purchase of residential mortgages when determining its service and other activities B&O tax liability. We deny taxpayer’s petition.

Taxpayer, an internet retailer, challenges assessment of B&O tax and retail sales tax. Taxpayer disputes that it had sufficient physical presence within Washington to create the substantial nexus to allow Washington to tax its sales. Taxpayer also maintains that certain of its sales should be dissociated from its Washington activity. Taxpayer’s petition is denied.

An out-of-state company disagrees with the Tax Ruling it received from the Department, informing Taxpayer that it provides a dating service, which is a retail business activity subject to Washington’s Retailing B&O tax under RCW 82.04.050(3), and that it must charge retail sales tax on the charges its Washington customers pay for that service under RCW 82.08.020. We affirm the Tax Ruling.

A payroll processing services provider protests the Department’s assessment of service and other activities B&O tax. Taxpayer argues that all of its receipts are excluded from the measure of B&O tax. We deny the petition.

A corporation protests the amount of estimated cigarette remedial penalty imposed for sale of single-stick cigarettes, asserting that the sales estimated by the LCB are too high. Taxpayer’s petition is denied.

A distributor that sells pre-packaged snacks to retailer customers protests the disallowance of cash and trade discount deductions Taxpayer originally claimed for “off invoice” discounts that it gave to its retailer customers when selling products to such customers. Taxpayer argues that the discounts were given to its customers without the expectation of anything in return from those customers. We deny the petition.

A buffet restaurant disputes assessments of tax and penalties resulting from an estimate of cash sales. The restaurant asserts that the Department erred in estimating the percentage of cash sales by observing customer payments and calculating an average percentage of the frequency at which customers paid in cash, instead of selecting an industry average percentage. The restaurant also asserts the Department has not shown that it intended to evade paying taxes. Petition denied.

A provider of cloud-based services [asserts] . . . that its services . . . constitute nontaxable “internet access” under the ITFA. [In Det. No. 14-0307, the Department held to the contrary. On reconsideration, the Taxpayer] argues that the Department should instead follow the broader interpretation of "internet access" by the [Out-of-State 1] and [Out-of-State 2] tax authorities that rendered rulings to the contrary. Taxpayer’s petition is denied.

A manufacturer of precision hard metal and titanium parts petitions for a correction of use tax assessed on grinding machines it purchased that it uses to sharpen tools for customers, to sharpen its own tools, and to manufacture new tools. It asserts that the purchased machinery qualifies for the M&E exemption. We deny the petition.

A medical marijuana management company protests the Department’s assessment of retail sales tax and retailing B&O tax arguing that it is a management company providing management services to a collective garden only, and that neither party is making retail sales. It also argues that even if it is making retail sales, those sales are exempt either as sales of drugs pursuant to a prescription or sales of medicines of a botanical origin. We deny the petition.

Taxpayer was informed that its sales of nutritional supplements to its clients are subject to retail sales tax and retailing B&O tax. We affirm the Tax Rulings issued to Taxpayer on November 2 and 18, 2015 in their entirety.

A provider of electronic payment processing solutions for eCommerce merchants protests the attribution method employed by the Department’s Audit Division to determine Taxpayer’s taxable income. . . . Taxpayer argues that, for the period beginning June 1, 2010, the attribution method used should have been based on the merchant billing address. We deny the petition.

A former president . . . of a disbanded corporation petition[s] for review a TFAA against [him] . . . . The petition is denied.

An individual domiciled [out-of-state] protests the assessment of use tax on a motor vehicle purchased in Washington and registered [out-of-state]. Because the individual owned property in Washington, worked in Washington, and spent significant time in Washington during the period in which the motor vehicle was purchased, he maintained sufficient ties to Washington to categorize him as a dual resident of Washington and [another state]. Therefore, he is not eligible for the nonresident use tax exemption for the motor vehicle in question and the assessment is affirmed.

A municipal corporation protests the imposition of leasehold excise tax on street obstruction permits issued to persons needing to obstruct the public’s right of way during construction projects. Because the municipal corporation has a real property interest in the public’s right of way, and because the permits allow the permit holder to exercise dominion and control over a specific location, the street obstruction permits create a taxable leasehold interest. The petition is denied.

An out-of-state franchisor of . . . yogurt stores protests the assessment of B&O tax on grounds that the assessment discriminates against interstate commerce in violation of the Commerce Clause of the U.S. Constitution. We deny the petition.

Taxpayer seeks waiver of late payment penalties on annual returns for 2015 and 2016 asserting that the late filing was due to a former accountant’s fraudulent conduct and mismanagement. As the Taxpayer has not sufficiently substantiated the assertion of fraud or established that reasonable safeguards were in place, we find the requirements for a waiver under WAC 458-20-228 are not met and deny the Taxpayer’s petition.

A Washington construction company protests the assessment of retailing B&O tax and retail sales tax on grounds that the Department of Revenue Audit Division erroneously classified Taxpayer as a prime contractor rather than a speculative builder. Taxpayer also contends that, if it is a prime contractor, it is eligible for tax paid at source deductions. We deny the petition in part and grant the petition in part.

A business that provides “crossfit” training disputes re-classification of its income from the service and other activities B&O tax classification to the retailing B&O tax classification and the resulting assessment of [retail sales] tax. The business asserts the services it offers are primarily instructional in nature and distinguishable from retail physical fitness services offered by regular gyms. The business also requests waiver of penalties and interest because its owner was on active duty participating in an armed conflict when the tax liability accrued. The petition is denied in part and granted in part.

An out-of-state ATM card transaction processor protests the assessment of B&O tax in Washington on various grounds, including (1) that some of its gross income should have been classified under the royalties tax classification; (2) the Department’s taxation of Taxpayer’s gross income is unconstitutional; and (3) if constitutional, the Department’s taxation of Taxpayer’s gross income was based on an improper attribution method. The petition is denied.

A Washington dentist petitions for the correction of an assessment of service and other activities B&O tax on payments received for a tenant’s portion of shared building insurance and building utilities . . . . Taxpayer’s petition is denied.

A LLC protests the Department’s denial of its annual report filing extension for the preferential aerospace B&O tax rate arguing that the reports were due when it became eligible to claim the tax preference when it filed its tax returns with the Department. We deny the petition.

Taxpayer protests an assessment of successorship liability. We hold that Taxpayer was a successor because Taxpayer received more than 50% of the predecessor’s assets.

A credit card processor protests B&O tax imposed on interchange fees paid to its sponsoring bank on the grounds that it never actually receives the interchange fees and that the interchange fees are excludible from gross income as an advance or reimbursement under WAC 458-20-111. The petition is denied.

A provider of . . . services appeals the assessment of evasion penalties on grounds that it did not intentionally evade its tax liability, and delinquent penalties on grounds that its failure to pay was due to circumstances beyond its control. We deny the petition.

A Washington resident requests a refund of use tax paid on a boat the resident asserts was never used in Washington. Because there is no evidence that the Washington resident ever used the boat in Washington, the petition is granted.

A telecommunications company sought review of an assessment of service and other activities B&O tax imposed on receipts of USF support distributions. The taxpayer asserted that the Department cannot tax those receipts because the taxpayer previously paid B&O tax on the revenue it used to contribute to the USF. The taxpayer also asserted that the assessment should be waived based on the Department’s silence on the issue in prior audits. The Department denies the taxpayer’s petition.

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 . . . .

An out-of-state transportation company protests penalties assessed when it failed to timely pay REET on its controlling interest transfer. The taxpayer alleges that the Department should waive the penalties because it did not know it was subject to REET and that it is eligible for the twenty-four month waiver provision in RCW 82.32.105. The petition is denied.

An out-of-state limited liability company engaging in the business of manufacturing carbon fiber in Washington State seeks extension of the deadline to file its required annual tax preference survey following denial by TAA of the Department. Taxpayer does not dispute the facts leading to the initial denial, but requests waiver of the deadline because Taxpayer was simultaneously preparing for its first Washington tax deferral audit, and it showed good faith effort to comply by filing its completed survey only two days after the deadline. We deny Taxpayer’s petition.

A company that failed to timely pay an assessment of interest for additional tax owed on its reconciliation return and was subsequently assessed an additional penalty, requests refund of the penalty on the basis that the assessment was mailed to its sales office and not timely routed to the person, in its corporate tax office, responsible for filing and paying excise taxes. We deny Taxpayer’s petition

An out-of-state corporation protests the Department’s assessment made more than four years after the close of the tax year in which the tax was incurred. Taxpayer argues that it was a registered taxpayer under RCW 82.32.050(4)(a) and WAC 458-20-230(3) (Rule 230) because it registered with the Department in 1999, notwithstanding that it asked the Department to close its account prior to the Department’s contact. We deny the petition.

A Washington couple acting as one single independent distributor selling nutritional supplements for an incorporated [out-of-state] direct seller organization seeks refund of taxes assessed when the Department reclassified their reported gross income. Taxpayers dispute a decision by the Department to reclassify their income to the service and other activities B&O tax classification resulting in additional tax liability. Taxpayers state they relied on oral instructions from the Department to report their income as wholesaling, and contend they properly reported their income under the retailing, wholesaling, and royalties B&O tax classifications throughout the review period. We deny the petition.

A provider of information technology services protests a tax assessment of additional service and other activities B&O tax from attributing additional gross income from two service contracts to Washington. Taxpayer argues that the gross income should be attributed to multiple states where the parties to the contracts allegedly contemplated the benefits from such contracts would be received. Taxpayer also argues that the Department should attribute the gross income from a third contract differently than Taxpayer originally attributed the gross income from that contract. We remand for application of a reasonable method of proportionally attributing gross income from the first two contracts, but deny the petition as it pertains to the third contract.

A parent company that provides a variety of “general and administrative services” to various affiliated companies protests the method used by the Department’s Audit Division to calculate an assessment of B&O tax. Specifically, Taxpayer argues that (1) the Audit Division included amounts that do not constitute gross income in Taxpayer’s tax base, (2) the Audit Division used an unreasonable method of proportionally attributing Taxpayer’s income from certain categories of services, and (3) it is entitled to a waiver of penalties. We grant the petition in part, deny in part, and remand for adjustment to the tax assessment.

A Washington corporation . . . protests the assessment of retail sales tax and retailing B&O tax based on an estimate of cash sales. While conceding the inaccuracy of electronic records, the business asserts that handwritten records provided are complete and accurate, and alternatively argues that the estimate used by the Audit Division is too high. [W]e affirm the conclusion that these records are not accurate and that the Audit Division reasonably exercised its authority to use an estimate. We also find that the estimate was reasonably calculated and find no evidence to establish that estimate rests on untenable grounds or constitutes an abuse of discretion. The Taxpayer also asserts that non-business income was incorrectly treated as business income. Because insufficient detail was provided to substantiate a non-business source for the remaining items, we affirm their categorization as business income. We affirm the assessment as issued and deny the Taxpayer’s petition.

Taxpayer protests the assessment of additional REET, based on the assessed value of the property, and contends that REET was correctly paid on the total consideration received. We conclude that the sale at a 66% discount was not at the true and fair value and affirm REET assessed on the assessed value of the property. The Taxpayer’s refund petition is denied.

A retailer of OTP disputes an estimated assessment of tobacco products tax, moist snuff tax, and cigar tax on unlicensed purchases of OTP resulting from a WSLCB investigation. The retailer asserts that the Department overestimated the tax due for the audit period by failing to account for the age of the OTP found during the investigation. Taxpayer also asserts that the Department disclosed its successor’s confidential tax information by sending [Taxpayer] the assessment.

A construction company objects to reclassification of its design services as services rendered in respect to construction and retail sales under RCW 82.04.051. The taxpayer asserts that at the time it executed the design contract it was not contemplated by the parties that the taxpayer would be awarded the subsequent construction contract. . . . The taxpayer’s petition is denied.

A Washington state corporation disputes the Department’s assessment of successorship liability for the unpaid taxes of a defunct business, based on Taxpayer’s acquisition of the business’s assets. We conclude that Taxpayer is a successor and is liable for the unpaid taxes of its predecessor. We further conclude that Taxpayer has not met its burden of proving that the fair market value of the assets it acquired from its predecessor is less than $50,000. Therefore, Taxpayer may not limit its successorship liability to the fair market value of the acquired assets. We deny the petition.

A firm in the business of providing bed and breakfast services and venues for events protests the imposition of retail sales tax and retailing B&O tax on its income. . . . The petition is denied.

A taxpayer that renovated a facility to relocate a laboratory objected to the disallowance of the high technology retail sales and use tax deferral for portions of the project. The taxpayer asserted that an unfinished area should have been excluded in apportioning common area costs. The taxpayer also asserted that the area used for developing a new type of nuclear reactor qualifies for the deferral as development of an alternative energy source. The Department denies the petition.

A real estate broker, that is authorized to arrange third-party vendors to perform maintenance work on properties owned by a bank, appeals the assessment of retail sales tax and retailing B&O tax on the maintenance expenses paid to the third-party vendors directly by the bank. The petition for correction of assessment is denied.

An asphalt and aggregate manufacturer and road paver protests the Department’s assessment of use tax and manufacturing B&O tax arguing the Department incorrectly valued asphalt and aggregate products it manufactured and used in public road construction projects. Taxpayer also disputes the Department’s disallowance of the manufacturers’ M&E exemption for a canvas covering it purchased to shelter recycled asphalt. We remand the petition in part and deny it in.

A restaurant protests the Department’s assessment of retail sales tax and B&O) tax under the retailing classification. Taxpayer argues the Department erroneously estimated cash sales. We deny the petition.

A former member of a closed LLC seeks a refund of money the member paid arising out of a trust fund assessment based on the closed LLC’s unpaid retail sales taxes, asserting that he was not a responsible person for the closed LLC. The former member also contests the Department collecting money to satisfy the liability out of a bank account owned jointly by the former member and an unrelated third party. The former member is a former chief executive and is liable for the retail sales taxes assessed in the tax warrant against the closed LLC for the portion of the audit period where the former member was the chief executive. The petition is granted in part and denied in part.

A business that rents portable horse-stalls protests an assessment resulting from the reclassification of its rentals from wholesale to retail, claiming that all of its customers re-rent the stalls at competitive horse events. Taxpayer also asserts that at some point a Department employee orally advised it to report its stall rentals as “wholesale sales.” We deny Taxpayer’s petition.

A company that retails and wholesales custom glassware, tableware, lighting and home décor, petitions for correction of an assessment of retail sales tax, retailing B&O tax, wholesaling B&O tax, and penalties and interest contending that it lacked substantial nexus with Washington during the relevant years. The company also requests a waiver of interest and penalties. In regards to the tax, interest, unregistered business penalty, and delinquent penalty, we deny the petition. In regards to the assessment penalty, we deny the petition in part and grant it in part.

A jewelry gallery protests an assessment of service and other B&O on the gallery’s commission income. The gallery argues it does not have to pay taxes on amounts received as commission for sales of goods sold on consignment. We conclude that Taxpayer has not overcome the presumption that it is selling goods in its own name, is subject to retailing B&O tax and retail sales tax on the proceeds of the sales, and remand the assessment to the Operating Division to adjust it accordingly.

Taxpayer protests the Department of Revenue’s denial of Taxpayer’s application for a CTRC, arguing that its late application submission was caused by its internal personnel changes that prevented Taxpayer from gathering the information needed to timely complete its CTRC application. We deny Taxpayer’s petition.

Taxpayer sold an office building and paid REET on the total consideration paid. Taxpayer now petitions for a partial refund of the REET, claiming that the amount it paid exceeded the property’s “true and fair value.” We conclude that Taxpayer’s initial REET Refund Request was timely filed, but that it failed to rebut the presumption that the total consideration actually paid was the property’s true and fair value. We deny Taxpayer’s petition.

A grocery store with pharmacies in a number of its retail stores, that made sales of prescription drugs, seeks a refund of retailing B&O tax paid on these sales asserting that this tax is a prohibited indirect tax on the insurance carriers participating in the FEHBA, Medicare Advantage, and TRICARE, federal health insurance programs, from whom it received payment. We conclude that the B&O tax is not preempted and affirm the denial of the request for refund.

The purchaser of a motor vehicle requests a partial refund of retail sales tax paid on the purchase of a new motor vehicle. The purchaser asserts that he is entitled to a reduction in the “selling price” of the new motor vehicle because he traded in another motor vehicle as consideration for the new motor vehicle, and his motor vehicle broker served to umbrella the transactions. Petition denied.

A limited liability company that owns a 38.14 percent interest in an apartment complex protests the assessment of REET on 38.14 percent of the assessed value of that apartment complex as a result of Taxpayer’s two members selling their combined one hundred percent interest in Taxpayer to a third party. Taxpayer argues that the amount of consideration that the third party paid for the one hundred percent interest in Taxpayer should be treated as the true and fair value of the 38.14 percent interest that Taxpayer owns in the apartment complex. We deny the petition.

A Washington publishing company that provides services within and outside Washington disputes retail sales tax assessed on receipts for products purchased by customers outside of Washington. The company also protests the Department’s calculation of “throw-out” income when apportioning its income for B&O tax purposes. The petition is granted in part, denied in part, and remanded for adjustment.

A healthcare services provider petitions for reconsideration of Det. No. 15-00328, which held that the provider was liable for use tax on a contract for information technology and software support services, because neither the de minimis exclusion nor the true object exclusion from the definition of a bundled transaction applied. The petition for reconsideration is denied.

A dairy farm protests retail sales tax assessed on construction of a farmhouse, claiming the structure is exempt from retail sales tax under RCW 82.08.02745 as it houses agricultural employees. The petition is granted.

Two affiliated Washington state auto dealerships located in . . . County and . . . County, respectively, petition for adjustment of their assessments as follows: 1) both dealerships dispute the assessment of use tax and/or deferred sales tax on certain “service kits” they purchased, arguing that the purchase price of the kits can be bifurcated between retail and wholesale components and should not be taxed as bundled transactions; [and] 2) both dealerships dispute the assessment of use tax and/or deferred sales tax on car wash services they purchased, arguing that the purchases were for resale. . . . We grant the petitions as to the issue of the service kits and remand to the Audit Division, and deny the petitions as to the remaining issue.

A business that made purchases under the Rural County Investment Project Tax Deferral under RCW 82.60.070, but never finished the investment project, appeals assessments of use tax/deferred retail sales tax, interest, and penalties. The business asserts the . . . purchases of machinery and equipment [that initially] qualified for the M&E exemption in RCW 82.08.02565 and 82.12.02565, are subject to use tax measured by the items’ values once such items failed to qualify for the exemption. If liable for deferred retail sales tax, Taxpayer argues that WAC 458-20-24001A(108)(b)(i) requires a waiver of interest and penalties. Petition denied in part and granted in part.

An out-of-state wholesaler protests the assessment of wholesaling B&O tax on sales of its goods to Washington retailers, claiming it lacked nexus with the State of Washington prior to September 2015. We conclude Taxpayer has nexus with Washington and B&O tax, interest, and penalties were properly assessed. Taxpayer’s petition is denied.

A vehicle restoration business disputes the denial of Interstate and Foreign Sales deductions, and resulting assessment of retail sales tax, on income it derived from progress payments paid for restoration work performed on vehicles for nonresidents. The vehicles were located in this state when the progress payments were made, prior to out-of-state delivery to nonresidents, or delivery of the vehicles to common or bona fide carriers consigned to out-of-state delivery to nonresidents. Because the payments were made for interstate sales to nonresidents, we conclude that the business is allowed to take the Interstate and Foreign Sales deduction for income derived from such progress payments during the audit period.

However, if Taxpayer is later unable to show that completed sales meet the statutory requirements to qualify for the nonresident sales tax exemption, Taxpayer will be liable for any unpaid sales tax on those sales. We grant the petition, and remand to the operating division for adjustments to the assessment

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.

A computer sales and repair shop petitions for correction of an assessment of retail sales and B&O tax, contending that it properly paid tax on amounts net of the retail sales tax collected from its customers because its prices were advertised as “tax included.” The weight of the evidence supports Taxpayer’s position that all sales were advertised as tax-included. Accordingly, Taxpayer’s petition is granted.

A seller of propane and propane accessories to residential and commercial customers protests the assessment of use tax on two propane tanks Taxpayer acquired from a third party. Taxpayer argues that it acquired the propane tanks at issue for the purpose of reselling them and, therefore, has not “used” the tanks [as a consumer]. We grant the petition and remand for appropriate adjustment.

A Washington retailer protests the imposition of retail sales tax on sales the retailer alleges were made to non-Washington residents for use outside Washington, arguing it properly documented sales of tangible personal property made to nonresidents for use outside of Washington. We deny the petition.

An equipment financing company seeks review of an assessment of retail sales tax on leases and sales of equipment and vehicles . . . . First, the company claims that third-party loan servicers collected and remitted the applicable retail sales tax on equipment leases. Second, the company claims that although it did not collect retail sales tax when selling used vehicles at auction, purchasers of the used vehicles should have paid use tax when registering the vehicles with other state agencies. . . . The petition is denied in part, granted in part, and remanded for adjustment based on records provided.

A store developer disputes an assessment that stems, in large part, from a finding that the store developer provided “services rendered in respect to” construction when it accepted responsibility for assembling and building-out store fixtures. The store developer asserts that, at most, it assembled light shelving and attached slat walling – both of which activities constitute less than 1% of its services. Petition denied.

A provider of gantry cranes to the [United States agency] appeals the assessment of government contracting B&O tax and use tax on grounds that it is a seller of tangible personal property liable only for retailing B&O tax, rather than a government contractor liable for government contracting B&O tax and use tax on materials incorporated into the work. We deny the petition.

A taxpayer objects to the reclassification of its income from the retailing B&O tax classification to the wholesaling B&O tax classification. If the reclassification stands, the Taxpayer also objects to the measure of the tax being the income it received from the retail price of the goods.

A speculative builder petitions for correction of an assessment of use tax and/or deferred sales tax on materials and subcontractor services used in the construction of speculatively built homes. The assessment of tax is sustained.

Taxpayer requests reconsideration of Det. No. 16-0141. Taxpayer requests correction of an assessment of retailing [B&O tax] and retail sales tax on income received from providing customers digital certificates, maintaining that its service is excluded from the definition of DAS as a service that “primarily involves the application of human effort by the seller.” We affirm the assessment.

Health care providers appeal the denials of their requests for refund of B&O tax paid on: (i) receipts from insurance carriers that participate in federal health insurance programs, asserting that Washington’s tax is preempted by federal law; and (ii) receipts from certain prescription infusions or injections. Taxpayers’ petitions are denied.

A LLC, that owns real property in the state, petitions for correction of an assessment of REET on the transfer of a controlling interest in the LLC asserting that the transfer of interest was a gift where there had been no change in the parties responsible for the debt on the property or in the source of funds used to make monthly mortgage payments. Taxpayer’s petition is denied.

An LLC that owns real property in Washington protests the assessment of REET on the transfer by one of its two members of a fifty-percent interest in Taxpayer to the other member. Taxpayer argues that the Department’s Special Programs Division used an incorrect amount as the “selling price” of the fifty-percent interest, and also should have assessed REET proportional to the interest percentage transferred. We grant in part and deny in part Taxpayer’s petition, and remand to Special Programs.

Taxpayer, a medical marijuana business, protests an estimated assessment of retailing B&O tax and retail sales tax. Taxpayer maintains it was a collective garden that does not conduct taxable transactions. In the alternative, Taxpayer maintains the sales of marijuana qualify for the retail sales tax exemption afforded prescription drugs. The assessment is affirmed.

A grocery store business protests an assessment of retail sales tax, retailing B&O tax, and evasion penalty, asserting that the auditor overestimated its retail sales based on its bank records and that it did not intentionally underreport its tax liability. The taxpayer’s petition is denied.

An out-of-state online retailer of brand name apparel and accessories (and its successor) appeals assessments of retailing B&O and retail sales tax, asserting that the Washington activities of its wholesaling affiliate are insufficient to establish taxable nexus. Held: A wholesaling affiliate’s promotion to third-party retailers of the same brand name products sold by an online retailer affiliate, wholesale product packaging containing the online retailer affiliate’s website, and the existence of a retail “store locater” on the online retailer affiliate’s website, are insufficient activities to create taxable nexus for the online retailer. The taxpayer’s petition is granted.

A Washington LLC that provides services in and outside Washington objects to the Department calculation of “throw-out income” for purposes of apportioning its income. Taxpayer’s petition is denied.

The operator of a motel disputes the disallowance of its claimed partial exemption from retailing B&O tax and retail sales tax for gross income that Taxpayer claims it received from “nontransient” tenants. Taxpayer also claims that it does not owe TPA charges for certain transactions. Based on additional records provided by Taxpayer, we remand the assessment for possible adjustment of the retailing B&O and retail sales tax assessed on room rentals. We deny Taxpayer’s petition with regard to collected and unremitted TPA charges.

The purchaser of the assets of Washington businesses objects to the imposition of use tax/deferred retail sales tax. The assessment is upheld.

Taxpayer, a supplier of telecommunications equipment, protests the assessment of wholesaling B&O tax. Taxpayer claims that the Department failed to properly deduct income from wholesale transactions of sales performed outside of Washington, and that it is entitled to deduct certain discounts from its taxable sales income. We conclude that the taxpayer has failed to provide adequate documentation of its claims that its Washington sales are overstated, and further conclude that the discounts it seeks are not bona fide and are not deductible. Taxpayer’s petition is denied and the assessment is upheld.

An out-of-state company that generates revenue from digital media programmatic ad buying (classified as internet advertising services) objects to the Department’s use of internet user population, rather than general population, to represent the relative population in its customers’ market in proportionally attributing its Washington receipts. . . . . The taxpayer’s petition is . . . denied in part.

[Taxpayer] petitions for review of the Department’s denial of its request for a waiver of the interest and penalties assessed on its late payment of a tax assessment. Taxpayer asserts that the fact that the USPS did not postmark its payment on the same day it was placed in the mail is a circumstance beyond its control that caused its late payment. Taxpayer’s petition is denied.

A Washington automobile dealer protests B&O tax assessed on incentives paid by a car manufacturer. Because the dealer performs services for the incentives, the dealer owes B&O tax on the payments.

An importer of motor vehicles manufactured in Asia protests the assessment of wholesaling B&O tax on the sale of vehicles it asserts were in the process of import transportation until received by the buyers in Washington. Taxpayer asserts that all activities undertaken at other United States ports outside Washington where the vehicles are unloaded from a ship are related to shipping needs, which does not interrupt import transportation. We conclude the processing and handling involves a business purpose, rather than a direct shipping need, and thus results in a break in import transportation. We affirm the vehicles are subject to wholesaling tax.

A taxpayer that engages in custom construction and speculative construction, where its subcontractors and vendors maintained its reseller permit on file, did not pay retail sales tax on purchases related to its speculative construction projects. The Department assessed deferred retail sales tax on the speculative construction purchases and imposed a penalty for improper use of the reseller permit, under RCW 82.32.291. The taxpayer sought review of the penalty, asserting that it did not affirmatively provide its reseller permit in making the purchases; therefore, it did not improperly use its reseller permit and the penalty does not apply. The taxpayer’s petition is denied.

An out-of-state corporation that manufactures and sells natural ingredients and botanical extracts to Washington customers protests the Department’s tax assessment, arguing that it does not have substantial nexus with Washington State. We deny the petition.

An airline appeals the Department’s assessment of service and other activities B&O tax on compensation for collecting passenger facility charges, . . .deferred sales tax on upgrades to its boarding facilities at two airports in Washington, and [use tax on] complimentary non-alcoholic beverages provided to customers in Washington. We grant the petition as to [passenger facility charges], concluding federal law preempts the taxation of such revenues, but deny the remainder of the petition.

Naturopathic clinic protests assessment of service and other activities B&O tax on amounts disallowed as deductions under independent contractor arrangements for provision of natural health services. Taxpayer’s petition is denied.

A dentist objects to the assessment of use tax paid on equipment he purchased from the prior occupant of his dental office, contending that the amount paid exceeded its value. We deny the petition.

A used vehicle dealer disputes the Department’s denial of a credit for sales and use tax it previously paid on bad debts for vehicles it subsequently repossessed. We deny the petition.

A Taxpayer protests the assessment of REET on saw mill equipment sold in conjunction with the sale of real property. It asserts that the equipment was tangible personal property not subject to REET. We conclude that this equipment is tangible personal property rather than fixtures subject to REET and, accordingly, grant the Taxpayer’s petition and remand to the Special Programs Division to adjust the assessment.

A company protests assessment of service and other activities B&O tax on income received for the grant of rights to remove minerals, rock sand, or other natural resource products, asserting that the income is exempt as amounts derived from the rental of real estate. We conclude that the income at issue is not exempt from B&O tax and deny the Taxpayer’s petition.

A building contractor disputes retail sales tax and B&O tax assessed on permit fees and other charges from a city, which it contends were excludable as reimbursements from the landowner. Because the taxpayer was liable to pay the city, other than as agent, the charges were not excludable. We deny the petition.

A mechanical engineering and product development services provider protests the assessment of use tax and/or deferred retail sales tax on the materials it used to produce prototypes as part of its mechanical engineering and product design services, asserting that it is a manufacturer and entitled to purchase the materials at wholesale under RCW 82.04.050(1)(a)(iii). In the alternative, the taxpayer asserts that its purchases of materials used to produce prototypes are exempt from tax under the [M&E] exemption, RCW 82.08.02565, because it purchased the materials as a processor for hire and agent of its manufacturer clients. The taxpayer’s petition is denied.

A shooting sports products distributor protests the Department’s assessment of wholesaling B&O tax and argues that it did not have contacts with Washington sufficient to constitute nexus during the audit period. We deny the petition.

Movie theatres object to the Department’s assessment of retail sales tax on popcorn they sell to customers. We deny the petition.

A limited liability company that sells non-prescription dietary supplements and health foods through its internet website requests a refund for the taxes it paid to the Department, arguing that it does not have nexus with Washington State, and that the taxes imposed on it violate the fourth prong of the test in Complete Auto Transit v. Brady, 430 U.S. 274, 97 S. Ct. 1076, 51 L.Ed.2d 326 (1977) by not being fairly related to the services provided by this State. We deny the petition.

A Washington taxpayer objects to the assessment by the Department of use tax on transportation charges associated with the transport and delivery of materials the taxpayer used in a government contracting project completed in Washington. . . . The taxpayer contends that the Department improperly included transportation costs in the measure of use tax. Taxpayer’s petition is denied . . . . [T]ransport charges are included in the measure of use tax in addition to the value of the goods or materials purchased.

A provider of services associated with “supply chain management” protests a tax assessment of use tax and/or deferred sales tax on the purchase of certain consumable supplies on various grounds. Taxpayer further protests future reporting instructions requiring Taxpayer to refrain from reporting any of its gross income under the stevedoring and associated activities B&O tax classification, and to report its gross income on various other tax classifications instead. Taxpayer argues that it should be entitled to report under the stevedoring and associated B&O tax classification because Taxpayer’s services occur within a foreign trade zone. We deny Taxpayer’s petition on all counts.

A seller of marijuana products contests an assessment resulting from reclassification of certain sales from wholesale to retail, asserting that it has established facts and circumstances that the transactions at issue were properly reported as wholesale sales, under RCW 82.04.470(5) and WAC 458-20-102(7)(h). The taxpayer’s petition is denied.

A nonprofit physicians association protests a tax assessment that disallowed deduction of a portion of their dues under RCW 82.04.4282. We hold that the portion of the dues received for the value of significant services rendered to its members through its Coordinated Quality Improvement Program is disqualified from the bona fide dues deduction. We affirm the assessment.

Taxpayer requests reconsideration of Det. No. 13-0255. Taxpayer is a health care insurance company. Taxpayer’s affiliated companies provide services to Taxpayer. Similarly, Taxpayer provides services to its affiliates. Taxpayer paid service and other B&O tax on the amount it received for services provided to the affiliates, which was offset by the amount Taxpayer owed the affiliates for services they provided to Taxpayer. Audit assessed service and other activities B&O tax on total consideration Taxpayer received, which was the amount received from the affiliates plus the value of the services provided by the affiliates. We sustain Det. No. 13-0255, which sustained the assessment and deny the refund of tax paid.

A business that sells savory pies, sausage rolls, and sweet pastries, objects to assessment of retail sales tax on sales of those items, contending they are tax-exempt bakery items, and argues that the Department improperly disallowed an exempt food tax deduction. The business further argues that it is entitled to relief because it allegedly relied to its detriment on a Special Notice issued by the Department. Taxpayer’s petition is granted in part and denied in part. We remand to Audit for possible adjustment.

An out-of-state taxpayer providing mutual fund investment management services appeals the assessment of B&O tax, under the service and other business activities classification, on income the Department [attributed] to Washington. The taxpayer contends none of its income should be [attributed] to Washington because its sole customer, a financial services company, receives the benefit of the taxpayer’s services [out-of-state], where the customer is located. The taxpayer’s petition is denied. We conclude that the individual investors in the mutual funds managed by the taxpayer are the ultimate benefit recipients of the taxpayer’s investment management services...

Two individuals dispute TFAAs on the basis that the TFAAs include uncollected retail sales tax and the individuals did not willfully fail to pay or cause collected retail sales tax not to be paid to the Department. Petition denied in part and granted in part.

A Washington manufacturer disputes B&O tax assessed on receipts from patent licenses, payroll receipts for employees who worked for affiliates, and use/deferred sales tax assessed on building improvements for a building that was used to transfer fuel to rail cars and later used to blend fuel. Because receipts from the patents were not casual or isolated, they were subject to B&O tax. Through its employees, the manufacturer provided services to the affiliates and was subject to tax on the affiliates’ payment for those services. The building improvements do not qualify for the M&E exemption. Petition denied, but remanded to reclassify licensing income

A company, specializing in concrete underlayment work, protests the assessment of use tax on materials used in government contracting. The Taxpayer asserts that it had no direct contractual relationship with the government entity, and acted as a subcontractor and reported tax based on instructions and information provided by the prime contractor on the projects. The Taxpayer’s petition is denied.

A road contractor, that did not pay a cement vendor retail sales tax on materials used for a county road project, appeals the improper use of its reseller permit penalty imposed on the materials purchased.... [W]e grant the petition.

A trucking company objects to the assessment of retail sales tax on (1) lease payments it made to related companies that exceeded the equipments’ purchase price, and (2) the denial of the interstate/foreign deduction from PUT on hauls it made of imported goods between Washington ports and Washington destinations. It further asserts that the Department is [precluded] from assessing these taxes because the Audit did not assert them in prior audits. The assessment is sustained.

A collective garden disputes the assessment of retail sales tax on medical cannabis products and asserts that no taxable transactions occurred, but if they did, such products are exempt from retail sales tax as a prescription drug and/or medicine of botanical origin. Petition is denied.

A company that sold a complete vegetable processing plant petitioned for reconsideration of Det. No. 06-0245, which denied the taxpayer’s request for refund of REET on the portion of the sales price attributable to M&E. In dispute is whether the items of M&E are real property fixtures or tangible personal property for purposes of REET. We grant in part and deny in part.

Taxpayer petitions for a reconsideration of the holdings in Determination No. 15-0093. On reconsideration, we reverse [one of] the holdings in Det. No. 15-0093, and hold that Taxpayer is entitled to deduct its separately stated direct mail delivery charges before calculating its B&O and retail sales tax liability. . . .

A taxpayer protests the assessment, by the Department, of REET on the transfer of a controlling interest in a Washington corporation. The taxpayer contends the corporation did not own real property in Washington at the time of the transfer. Taxpayer’s petition is denied.

A contractor engaged in construction petitions for the correction of assessment, contending the Department is barred by statute from assessing taxes for certain prior tax periods and, for the open tax periods, Taxpayer’s tax liability should be offset by a tax paid at source deduction. Taxpayer’s petition is denied.

Taxpayer sold a two-story concrete Class B office building and paid REET based on the total consideration paid. Taxpayer now petitions for a partial refund of the REET, claiming that the amount it paid exceeded the property’s “true and fair value.” We conclude that Taxpayer has failed to rebut the presumption that the total consideration actually paid was the property’s true and fair value. We deny Taxpayer’s petition.

A company engaged in the business of providing proxy voting services to brokerage houses and banks petitions for correction of assessment of retail sales tax and retailing B&O tax on the processing fees and intermediary fees it charges its customers. We hold that the company’s proxy voting services are taxable under the service and other activities B&O tax classification for periods prior to July 26, 2009. However, we hold that the company’s proxy voting services are taxable as digital automated services for periods after July 26, 2009, and are therefore, subject to the retail sales tax and retailing B&O tax for those periods. . . . Taxpayer’s petition is granted in part and denied in part.

A physician group protests the denial of its request for refund of service and other activities B&O tax paid on receipts from the FEHBA and Medicare Advantage MA, federal insurance programs, which it asserts are preempted from taxation by federal law. We conclude that the Taxpayer has not established that Washington tax is preempted and deny the Taxpayer’s petition.

An out-of-state corporation that provides apartment listing services to property owners and property management companies protests the Department’s assessment [of] use tax/deferred sales tax on the toll-free number service purchased from a vendor. Taxpayer argues that the sales are not retail sales because the primary purpose of its purchases is to collect the data from the callers and, thus, the sales qualify for the data processing and information services [exclusion] under RCW 82.04.065(27)(a). We deny the petition.

A [taxpayer] sought review of the partial denial of its request for refund of 75 percent of the retail sales tax paid on the purchase and installation of a solar energy system. The taxpayer asserts that the Department improperly denied its refund, allowable under RCW 82.08.962 and WAC 458- 20-263, of tax paid on charges for electrical and structural engineering, electrical and building permits, a construction bond, plan review, project management and coordination, equipment rental, and a weather station with solar radiation monitoring. The taxpayer’s petition is denied.

A company that claimed a fruit and vegetable manufacturer [B&O] tax exemption, but failed to timely submit the required annual tax incentive survey, seeks review of the denial of its request for an extension to file the survey. The basis for the company’s Petition is that it experienced a significant departure of employees around the time of the due date for filing the survey due to a VSIP. We conclude that the significant loss of employees to a VSIP does not amount to circumstances beyond the control of the taxpayer pursuant to WAC 458-20-228 (“Rule 228”). Petition denied.

Taxpayer appeals the taxation of intercompany charges. Taxpayer’s petition is denied.

A LLC that sells medical marijuana and marijuana-related products protests the Department’s assessment of retail sales tax and retailing B&O tax arguing that it is a collective garden and it does not sell or provide medical marijuana to consumers in exchange for donations. Taxpayer also argues that even if there were retail sales, those sales are exempt either as sales of drugs pursuant to a prescription or as sales of medicines of a botanical origin. We deny the petition.

A wind farm seeks administrative review of a denial of its request to refund retail sales tax, asserting the tax was paid on tax exempt machinery and equipment used in generating electricity. We deny the petition.

An automobile dealership seeks executive level reconsideration of Determination 08-0306 in which we concluded that dealer cash incentive program awards are income to the business and subject to B&O tax under the other business or service activities classification. We affirm our decision in Det. No. 08-0306 as Taxpayer has not proved that dealer cash incentive program awards qualifies as discounts to or reductions on the selling prices of the vehicles.

A company, engaged in the manufacture and installation of custom casework, seeks reconsideration of a decision that use tax was due on value of cabinets installed rather than on the cost of component materials. We affirm our decision that, because the company was the “consumer” of the materials it manufactured for installation under RCW 82.04.190(6), it owed use tax on the value of the cabinets under RCW 82.12.010(1)(a) and WAC 458-20-17001(7)-(9) rather than just on value of the component parts. We sustain the assessment as issued and deny the Taxpayer’s petition.

A berry wholesaler protests the assessment of wholesaling B&O tax, interest, and resulting penalties on its Washington sales. We conclude that the Department’s assessment was proper because the taxpayer’s customers received taxpayer’s goods in Washington. We also conclude that the Department was not bound by a previous letter ruling because the facts upon which the letter ruling was based did not reflect Taxpayer’s actual business practices. Finally, we find that the Department was not barred by the statute of limitations because Taxpayer was an unregistered business. Taxpayer’s petition for correction of assessment is denied.

A cable television distribution company petitions for the refund of leasehold excise tax paid on the utility pole contract charges it paid to public entities in Washington. At issue is whether the utility pole contracts convey the requisite “possession and use” to constitute a taxable leasehold interest under RCW 82.29A.020. Taxpayer’s petition is denied.

A taxpayer protests the assessment of B&O taxes and retail sales taxes based off of bank records and argues taxes were assessed against the wrong entity. The taxpayer’s petition is denied.

Quarry operator protests use tax/deferred sales tax assessed on the value of M&E on the grounds that (i) its screening and washing activities take place in conjunction with crushing and blending; (ii) it satisfies the majority use test. The petition is denied.

A manufacturer of wire and cable products, protests the Department’s Audit Division’s disallowance of the M&E use tax exemption it took on reels it used to store and ship cable. We sustain the tax assessed concluding the reels are not part of the manufacturing process and do not qualify for the M&E use tax exemption.

A firm that provides legal services to a parent petitions for correction of an assessment of B&O tax on payments received as personnel expense reimbursements from its parent on the grounds that the employees were employed by the parent company. . . . Taxpayer's petition is denied.

A taxpayer appeals the assessment by the Department of REET on the quit claim transfer of his 50 percent ownership in residential property to his former spouse who owned the other 50 percent. The taxpayer contends that the transfer was between tenants in common and pursuant to a court order, exempting the transfer from REET. Taxpayer's petition is denied.

A taxpayer protests the denial of a High Technology Sales and Use Tax Deferral because either the otherwise qualifying machinery and equipment was used at a location not specified in the deferral application or the expenses were for tenant improvements, which were also not specified in the original application. Taxpayer’s petition is denied.

A former . . . manufacturer that claimed the Washington Customized Employment Training Credit on its combined excise tax returns, but then failed to file the required annual survey by the due date, protests the Department's assessment of B&O tax to recover the amount of the tax credit claimed. We deny Taxpayer's petition.

A taxpayer seeks an extension to file its annual survey to qualify for a high technology tax credit after the Department disallowed the taxpayer’s use of the credit and issued an assessment. Taxpayer also requests the penalties imposed in the assessment be waived. Taxpayer's petition is denied in part and granted in part.

A [retail] store chain protests the assessment of retail sales tax and retailing B&O tax due on disallowed bad debt deductions. Holding: The taxpayer is not entitled to the bad debt deductions. Petition denied.

A medical marijuana management company protests the Department's assessment of retail sales tax and retailing B&O tax arguing that it was a management company only providing management services to a collective garden, and that neither party made retail sales. Taxpayer also argues that even if there were retail sales, those sales are exempt either as sales of drugs pursuant to a prescription or sales of medicines of a botanical origin. We deny the petition.

An out-of-state bakery objected to the imposition of B&O tax on sales of baked goods delivered to its Washington customers, arguing that it lacked nexus and that its goods were not received in Washington. The assessment is sustained.

A married couple protests the assessment of REET on the transfer of real property to the parents of one of the spouses in exchange for forgiveness of a loan. We conclude that the forgiveness of a loan is consideration and the transfer constitutes a sale for REET purposes. The assessment is affirmed.

Taxpayer petitions for the correction of a REET assessment, claiming that the change in ownership in a LLC, which resulted from the distribution of an inheritance, did not constitute a REET-taxable transaction. Taxpayer's petition is granted.

A Washington construction contractor disputes the evasion penalty assessed on retail sales taxes that the contractor collected and used to meet its payroll, but did not remit to the Department. The contractor modified its QuickBooks records prior to an audit so that the invoices showed wholesale sales without sales tax, rather than the separately stated retail sales tax originally billed. Because the taxpayer knew the tax was due and altered its records to escape detection, we deny the petition but remand the assessment to adjust the amount due.

A rescue vessel operator appeals a portion of an assessment of PUT, and asserts such tax was improperly assessed on towing adrift, undamaged vessels because such vessels were in peril and the assistance activity was actually salvage. Petition denied.

An out of state limited liability holding company that provided payroll and benefits services to a subsidiary corporation, and that reported wages in this state as the employer of record, protests the assessment of B&O tax under the services and other activities classification on payroll expenses, arguing that amounts received for payroll and benefits are excluded reimbursements under WAC 458-20-111 (Rule 111). Because Taxpayer did not prove it had solely agent liability to pay the employer obligations, we conclude the amounts received are not excludible reimbursements. The petition is denied.

A small harvester, that retained an affiliated entity to harvest and market timber, objects to the disallowance of its harvesting and marketing cost deduction of 50 percent of the timber sale price in determining the measure of forest excise tax due. Where the taxpayer provides minimal documentation of harvesting and marketing costs, in addition to the absence of an arm’s length transaction to verify the taxpayer’s asserted costs, the Forest Tax Section appropriately applied the standard 35 percent cost deduction, as required by RCW 84.33.074(3)(b) and WAC 458-40-610(11). The taxpayer’s petition is denied.

A Washington nonprofit corporation disputes an assessment of retail sales tax on receipts from its customers in exchange for marijuana. Because the marijuana was exchanged for money, a sale occurred. Because the corporation did not provide records of nontaxable transactions, retail sales tax was properly assessed on total sales. We deny the petition.

A small business appeals the Department’s denial of its request for a waiver of the electronic filing and electronic payment requirements for its quarterly excise tax returns. Because the business has shown statutory good cause, we grant the petition.

A manufacturer, who deferred paying retail sales tax in a CEZ, appeals the tax assessed after the Department concluded that the manufacturer did not hire the requisite number of qualified employment positions based on the law in effect when the manufacturer applied for the deferral. In the alternative, the taxpayer asks to prorate the deferred tax for the qualified employment position it did hire. Because the manufacturer did not hire the requisite number of qualified employment positions, and there is no authority to prorate for the single qualified employment position, we deny the petition.

A homeowner appeals the denial of a request for refund of retail sales tax paid on the purchase of metal roofing for his home, asserting that the roofing qualifies as M&E as a support facility that is integral and necessary for the solar energy system’s generation of electricity. The taxpayer has not established that the roofing is integral and necessary for the solar energy system’s generation of electricity; therefore, the roofing does not qualify as M&E exempt from retail sales tax under RCW 82.08.963 and WAC 458-20-263. The taxpayer’s petition is denied.

A seller of vehicle tires protests the assessment of tire fees that Taxpayer failed to collect from its customers. Taxpayer argues that it received incorrect oral instructions from a Department employee, who reportedly advised Taxpayer that the tire fee requirement expired on June 30, 2010. Because it relied on this alleged incorrect information, Taxpayer argues it should not be liable for the tax assessment. We deny the petition.

A LLC that owns real property in Washington protests the assessment of REET on the value of the property upon the transfer of two one-third shares in the company to the holder of the remaining one-third share. We conclude that the sole remaining owner of the company acquired a controlling interest, causing imposition of REET on the full value of real property owned by the company. The assessment is affirmed.

A private educational institution that provides educational programs solely through the internet, disputes the assessment of retail sales tax and B&O tax on certain charges to its students, arguing that fees for online educational programs are specifically excluded from the definition of “digital automated service” and not subject to taxation as retail sales. We conclude that Taxpayer’s fees for its online educational programs are not taxable as retail sales, and that Taxpayer’s library and resource fees, science lab fees, and nursing program fees are tuition fees not subject to tax as retail sales. However, Taxpayer may owe use tax on certain property it used in this state as a consumer, for which sales tax was not paid. We grant the petition, but raise the issue of possible use tax liability and remand to the operating division for further findings and adjustments.

A wildfire suppression private contractor seeks a refund of tax, penalties, and interest paid to the Department for an assessment of service and other B&O tax, claiming that its activities are properly classified under the wholesaling B&O tax classification . . . . The petition is . . . denied . . . .

Two corporate officers of a now defunct computer installation and repair business protest a TFAA issued against them as individuals, stating that the amount assessed against the defunct business was in error. We conclude that the corporate officers are responsible for the corporation’s collected and unremitted retail sales tax and may not challenge the amount assessed against the underlying corporation. The assessment is affirmed.

A chiropractor protests the assessment of retail sales tax on nutrition products that he sold to patients. Because the products were dietary supplements, which the chiropractor could not prescribe, the chiropractor’s sales of the supplements were not exempt from retail sales tax. We deny the petition.

A speculative and custom builder protests the assessment of the reseller permit misuse penalty with regard to items purchased for consumption by the business, arguing that it was not aware that it improperly used its permit. Taxpayer also asserts that its lack of knowledge of its retail sales tax liability and the serious illness of Taxpayer’s member’s family are circumstances beyond Taxpayer’s control for waiver of penalties and interest. We deny the petition.

Owner of a firearms store and gun range petitions for correction of an assessment of retail sales tax on replica silver bullets, contending they are exempt sales of precious metal bullion. Petition is granted.

Owner of several sandwich franchise locations, which sell bagged chips both individually and as part of single price meal options with other prepared foods, challenges an assessment of retail sales tax on the sale of bagged chips. We deny the petition.

A building foundation repair contractor argues that it is not a successor, claiming it acquired less than 50 percent of the predecessor’s intangible assets. We find the contractor is a successor and uphold the assessment of successorship liability.

A securities broker-dealer entity appeals the denial of a refund request and contends that it is entitled to the lower B&O tax rate provided for “international investment management services” under RCW 82.04.290. We conclude a broker-dealer does not provide investment management services and, therefore, does not qualify for the rate. Petition denied.

A yacht owner protests the Department’s assessment of WET on its yacht arguing that the value the Department used in assessing WET was overstated. We deny the petition.

A computer service provider petitions for correction of an assessment and a refund, arguing that the Department erred when reclassifying certain separately stated charges as retail sales. Petitioner alleges that the charges were de minimis relative to the business’s primary activity of providing help desk and consulting services, or were in relation to network-based services not subject to retail sales tax. Because the Department reclassified only line items on Taxpayer’s own invoices that indicated retail sales activity, and because Taxpayer has not shown that the activities should be classified differently, we deny the petition.

An out-of-state LLC that sells gluten free bread products to Washington customers protests the Department’s tax assessment arguing that it does not have substantial nexus with Washington State. We deny the petition.

An out-of-state seller of goods challenges the various penalties assessed in a tax assessment, arguing primarily that (1) that the delinquent penalty should have been assessed at a lower rate . . . . As to Taxpayer’s . . . argument, we deny the petition. . . .

Members of a now defunct LLC, that operated an automobile dealership, protest a TFAA against them, stating that the LLC effected a timely EFT of the tax due and owing. The Department’s bank received the transfer, but subsequently returned the transferred funds because the LLC’s bank swept the LLC’s account of funds. We conclude that [Member A] and [Member B] are responsible for the LLC’s collected and unremitted retail sales tax. We find that [Member C] is not.

An insurance company and its wholly owned broker/dealer . . . appeal assessments of service and other activities B&O tax on grounds that the receipts are exempt as functionally related to insurance business. We deny the petitions.

A Washington LLC appeals the assessment of use tax on a motor vehicle it purchased, registered, and licensed [out-of-state]. Petition denied. We conclude that the company is liable for use tax on the vehicle it purchased and licensed in another state, but uses in Washington.

A Pilates studio appeals an assessment of retailing B&O tax and retail sales tax, asserting that its Pilates classes are not physical fitness services classified as retail activities because the primary focus of the classes is instructional. The taxpayer’s petition is denied.

A sightseeing tour operator disputes the value the Department used in a use tax assessment against its crew vessel arguing that the Department should have used the value listed on the appraisal it provided. We deny the petition.

Information technology firm protests retail sales tax imposed on subscription-based access to its proprietary research library and other related services on the grounds that access to the proprietary research library is not a digital automated service because it primarily involves the application of human effort. The petition is denied in part and remanded in part.

A management company objects to assessments of tax for its transactions with a holding company that is commonly-owned, and further objects to the inclusion of certain amounts in the taxable measure for which it has provided no documented evidence that they should be exempt. The assessments are upheld.

A business that organizes and hosts [vehicle] races protests the reclassification of rider participation/entry fee and comingled general admission/camping fees from the service and other B&O classification to the retailing business B&O and retail sales tax classifications. We affirm the assessment as issued. [U]nder RCW 82.04.050, WAC 458-20-183 [and ETA 3167.2011], the rider participation/entry fee allows for the participation in the sporting activity of [vehicle] racing and . . . is taxable as a retail activity. [Also,] the mingling of the service taxable general admission fees with the retail camping fees subjects the charge to the retail classification. The Taxpayer’s petition is denied.

An industrial engineering company protests the assessment of [deferred sales] tax on construction. . . . Taxpayer claims it should receive a credit for retail sales tax it previously paid to subcontractors for some of those materials and costs on behalf of the prime contractor. We remand Taxpayer’s petition.

A manufacturer protests the Department’s denial of Taxpayer’s request for refund, in which Taxpayer claimed that it overpaid BNG use tax. Taxpayer argued that it should not have included (1) certain service fees or (2) the value of “lost and unaccounted-for” natural gas in the measure for determining the amount of BNG tax owed. We deny Taxpayer’s petition.

A singles club that offers organized activities for its customers seeks reconsideration of Determination No. 14-0330, which affirmed the disallowance of a claimed deduction of [initiation] fees and dues from [its] measure of B&O tax. We deny Taxpayer’s request for reconsideration.

A fresh fruit packer petitions for refund of use tax paid on its rental of pooled pallets, on the grounds that the pooled pallets were purchased for resale and are exempt from use tax as packing materials. We deny the petition.

An out-of-state computer software corporation petitions for correction of an assessment, claiming that the sponsorship revenue it received for holding software conferences outside of Washington is not taxable in Washington. The company also seeks a credit for collected and unremitted sales taxes that it claims it refunded to its customers and a waiver of the 5% assessment penalty. Taxpayer’s petition is granted with respect to the convention sponsorship revenue, but denied on all other issues. The matter is remanded to the Audit Division for adjustments consistent with this determination.

Taxpayer appeals the assessment of service and other activities B&O tax on income derived from the rental of indoor space in a building where a swap meet is held. We conclude that the income is derived from granting a B&O taxable license to use realty and not a B&O exempt rental of real estate. While we sustain the future reporting instructions on a prospective basis, we grant Taxpayer’s request for cancellation of the assessment based on erroneous previous written reporting instructions contained in a prior audit report.

A Washington corporation in the construction business protests an assessment of retail sales tax and retailing B&O tax, asserting that the Department erroneously classified Taxpayer as a prime contractor rather than as a speculative builder. Taxpayer’s petition is denied.

A road construction subcontractor appeals the assessment of use/deferred sales tax on materials purchased for public road construction and seeks waiver of the reseller permit misuse penalty. We deny the petition.

A corporation engaged in selling, renting, and repairing heavy equipment; selling aggregate; and providing hauling for hire appeals the assessment of retail sales tax on grounds that the measure of tax should be reduced by credit memos. Taxpayer also appeals the negligent penalty on grounds that it did not disregard specific reporting instructions. We deny the petition.

A company protests the assessment of retail sales tax on its Washington sales of hyperbaric chamber systems. Because the primary use of the hyperbaric chamber is not to generate or store medically prescribed oxygen, the company’s sales of the chambers are subject to retail sales tax. We uphold the assessment.

A LLC that owns real property in Washington, appeals the assessment of REET on its transfer of a controlling interest, asserting that the transfer is exempt from REET because it was nontaxable under federal law, or was a mere change in form or identity. Taxpayer alternatively asserts that if REET is due on the transfer, the value of the LLC’s real property is significantly less than that asserted by the Department. We conclude that REET is due on the transfer, but the assessment must be adjusted to remove liability for a second parcel assessed in error, and to reflect a professional appraisal later submitted by Taxpayer. We grant the petition in part, deny it in part.

A Washington corporation objects to the classification of asphalt production as manufacturing for B&O tax purposes. Taxpayer’s petition is denied.

A firm that provides medical imaging services petitions for reconsideration of Det. No. 15-0065, which sustained assessment of B&O tax on fees received from patients that were subsequently paid to physicians who interpreted the medical images. We deny Taxpayer’s petition, finding that Taxpayer neither acted as a billing agent for the physicians nor as an agent of the patients.

A contracting company petitions for the correction of assessment of retail sales tax on acquired capital assets from its predecessor company arguing that it received the capital assets in a business reorganization. Taxpayer’s petition is denied.

Health care provider appeals the denial of its request for refund of service and other activities B&O tax paid on receipts from insurance carriers that participate in the FEHB and MA programs, asserting the tax is preempted by federal law. The taxpayer’s petition is denied.

Taxpayer petitioned for the correction of an assessment, claiming it was entitled to a larger B&O tax credit, because certain deductions for prescription drugs were improperly disallowed by the Audit Division of the Department of Revenue. Taxpayer’s petition is granted.

An out-of-state manufacturer and seller of bedding products protests the assessment of B&O tax and retail sales tax on sales of its products in Washington, contending it did not have sufficient nexus with Washington. We deny Taxpayer’s petition.

Beverage manufacturer petitions for refund of sales tax on its rental of pallets, on the grounds that they were purchased for resale as packing materials under WAC 458-20-115. The petition is denied.

[Taxpayer] appeals the assessment of manufacturing B&O tax and retail sales tax on sales of yacht design and engineering services. Taxpayer contends the sales income was properly reported under the service and other activities B&O classification. We conclude that the income at issue is properly included in the gross proceeds of sales and selling price and is subject to manufacturing B&O tax and retail sales tax. Taxpayer’s petition is denied.

A sole proprietor of an auto body shop protests the assessment of successorship liability. We find the taxpayer is not a successor and conclude that he is not liable for the tax in the outstanding warrants filed against the defunct business. Taxpayer’s petition is granted.

A company operating a restaurant protests an assessment estimating unreported cash sales, asserting that the records provided were sufficient and all sales were reported. We affirm the assessment because the Audit Division has established that business records were insufficient and reasonably exercised its authority to arrive at an estimate of cash sales. We deny the Taxpayer’s petition.

Taxpayer requests refund of the extension interest and late-payment penalty paid on a tax assessment that was paid late. Taxpayer maintains that the assessment would have been paid timely and no extension interest or late-payment would have been assessed had the audit report and assessment been sent by United States Postal Service (“USPS”) rather than transmitted over the internet to his secure Department of Revenue [(Department)] account. Taxpayer’s petition for refund is denied.

[A husband and wife are the former members of a now defunct LLC. The wife protests a TFAA against her and the marital community of her and her husband, contending that she was not involved in the day-to-day affairs of the business, was not responsible during the disputed period for collecting and remitting retail sales taxes, and that she did not willfully fail to pay those taxes.] We conclude that the former member was not personally liable for the TFAA because she did not have control or supervision of the collected funds or the responsibility of filing returns or paying the taxes to the Department during the period at issue, but that her husband and the marital community are liable. We grant the petition in part and deny it in part.

A married couple domiciled [out-of-state] seeks a refund of use tax paid on a vehicle purchased and registered [out-of-state], and subsequently brought into Washington during weekend excursions to a vacation home. The petition is granted.

Timberland owner disputes an assessment of FET, contending that he did not harvest as much timber as the estimated assessment reflects. Because the owner failed to provide suitable records to substantiate the amount of tax due, we deny the petition.

A winery objects to the assessment of use tax on wine it provided free of charge for wine tasting and on items it gave free of charge to its wine-making class participants. The winery also protests the disallowance of the sales tax exemption it took for sales of wine to qualified nonresidents. The winery further asserts that tax should be waived because it relied on the erroneous tax advice and services of its accountant. We grant the petition in part and deny it in part.

A German pharmaceutical company with no physical presence in Washington objects to the assessment of Washington’s B&O tax on royalties it received that were based on the sales of its products in this state. Taxpayer’s petition is denied.

A manufacturer objects to an assessment after it acquired the assets of a predecessor that had a high-technology sales and use tax deferral. The manufacturer argues that the contract between the parties indemnified the manufacturer from any potential tax liability for taxes deferred on the qualified buildings portion of the investment project . . . . We deny the petition.

A flooring company disputes the assessment of retail sales tax arguing that the Department erred when calculating tax liability, and further, contests the assessment of a misuse of reseller permit penalty on certain purchases from Washington State businesses contending that it made the purchases as a subcontractor or government contractor, and therefore, did not owe retail sales tax. Taxpayer also requests the waiver of interest and a late-payment of return penalty on the grounds that they are excessive and unnecessary. We conclude that the business has not shown that the Department erred when calculating and assessing retail sales tax or when the Department imposed the misuse of reseller permit penalty. We further determine that the business has not shown a basis for a waiver of interest or penalties. Accordingly, we deny the petition.

A LLC protests the disallowance of a REET exemption. Taxpayer argues the transaction met the requirements of the nominee exemption. We deny the petition

A non-profit organization that operates a martial arts training center appeals the denial of the RCW 82.04.4282 deduction it claimed for its membership dues income, asserting that the dues are deductible donations. The taxpayer’s petition is denied.

A grantor of a 50% interest in real property protests the REET assessed on a quit claim transfer where the grantee had paid 100% of the mortgage payments on the property for a period of ten months prior to the transfer. We deny the petition.

An out-of-state company that provided marketing services for a Washington insurance company, protests additional B&O taxes assessed under the service and other activities classification when its deduction for marketing materials was disallowed. The company contends that its income should be taxed under the lower B&O tax rate for the activities of insurance producers or agents. Because the company provided marketing services for the insurer, rather than insurance services for the policy holders, its income was properly taxed under the service and other activities B&O tax classification. In the alternative, the company seeks to deduct payments to a foreign affiliate, under a transfer pricing agreement. We deny the petition.

A taxpayer appeals the assessment of service and other activities B&O tax, penalties, and interest on income the Department disallowed as deductible advances. The taxpayer’s petition is denied.

An out-of-state corporation appeals B&O taxes assessed on sales of its products delivered into Washington. The corporation contends that, because it had no property or employees in Washington, it was not obligated to pay Washington B&O taxes. Because independent businesses demonstrated the corporation’s products and solicited orders here on the corporation’s behalf, the corporation had sufficient activity in Washington (nexus), and is liable for B&O tax on its receipts and income. Petition denied.

Home manufacturer protests instructions that it must report periodic payments when received, rather than when the contract is complete. The petition is denied.

A business that operates a vocational school in Washington petitions for refund of B&O tax on grounds that it qualifies for the tuition fees deduction in RCW 82.04.4282. Taxpayer’s petition is denied.

[Taxpayer] petitions for reconsideration of Det. No.. 15-0042, 34 WTD 169 (2016), which affirmed an Assessment of Successorship Liability imposed on Taxpayer after it acquired all of the assets of a business, against which the Department made an assessment within six months after receiving Taxpayer’s written notice of the sale. In Det. No. 15-0042 we concluded that Taxpayer was a successor to predecessor’s liability. Taxpayer timely filed for reconsideration. We deny Taxpayer’s petition for reconsideration.

Provider of training services petitions for correction of a letter ruling in which the Department instructed it to attribute income earned from its in-person and online training workshops to the location of each individual workshop participant at the time the training is provided. We revise the letter ruling. With respect to in-person workshops, a reasonable method of proportionally attributing income is to the location where the workshops take place. With respect to online workshops, income should be attributed to the participant’s permanent office location because a reasonable method of proportionally attributing receipts is not available.

A previously unregistered, out-of-state, party supplies wholesaler and retailer disputes assessments of retail sales tax, retailing B&O tax, wholesaling B&O tax, litter tax, interest, and penalties on the basis that it did not have nexus with Washington, internet sales should be dissociated from those originating from a representative’s visits to Washington, and it relied – to its detriment – on incorrect oral advice allegedly received from a Department agent. In addition, Taxpayer requests abatement of penalties because it acted in good faith in relying on the alleged oral advice and did not intend to defraud. Petition denied.

An out-of-state company that hires audio and visual independent contractor technicians to perform services for clients on a temporary basis in Washington protests the Department’s assessment of B&O tax claiming it lacks sufficient contacts with Washington to be subject to B&O tax. We deny the petition.

An out-of-state web development company appeals the denial of its request for a refund of taxes. Taxpayer contends that it should not be liable for excise taxes in Washington in 2014 because it was only marginally over the nexus threshold for 2013. We deny Taxpayer’s petition.

[Taxpayer] appeals an Assessment of Successorship Liability imposed after it acquired all of the assets of a business from [Predecessor], against which the Department made an assessment within six months after receiving the taxpayer’s written notice of the sale. We deny the petition.

An interpreter . . . service (Taxpayer) protests the denial of its requests for refund for taxes it claims it overpaid by not properly reducing its reported gross income by amounts it paid to individual interpreters for interpreter services. Taxpayer claims that such amounts were not part of its income because Taxpayer served as agent for the individual interpreters in collecting payment from the various organizations. We deny Taxpayer’s petition.

A political subdivision of the State of Washington (Taxpayer) protests a tax assessment, in which Taxpayer was assessed service and other B&O tax on “tip fees” collected from individuals that paid the fee to deposit their solid waste at a central transfer station owned and operated by a third party, but leased by Taxpayer. Taxpayer argues that its activity in relation to the central transfer station was an “exclusively governmental activity” and, therefore, exempt from B&O tax. We conclude that the activity at issue is an “enterprise activity” subject to B&O tax. Accordingly, we deny Taxpayer’s petition.

A construction company petitions for refund of use tax paid on its acquisition of six vehicles, asserting the transfer of such vehicles was a non-taxable transfer of capital assets between wholly-owned subsidiaries of the same corporation. Petition denied.

Retail services provider argues that (i) the Department’s assessment is barred by the statute of limitations; (ii) the installation of promotional displays inside retail stores is not a retail sale on the grounds that its customers are not “consumers”; [(iii)] the performance of architectural site surveys is a professional service not subject to retail sales tax; and (iv) travel expense reimbursements are not subject to retail sales tax. The petition is denied.

A building contractor protests retail sales tax assessed when it over-billed its Washington customers for sales tax by including its business and occupation (B&O) tax in the sales tax billed to its customers. [The] contractor must remit over-collected sales tax as retail sales tax (not B&O tax) to the Department of Revenue (Department). The contractor must also include permit fees for which it was financially liable in its measure of tax, even though the owner was liable to pay the contractor for the fees. We deny the taxpayer’s petition.

A firm providing both architectural design and construction services protests reclassification of design work from the service and other B&O classification to the retailing business B&O and retail sales tax classifications on projects where it also acted as contractor. Because there is evidence that the parties contemplated that the Taxpayer would provide both services, we affirm the classification of the design work as a retail service. The Taxpayer’s petition is denied.

Is an out-of-state lessee liable for use tax under RCW 82.32.730(10) when the leased property is primarily located outside of Washington?

A seller of interactive web-based computer programs, that assists lenders in evaluating the credit risks of potential borrowers, objects to the assessment of retail sales taxes and penalties. We deny Taxpayer’s petition.

A taxpayer bank petitions for the correction of an assessment of service and other activities B&O taxes on “shared-loss” payments it received from the FDIC. The FDIC took over three failing banks and sold those banks to Taxpayer under an agreement where the FDIC would compensate Taxpayer when a certain threshold number of loans Taxpayer acquired from the failing banks went into default. Taxpayer argues that the shared-loss payments it received from the FDIC were not taxable in Washington. Taxpayer’s petition is denied.

A taxpayer appeals a delinquent payment penalty resulting from sending payment timely, but to another Washington Government Agency. We grant Taxpayer’s refund request.

Taxpayers’ petition for the correction of a REET assessment claiming that the change in ownership in LLCs, which resulted from the redemption of other members’ ownership interests, did not constitute a REET-taxable transaction. Taxpayer’s petition is denied.

A company protests B&O tax assessed on payments it received from affiliates for payroll. Because it had no liability other than as agent of the affiliates, we grant the petition subject to verification.

A [taxpayer] appeals a tax ruling that its purchase of LOX for use in its wastewater treatment process is subject to retail sales tax. The [taxpayer] appealed the ruling, asserting that its ruling request did not contain sufficient facts regarding its use of LOX in the manufacture of a mulch-like biosolids product, and that its purchase of LOX for this purpose is exempt from retail sales tax, pursuant RCW 82.04.050(1)(a)(iii) and WAC 458-20-113 (Rule 113) because it is used in manufacturing a new product for sale and becomes an ingredient or component of the product. The taxpayer’s petition is granted.

A [credit bureau] protests the Department’s assessment of retail sales tax and B&O tax under the retailing and wholesaling classifications. The taxpayer argues that its sales were either exempt as digital goods used solely for a business purpose or were predominantly wholesale sales, and that they should not be sourced to Washington. We deny the petition.

A fitness and training facility designed for athletic performance enhancement appeals an assessment of retail sales tax on the basis that it provides specialized coaching in running and movement, and not simply personal training. Petition denied.

A company that offers cloud-based services that automate the creation and delivery of customized outbound high volume faxes and emails for its customers, objects to a Department ruling that its activities are taxable as telecommunications and digital automated services. Taxpayer contends that it is providing data processing services taxable under the service and activities classification of the B&O tax, or, in the alternative, that its email activities are entirely exempt under the ITFA. Taxpayer’s petition is denied.

An aerospace manufacturer appeals the Department’s denial of its refund request, based on reclassification of its business activities in a prior tax period to the preferential aerospace manufacturing B&O tax classification and the allowance of an aerospace B&O tax credit for that period. The Department denied the refund request on the basis that the manufacturer had failed to timely file its required annual report for the disputed period, and was therefore, not entitled to the tax benefits for that period. We conclude that the annual report was not timely filed and deny the petition.

The operator of a motel protests the disallowance of its claimed partial exemption from retailing B&O tax and retail sales tax for gross income Taxpayer claims it received from “nontransient” occupants. Because we conclude Taxpayer has failed to provide adequate evidence that any occupants were “nontransient,” we deny the petition.

A wholesaler of meat objects to the assessment of litter tax because it does not create any litter . . . . We uphold the assessment.

A seller of medical related products protests an assessment of retail sales tax asserting that, pursuant to RCW 82.08.050(7), its acceptance of blanket exemption certificates specific to RCW 82.08.0281 and RCW [82.08.0283] tax-exempt sales relieves it of personal liability for retail sales tax due on sales of items not exempt under those statutory exemptions. The taxpayer’s petition is denied.

A taxpayer appeals the refund denial of a late payment penalty, contending that payment of the assessment was late because the taxpayer worked with the Department in good faith to correct the amount of tax due. The taxpayer’s petition is denied. We conclude that the taxpayer’s circumstances in this case do not meet the statutory qualifications for waiver of a late payment penalty.

An out-of-state wholesaler of commercial vehicle chassis protests a tax assessment for B&O tax on sales Taxpayer claims are not subject to B&O tax. Specifically, Taxpayer argues that it lacks nexus in Washington to subject it to taxation here, and further argues that the vhicle chassis at issue were received by the purchasers outside of Washington. We grant Taxpayer’s petition in part, finding the [Vehicle 1] chassis were received outside the state, and remand for adjustment of the tax assessment.

Service affiliates object to the imposition of B&O tax on amounts represented by credits to expenses they allocated to their affiliated entities, asserting that the credits do not constitute gross income as defined in RCW 82.04.080(1). [Taxpayers] also assert that the Audit Division employed faulty methodology in determining their use tax or deferred sales tax liabilities. The taxpayers’ petitions are denied.

A provider of physician services and seller of food and dietary supplements appeals the assessment of retail sales tax on grounds that the sales are exempt as dietary supplements dispensed pursuant to a prescription. We deny Taxpayer’s petition.

A business engaged in providing rotary brush cutting services and making sales of brush cutter parts and equipment protests the assessment of reseller permit misuse penalty with regard to items purchased for consumption by the business. Taxpayer argues it was not aware that it improperly used its permit. We deny the petition.

Private golf and country club protests the exclusion of six nine-hole golf courses from its market comparison for purposes of determining the taxable amount of its membership fees and dues under the actual usage of facilities method pursuant to WAC 458-20-183 and ETA 3080.2009. The petition is granted in part and denied in part.

Out-of-state [companies protest] the imposition of [late payment of assessment penalties] on the grounds that such late [payments were] the result of employee fraud. The [petitions are] denied.

A logger protests a use tax and/or deferred sales tax assessment on his purchase of a feller-buncher used to cut trees. Because the logger did not use the feller-buncher in a manufacturing operation, we deny the petition.

A Washington company that provides communication services, and designs voice and data networks, appeals a penalty for misuse of its reseller permit. Some of the company’s vendors delivered products to the company at out-of-state locations, and did not charge the company sales tax, while others did not charge sales tax after they obtained the company’s reseller permit. We uphold the penalty assessed on sales of deliveries into Washington from vendors that may have obtained the company’s reseller permit. However, the penalty was not applicable to products the company picked up at out-of-state locations, and later brought into Washington. We grant the petition in part, deny it in part, and remand the assessment for adjustment.

Tennis club petitions for correction of tax ruling in which the Department ruled that mandatory member assessments used to make capital improvements are subject to retail sales tax and retailing B&O tax. We revise the ruling. A portion of the assessments paid by members is deductible as bona fide dues in accordance with the tennis club’s prior determination, Det. No. 07-0254, [28 WTD 1 (2009)].

The owner of a mobile home park protests the Department denial of a refund request based on the Department’s finding that Taxpayer did not qualify as a “financial business” and, therefore, could not deduct from the measure of its tax liability certain amounts it received from interest on mortgage loans. Taxpayer argued that it was a “financial business” because it was the lender on such loans similar to other types of financial businesses. We deny the petition.

A taxpayer seeks waiver of an assessment of B&O tax issued in the amount of the taxpayer’s previously asserted credit for R&D spending after the taxpayer failed to timely file the required annual survey. The taxpayer claims the late survey filing was the result of [its] employee[‘s] mistake. The taxpayer’s petition is denied.

A taxpayer alleges she was a victim of embezzlement and petitions for a correction of assessment based upon the wrongful acts of her employee. Taxpayer’s petition is denied.

An individual grantor, who transferred Washington real estate to a grantee who agreed to pay $ . . . to the grantor’s revocable trust secured by the property, protests REET assessed on the transfer. The grantor alleges that he was acting as trustee on behalf of the grantee, who was a beneficiary of the trust. Because the grantor could revoke the trust and receive the payments from the grantee under the deed of trust, the transfer was subject to REET measured by the amount due under the deed of trust.

A forest harvester protests timber tax assessed on the scaled volume of logs sold to a chipwood processor. Because the buyer’s facility was not an approved chipwood destination when the logs were delivered, the harvester could not pay the tax based on the weight of the wood. We deny the petition.

A [Taxpayer] appeals a letter ruling that improvements to its combined sewer and storm water system do not qualify as public road construction. We sustain the letter ruling.

A lessor of employees to affiliated companies petitions for reconsideration of Det. No. 14-0237, which held that Taxpayer cannot exclude amounts received for payroll and employee expenses from its measure of B&O tax, and the Department can assess Taxpayer for tax periods 2004 through 2006 when it was previously registered but not registered when audited by the Department. Taxpayer’s petition is denied

Health care providers appeal the denials of their requests for refund of B&O tax paid on receipts from insurance carriers that participate in federal health insurance programs, asserting that Washington’s tax is preempted by federal law. Taxpayers’ petitions are denied.

An electrician protests reclassification of sales from wholesale to retail where valid reseller permit information was not available. Because no records were provided to substantiate any additional wholesale sales, we sustain the assessment and deny the Taxpayer’s petition.

The managing member of a now defunct restaurant and lounge protests a TFAA against her, stating that the amount assessed against the defunct business was in error. We conclude that Taxpayer is responsible for the LLC’s collected and unremitted retail sales tax and may not challenge [the amount assessed against] the defunct business. Accordingly, we affirm the assessment.

The owner of a now defunct used car dealership appeals a TFAA on the basis that he was not responsible for the collection and payment of trust fund amounts and had no control over trust fund amounts. Petition denied.

A seller of liquor and wine appeals the assessment of service and other activities B&O tax on grounds that it relied on advice from the Department in not reporting its commission income. Taxpayer also appeals the assessment of spirits sales tax on grounds that Audit erred by not deducting the 17 percent LCB fee from the measure of the tax and assessing the tax on beverages with less than 37% alcohol content. We deny the petition.

A taxpayer appeals a letter ruling wherein the Department instructed the taxpayer that its sales constitute sales of prewritten computer software subject to Retailing B&O tax and retail sales tax. As set forth below, we conclude that the correct taxation classification of a particular sale is dependent on the elements of the transaction and how those elements are billed to the customer. The letter ruling issued to Taxpayer is modified accordingly.

Taxpayer objects to Department’s assessment of retail sales tax on the full contract price of a home it built for its corporate president and his wife, and further asserts that the assessment did not take into consideration all amounts of retail sales taxes that it paid to it its vendors and subcontractors. The assessment is upheld.

The chairman of a defunct nonprofit corporation petitions for cancellation of his TFAA, challenging the accuracy of the underlying corporate assessment that was never appealed. The petition is denied.

A company that claimed a B&O tax credit, but failed to timely submit the required annual tax incentive survey, appeals the denial of its request for an extension to file the survey on the basis that notification of the survey was mailed to the incorrect office and not timely routed to [the] person responsible for filing the survey and the company’s record of timely filing and paying excise taxes. Petition denied.

[Taxpayer] appeals the assessment of service and other activities B&O tax on payments received for allowing a related entity to use real property and improvements located at [the Port]. The Department issued the assessment based on its opinion that the related entity’s use of the property and improvements constituted a taxable license to use real estate. Taxpayer contends the use constituted the tax-exempt rental of real estate . . . . We deny Taxpayer’s petition . . . .

A Washington manufacturer, retailer, and wholesaler of pet supplies objects to the assessment of retailing B&O tax and retail sales taxes on its sales to out of state consumers and to other pet supply stores and retailers. We uphold the assessment.

[A technical] publication services company protests B&O tax on the grounds that none of its income should be attributed to Washington under RCW 82.04.462. The petition is denied.

A syrup manufacturer protests a syrup tax assessment alleging that it is not required to collect the syrup tax for sales to the federal government . . . in Washington. Taxpayer also contests the wholesaling B&O tax assessment arguing that it should be allowed to deduct from its gross income as volume discounts certain payments to its customers. We deny . . . the petition.

Taxpayer, the sole corporate officer of a defunct corporation, appeals a TFAA. Because we find that Taxpayer was the chief executive and chief financial officer during the time the trust fund liability accrued, the TFAA is sustained and Taxpayer’s petition is denied.

[Taxpayer] protests an assessment of deferred sales tax on charges for a water line reconstruction and for a paved section in a parking lot, claiming that the purchases qualify for the public road construction retail sales tax exception under RCW 82.04.050(10). In addition, Taxpayer claims that the Department is estopped from assessing the tax because the Department issued it a certificate stating that all taxes are paid in full. We grant the petition in part and deny in part.

The taxpayer objects to the assessment of Retailing B&O tax and retail sales tax for delivery charges it paid to third-party shippers and later billed back to buyers of its equipment. We determine that Taxpayer does not show it had no liability, either primarily or secondarily, for the delivery charges. Taxpayer’s petition is denied

Taxpayer derives income from the sale of garden supplies. Taxpayer protests the retailing B&O and retail sales tax assessed on Washington sales based on a claimed lack of nexus. Taxpayer also protests a late-payment penalty assessed on the late payment of two assessments based on a delay in receiving the assessments. Taxpayer’s petition is denied.

A towing company disputes the results of an audit on the basis that its records were not correct at the time of the audit and it is in the process of reconciling income to produce correct records. Petition denied

A recipient of [a tax deferral under] the rural county sales and use tax deferral program (“Rural County Deferral”) protests the Department of Revenue’s (“Department”) assessment of the amount of the tax deferral, claiming that it is not liable for the tax because the sale of the real property where the tax deferred activity took place [was] under threat of eminent domain, or that the governmental entity that threatened eminent domain and purchased the property is the recipient’s successor, and is liable for the deferral. We deny the petition.

A flagging services company (“Taxpayer”) protests the Department of Revenue’s (“Department”) reclassification of income from the public road construction and wholesaling business and occupation (“B&O”) tax classifications to the service & other activities B&O tax classification. We deny the petition.

Taxpayer, the controller of a defunct corporation, appeals a trust fund accountability assessment (TFAA). Because we find that the Taxpayer held himself out to be and was acting in the capacity of a chief financial officer at the time a portion of the trust fund liability accrued, the assessment is sustained with respect to the unpaid sales taxes that accrued while Taxpayer was acting as chief financial officer. Taxpayer is not liable for the unpaid sales taxes that accrued after his position was terminated. Taxpayer’s petition is granted in part and denied in part.

An out-of-state property management company (Taxpayer) protests the Department’s denial of a refund request in which Taxpayer claimed (1) it should have been allowed to exclude from its measure of business and occupation (B&O) tax amounts that it received from its customers to cover Taxpayer’s own payroll expenses, and (2) protests the classification of a portion of [its] income to retail sales. We deny Taxpayer’s petition

A heating and air conditioning company objects to the disallowance of “discounts” booked in the “Finance Company Buy Downs” and “Coupons and Discounts” accounts that reflected the short pay of customer invoices by customers’ retail financing companies. Taxpayer’s petition is denied.

[Taxpayers] appeal a real estate excise tax (REET) assessment, claiming they transferred their interest in the subject real property as a tax-exempt gift. The Department of Revenue (the Department) assessed REET based on the value of Taxpayers’ relief of debt following the transfer. We uphold the assessment.

Taxpayers protest the service and other activities business and occupation (“B&O”) tax assessed on amounts collected from franchisees for local and national advertising. We conclude that the amounts are received for providing advertising services, and are not excludable from tax under WAC 458-20-111 (“Rule 111”). Taxpayer’s petition is denied.

A hospital appeals the assessment of use tax and/or deferred sales tax on purchases of various medical equipment and other medical items in cases where it had not paid retail sales tax at the time of purchase from the vendors. The Taxpayer asserts that a list of 45 purchases represent items that are tax exempt under various statutes for medical items, or exempt as a service. As the Taxpayer’s claims of exemption are mainly based on statutes that were amended before the audit period, and an outdated administrative rule, the appeal is denied except as to eight specified items.

An out-of-state student loan servicer (Taxpayer) appeals a tax assessment, contending that because it has no physical presence and does not solicit business to establish a market in Washington, it has no nexus with Washington. Taxpayer further contends that the income it received from loan lenders for “servicing” loans cannot constitute “receipts” from Washington. We conclude Taxpayer has adequate nexus with Washington under the Commerce Clause and the Due Process Clause of the U.S. Constitution, and that a portion of Taxpayer’s income from lenders may constitute receipts attributable to Washington, thereby subjecting Taxpayer to taxation in Washington. Taxpayer’s petition is denied.

Taxpayer operates a consulting service that acts as an owner’s representative during the design and construction process of large commercial projects. Taxpayer requested a ruling affirming that it provided a professional service subject to the service and other activities B&O tax and the income could be apportioned. Taxpayer protested the Department’s ruling that it provided services “in respect to construction” that was not apportionable and subject to either the wholesaling B&O tax or retailing B&O and retail sales tax classifications. We grant Taxpayer’s petition.

A taxpayer, who applied for a Voluntary Disclosure Agreement (VDA), protests the imposition of late payment penalties imposed after the Department of Revenue (Department) [cancelled] the VDA.

Two [out of state] nonprofit hospitals seek a refund of business and occupation (B&O) tax paid on . . . Medicaid payments and . . . Children’s Health Insurance Program (CHIP) for medical care provided in Washington. They also seek a refund of B&O tax on medical services that they provided to their employees covered by the hospitals’ self-insurance plans. Because no exclusion applies to payments from . . . Medicaid and CHIP, and the medical services provided to the hospitals’ employees were taxable activities, we deny their petitions.

Two out-of-state companies providing extended warranties to vehicle purchasers in Washington protest a letter ruling that their sales of the warranties were subject to business and occupation (B&O) tax. One of the entities also appeals an assessment of B&O tax on these sales. They claim that their receipts were gross premiums in respect to insurance business upon which a premiums tax was paid. . . . Petitions denied.

A financing company (“Taxpayer”) petitioned for waiver of delinquent and substantial underpayment penalties in an Audit assessment claiming that the late payment of tax resulted from Taxpayer’s reliance on incorrect written instructions contained in a Department of Revenue (the “Department”) form. We deny the petition.

A Taxpayer, acting as a subcontractor on a federal government dock building contract, incorrectly used its reseller permit when making purchases of materials. As a result it did not pay any retail sales tax on this project, and it also did not subsequently pay any use tax. Because the Taxpayer’s basis for requesting a waiver of the reseller permit misuse penalty was that it was unaware of its proper usage in this type of contract, there is no basis under RCW 82.32.291 for waiver of the penalty.

Two shopping malls protest business and occupation (B&O) tax assessed on promotional dues that they collected from their retailers. Because the payments booked as promotional dues were exempt from B&O tax as derived from the rental of real property, we grant the petition.

A Taxpayer, who prepares meals for a fraternity organization at a Washington [educational institution], appeals her retail sales tax refund request denial. Taxpayer argues that income from the services she provides is subject to the service and other activities business and occupation (“B&O”) tax classification and she remitted the retail sales tax in error. We grant the petition and remand the case back to the Taxpayer Account Administration (TAA) for refund of uncollected retail sales tax and an adjustment regarding Taxpayer’s service and other activities B&O tax.

Two affiliated limited liability companies, Taxpayer A and Taxpayer B, operate two restaurants. Taxpayers protest the retail sales tax and retailing business and occupation (B&O) tax assessed by the Department. Taxpayers contend that its records do not accurately reflect (1) the amount of retail sales tax actually collected from their customers and (2) the amount of Taxpayers’ actual gross proceeds of sales. Taxpayers also contend that they are entitled to a larger cash and trade discount deduction than allowed by the Department. We [deny] Taxpayer A’s petition. We deny Taxpayer B’s petition.

The Taxpayer, an [out-of-state] manufacturer and wholesaler of prefabricated buildings, protests the assessment of wholesaling B&O tax on sales made to Washington State customers.

A non-profit, collective medical garden appeals a ruling that it must collect retail sales tax when it sells medical marijuana to patients who present written authorization from a health care professional that the patient may benefit from the medical use of cannabis. Because the authorization is not a prescription, the transfer of medical marijuana is not exempt from retail sales tax, and we deny the petition.

A Washington manufacturer of high power semiconductor diode lasers and components appeals a ruling that it is ineligible for the preferential manufacturing B&O tax rate for the manufacture of semiconductor materials, and the retail sales and use tax exemption for gases and chemicals used in the manufacture of semiconductor materials. Taxpayer’s petition is denied for the B&O tax preferential rate, and granted as to the retail sales tax/use tax exemption.

An internet marketing research company challenges Audit’s denial of its several applications for refund, on the basis that the nonclaim period had not run on some claims, that unusual items in a non-statistical block sample should be excluded from the sample, that panelist costs should be treated as representative third party costs, and two refund requests were improperly denied for lack of substantiation. Petition denied.

An out of state corporation that provides payroll and benefits services to a parent corporation, and that reported wages in this state as the employer of record, protests the assessment of B&O tax under the services classification on estimated income, arguing amounts received for payroll and benefits are excluded reimbursements under WAC 458-20-111 (Rule 111). Because the taxpayer did not prove it has solely agent liability to pay the employer obligations, we conclude the amounts received are not excludible reimbursements. The petition is denied.

A state-run community college (Taxpayer) located in . . . Washington, protests a tax assessment of uncollected retail sales tax on sales to purported nonresidents, asserting that its documentation of the nonresident sales substantially complied with the statutory requirements. Taxpayer further challenges written reporting instructions issued by the Department, which instructed Taxpayer to collect retail sales tax from nonresident students on purchases of tangible personal property at Taxpayer’s bookstore. Taxpayer’s petition is denied.

A contractor, engaged in the custom construction of concrete structures, walkways, and roads, challenges an assessment of retail sales tax, retailing business and occupation (B&O) tax on unreported income, and use tax and/or deferred sales tax on construction materials. Because the contractor has not provided records documenting its unreported income or receipts proving it paid retail sales tax on materials used in its public road construction jobs, we deny the petition.

An individual objects to his liability under a trust fund accountability assessment (TFAA), the amount of the assessment, and the additional amount added to it when corporate records became available. The petition is denied.

An out-of-state web hosting company requests that the Department cancel an assessment of service and other activities business and occupation (B&O) tax, interest, and penalties, because it argues that it does not have substantial nexus. We deny Taxpayer’s petition.

A taxpayer engaged in the business of providing sunless tanning services and selling beauty products petitions for correction of assessment, asserting that she should not be assessed sales tax on her sunless tanning services because she did not collect retail sales tax from her customers for those services . . . Taxpayer’s petition is denied

Sellers of firewood, ([Taxpayer A], succeeded by [Taxpayer B], collectively referred to as “Taxpayers”) appeal assessments of retail sales tax, retailing business and occupation (B&O) tax, and the evasion penalty, on grounds that the estimated measure of taxes are unreasonable and they were unaware of their tax liabilities. We deny the petitions.

An LLC owning real property appeals a Real Estate Excise Tax Assessment (REET) on a controlling interest transfer, asserting that assessed value of the property or the selling price of the interest represents the true and fair value of the property in light of a permanent conservation easement, which significantly limits the use of the property. As the assessed value of the property on the county tax rolls reflects the true and fair value of the land under RCW 84.34.060, we conclude this value should have been used. Taxpayer’s petition is granted.

A retailer of tobacco products disputes an assessment of tobacco products tax. The taxpayer’s petition is denied.

The recipient of a trust fund accountability assessment (TFAA) objects to an additional amount added. He alleges that he was not a “responsible individual” because the Department did not assist him in obtaining records from another corporate officer, and was not provided the corporate records when they became available. The petition is denied.

A ship building company claimed improvements and repairs it made to a customer’s vessel were exempt from retail sales tax on the basis that the taxpayer delivered the completed vessel to a nonresident purchaser at a point outside of Washington State. Because the taxpayer failed to meet its burden of proof to show it qualified for the exemption under RCW 82.08.0265, we uphold the assessment and deny taxpayer’s petition.

[Taxpayer] petitions the Department of Revenue (Department) for correction of an assessment for use tax associated with the use, by a nonresident member of the armed forces, of a motor vehicle purchased outside of Washington but registered in Washington. Taxpayer’s petition is denied

Taxpayer operates a bar and derives income from the sale of food and beverages. Taxpayer petitions for correction of assessment of additional retail sales tax and retailing business and occupation (“B&O”) tax on beverage sales where sales tax was not separately stated on sales receipts. Taxpayer’s petition is denied.

Taxpayer, a natural pet food retailer, appeals an assessment of retail sales taxes it over-collected on sales of goods where its point-of-sale system mistakenly charged sales tax on the full retail price of goods sold to customers at a discount. Taxpayer also appeals retail sales tax assessed on manufacturer discounts that Taxpayer deducted from the retail sales price of goods it sold to its customers. Finally, Taxpayer protests the assessment on the grounds that the State of Washington receives a windfall by collecting over-collected sales taxes. Taxpayer’s petition is denied.

Three community solar projects (CSPs) object to a ruling that they must register, report, and possibly pay business and occupation (B&O) tax on incentive payments they receive from public utility districts (PUDs). Because they are engaged in business, the CSPs must register and report the incentive payments as gross income subject to B&O tax. We deny the petitions.

A business performing carpet cleaning and related services for multi-family housing complexes, protests an assessment of retailing business and occupation (B&O) tax and retail sales tax on income from carpet cleaning for water damage, carpet repair, and deck cleaning, asserting the services constitute janitorial services excluded from the definition of “retail sale” pursuant to RCW 82.04.050(2)(d) and WAC 458-20-172. The petition is denied.

A corporation (“Taxpayer”) [petitions for reconsideration of a determination sustaining the assessment of use tax and/or deferred sales tax on] dredging services it purchased for its anaerobic lagoons, because the services are not exempt from [retail sales tax under RCW 82.08.02565] and WAC 458-20-13601 (Rule 13601). . . . [We grant the petition in part.]

A taxpayer engaged in the furniture rental business petitions for reconsideration of a determination remanding the matter to Audit Division for adjustments to taxes arising from the disallowance of retail sales tax exemptions on rentals to Native Americans . . . . Taxpayer’s petition for reconsideration is denied and the post-audit adjustment (PAA) issued by the Audit Division after the remand is affirmed.

A taxpayer that collected and transported hazardous waste from Washington customers to its own hazardous waste disposal site [out-of-state] petitions for reconsideration. The taxpayer requests the Department rule that the costs of certain chemicals and binding reagents it uses to bind and dry hazardous waste before depositing that hazardous waste in its [out-of-state] landfill be allocated to [that state]. Taxpayer’s petition for reconsideration is denied

A truck detailing business appeals an assessment of use tax and/or deferred retail sales tax on its purchase of polishing compound supplies used in performing its detailing services, asserting that the specialty polishing compounds are resold to the customer as part of the detailing service. The taxpayer’s petition is denied.

A limited liability company (LLC) that was assessed retail sales tax, business and occupation (B&O) tax, penalties, and interest, protests the assessment on the grounds that its current owners purchased the LLC from a prior owner during the audit period. The LLC’s current owners claim that they should not be held accountable for periods when the LLC was owned by someone else. Because the LLC was engaged in business as a separate legal entity for the entire audit period, we hold that the change in ownership of the LLC is immaterial, and that the LLC owes the tax, penalties, and interest that it accrued through its business activities. Taxpayer’s petition is denied.

A private golf club (Taxpayer) appeals the Department of Revenue’s (Department’s) estimated assessment of deductible member dues. We grant the petition in part, and remand to the Department’s Audit Division for adjustments consistent with this determination.

An out-of-state corporation (Taxpayer) that reported wages in Washington as the employer of record for film crews working in Washington protests the assessment of service and other activities business and occupation (B&O) tax on Taxpayer’s full gross income, arguing that amounts it received for payroll and benefits from its Washington client are excludable reimbursements under WAC 458-20-111. Because Taxpayer failed to prove that it was not personally liable for the payment of payroll and benefits expenses associated with the film crews, we conclude those expenses were not excludable under WAC 458-20-111. The petition is denied.

A Taxpayer appeals a letter ruling classifying the transfer of real property from a personal residence trust to the grantor as a sale subject to Real Estate Excise Tax. Because there was consideration for the transfer we affirm the letter ruling. The Taxpayer’s petition is denied.

A nutritional products company disputes an assessment of retail sales tax resulting, in part, from the classification of its goji juice as “dietary supplements” and asserts its goji juice-based products are “food and food ingredients” exempt from retail sales tax because its products are not required to be labeled as a dietary supplement. Petition denied.

Taxpayer protests the Hazardous Substance Tax (“HST”) and Petroleum Products Tax (“PPT”) assessed on aviation fuel consumed in Washington, which was either purchased within Washington, or purchased elsewhere and brought into Washington in the fuel tanks of Taxpayer’s aircraft. Taxpayer maintained that it did not owe the tax because it was not the first possessor of the fuel. We sustain the tax assessed.

A software development company (Taxpayer) that serves certain customers in the aerospace industry protests the Audit Division’s reclassification of its income from various classifications to the service and other activities business and occupation (B&O) tax classification. Taxpayer argues that its business activity is properly classified under one of the preferential tax rates offered for certain aerospace-related activities. Taxpayer further protests the Audit Division’s assessment of use tax and/or deferred sales tax on certain purchases of computers, arguing that those purchases are exempt from retail sales tax and use tax under an aerospace-related exemption. We deny Taxpayer’s petition.

Taxpayer, an interest charge domestic international sales corporation (“DISC”) petitions for a refund of service and other activities business and occupation (“B&O”) tax paid for the period January 1, 2008, through May 31, 2010, claiming that it is entitled to apportion its commission income outside of Washington. Taxpayer’s petition is denied.

A seller of skydiving-related products and services (Taxpayer) appeals the reclassification of video sales from the service and other activities business and occupation (B&O) tax classification to the retailing B&O tax classification and the assessment of retail sales tax on these sales. Taxpayer also appeals instructions that it must begin collecting retail sales tax on sales of tandem skydiving packages and flights to higher elevation. We deny the petition.

Taxpayer, a renter of road signs, requests reconsideration of Determination No. 14-0008, which sustained an assessment of retailing business and occupation (“B&O”) tax and retail sales tax on the first lease payment of equipment rented at a Washington location and subsequently transported to an Oregon job site. Taxpayer’s petition is denied.

A limited liability company engaged in speculative building protests an Audit assessment of deferred sales and/or use tax on certain retail purchases. Taxpayer contends that certain purchases were exempt from retail sales tax because they were purchases either for the U.S. government or for public road construction. Taxpayer also contends that certain amounts it paid for mosaic tile work were for design services, and therefore exempt from retail sales tax. We deny the petition.

A provider of prescription benefit management (PBM) services (Taxpayer) seeks correction of a letter ruling on grounds that its measure of business and occupation (B&O) tax does not include receipts that it uses to pay pharmacies and that the Department is bound by a contrary letter ruling issued to its predecessor. We deny the petition.

A manufacturer appeals the assessment of business and occupation (B&O) tax on the value of by-product it sells to recycling companies. We deny the petition.

An out-of-state web development company (Taxpayer) appeals a letter ruling finding that Taxpayer established nexus in Washington in 2013 because Taxpayer had payroll of more than $53,000 in Washington during that year. Taxpayer argues that a portion of the amount of payroll it paid in 2013 was attributable to 2012. Taxpayer also argues for a waiver of any tax liability because its payroll was only slightly above the $53,000 threshold. We deny Taxpayer’s petition.

A motor carrier protests the assessment of use tax on trucks and trailers (“rolling stock”) that no longer qualified for a use tax exemption and contends the assessment is barred by RCW 82.32.050(3), which provides a statutory limitation on the time period that the Department of Revenue (“Department”) can issue an assessment. Taxpayer’s petition is granted.

A seller of loose tobacco, tubes, and the use of its facilities to roll cigarettes (Taxpayer) petitions for reconsideration of Det. No. 14-0006 on grounds that its purchase of roll-your-own cigarette machines is exempt from use/deferred sales tax as machinery and equipment (M&E) used in a manufacturing operation. We deny the petition.

A contractor specializing in ceiling construction appeals an assessment of retail sales tax, retailing and wholesaling business and occupation (“B&O”) tax, penalties, and interest, on the basis that it worked as a sub-contractor on several jobs and has been unable to secure resale certificates and/or reseller permits because many general contractors have closed their businesses, monetary gifts from a relative were improperly assessed retailing B&O and retail sales tax, and it did its best in reporting and paying taxes. We deny the petition.

A retailer appeals the assessment of retail sales tax on grounds that the measure of tax includes sales to qualified nonresidents. We deny the petition.

An individual petitions for refund of sales tax paid on a geothermal heat pump on the grounds that the heat pump is machinery and equipment used directly in generating electricity using geothermal resources. The petition is denied.

A business objects to the assessment of tax for custom construction activities asserting the company was a non-operating corporation and did not engage in business. As the Taxpayer has not provided any records or information to contest the audit, we sustain the assessment as issued.

A Washington public port district appeals an assessment of public utility tax on its dockage revenue, asserting that it correctly reported its dockage revenue from charges for vessel berthing for the purpose of moving goods and commodities in waterborne interstate or foreign commerce, under the stevedoring business and occupation (B&O) tax classification, pursuant to RCW 82.04.260(7). The taxpayer’s petition is granted.

[Taxpayer] appeals the assessment of use tax and/or deferred sales tax, plus penalties and interest, resulting from sales reclassified from wholesaling to government contracting where Taxpayer received resale certificates or reseller permits from prime contractors, and where Taxpayer did not understand its tax liability as a government contractor. Taxpayer’s petition is denied in part but remanded for possible adjustment based on additional documents provided on appeal. [Taxpayer’s petition is denied in part and remanded in part.]

General contractor protests retail sales tax imposed on amounts paid to subcontractors for which sales tax was included in the contract price. The petition is denied in part and remanded in part.

A corporation (“Taxpayer”) protests the disallowed deductions it took from the gross income it received for the services it provided to its affiliated entities, claiming the deductions were reimbursements for advances under WAC 458-20-111 (“Rule 111”). We deny the petition.

A limited liability company (LLC) protests the Department of Revenue’s (Department) use of an appraised value to determine the selling price of real property owned by the LLC for real estate excise tax (REET) purposes. The LLC also protests the assessment of a delinquency penalty for failing to report the REET-taxable controlling interest taxable transfer until six months after the date of transfer. Taxpayer’s petition . . . is denied.

A construction company petitions for reconsideration of a determination affirming an assessment of tax for failing to report tax on outstanding invoices when it converted from cash to accrual method of accounting. The Taxpayer asserts tax was remitted on a number of the invoices at issue. Because the Taxpayer has not been able to substantiate tax was remitted on the invoices at issue, we sustain the assessment as issued and deny the Taxpayer’s petition.

A business that provides exterior maintenance services for commercial building owners seeks a refund of retail sales tax and retailing business and occupation (B&O) tax, asserting that its services should not be classified as a retailing activity because they constitute janitorial services taxable as a service activity. The taxpayer’s petition is denied.

A seller of floral greenery and seasonal wreaths and garland (Taxpayer) requests a correction of use tax and/or deferred sales tax assessed on various purchases of machinery and equipment, and on payments for repairs on certain machinery and equipment. Taxpayer claims that the purchases at issue qualify for the machinery and equipment (M&E) exemption from retail sales tax and use tax. We deny Taxpayer’s petition.

Affiliated entities (“Taxpayers”) that sell new and used video games, video game controllers, video game consoles, and other miscellaneous items protest retail sales tax and retailing business and occupation (B&O) tax assessed on disallowed deductions it had claimed for like kind trade-ins. We deny the petitions.

Following the federal government’s seizure of cigarettes from a residence in Washington, the Department of Revenue (“Department”) assessed Taxpayer cigarette tax, and a ten-dollar per-pack penalty on those cigarettes. Taxpayer objects to the assessment. We deny the petition.

An out-of-state company protests the denial of a request for refund of Business and Occupation (B&O) tax for the period of October 1, 2007 through May 31, 2010, because it did not maintain a place of business in Washington during that time. We affirm the denial, because until 2006 the company employed a sales representative who visited Washington on its behalf, establishing nexus under RCW 82.06.067 and WAC 458-20-194.

A mutual fund advisor appeals a ruling that its gross income could not be taxed at the preferential rate for international [investment management] services. When the proportion of the advisor’s income from investment management services to total income exceeds 50%, and 10% of their income comes from qualified clients, the advisor can pay business and occupation (B&O) tax on its income from investment management services multiplied by the preferential rate. We revise the ruling subject to verification.

A taxpayer that charged customers to play in its basketball tournaments and leagues disputes the assessment of additional tax, penalties, and interest that resulted from reclassification of taxpayer’s tournament and league revenue from the Service & Other Activities business and occupation (B&O) tax classification to the Retailing B&O tax classification. The taxpayer argues that RCW 82.04.050 and WAC 458-20-183 are unclear on their faces, that the taxpayer reasonably relied on the substantive tax advice of its professional accountant, and that Taxpayer has always filed its returns timely and accurately. We deny the petition.

A joint owner of real estate quitclaimed his one-half interest in the real estate to the other owner. Prior to the transfer the grantor was paying 50% of the mortgage payment but, after the transfer, the grantee began paying 100% of the mortgage payment on the property. The grantor petitions for refund of real estate excise tax (REET) paid on 50% of the outstanding debt on the property at the time of transfer. We deny the petition for refund, because the grantee relieved the grantor of his monthly mortgage payment, which constitutes consideration.

The taxpayer, a building contractor on an active nonreporting status, collected retail sales tax from customers and did not remit it for several years. It appeals the 50% tax evasion penalty imposed on the amount of retail sales tax it collected but did not remit. Because the failure to remit these retail sales tax trust funds was intentional, we uphold the penalty.

Public hospital district protests future reporting instructions and denial of refund request on the grounds that the Department of Revenue (the “Department”) improperly calculated its leasehold excise tax credit under RCW 82.29A.120. The petition is denied

A company operating a restaurant protests an adjusted assessment of tax for unreported cash sales, asserting that all sales were reported. We affirm the adjusted assessment because business records were insufficient and the Audit Division reasonably exercised its authority to arrive at an estimate of cash sales. We deny the Taxpayer’s petition.

Three LLCs that transferred real property for consideration that included the grantees taking the property subject to non-recourse mortgages, petition for reconsideration of a determination sustaining REET (Real Estate Excise Tax) assessed on the non-recourse debt included in the sales price. Because the WAC 458-61A-103(2) REET exemption applies only to transfers involving solely non-recourse debt, and no other consideration, we affirm the assessment of additional REET.

A taxpayer petitions for the correction of a real estate excise tax (REET) assessment claiming that the change in ownership in a limited liability company (LLC), which resulted from the extinguishment of a fifty percent owner’s membership interest under the terms of the LLC agreement due to the member’s insolvency, did not constitute a “transfer” or “acquisition” of a controlling interest in the LLC and that a REET-taxable transaction did not take place. Taxpayer’s petition is denied.

A motor vehicle dealer protests an assessment of retail sales tax, asserting that it met the documentation requirements for tax-exempt sales of motor vehicles for use outside the state, set forth in RCW 82.08.0264 and WAC 458-20-177 (Rule 177), by providing proof of motor vehicle registration in the nonresident buyer’s state of residence subsequent to the sale. The taxpayer’s petition is denied.

Two affiliated limited liability companies (Taxpayers) engage in construction services. Taxpayers protest the Department of Revenue’s (Department) disallowance of bad debt deductions taken against retailing business and occupation (B&O) tax and retail sales tax. Taxpayers argue that they were eligible to claim the bad debt deductions for federal income tax purposes and, therefore, qualified for the deduction on their Washington combined excise tax returns. We disagree and deny Taxpayers’ petition accordingly.

A taxpayer appeals a successorship assessment after it assumed the debts of an insolvent company in exchange for most of the company’s assets. Because the taxpayer was a successor of the company, it was liable for the company’s unpaid taxes. We deny the petition.

A Washington-based firm providing engineering and repair services on [tangible personal property] requests a refund of service and other activities business and occupation (“B&O”) tax, interest, and additional assessment penalties, contending its income should be apportioned and that it had no notice of the change in nexus law. We deny the petition.

A taxpayer in the business of fumigating shipping cargo containers and their contents for extermination and pest control purposes appeals an assessment reclassifying its gross income from the retailing B&O tax classification to the services and other activities tax classification. We affirm the assessment.

Cosmetology schools appeal assessments of service and other activities business and occupation (B&O) tax on tuition fee income, contending that the income is deductible from gross income under RCW 82.04.4282 and WAC 458-20-167. The taxpayers’ petitions are denied

Out-of-state nutritional supplement manufacturer and wholesaler protests business and occupation (“B&O”) tax imposed on the grounds that [the buyer does not receive the goods] in Washington. The petition is granted.

Taxpayer, a federal records management contractor, protests the assessment of Business & Occupation (B&O) tax on income earned in Washington State where the work was performed by a subcontractor. Because the advice that it did not owe tax came from the subcontractor and a federal agency, and not the Department of Revenue, the Taxpayer owes the taxes as assessed.

A company (“Taxpayer”) primarily engaged in the business of collecting construction, demolition, and land clearing debris (CDL) and hauling it to third-party recycling facilities petitions for Executive Reconsideration of a determination concluding that: 1) Taxpayer’s income from the collection and hauling of CDL to third-party recycling facilities for compensation is subject to the Service & Other Activities business and occupation (B&O) tax classification, rather than the Motor Transportation or Urban Transportation public utility tax (PUT) classification; 2) Taxpayer’s rental of a trackhoe for use at its recycling facility does not qualify for the manufacturer’s machinery and equipment retail sales tax exemption (M&E exemption); and 3) Taxpayer failed to establish that it paid retail sales tax on recycling containers at the time of purchase. Taxpayer’s petition is granted with regard to the first issue, but denied as to the remaining issues; however, with regard to the third issue, the Department will adjust the measure of the retail sales tax on the recycling containers to reflect the actual purchase price.

A timeshare association management company petitions for the correction of an assessment of service and other activities business and occupation (B&O) tax collected on housekeeping fees it charged to timeshare owners after their stay to clean the residences before the next timeshare owner takes possession of the unit. We hold that only the fees collected for the cleaning of common areas are deductible from Taxpayer’s B&O tax base, which means that the housekeeping fees collected for the cleaning of the residences themselves are not deductible. Taxpayer’s petition is denied

Restaurants protest assessment of retail sales tax on . . . purchases of charcoal used to cook meat and vegetables . . . The petition is denied in part, granted in part, and remanded in part.

Following the federal government’s seizure of cigarettes from a storage facility in Washington, the Department of Revenue (Department) assessed Taxpayer cigarette tax, and a ten dollar per pack penalty on those cigarettes. Taxpayer objects to the assessment. We deny the petition.

A collector of rare coins appeals a tax ruling that coins purchased for their value as collector items are subject to retail sales tax on the selling price that exceeds the face value of the currency. The coin collector asserts that the sales of rare coins are sales of monetized bullion and exempt from retail sales tax pursuant to RCW 82.04.062 and WAC 458-20-248. Petition granted.

A Washington contractor challenges an audit assessment, arguing that retail sales tax was not due on construction it performed for [a State Institution] and a nonprofit charitable organization. It further asserts that it is entitled to a credit for amounts it paid under another business entity’s Uniform Business Identifier (UBI), and additionally requests a waiver of interest and penalties on the assessment. Taxpayer’s petition is denied.

Telecommunications company protests retail sales tax imposed on its leases of dark fiber on the grounds that (i) they are not “competitive telephone services” under RCW 82.04.065; or, alternatively, (ii) they are leases of real property not subject to retail sales tax. The petition is denied as to these issues. . . .

A taxpayer protests the Audit Division (Audit) of the Department of Revenue’s (Department) revisions to an Audit assessment to correct a mathematical error found in the audit workbook. Because the revised assessment was less than the amount originally assessed, we conclude Audit was not barred from correcting the error. We deny the petition.

[Taxpayer] appeals the assessment of real estate excise tax (REET) on the quitclaim transfer of a partial interest in real property. Taxpayer contends the transfer qualifies for the gift exemption. Taxpayer’s petition is denied.

Taxpayer appeals the assessment of service Business and Occupation (B&O) tax on receipts from member licensees to cover local and national advertising expenses, contending that the receipts are [excludable] reimbursements for cooperative advertising expenses as described . . . . Taxpayer’s petition is denied.

An Internet marketing business appeals a tax assessment asserting that the assessment should be waived because, when it reported and paid its excise taxes, it relied on oral advice from a Department representative regarding the proper application of the apportionment methodology set forth in WAC 458-20-19402 (Rule 19402). The taxpayer’s petition is denied.

An out-of-state manufacturer and seller of custom sportswear protests the determination that its contacts with Washington solely through visits to trade shows are sufficient to establish taxing nexus. We affirm the existence of taxing nexus. Taxpayer’s petition is denied.

A business selling school themed items, disputes the assessment of additional retail sales tax and retailing business and occupation (B&O), asserting that the assessment both overstates the measure of underreported income and also mischaracterizes commission income as retail sales. The Taxpayer has not provided sufficient records to show that the assessment is in error. The Taxpayer’s petition is denied.

A hotel disputes use tax assessed on the purchase price of food and beverages used to provide complimentary meals to its guests. We conditionally grant the petition.

A vendor of medical equipment protests the assessment of retail sales tax on its sales of programmable drug infusion pumps. Because the pumps were reused as durable medical equipment, and not worn in or on the patient’s body as a prosthetic device, their sale was not exempt under current Washington statutes. Petition denied.

A corporation (Taxpayer) that purchases raw logs and then further cuts those logs to specific specifications and grade qualities, contends that its gross income from such activity should be taxable under the preferential tax rate for manufacturing and selling of timber products under RCW 82.04.260(12) because its activity qualifies as “manufacturing.” We deny the petition in part and grant in part.

Taxpayer, a club that offers live music and dining, petitions for the correction of assessment of an assessment of retail sales tax, retailing business and occupation (“B&O”) tax, and deferred sales tax. We hold that Taxpayer is required to charge retail sales tax on its mandatory gratuities, is liable for deferred sales tax on construction services related to a remodel of its club, and is responsible to remit over-collected retail sales tax it collected in error. Taxpayer’s petition is denied.

Taxpayer petitions the Washington Department of Revenue (Department) to reverse the decision of the Department’s Taxpayer Account Administration (TAA) denying Taxpayer a business and occupation (B&O) tax refund for the difference between the wholesaling B&O tax rate it paid for years 2008 and 2009 and the preferential aerospace manufacturer’s rate. Taxpayer’s petition for refund is denied.

A person who digitally manipulates photographs for commercial customers to be used for online viewing protests the Department of Revenue’s Taxpayer Account Administration Division’s instructions that he must charge his customers retail sales tax. We conclude that Taxpayer is providing a retail activity taxable under the retailing classification of the B&O tax, but is not required to charge and collect retail sales tax for sales when customers provide Digital Products and Remote Access Software Exemption Certificates.

A Washington real estate broker and property manager (Taxpayer) that provides maintenance services for others’ property appeals the assessment of service and other activities business and occupation (B&O) tax on grounds that the measure of tax includes commissions, reimbursements from its associates for business expenses, and income that it claims was duplicated in general ledgers. Taxpayer’s petition is denied

A contracting company argues that it was not a successor because it purchased its predecessor’s assets from the Internal Revenue Service (IRS). We uphold the Notice of Successorship.

Taxpayer appeals the assessment of the evasion penalty assessed as a result of the Washington Department of Revenue’s (Department) audit of his Washington business activity. Taxpayer’s petition is denied.

Taxpayer, a yacht broker from California, is in the business of manufacturing and selling seagoing vessels. Taxpayer sold a yacht to a Washington resident and delivered the yacht to the buyer three miles off the coast of Port Townsend, Washington at or near coordinates N 48° 13’ 36” W 122° 3’ 12”. Taxpayer disputes the retail sales tax assessed against it by the Department of Revenue’s Audit Division, claiming that it sold the yacht outside the borders of the State of Washington. We affirm the assessment and deny the Taxpayer’s petition.

A farm that grows potatoes seeks a retail sales tax and use tax exemption for replacement parts and labor for equipment in its cleaning shed and for its forklifts. We deny the petition.

A taxpayer petitions for reconsideration of a determination holding that the department can assess additional use tax on motor vehicles when the value of the vehicles recorded in the taxpayer’s books, records, and federal depreciation schedules was higher than the value reported to the Department of Licensing when the vehicles were licensed. Taxpayer’s petition for reconsideration is denied.

Taxpayer that licenses copyrighted television programs to cable companies, protests Audit’s reclassification of advertising income from the radio or television broadcasting classification to the service and other business activities classification. We conclude the taxpayer is not a television broadcaster and deny the petition.

A Washington business that leases charter vessels for use both within and outside of Washington appeals an assessment of retail sales tax on its sales of leased charter vessels, and seeks waiver of the assessment based on its lack of awareness of the requirement that it source those sales to the Washington location where the charter vessels are received by the purchaser. The taxpayer’s petition is denied.

Indoor playground operator protests retail sales tax and retailing business and occupation tax on the grounds that it does not provide amusement and recreation services. The petition is denied.

Taxpayer asks for a refund of tax, interest, and penalties paid following the Department of Revenue’s (Department) audit of Taxpayer’s business records and state excise tax returns. Taxpayer’s petition for refund is denied.

Taxpayers petition for correction of an assessment in which the Department of Revenue (Department) reclassified sales from the Wholesaling Business & Occupation (B&O) tax classification to the Retailing B&O tax classification and assessed retail sales tax. Taxpayers’ petition is denied.

The taxpayer appeals the denial of a petition for refund of real estate excise tax (REET), asserting that the selling price for measuring REET should be reduced to reflect the cash equivalency value of the amount of a promissory note given as partial consideration for the transfer. Appeal petition denied.

Health care providers appeal the denials of their requests for refund of service and other activities business and occupation (B&O) tax paid on receipts from insurance carriers who participate in the Federal Employee Health Benefits (FEHB), Medicare Advantage (MA), and TRICARE, federal health insurance programs, asserting the tax is preempted by federal law. The taxpayers’ petitions are denied.

[Taxpayer] seeks reconsideration of a determination that denied Taxpayer’s request for refund of service and other activities business and occupation (“B&O”) tax paid on payments received from a foundation. Taxpayer’s petition for reconsideration is denied, based on a conclusion that the payments received were to further a business purpose and not gratuitous.

A real estate brokerage appeals service and other business activities business and occupation (“B&O”) tax assessed on amounts it received from its associate brokers as payment for their share of miscellaneous office expenses. Taxpayer’s petition is denied in part and granted in part.

A real estate development limited liability company (“LLC”) assessed real estate excise tax (“REET”) in a controlling interest transfer disputes the measure of tax for one parcel of real property and asserts the county assessor’s value is not the true and fair value of such parcel. Petition denied.

Registered investment advisory firm protests the denial of its refund claim and contends that it is entitled to the lower business and occupation (“B&O”) tax rate provided for “international investment management services” under RCW 82.04.290. Taxpayer’s petition is granted in part and remanded in part.

A nonprofit hospital petitions for reconsideration of Determination No. 13-0198 (Determination), which affirmed the Department of Revenue’s denial of a refund of business and occupation (B&O) taxes it paid on revenues it received for providing medical services to employees under its employee medical benefit plan, and which sustained the B&O tax assessed on amounts the hospital excluded from its gross income as alleged discounts to its employees. We deny the hospital’s petition for reconsideration.

Taxpayer leases digital equipment to movie theatres and also receives income in the form of virtual print fees from contracted movie distributors each time that distributor’s movie is booked for showing on a theatre screen equipped with Taxpayer’s leased digital equipment. Taxpayer protests the Department’s reclassification of the income Taxpayer received from the virtual print fees from the retailing and the wholesaling business and occupation (B&O) tax classification to the service and other activities B&O tax classification. Further, although Taxpayer reported the VPFs under retailing, it now argues that the fees are properly taxable under the income from royalties B&O tax classification. We affirm the reclassification to the service and other business activities B&O tax classification and deny Taxpayer’s petition.

A real estate development limited liability company (“LLC”) assessed real estate excise tax (“REET”) in a controlling interest transfer disputes the measure of tax for one parcel of real property and asserts the county assessor’s value is not the true and fair value of such parcel. Petition denied.

A motor carrier protests the disallowance of interstate deductions taken on revenue related to the transportation of shipments the motor carrier picked up at various Washington ports and delivered to Washington locations. We sustain the assessment.

Hotel management company protests assessment of business and occupation (“B&O”) tax on the grounds that employee wages paid by a hotel owner to a professional employer organization (i) cannot be taxable to the management company; or (ii) are excludable under WAC 458-20-111 as a pass-through payment. The management company also claims it is entitled to a deduction under RCW 82.04.540. The petition is denied.

A limited liability company (Taxpayer) that provides hunting guide services to customers for a flat fee disputes the Department of Revenue’s (Revenue’s) reclassification of its revenue from the service and other activities business and occupation (B&O) tax classification to the retailing B&O tax classification, claiming that its services amount to instructional lessons. We deny the petition.

A chiropractor protests the assessment of retail sales tax on sales of dietary supplements to patients, contending the sales are exempt from retail sales tax under RCW 82.08.925. Because chiropractors are not authorized under Washington law to prescribe drugs, we conclude the exemption does not apply and deny the petition.

Hotel management companies protest imposition of tax on the grounds that employee wages paid by hotel owners to a payroll processing company (i) are not gross income to the management companies, and (ii) are excludable under WAC 458-20-111. The petitions are denied.

Two affiliated corporations, conducting research in Washington, protest the denial of a portion of high tech credits they claimed. Because the corporations failed to file surveys for the year in which the credits were claimed, and both corporations claimed the credit for the same research, we deny their petitions.

Taxpayer, a venue management, marketing, and development company, petitions for an adjustment of business and occupation (“B&O”) tax assessed on amounts paid to facility personnel and related costs incurred in the course of managing an event facility. These expenses were paid directly from the “Facility Operating Account” of the public facility district (“PFD”) that contracted with Taxpayer to manage a facility on its behalf. Taxpayer argues that B&O tax does not apply because: (1) no value proceeded or accrued to Taxpayer from the payments to facility personnel, and therefore the amounts cannot be considered “gross income of the business;” (2) even if such payments are valid consideration, the amounts paid from the Facility Operating Account qualify for [exclusion from B&O tax] under WAC 458-20-111 (“Rule 111”); and (3) amounts paid to on-site personnel out of the Facility Operating Account are exempt from B&O tax under RCW 82.04.394 for periods prior to June 1, 2010. The Department denies Taxpayer’s petition.

A dentistry practice (Taxpayer) argues that paying a tax assessment would be an economic hardship. We deny Taxpayer’s petition.

A personal representative requests a refund of real estate excise tax (“REET”) paid with respect to the estate’s sale of the deceased’s residence to an unrelated third party because the net proceeds from the sale were distributed to beneficiaries pursuant to the deceased’s will. Petition denied.

A retail store chain petitions for the correction of assessment of retail sales tax, assessed as a result of the Department of Revenue (Department) disallowing bad debt deductions based on defaulted transactions made by customers on the retailer’s private label credit card. The retailer sold its credit card accounts to a financing institution that now runs the retailer’s private label credit card program. Cardholder indebtedness on the books of the financial institution is taken into account in calculating the service fee the retailer receives from the financial institution. However, the retailer is no longer the owner of the credit card accounts and ultimately the indebtedness for credit card charges, including the sales tax, is owed by the cardholder to the bank. Since the financial loss incurred by the retailer is in the form of reduced service income and does not actually reflect uncollected retail sales tax, the retailer does not qualify for the refund provided in RCW 82.08.037. The petition is denied.

The Taxpayer, a bank, appeals the assessment of Business and Occupation Tax on its interest income received from the government sponsored enterprises Fannie Mae and Freddie Mac. Because these payments do not represent tax exempt direct obligations of the federal government, we affirm the assessment.

A used car dealership protests the assessment of use tax on executive use of dealership vehicles. As the Taxpayer does not have a recent model vehicle licensed in its name as required by WAC 458-20-132, we conclude that it is subject to use tax on use of an executive vehicle and sustain the tax assessed. The Taxpayer’s petition is denied.

A moving and storage company petitions for correction of assessment of tax on a number of issues, including . . . whether it is required to collect retail sales tax on packing materials it sells to its customers, whether it owes use tax on packing materials it uses in providing packing services to its customer, whether the proceeds it received from its landlord for prematurely breaching a lease agreement, and future instructions on whether to report retailing business and occupation (“B&O”) tax on auction sales of items abandoned by customers who defaulted on their storage payments, and the proper documentation required to be eligible for the intrastate carrier exemption on purchases of motor vehicles and trailers. Taxpayer’s petition is granted with respect to the proceeds it received from its landlord for the breach of a lease agreement, but is denied on all other issues.

A landscaping company objects to the imposition of the evasion penalty for its failure to remit retail sales taxes collected from its clients. We uphold the penalty.

A perishable meat wholesaler (“Taxpayer”) protested the slaughtering/breaking/processing perishable meat wholesaling Business and Occupation (B&O) tax assessed on its sales of perishable meat to its affiliate claiming that it purchased the meat as the affiliate’s agent and the amounts received were not subject to wholesaling B&O tax. Taxpayer further asserts that the Department of Revenue (the “Department”) is estopped from assessing the wholesaling tax on such sales because the Department in a prior audit failed to detect it was not reporting these sales. We deny the petition.

[Taxpayer] petitions for reversal of a Letter Ruling, issued by the Department of Revenue’s (Department) Taxpayer Account Administration (TAA) division, notifying Taxpayer that it does not qualify for a 2011 high technology business and occupation (B&O) tax credit for research and development (R&D) spending because the required annual survey was not timely filed. We conclude TAA’s ruling is correct. Taxpayer’s petition is denied.

A business that performs “water damage restoration” on behalf of customers whose carpets were damaged by water as a result of flooding protests the retail sales tax and retailing business and occupation (“B&O”) tax assessed on such activity. We affirm the assessment.

Strength and conditioning coach claims that he does not provide “physical fitness services” on the grounds that his services are instructional in nature. The petition is denied.

An out-of-state company engaged in the business of designing and manufacturing custom heating systems protests the assessment of tax on sales of equipment to Washington customers, and contends that it lacks nexus with Washington. We conclude that the Taxpayer’s activities within Washington establish nexus.

The owner of a car dealership (Taxpayer) challenges a tax assessment for additional tax liability due to Taxpayer’s failure to accurately report its income and remit retail sales tax. Taxpayer argued that it is unable to provide records to support an adjustment to the tax assessment because his bookkeeper has refused to allow him access to his own records. We deny Taxpayer’s petition.

A Washington corporation that owns and operates a cafeteria (“Taxpayer”) protests an estimated assessment for retail sales tax and retailing business and occupation (B&O) tax. Taxpayer also contends that the Department of Revenue (the “Department”) should not include the retail sales tax it has already remitted in the measure of its tax liability. We affirm the assessment because Taxpayer did not maintain records of its cash sales during the audit period, and because it did not separately state the retail sales tax on its sales receipts to its customers. We deny the petition.

A transferor of a real property interest appeals a Real Estate Excise Tax (REET) assessment claiming that the transfer is not subject to REET because she transferred her interest in the property as a gift. The Department of Revenue (Department) assessed REET on the transferor’s relief of debt following the transfer. The taxpayer’s petition is denied.

A clinic for treatment of asthma and allergies requests a refund of business and occupation (“B&O”) tax paid on receipts it received from patients on behalf of its owner, a doctor working for Taxpayer as an independent contractor. Taxpayer argues it is entitled to an exclusion from gross income because the payments qualify as advances under WAC 458-20-111. We affirm the refund denial because Taxpayer provided services to patients through an independent contractor, and because Taxpayer was not liable for payment to the doctor solely as an agent of the patients. Taxpayer’s petition for refund is denied.

Taxpayer petitions the Department for refund of assessed taxes Taxpayer paid as a result of an audit. Specifically, Taxpayer protests the disallowance of bad debt deductions taken against the retailing business and occupation (B&O) tax and retail sales tax paid. Taxpayer also protests use tax assessed on certain business purchases. We deny Taxpayer’s petition.

Out-of-state oil refinery and fuel seller (Taxpayer) petitions for reconsideration of Determination No. 13-0068, which ruled that Taxpayer has taxable nexus with Washington State through an exchange agreement with a [third-party supplier] fuel terminal in [City A, Washington]. Because the Taxpayer’s customers are receiving the fuel in Washington State, and a third party is assisting the Taxpayer in maintaining its Washington market, nexus is created and we reaffirm the Department’s finding.

An operator of a wrecking yard that sells cars and car parts (Taxpayer) protests the assessment of retail sales tax and business and occupation (B&O) tax on grounds that the measure of taxes and allocation between retail and wholesale sales should be based on its general ledger rather than bank deposits and documentation of wholesale sales. Taxpayer also argues that certain sales are deductible from retail sales because they were made to qualified nonresidents. We deny the petition.

A taxpayer appeals the rescission of the rural county business and occupation tax credit for new employees authorized under chapter 82.62 RCW, and requests a refund of business and occupation tax paid as a result of the rescission. The Taxpayer Account Administration Division (TAA) of the Department of Revenue (Department) rescinded the credit because the taxpayer failed to file a second annual report required by the Department to verify the eligibility requirements of the tax credit have been met. The taxpayer argues the credit should be reinstated because it has now provided the report substantiating its eligibility for the credit, and because a second annual report is not mandated by statute. We grant the petition.

Appeal of use tax assessments on two antique automobiles. Because both automobiles were delivered to Washington State where the Taxpayer is a resident, and neither automobile was purchased for resale, we affirm the assessments. We sustain both assessments.

A vending machine operator protests retail sales tax assessed on taxable food items that were originally categorized as “tax exempt” and on vending machine purchases on which taxpayers later took a “tax paid at source” deduction. Taxpayer’s petition is denied.

A married couple appeals real estate excise tax (REET) assessed on their transfer of encumbered Washington real estate to their limited liability company (LLC). When the LLC assumed the mortgage, which was larger than the couple’s adjusted basis in the property, the gain was partially recognized for federal income tax purposes under I.R.C. § 731(a). REET applies to the amount of the transaction for which gain was recognized under WAC 458-61A-212 and RCW 82.45.010(3)(p)(i). Petition granted in part.

A retailer appeals an assessment for uncollected retail sales tax on purported sales to nonresidents, asserting that its documentation of the nonresident sales adequately met the requirements for tax-exempt nonresident sales authorized by RCW 82.08.0273. The taxpayer’s petition is denied.

A leasing company requests reconsideration of Determination No. 12-0380, which affirmed the retail sales tax assessed on certain sales Taxpayer made to an affiliate company. Taxpayer argues retail sales tax is not due on those sales because the affiliate company traded in like kind tangible personal property, the value of which reduced the selling price of the items Taxpayer sold, thus reducing the measure of the retail sales tax due. We deny the petition.

Taxpayer, a prime contractor, disputes the Department of Revenue’s (Department’s) disallowance of tax paid at source deductions it claimed during the audit period. We deny the petition.

Taxpayer protests the Department’s denial of a refund request regarding . . . the calculation of the high technology research and development business and occupation (“B&O”) tax credit (the “R&D Credit”). The petition is granted in part and denied in part.

A taxpayer engaged in printing and mailing services petitions for cancellation of an assessment issued by the Taxpayer Account Administration (TAA) Division of the Department of Revenue (Department), contending TAA erred when it denied the taxpayer’s deduction of separately stated postage charges for delivery of direct mail. We grant the petition.

Taxpayer, a business that provides “crossfit” training, disputes re-classification of its income from the service and other activities business and occupation (“B&O’) tax classification to the retailing B&O and retail sales tax classifications. Taxpayer maintains the services it offers are primarily instructional in nature and distinguishable from retail physical fitness services offered by regular “gyms”. We conclude that improving and maintaining physical conditioning was the primary focus of the classes at issue and sustain the assessment of tax on this income as retail physical fitness services. Taxpayer’s petition is denied.

A bank (Taxpayer) was denied a refund of retail sales tax because it had been granted a waiver of penalties and interest under RCW 82.32.052 (commonly referred to as “Amnesty”) for the same tax period. Taxpayer petitions for reversal of the denial claiming that amnesty for the penalties and interest owed on an unrelated Business and Occupation (B&O) tax liability did not bar it from receiving a refund of retail sales tax. Taxpayer’s petition is granted.

A seller of gold, coins, and jewelry appeals the assessment of retailing business and occupation (B&O) tax and retail sales tax on sales of collectible currency. The petition is denied.

A taxpayer who offers various classes, including dance fitness, protests an Audit assessment of uncollected retail sales tax on revenues from dance fitness classes, contending the dance fitness classes are instructional lessons. We conclude that the taxpayer’s dance fitness classes are physical fitness services subject to retail sales tax and deny the petition.

The Department of Revenue issued use tax assessments on a vessel to an out-of-state limited liability company (LLC) and to its members as individuals. Both the members and the LLC protest the assessments. The LLC argues that it is an out-of-state company and is exempt from the use tax because its use in Washington was temporary and constitutes a nontaxable use. The members argue that the LLC owns the vessel and they only used it as “bailees.” We deny both petitions.

Contract mail transportation business disputes an assessment for public utility tax on its income from services provided in Washington, asserting that Washington is prohibited from taxing its interstate activities and that it is immune from state tax as a federal agency. Petition denied and remanded for production of records.

A Washington resident and his wholly owned out-of-state limited liability company (LLC) appeal identical assessments of use tax and/or deferred sales tax on a vessel purchased in Washington, which they believed was delivered outside of Washington. Because the documents they provided the seller do not meet the requirements for an exempt sale to a nonresident or the requirements for a purchase for resale, we deny the petition.

A warehouse operator who applied for and was granted a partial remittance (refund) under the warehouse tax incentive in RCW 82.08.820 petitions for an increase of the remittance amount. In dispute is whether repair and maintenance of the ammonia system, dock leveler, and dock doors and seals qualify as labor and services rendered in respect to “material-handling and racking equipment” as defined in the statute. We conclude these items do not qualify and deny the petition.

Taxpayer appealed an assessment of retailing business and occupation taxes assessed on amounts received for the development and construction of commercial buildings. The taxpayer argued that it was engaged as a consultant and agent to facilitate the construction. The petition is denied.

Professional employer organization (“PEO”) protests denial of high technology research and development credit on the grounds that it isn’t disqualified from the credit solely by virtue of being a PEO. We remand the petition.

Auto dealer appeals an opinion letter stating that there is no retail sales tax exemption for used electric motor vehicles. Because the statutory retail sales tax exemption for electric motor vehicles applies only to new vehicles, we confirm that used electric motor vehicles are not exempt from the retail sales tax.

A law firm that specializes in personal injury litigation, which incurs litigation expenses that the client remains liable for reimbursing the law firm regardless of the outcome of the litigation, appeals the assessment of B&O tax on its expense reimbursements, asserting the reimbursements were excludable from gross income under WAC 458-20-207 (Rule 207). The petition is granted in part, and denied in part.

Taxpayer appeals the denial of a refund request. Taxpayer asks the Department of Revenue to find it eligible for the preferential rate that applies to the Prescription Drug Warehousing Business & Occupation tax classification. We find that Taxpayer does not meet the requirements for the preferential rate because it is not registered with the federal drug enforcement administration and not licensed by the Washington board of pharmacy. We deny the petition.

Restaurant protests imposition of retail sales tax on sales of bakery goods on the grounds that such food is “sold without eating utensils provided by the seller” under RCW 82.08.0293. The petition is granted.

Taxpayer, the operator of a motel in Washington, protests the assessment of retail sales tax on sales of lodging to Federal Government employees. The issue is remanded to the Audit Division to allow Taxpayer to provide documentation to support its claim that the motel room charges were paid for by the Federal Government.

A contractor protests the assessment of retailing B&O tax and retail sales tax on unreported income received from its subsidiaries for construction services performed on land owned by the subsidiaries. The taxpayer argues it is the owner of the land under the attributes of ownership test in WAC 458-20-170 (Rule 170). Accordingly, the taxpayer asserts it is a speculative builder and does not owe retail sales tax on its own labor. We conclude the taxpayer is not the owner of the land under Rule 170, and deny the petition.

A provider of catering and a venue for weddings appeals the assessment of retail sales tax and business and occupation tax on grounds that its income includes rent, which it asserts is exempt from tax, and in the alternative, that the Department of Revenue (Department) is estopped from assessing the taxes because Taxpayer relied on incorrect oral advice from the Department. We deny the petition.

A business that builds, repairs, and sells customized marine engines, generators, and related products, objects to the classification of its activities as manufacturing, as defined in RCW 82.04.120(1), and the assessment of manufacturing business and occupation tax on the manufacture of its products. The taxpayer’s petition is denied.

A taxpayer petitions for waiver of the late payment penalties imposed because it failed to file and pay its excise taxes electronically and also objects to the Department’s disallowance of a waiver from the electronic filing requirements. Taxpayer’s petition is denied.

A taxpayer engaged in manufacturing wood products requests a correction of use tax assessed on five equipment purchases in 2007, claiming that the purchased equipment qualifies for the machinery and equipment (“M&E”) exemption. Taxpayer’s petition is granted primarily on the basis of prior written instructions, but, in the future, Taxpayer’s equipment must satisfy the majority use test to qualify for the M&E exemption.

Taxpayer, a dog breeder, petitions for correction of an assessment of retail sales tax and retailing business and occupation tax assessed on the sale of dogs for breeding purposes. We hold that dogs are not considered “livestock” for purposes of the retail sales tax exemption and, for that reason, the sale of dogs for breeding is taxable. Taxpayer’s petition is denied.

A corporation (the taxpayer) protests a letter ruling from the Taxpayer Information & Education (TI&E) Section of the Department of Revenue declaring that it is providing a dating service and should have been collecting and remitting retail sales tax and reporting retailing business and occupation (B&O) tax rather than service and other activities B&O tax. Holding: TI&E was correct in concluding that the taxpayer is providing a dating service that is subject to retail sales tax.

Taxpayer protests an assessment of service and other business and occupation tax, arguing that its income from the sale of individual fishing quotas for the privilege of fishing in Alaska should be sourced to the state where the natural resources are located. Based on the doctrine of mobilia sequuntur personam, and on the Taxpayer’s Washington domicile, the petition is denied.

An escrow company that prepared documents and hired a third party to file the documents protests retail sales tax assessed on its charges for those services. Because the documents needed to be prepared and then recorded to complete the escrow, charges for those activities constituted escrow services subject to retail sales tax. We deny the petition.

Seed manufacturer protests the denial of the sales and use tax deferral for investments in rural counties with respect to a seed vault and a storage building that houses equipment used to plant and harvest seed. We deny the petition.

A Washington business engaged in site preparation activities and extracting timber for sale, petitions for correction of an audit assessment that includes retailing business and occupation tax and retail sales tax on underreported income, and use and/or deferred sales tax on the purchase of a CAT excavator used for extracting timber. The taxpayer contends the Audit Division erred when it determined gross income based on the taxpayer’s bank deposits, because the bank deposits include the proceeds of bank loans. The taxpayer also contends that logging equipment is exempt from retail sales and use tax. Because the taxpayer failed to provide any documentation regarding the bank loans, and because the purchase of equipment for extracting timber is not exempt from retail sales or use tax, we deny the petition.

Taxpayer requests the Washington State Department of Revenue approve Taxpayer’s application for a Commute Trip Reduction Credit even though Taxpayer filed the application after the due date. We deny Taxpayer’s petition.

A Washington corporation, which provides skydiving services, protests retail sales taxes assessed on its skydiving receipts and DVD sales. The corporation contends that its charges were for air commerce, preempted by federal law. Because skydiving is not air commerce, Washington may tax the skydiving charges. Charges to skydivers holding an A class parachute license and charges for instructional DVDs are retail sales. Petition denied.

An owner of a restaurant that failed to maintain source records protests Audit’s use of an industry average percentage to determine cash sales and the assessment of retail sales tax. It contends its records and facts and circumstances reasonably prove its cash sales were less than the industry average percentage. We conclude the Taxpayer failed to maintain adequate records of cash sales, Audit’s use of an industry average percentage was correct, and deny the petition.

A medical equipment provider protests the assessment of retail sales tax on sales of its continuous positive airway pressure machines on the grounds that they are (i) exempt prosthetic devices, or (ii) exempt legend drugs. The petition is denied in part and granted in part.

A nightclub appeals an assessment of retail sales tax and retailing business and occupation (B&O) tax on cover charges claiming that the charges should be taxed under the service and other activities B&O tax classification under RCW 82.04.050. Taxpayer also asserts that even if the cover charges are subject to the retail sales tax and retailing B&O tax, only a portion of the cover charge should have been classified as retail. We deny the petition.

A retailer protests the denial of a bad debt deduction for sales tax paid that it received from private label credit card sales. The customers purchased retail goods and services from the taxpayer using banks’ credit cards, but failed to pay the banks the amounts due on their accounts. Because the banks held the debt, the taxpayer was not entitled to claim a credit for bad debts on their customer’s purchases using the banks’ credit cards. Petition denied.

A county jail health services program appeals a Department of Revenue (Department) letter ruling that the sale of packaging and labels used to package prescribed drugs to be dispensed to inmates is not exempt from retail sales tax under RCW 82.08.0281. The taxpayer’s petition is denied.

A nonprofit water association appeals the assessment of service and other activities business and occupation (“B&O”) tax on up-front amounts it receives from new members in order to join its association, arguing that those up-front amounts are “transferable deposits” and are not gross income to the business. Taxpayer’s petition is denied.

Taxpayer, a transportation and logistics services provider, appeals a denial of a request for refund, arguing it provided sufficient substantiation for its refund claim under RCW 82.32.060 and WAC 458-20-229 and that its business activities in Washington should be subject to the lower business and occupation tax rate of .00275 for international freight brokers. Taxpayer’s petition is denied.

Seller of kidney dialysis device seeks retail sales tax exemption. Petition granted.

This appeal involves two taxpayers: a sole proprietor and a limited liability company (LLC). The sole proprietor, engaged in the business of investing in real property, protests an assessment for retail sales tax on construction and laborer services provided on properties held in trust. The sole proprietor asserts that it is not liable for tax on the transactions because it was not the buyer. The LLC, an administrative entity for the trusts holding title to the properties, protests the protective assessment issued against it for the same tax. The LLC asserts that the sales of the services were not retail sales subject to retail sales tax. We affirm the assessments.

An out of state company protests retail sales tax assessed on amounts it charged to rent cranes with an operator in Washington. The company did not own the cranes, but rented them in Texas where it paid retail sales tax, then shipped the cranes to Washington. We remand the assessment to the Audit Division to credit the taxpayer for Texas retail sales tax it paid against the use tax assessed during the period of its leases, as well as to adjust the assessment for any deferred sales/use tax that the subcontractor paid on the taxpayer’s charges. Petition granted in part.

Related hospitals appeal the assessment of use tax/deferred sales tax on medical devices. The hospitals request a credit for sales tax paid on items they claim were exempt from tax. We deny the taxpayers’ petitions as to use tax/deferred sales tax due.

A property management company objects to the Department’s assessment of use tax and/or deferred sales tax on its purchase of online property management services from a third party, and argues that it merely purchased a service not subject to retail sales tax. We grant Taxpayer’s petition for periods prior to the advent of digital products legislation, and uphold the Department’s assessment for periods after the effective date of the digital products legislation.

A singles activity club protests a tax assessment that disallowed a claimed deduction of membership fees and dues from its measure of business and occupation tax. We deny the petition.

An erector and installer of structural steel appeals the assessment of deferred sales tax on rentals of cranes with operators on grounds that (1) it hired the crane company to do work as a subcontractor for resale, and (2) it should be permitted to deduct the crane company’s expenses from the measure of tax. We deny the petition.

A retailer protests an assessment of retail sales tax claiming that certain sales should be exempt from tax because its records sufficiently document that the sales were to nonresidents. The retailer also protests deferred retail sales tax assessed on construction services it purchased for two projects in Washington, claiming that it should be allowed a credit for taxes it paid on these projects. Finally, the retailer asks that we waive interest included in the assessment because it made a good faith effort to comply with Washington law. We reverse deferred retail sales tax assessed on construction services performed in one of the projects at issue. Otherwise, we uphold the assessment.

A Washington corporation that owns and operates a restaurant protests assessment of retail sales tax and retailing business and occupation tax estimating cash sales, because the taxpayer failed to keep and preserve business records detailing their cash sales transactions. We affirm the assessment because the taxpayer did not maintain records of its cash sales during the audit period.

An airline with long-term contracts with hotels to provide rooms for their off-duty flight crews’ requests a refund of the retail sales taxes charged. Held: Taxpayer’s petition is granted.

A taxpayer doing business as a convenience store protests an audit assessment of retail sales tax asserting that Audit underestimated the amount of tax-exempt food sales made during the audit period. We affirm the assessment.

A Washington company developing a complex medical device protests the Department’s disallowance of the chapter 82.63 RCW High Technology Tax Deferral and the RCW 82.08.02565 M&E exemption for the materials it used to build the prototypes it used for product development. We uphold the assessment.

Taxpayer protests the reclassification of income derived from providing a mobile video arcade from the service and other activities B&O tax classification to the retailing B&O and retail sales tax classifications. Taxpayer also argues that if the arcade’s income must be reported as retail then a tax credit should be granted for the retail sales tax/use tax paid on the video game hardware and software when acquired. We conclude that: 1) Taxpayer’s video arcade’s income was correctly reclassified to retail; and 2) no retail sales tax refund is due on the purchase of game software or hardware.

The owner of a car rental facility contests a portion of a tax assessment reclassifying income for the sale of optional collision damage waivers and roadside assistance coverage from the retailing B&O tax classification to the service and other business activities B&O tax classification. Held: Rental car options for collision damage waivers and roadside assistance coverage added to a car rental purchase by election of the customer are not considered retail sales pursuant to RCW 82.04.050. The taxpayer’s petition is denied.

A computer data center appeals a letter ruling by the Department of Revenue’s Taxpayer Information and Education section advising that it is required to pay retailing business and occupation tax and collect retail sales tax on amounts received for performing “digital automated services.” The petition is denied.

A transferor of a real property interest appeals a REET assessment claiming that she transferred her interest in the property as a gift and pursuant to ending a committed intimate relationship with the joint owner of the property. The Department of Revenue assessed REET on the transferor’s relief of debt following the transfer. We uphold the assessment.

A LLC (the taxpayer) doing business as a motor contract carrier protests the assessment of public utility tax (PUT) under the motor transportation business classification on gross income earned for the intrastate hauling of recyclable materials for an affiliated LLC. Holding: Gross income earned by the taxpayer from such intrastate hauling is subject to motor transportation business PUT. Decision: Petition denied and assessment affirmed.

A sole proprietorship (the taxpayer) that operates a dinner club/theatre protests the assessment of retailing business and occupation tax and retail sales tax on the single non-itemized admission charge that includes both musical entertainment and dinner. Held: the taxpayer was selling prepared meals and musical entertainment as a bundled transaction that is subject to retail sales tax on the full price. Petition denied.

A solar power system seller appeals a Taxpayer Information and Education section letter ruling that a special purpose entity does not qualify for the cost recovery incentive payment under RCW 82.16.120 and WAC 458-20-273 (Rule 273), where it leases the roof space of a customer of a light and power company, installs its renewable energy system on the roof and sells the energy produced by the system to the roof owner. We affirm the letter ruling and deny the appeal.

A corporation that provided escrow services protests the assessment of retail sales tax and retailing business and occupation tax on fees it charged its customers for services such as courier delivery, reconveyances of deeds of trust, and wire transfers that it purchased in its own name from third parties. Held, we affirm the assessment and deny the taxpayer’s petition.

Taxpayer appeals an assessment of real estate excise tax on a controlling interest transfer, arguing that the county assessor’s valuation used by the Department does not reflect the true and fair value of the property. Taxpayer’s appeal is denied.

A daughter, who quitclaimed mortgaged real property to her father who paid off the mortgages with a reverse mortgage, protests the assessment of real estate excise tax on the transfer, arguing the transfer qualifies for the gift exemption in WAC 458- 61A-201. We conclude the transfer was a sale, not a gift, and deny the petition.

A sole proprietor (the taxpayer) who operates a charter fishing business questions whether his purchases of bait should be subject to retail sales. Holding: Fishing bait purchases by the taxpayer are subject to retail sales tax. Petition denied.

A medical equipment provider protests the assessment of retail sales tax on the leasing of (1) a medical device that delivers cold therapy and intermittent compression therapy to an injured joint or limb; and (2) a medical device that generates spinal bone growth to aid in bone repair and to enhance bone fusion. We deny the petition in part and grant the petition in part.

Out-of-state provider of continuing professional education whose independent contractor speakers provide live seminars in Washington protests assessment of business and occupation tax on the grounds that it lacks nexus in Washington. The petition is denied.

A mobile automobile crushing business in Washington appeals use tax/ deferred retail sales tax assessed on machinery and equipment purchased for use in the taxpayer’s business. The taxpayer argues that the crushing of automobile hulks constitutes a manufacturing operation under RCW 82.08.02565 and the crushing equipment used in this operation is exempt from retail sales tax and use tax. We uphold the assessment.

Taxpayer, a comprehensive cancer center, petitions for refund of retail sales tax paid on liquid nitrogen purchased for the purpose of storing tissue samples used in Taxpayer’s research. Taxpayer’s petition is granted.

A corporate owner of coin-operated amusement devices protests the assessment of B&O tax on the gross proceeds of the amusement devices by claiming to have joint venture agreements that allow it to reduce its tax liabilities when splitting the revenues with the owners of the establishments where the devices are placed. The petition is denied.

Taxpayer appeals a ruling that Real Estate Excise Tax (REET) applies to transfers or conveyances of real property in circumstances where a receiver is appointed by the superior court in a judicial foreclosure. We grant taxpayer’s petition and hold that the appointment of a receiver does not change the nature of a judicial foreclosure and that the transfer or conveyance of real property in such a circumstance is still effectuated by an order of sale by the court. Because transfers or conveyances made pursuant to an order of sale by a court in a lien foreclosure proceeding do not fit within the statutory definition of a “sale” of real property, the transfer at issue herein is not subject to REET.

An out-of-state seller of food products protests an assessment of B&O tax and retail sales tax, arguing that two visits to an international wholesale buyer during the last five years to promote sales of its product shipped from outside Washington through buyer’s location in another state to overseas locations do not establish nexus in Washington. We agree. Accordingly, Taxpayer’s petition is granted.

Taxpayer, a used car dealer, petitions for correction of an assessment of retail sales tax and retailing B&O tax based upon the Department of Revenue disallowing a portion of Taxpayer’s claimed bad debt deductions for the value of automobiles subsequently repossessed by Taxpayer. Taxpayer’s petition is denied.

The taxpayer, an Indian owned corporation operating as a general contractor, seeks reconsideration of Det. No. 10-0307. We affirm the holding in Det. No. 10-0307, that the taxpayer’s purchase of capital assets and routing delivery of those assets through Indian country to the taxpayer’s plant outside Indian country does not qualify for exemption under WAC 458-20-192 (Rule 192), and deny the petition.

Landowners protest the imposition of B&O tax, contending that payments received under a “Mineral Lease” are really exempt rental payments for granting exclusive rights to possess the property. The petition is denied.

Taxpayer appeals an assessment of forest excise tax on red cedar shake and shingle blocks, arguing that it correctly reported its red cedar shake and shingle blocks in Scribner Decimal C log scale. Further, Taxpayer argues that it should not have been classified and assessed forest excise tax as a “large harvester.” We deny Taxpayer’s appeal.

A recycling facility operator in Washington appeals use tax assessed on machinery and equipment purchased for use in the taxpayer’s facility. The taxpayer argues that the sorting and bundling of recyclable materials constitutes a manufacturing operation under RCW 82.08.02565 and any machinery and equipment used in this operation is exempt from retail sales tax and use tax. We uphold the assessment.

A nonprofit corporation that provides emergency rescue coordination, support services, training, and education for the licensing and certification of emergency rescue personnel for local fire departments and hospitals petitions for a refund of B&O tax on the grounds that it is exempt as a “health or social welfare organization.” The petition is granted.

A company that provides logging services for timber harvesters, and occasionally logs some of its own timber, objects to the Department of Revenue’s assessment of deferred retail sales and/or use tax on a feller buncher it uses in its logging operations to cut and bunch trees, arguing that the feller buncher is used to primarily to sort cut trees and forward them. We deny the taxpayer’s petition, and find taxpayer’s purchase and use of the feller buncher is not exempt from deferred retail sales and/or use tax under the machinery and equipment (M&E) exemption.

A telecommunications company and internet service provider protests the assessment of retail sales tax on the digital subscriber line (DSL) component of its internet service charges to customers. We hold that the DSL charge is the transmission component of taxpayer's internet service charge and it may not be bifurcated and taxed as a separate activity. On this issue we remand for recalculation based on the income received for these charges being reclassified to Service & Other Activities B&O tax.

An out-of-state mail order retailer with a related corporation operating retail stores in this state, petitions for cancellation of an assessment of B&O tax and retail sales tax on mail order sales to Washington customers, contending it does not have substantial nexus with Washington State. We conclude the related corporation performs activities on behalf of the taxpayer that are significantly associated with the seller's ability to establish or maintain a market in this state for the sales, and therefore, establish nexus for the taxpayer in this state. We sustain the assessment.

The owner of a flooring business petitions for waiver of an evasion penalty assessed for unpaid tax liability including collected and unremitted retail sales tax, and seeks credit for sales tax paid on purchases. The taxpayer asserts that he should not be penalized for evasion because he did not collect retail sales tax from his customers and that certain purchase receipts establish allowable sales tax credit. The taxpayer's petition is denied.

A corporation (the taxpayer) providing commercial and residential painting services protests the disallowance of deductions for sales tax paid at source and the assessment of retail sales tax on portions of contract prices not reported by the taxpayer as gross proceeds of sales. Holding: We affirm the assessment. Petition denied.

A corporation in the construction business protests the assessment of retail sales tax and retailing business and occupation (B&O) tax by asserting that it was a speculative builder rather than a prime contractor constructing buildings on properties owned by its shareholders. We affirm the assessment.

A trustee of a trust protests the amount of the assessment of real estate excise tax based on the transfer of a controlling interest in an LLC that has a one-third tenancy in common interest in real property located in this state. The measure of the tax is the true and fair value of the property, which in this matter, is determined by an appraisal of the real property. Decision: Petition granted.

A local company in the business of used oil collection protests an assessment of hazardous substance tax (HST) on its possession of waste oil, arguing that waste oil is not a “hazardous substance” and that it did not have first possession because it was merely a transporter of the waste oil for hire. Taxpayer also protests the assessment of use tax/deferred sales tax on trucks and trailers that it claims to have used for hire in interstate commerce. We deny Taxpayer’s petition.

A Washington corporation engaged in real estate management disputes the Department of Revenue’s assessment of Service and Other Activities B&O tax on a portion of proceeds it received on a judgment entered in a lawsuit in which it sued for compensation for services rendered. The corporation argues that the portion of proceeds earmarked for its attorney under a contingent fee agreement, and for which the attorney had a statutory lien, is excludable from its gross income, and therefore not subject to B&O tax. Taxpayer also disputes use tax assessed on items which it purchased, and argues that it never received or used the items in Washington. We disagree with the corporation, and affirm the Department’s assessment of Service and Other Activities B&O tax and use tax.

A nonprofit corporation that sells sports materials and support services to churches who subsequently provide sports leagues to youth participants appeals a refund denial and letter ruling issued by the Department of Revenue’s (Department’s) Taxpayer Information and Education Section. The taxpayer argues that: (1) its provision of material and related services to churches is not a retail sale under the true object test; (2) alternatively, if a retail sale, its materials are resold by the churches to league participants, and therefore wholesale sales; and (3) it may deduct the proceeds of its sales from B&O tax under RCW 82.04.4271 because it is a “nonprofit youth organization” that provides recreational services to its members. We find that Taxpayer provides retail sales of its products to churches, which do not purchase the products for resale, and Taxpayer may not deduct the amounts from B&O tax under RCW 82.04.4271.

An event planning and production company requests reconsideration of Det. No. 06-0048, which sustained in part and reversed in part the Audit Division’s reclassification of its revenue from the service and other activities B&O Tax classification to retailing B&O tax and retail sales tax, contending Det. No. 06-0048 incorrectly held that certain entertainment services the taxpayer provided were retail in nature, and incorrectly held that the taxpayer was the consumer of entertainment equipment it used to provide entertainment services. We modify Det. No. 06-0048.

A Taxpayer operating supermarkets in Washington seeks reconsideration of our determination that the lower tax rate provided by RCW 82.04.260(4) for the slaughtering, breaking and/or processing of perishable meat products, does not apply to retail sales of meat products that are broken and/or processed in the Taxpayer’s deli and meat departments. We affirm our decision that the statutory language restricting the activity to products sold “at wholesale only and not at retail” precludes the Taxpayer’s retail sales from being classified as slaughtering, breaking and/or processing perishable meat products under the statute. We deny the Taxpayer’s petition for reconsideration and affirm the Audit Division’s denial of the Taxpayer’s refund request.

A fruit packing house asserts that its fruit sorting and packing income is exempt from the service and other activities B&O tax, alleging that its income was compensation for the “receiving, washing, sorting, and packing” of fruit from a grower. It also protests the warehousing B&O tax assessed on amounts derived from its storage of fruit claiming that this activity was not a separate business activity from its fruit sorting and packing business. Taxpayer also protests the deferred sales tax/use tax assessed on fruit bin rentals. We deny the petition.

A bail bond company that is licensed as an insurance agent authorized to solicit and execute surety bail bonds as an agent for a national surety bond insurer on behalf of criminal defendants petitions for correction of a business and occupation (B&O) tax assessment. The bail bond company’s position is that its gross income derived from its surety bail bond business should be taxed at the insurance producers B&O tax rate and that its taxable gross income should not include the amounts held in trust for the national surety bond insurer. Taxpayer’s petition is granted.

A nightclub appeals an assessment of retail sales tax and retailing business and occupation (B&O) tax on cover charges claiming that the charges were for listening to music as a spectator and not for dancing. We uphold the assessment.

An automobile panel manufacturing company protests retail sales taxes assessed on a fire suppression system installed into a spray/bake paint booth that qualified for a machinery and equipment (M&E) sales tax exemption under RCW 82.08.02565. We grant the exemption.

A commercial establishment that sells food, including piroshkies and other pastries, protests a Taxpayer Information and Education letter ruling that it is required to charge retail sales tax on the sale of all piroshkies. The Taxpayer argues that its meat and vegetarian piroshkies are bakery items exempt from retail sales tax. We deny Taxpayer’s petition.

A fuel dealer-franchisee requests a refund of B&O tax. Because the franchisee’s customers were liable only to the dealer-franchisee who billed them, we conclude that the franchisee purchased and resold the fuel to its customers at whatever location they purchased the fuel. We deny the petition for refund.

An outdoor lighting company protests the imposition of the evasion penalty on retail sales tax that the company collected, but did not remit to the Department of Revenue. The taxpayer’s owner claims that he did not willfully fail to remit the collected retail sales tax under WAC 458-20-228(5)(f)(ii) (Rule 228) because he did not know how to remit the taxes and had difficulty filling out the combined excise tax returns because of his medical condition. We uphold the evasion penalty.

A commercial and industrial real estate developer protests the assessment of service and other activities business and occupation (B&O) tax on income received from tenant late fees. We affirm the audit assessment.

Taxpayer appeals the assessment of deferred sales tax on a contract for demolition and excavation work performed at a manufacturing facility. The demolition and excavation work was for the removal of foundations in the facility after obsolete milling equipment was removed and before new milling equipment was installed. The Department holds that the demolition and excavation contract is to be evaluated independently from the contracts for other activities related to the removal and installation project. The Department further holds that the demolition and excavation work performed does not constitute “installation” of qualifying machinery and equipment and is therefore not subject to a retail sales tax exemption. Taxpayer’s appeal is denied.

A business owner protests the real estate excise tax (“REET”) assessment on a controlling interest transfer claiming that, pursuant to RCW 82.45.010(3)(p) and WAC 458-61A-212, the assessment should be reduced only to the extent that the gain was recognized in an Internal Revenue Code § 731 transaction. We deny the petition.

A consumer of natural gas appeals a Taxpayer Information and Education letter ruling that brokered natural gas use tax is due on amounts paid to an interstate pipeline for reserving pipeline capacity (demand/reservation charge).We rule that the demand/reservation charge is part of the amount paid to Pipeline for gas transportation services and must be included in the measure of the brokered natural gas use tax in accordance with WAC 458-20-17902 (Rule 17902).

A manufacturer of an electronic product protests the assessment of retail sales tax on chemicals used in its manufacturing process based on its belief that the chemicals qualify as “chemicals used in processing” and contain the necessary attributes for exemption detailed in RCW 82.04.050(1)(c) [and] WAC 458-20-113. We conclude that the Taxpayer has not established that the primary purpose of the chemicals at issue is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale. Accordingly, we affirm the denial of the exemption for the resist chemicals, the developer, and the strip chemicals.

A seller of petroleum products protests an assessment of Petroleum Products Tax (PPT), and Hazardous Substance Tax (HST) on its production of oxygenated gasoline in this state claiming that denatured ethanol is a hazardous substance subject to PPT and HST, and, therefore, that the subsequent blending of denatured ethanol with gasoline to create oxygenated gasoline is not a hazardous substance subject to PPT and HST. We hold that denatured ethanol is not a hazardous substance, whereas oxygenated gasoline is a hazardous substance.

A husband and wife (Taxpayer) who held a 100% ownership interest in real property transferred the real property to a limited liability company (LLC) in return for a 100% membership interest in the LLC. Subsequently, Taxpayer sold a 49% interest in the LLC to the buyers with two options to purchase the total remaining 51% interest in the LLC. The Department of Revenue’s Special Programs Division discovered the transfer of the 49% interest with the options and determined that the transaction was subject to real estate excise tax (REET). Taxpayer argues that the transaction was exempt from REET pursuant to RCW 82.45.010(2) because a transfer of 49% of an entity does not trigger REET and because an option to purchase, until exercised, does not constitute a sale or transfer of a present beneficial interest. We agree with Taxpayer and grant the petition.

Taxpayer appeals a letter ruling in which it was instructed to source its sales of print jobs, paper, and supplies to the location where the items were delivered. Taxpayer’s petition is denied.

A taxpayer appeals a denial of refund applications because it failed to timely submit a properly signed Confidential Tax Authorization Form (CTIA) under WAC 458-20-229 (Rule 229). We grant Taxpayer’s petition and re-instate Taxpayer’s applications for refund.

An out-of-state limited liability company engaged in selling prescriptions by mail order to an affiliate’s health and pharmacy benefit plan subscribers, requests executive reconsideration of Det. No. 08-0158, which sustained an assessment of retailing B&O tax on mail order pharmacy sales delivered to subscribers in this state. In dispute is whether the actions of the taxpayer’s affiliate in this state establish nexus for the taxpayer. We conclude the taxpayer’s affiliate performs activities on behalf of the taxpayer that are significantly associated with the taxpayer’s ability to establish and maintain a market in this state for the sales, and therefore, establish nexus for the taxpayer in this state. We sustain the assessment.

A special purpose district purchased industrial real property, and, as part of the consideration, agreed to allow the seller to use vehicle parking and storage on a portion of the property for a certain number of years. The Department of Revenue’s Special Programs Division assessed leasehold excise tax on the value assigned to the above consideration. The taxpayer appeals this assessment claiming that the arrangement is not a lease subject to the leasehold excise tax. We deny taxpayer’s petition and conclude that this arrangement is a lease subject to the leasehold excise tax.

Taxpayer, a retailer and wholesaler of cigars and tobacco related products, seeks a refund of Other Tobacco Products (OTP) tax, arguing that the OTP tax structure prior to July 1, 2005, suffers from several constitutional defects. We find that taxpayer failed to provide the Department with sufficient substantiation under RCW 82.32.060 and WAC 458-20-229 regarding its refund request, and therefore the Department is unable to consider taxpayer’s arguments. Accordingly, we deny taxpayer’s petition.