Refund Denied in Washington Since Taxpayer Website Advertised Tax Included

A taxpayer was denied a refund of Washington retail sales tax remitted on its ticket sales since the taxpayer’s website advertised the ticket prices as including tax. The taxpayer had previously filed and remitted sales tax on its ticket sales. Upon receiving a ruling from the Washington Department of Revenue that the ticket sales were not sales at retail, the taxpayer requested a refund of the sales tax filed and remitted. Under Washington tax law, if a seller does not collect sales tax from customers but erroneously remits sales tax to the Department of Revenue (DOR) on the sales, the seller may seek a refund from the DOR of the tax remitted. At question is whether the taxpayer collected sales tax from customers during the period at hand. The taxpayer submitted copies of receipts for its ticket sales for its 4-D virtual reality rides. The receipts included items labeled “General” and did not mention sales tax. Signs for the 4-D ride did not mention sales tax either. However, the taxpayer advertised on its website that ticket prices for the ride included tax. The taxpayer claimed that it was not aware of the language on the website or that its accountant was remitting sales to the DOR. The taxpayer did not provide any documents or records in support of these claims. In Washington, taxpayers are responsible for knowing their tax reporting obligations. Since the taxpayer’s website advertised the ticket prices as including tax, the DOR found that the taxpayer was collecting sales tax on the ticket sales, and as such, was not entitled to a refund of tax remitted. While the taxpayer’s receipts and signs did not state that tax is included, those instances are not sufficient to overcome the representations on the taxpayer’s website. The taxpayer would need to first refund the sales tax collected in error to their customers before they can seek a refund from the DOR.  (Determination No. 18-0208, Washington Department of Revenue, December 31, 2019)

Posted on January 13, 2020