Washington State: Department Responds to Lending Tree Decision

The Washington State Department of Revenue recently responded to the Lending Tree Court of Appeals decision on its website. Recall, the court of appeals held that the benefit of Lending Tree’s online loan referral service was received at the location where the lenders (the taxpayer’s customers) received and utilized the information contained in a referral to generate a potential loan for a borrower.  As such, for B&O tax purposes, the taxpayer’s receipts were attributed to the lender’s location.  The Department had argued that the taxpayer provided marketing and outreach services to enable lenders to make loans to borrowers and that the benefit of the service was received where the borrower was located. The Department’s recently-issued statement provides that the Lending Tree court’s opinion “does not suggest that Washington must always attribute receipts to a customer’s business location, nor does the case represent a new legal framework.” In the Department’s view, if a taxpayer provides marketing or advertising services to a customer engaging in selling goods or services, the customer’s most directly related activity is “selling” and that activity occurs in the customer’s market, and receipts will be attributed to that location.  Because the Lending Tree court concluded that the taxpayer’s service was a referral service, the relevant business activity was evaluating the referrals.  Please contact Michele Baisler at 206-913-4117 with questions.