Washington Tax Decisions

An audio equipment rental company protests the Department’s disallowance of a retail sales tax exemption the company claimed in relation to its rentals of audio equipment to artistic or cultural organizations. The subject exemption applies only to qualified buyers on sales of certain objects, and the Department determined that the company provides a service–not a rental of an object–when an operator accompanies the rented equipment. We conclude that the company is not entitled to the exemption on rentals of audio equipment that include an operator, but is entitled to the exemption on rentals of bare equipment. The company also argues that it is not liable for retail sales tax it failed to collect on non-qualifying equipment rentals if it accepted a certification of tax-exempt status from the buyer. We agree with the company on this second issue. We deny the petition in part and grant it in part, and remand the matter to the operating division for adjustment subject to verification of the exemption certificates the company provided.

A Washington construction company seeks a refund of amounts it paid towards an assessment of B&O tax and use tax following two partial audits. The Department assessed the subject B&O tax because it found the company reported certain income under the wrong tax classification and failed to report other income. The Department assessed the use tax on the estimated value of materials the company installed on public road construction and government contracting jobs because the company did not provide documentation showing that the materials were previously subject to retail sales tax. We conclude that the company has failed to provide suitable documentation to support its argument that the B&O and use tax assessments should be adjusted and, therefore, there is no basis for granting the refund the company seeks. Petition denied.

. . . (“Taxpayer”) protests the Department’s imposition of REET on the fair market value of real property according to the county tax roll instead of the value assigned by Taxpayer. We find that the Department’s Audit Division (“Audit”) correctly valued the transfer using the property’s value as recorded on . . . County property tax rolls. Taxpayer’s petition is denied.