Washington Tax Decisions

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.

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.

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.