Washington Tax Decisions

A Washington individual protests the use tax assessment on vehicles and watercraft that he used in Washington, claiming that the vehicles and watercraft were his out-of-state auto dealer’s inventory. The individual also argues the Department should waive the penalties and interest assessed because he was not aware of Washington tax laws. We deny the petition.

Operators of a full-service advertising agency (Taxpayers) contest the assessment of retail sales tax and business and occupation (B&O) tax on grounds that the measure of assessed taxes includes non-taxable advances and reimbursements. Taxpayers also contest assessment of the evasion penalty on grounds that Taxpayers did not intend to evade their tax liabilities. We deny the petitions.

A mental health medical group protests assessment of service and other activities business and occupation tax on amounts received from third-party payors on behalf of patients for the services the group members provide to the patients. The medical group argues that the payments should be excluded from the measure of its gross income as a collection agent. We grant the petition.

Two individuals protest the assessment of real estate excise tax, asserting the transfer was not a “sale of real property” under RCW 82.45.010 because the transfer was a partition of property among tenants in common or a mere change in identity. The petition is denied.

A company protests the assessment of real estate excise tax on machinery and equipment sold as part of a controlling interest transfer, arguing the machinery and equipment were not fixtures and therefore not subject to the real estate excise tax. We deny the petition.

A construction business protests the penalty portion of an assessment issued by the Department following an audit. The subject penalties include an evasion penalty, delinquent payment penalties, and a substantial underpayment penalty. Taxpayer argues that it did not intend to evade payment of its tax liabilities and, instead, the underpayments were the result of its owner’s lack of understanding of Washington’s tax laws. We conclude that the Department has established by clear, cogent, and convincing evidence that the business knew of the subject tax liabilities, but sought to evade paying the liabilities through deceit, fraud, or intentional wrongdoing. We also conclude that the business is ineligible for a penalty waiver because the circumstances that led to the penalties were not beyond the control of the business. Petition denied.

A business that sells cannabis and cannabis-related products disputes the assessment of retail sales tax and retailing business and occupation (B&O) tax on certain debit card processing fees, arguing that the fees are not part of the gross retail selling price. We deny the petition [in part and remand it in part].

A franchise restaurant owner protests the assessment of successorship liability for the taxes owed by an owner of the same franchise that immediately preceded it in the same location under the same lease. We deny Taxpayer’s petition.