Washington State: Website language foils refund

The Washington Department of Revenue recently denied a sales tax refund claim because language on the taxpayers’ website indicated that the sales price included sales tax. Two taxpayers were involved, and both operated 4-D rides at locations in Washington State; they also used the same website to advertise their rides. After the taxpayers received binding rulings from the Department that the rides were not taxable retail sales, they sought refunds of the taxes on tickets they had erroneously paid. Under Washington law, sales tax is required to be stated separately from the sales price, unless the seller advertises that the tax is included in the advertised price. The taxpayers asserted that they had not collected sales tax from customers and provided support for the claim through copies of sales receipts and signage that appeared at their physical locations, neither of which included any mention of sales tax. The Department, however, found language from the taxpayers’ website that indicated tax was included in the price of a ride. As such, the refund claim was denied. In the Department’s view, although the receipts and signage did not state that sales tax was included in the sales price, the representation made on the taxpayer’s website was sufficient evidence to show that the taxpayer had collected tax from its customers. The Department noted that before the taxpayers could seek a refund, they would first be required to refund the sales tax to customers. Please stay tuned to TWIST for more Washington State developments.