Washington Tax Decisions

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 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.