Washington Tax Decisions

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.