Washington Tax Decisions

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 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 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.