Washington Tax Decisions

A company providing [electronic] account access services to credit unions seeks reconsideration of our determination affirming the assessment of tax on digital automated services (DAS), asserting that the services fit within a number of exclusions from DAS and that the taxation of these services is prohibited by the Internet Tax Freedom Act. We affirm our decision that the activities at issue were properly classified as DAS and that the taxation of the services at issue is not prohibited by the Internet Tax Freedom Act. The Taxpayer’s petition is denied.

A Washington company whose owner resides . . . [outside of the United States] protests the Department’s assessment of retail sales tax and retailing business and occupation (“B&O”) tax on retail sales made to Washington consumers. The company argues that despite the fact that it was formed in Washington, it did not establish nexus with Washington during the relevant periods because it had no physical presence in the state. We conclude that the company did indeed have a physical presence in Washington because its owner/sole employee was present in the state as the company’s registered agent and the company owned a bank account in Washington, maintained a physical mailbox in Washington, and used a Washington-based answering service to interact with its Washington customers. For those reasons, we find that the company did have nexus with Washington throughout the subject periods and is subject to Washington retail sales tax and B&O tax as assessed. Petition denied.

An operator of a retirement community protests the imposition of retail sales tax on its sales of prepared meals to independent senior residents and on its sales of spare rooms to guests of its residents. The petition is denied.

The operator of a . . . restaurant (Taxpayer) protests an estimated assessment of retailing business and occupation (B&O) tax and retail sales tax on grounds that it provided adequate records to demonstrate the measure of its sales and that the estimated assessment is unreasonable and should be adjusted. We deny the petition.

An individual seeks cancellation of an assessment of real estate excise tax levied as the result of its sale of real property. The individual objects to the Department’s use of the county market value property tax assessment as the selling price of the real property at the time of sale. We grant the petition in part.

An information technology company that specializes in project management services and customization of preprogrammed business management software for clients protests the Department’s disallowance of a business and occupation (“B&O”) tax credit offered to companies engaged in “qualified research and development.” The company argues that because its business activities involve “translating technical and nonroutine activities into new or improved processes and software,” it was engaged in the type of research and development for which the credit is available. In fact, the company’s activities do not satisfy the Department’s definition of the term “nonroutine,” thus the activities cannot be considered “research and development” and the company does not qualify for the credit. Petition denied.

A broker-dealer that timely filed each of its required excise tax returns, but reported no business in every instance, protests the imposition of late payment and assessment penalties in connection with its annual reconciliation of apportionable income (ARAI) returns, arguing that the Department lacks the authority to impose such penalties in such cases. Petition denied.

A port district protests the Department’s tax ruling dated October 30, 2019. The port argues that the Department’s Taxpayer Information and Education (“TI&E”) section erroneously concluded that the port would be responsible for leasehold excise tax (“LET”) on leases it will assume when it purchases a building with existing tenants. We deny the petition.

A corporation that provided various services to its affiliates, which the parties group into three broad categories (credit card services, administrative services, and database services), protests the assessment of service and other activities business and occupation (B&O) tax on these services. The corporation argues that none of its gross income is attributable to Washington and, therefore, it should have no tax liability in Washington. We deny the petition.

A former owner of real estate protests the Department’s denial of a refund request of real estate excise tax (“REET”) paid. The former owner argues that the Department should allow its claimed exclusion from REET for a sale made by a receiver. We deny the petition.