Washington Tax Decisions

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.

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.

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.

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.

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.