Washington Tax Decisions

A dental laboratory protests the Department’s assessment of use tax, arguing that its dental models should be subject to retail sales tax, not use tax. Alternatively, the laboratory argues that if they are subject to use tax then the Department should use the laboratory’s cost valuation methodology as a basis for the measure of use tax. Taxpayer also argues that its refractory die labor and material are exempt from use tax as a prosthetic device. We deny the petition.

A telecommunications company disputes the assessment of B&O tax on gross income it received from certain co-location services, arguing that the income is real property lease revenue that is exempt from B&O tax.

An online retailer protests the disallowance of exemptions taken on retail sales of prescription pet medications. The retailer also protests the estimate of uncollected retail sales tax. The petition is denied.

A taxpayer disputes the Department of Revenue’s denial of a . . . B&O tax credit [for employers of veterans]. We deny the taxpayer’s petition.

A company that managed a parking garage protests the Department’s denial of the company’s request for a refund of retail sales tax and B&O tax. The company collected the retail sales tax from a customer on sales of reserved parking spaces, the prices for which the company listed as inclusive of retail sales tax, and remitted the taxes to the Department. The company also remitted retailing B&O tax on the income it generated from the same sales. The company later discovered that such sales are considered rentals of real estate and are exempt from retail sales tax. We find that the company is not entitled to a refund of the sales tax because it was the customer, not the company, that paid the tax, and the company has not refunded the taxes to the customer. However, the company is entitled to a refund of the B&O tax it paid on its income from those sales because such sales are specifically exempt from B&O tax. The petition is denied in part, granted in part, and remanded to the operating division for adjustment.

A cruise line offering cruises to [out of state] from Washington disputes the Department’s assessment of retail sales tax for certain optional tours [ . . .] lasting less than 24 hours that it provided to its customers. [The cruise line asserts] that it is a tour operator and that all of its gross income, including the revenue received from the tours at issue, is subject to a preferential tax rate and not retail sales subject to retail sales tax. We deny the petition.

An individual disputes the DOR’s denial of a partial refund of use tax the individual paid to the DOL to title and register a sailboat in his name. The individual asserts that the price at which he purchased the sailboat, which is less than one quarter of DOL’s valuation, is the proper basis for calculating the use tax and he is entitled to a refund of use tax paid in excess of this. We grant the petition.

Taxpayer disputes the denial of its amended excise tax returns wherein it sought to change the classification of its revenue that had previously been reported as retail sales. Taxpayer argues its hot tub cleaning services are janitorial services subject to the service and other activities B&O tax classification and not subject to retail sales tax. Taxpayer’s petition is denied.

A cigarette retailer requests the adjustment of an assessment for unstamped cigarettes because it returned the unstamped cigarettes to the original wholesaler to be correctly stamped. We grant Taxpayer’s petition in part and deny it in part.

A taxpayer that operates an automotive repair and maintenance business disputes the assessment of deferred sales tax on certain purchases of capital assets and consumables used in its services. The taxpayer says it has additional documents to support adjustments to tax imposed on those purchases, and asserts that the Department erroneously counted a large invoice twice in the audit.

The taxpayer also contests the assessment of use tax on certain transactions where it alleges it provided substantially discounted services to customers who redeemed certain coupons, rather than providing those services for free. The taxpayer argues that the services were not promotions subject to use tax, but were instead retail sales taxable only on the cash surrender value of the coupon and the customer’s goodwill. Alternatively, the taxpayer argues that deferred sales tax, not use tax, is the proper tax, and tax should be based on its purchase price from its vendor. We deny the petition in part, grant it in part, and remand to the operating division to make adjustments accordingly.