Justia Washington Supreme Court Opinion Summaries

The city of Federal Way (City) is a noncharter code city incorporated under Title 35A RCW. To address a budget deficit, the City identified and implemented cost-saving measures, but the spending cuts did not close the deficit. The City thus considered several potential sources of new revenue, including levying an excise tax on water and sewer utilities. The council found it necessary to expand the kinds of excises levied in order to pay for basic municipal services and to meet the budget deficit. In passing the ordinance, the council relied on RCW 35A.82.020, which it concluded gave the City broad authority to impose excises for regulation or revenue regarding all places and kinds of businesses. The issue this case presented for the Washington Supreme Court's review reduced to a decision on a municipal corporation's authority to impose an excise tax on another municipal corporation doing business within its borders. Several water-sewer districts petitioned for declaratory judgment, arguing the City lacked express legislative authority to impose the tax on them. The districts also raised a governmental immunity defense, and further challenged the ordinance on constitutional grounds, arguing it violated both due process vagueness principles and privileges and immunities antifavoritism principles. The parties cross moved for summary judgment, and the superior court granted summary judgment in the City’s favor. The Washington Supreme Court affirmed, finding the legislature granted code cities broad authority to levy excises on all places and kinds of business. "That policy prescription contemplates code cities may choose to exercise their local taxing power by imposing excises for regulation or revenue on the business of providing water-sewer services to ratepayers. We hold the governmental immunity doctrine does not bar the city from taxing the districts because they perform a proprietary function when they engage in this business. As for the districts’ constitutional claims, they lack standing to bring such claims." View "Lakehaven Water & Sewer Dist. v. City of Federal Way" on Justia Law

In 2015, the Washington legislature enacted RCW 81.104.160(1) (MVET statute) authorizing Sound Transit to use two separate depreciation schedules to calculate motor vehicle excise taxes (MVET). Under the statute, Sound Transit could pledge revenue from a 1996 depreciation schedule for MVETs to pay off bond contracts; Sound Transit could use a 2006 depreciation schedule for all other MVETs. Though each schedule is referenced, the MVET statute did not restate in full either schedule. Taylor Black and other taxpayers alleged the MVET statute violated article II, section 37 of the Washington Constitution, stating "no act shall ever be revised or amended by mere reference to its title, but the act revised or the section amended shall be set forth at full length." The Washington Supreme Court held the MVET statute is constitutional because (1) the statute was a complete act because it was readily ascertainable from its text alone when which depreciation schedule would apply; (2) the statute properly adopted both schedules by reference; and (3) the statute did not render a straightforward determination of the scope of rights or duties established by other existing statutes erroneous because it did not require a reader to conduct research to find unreferenced laws that were impacted by the MVET statute. View "Black v. Cent. Puget Sound Reg'l Transit Auth." on Justia Law

Lowe's Home Centers sought reimbursement of state sales taxes and Business and Occupation ("B&O") taxes from the Washington Department of Revenue ("DOR") because it contracted with banks to offer private-label credit cards to its customers, and agreed to repay the banks for losses it sustained when customers defaulted on their accounts. RCW 82.08.050 provided that a seller must collect and remit sales taxes to the State; for sellers unable to recoup sales taxes from buyers, RCW 82.08.037(1) provided that sellers could claim a deduction "for sales taxes previously paid on bad debts." In a split decision, the Court of Appeals affirmed the trial court's denial of reimbursement. After its review, the Washington Supreme Court held that although banks were involved in the credit transaction, Lowe's was still the seller burdened with the loss from its customers' defaults, including their nonpayment of the sales taxes. Accordingly, the Supreme Court reversed the Court of Appeals. View "Lowe's Home Ctrs., LLC v. Dep't of Revenue" on Justia Law

First Student, Inc., a school bus contractor, sought to reverse a Court of Appeals decision to affirm dismissal of its business and occupation ("B&O") tax refund action. At issue was whether First Student's transporting of students qualified as transporting persons "for hire" such that it made First Student subject to the public utility tax ("PUT") rather than the general B&O tax. The Washington Supreme Court found the meaning of "for hire" was ambiguous as used in the PUT, but resolved the ambiguity in favor of the long-standing interpretation that school buses were excluded from the definitions of "motor transportation business" and "urban transportation business" under RCW 82.16.010(6) and (12). The Court found that WAC 458-20-180 was a valid interpretation of the statute, and affirmed the Court of Appeals. View "First Student, Inc. v. Dep't of Revenue" on Justia Law

In February 2015, the city of Spokane (City) enacted an ordinance that granted a local property tax exemption to senior citizens and disabled veterans. Relying on a letter by the Washington Department of Revenue (DOR), the Spokane County assessor and treasurer (collectively County) refused to implement the ordinance, believing it to violate the Washington Constitution, Article VII, Sections 1, 9 and 10. The issue this case presented for the Washington Supreme Court in this case was whether the City's ordinance indeed violated the Washington Constitution's uniform property tax requirement. The trial court ruled that the ordinance was constitutional and issued a writ requiring the County to apply it. DOR filed a motion to intervene, and both DOR and the County appealed the trial court's ruling. On appeal, the Court of Appeals reversed and held that the City's ordinance was unconstitutional. Agreeing with the Court of Appeals, the Supreme Court affirmed. View "City of Spokane v. Horton" on Justia Law

The principal issue in this case was whether taxpayers could bring federal or state tort claims to challenge tax assessments, or instead must rely on the normal state tax appeals process. The taxpayers here are trucking companies that were assessed unemployment taxes after the Washington State Employment Security Department audited and reclassified their employment relationship with owner-operators who owned and leased out their own trucking equipment. The trucking companies, joined by their trade organization, Washington Trucking Associations, brought this suit asserting a civil rights claim under 42 U.S.C. 1983 and a state common law claim for tortious interference with business expectancies. The superior court dismissed the suit, holding that the trucking companies must challenge the tax assessments through the state tax appeals process. The Court of Appeals reversed in part, holding that the comity principle precluded the section 1983 claim only "to the extent that [Washington Trucking Associations] and the [trucking companies] seek damages based on the amounts of the assessments, but not to the extent that they seek damages independent of the assessment amounts." The Supreme Court reversed the Court of Appeals and reinstated the superior court's dismissal of both the federal and state claims. View "Wash. Trucking Ass'ns v. Emp't Sec. Dep't" on Justia Law

The issue in this case centered on the interpretation of the "right to travel" provision Article III of the Yakama Nation Treaty of 1855, in the context of importing fuel into Washington State. The Washington State Department of Licensing (Department) challenged Cougar Den Inc.'s importation of fuel without holding an importer's license and without paying state fuel taxes under former chapter 82.36 RCW, repealed by LAWS OF 2013, ch. 225, section 501, and former chapter 82.38 RCW (2007). An administrative law judge ruled in favor of Cougar Den, holding that the right to travel on highways should be interpreted to preempt the tax. The Department's director, Pat Kohler, reversed. On appeal, the Yakima County Superior Court reversed the director's order and ruled in favor of Cougar Den. Finding no reversible error in that judgment, the Washington Supreme Court affirmed. View "Cougar Den, Inc. v. Dep't of Licensing" on Justia Law

Barry Ackerley died in 2011. In 2008 and 2010, Ackerley made substantial gifts of money. On these inter vivos gifts, Ackerley paid the required federal gift taxes, which amounted to over $5.5 million. Upon his death, Ackerley was required under the federal estate tax code to include the value of the gift taxes paid in his federal taxable estate because he died within three years of making the gifts. Ackerley's estate thus included the gift taxes in its federal estate tax return. But when Ackerley's estate filed his Washington estate tax return, it did not include the $5.5 million in federal gift taxes paid as part of the Washington taxable estate. The Department of Revenue issued a notice of assessment, notifying Ackerley's estate that it owed additional Washington estate taxes on the amount of federal gift taxes paid. The Estate and Transfer Tax Act, chapter 83.100 RCW, made clear that calculating a Washington taxable estate begins with the federal taxable estate and that the Washington definition of "transfer" is the same as the federal definition. Under federal estate tax law, the gift tax paid is included in the taxable estate under the "gross-up rule" and, as such, is transferred upon death as part of the entire estate. Following the legislature's clear mandate, the Washington Supreme Court must also find that the gift tax paid is part of the Washington taxable estate and transferred upon death as part of the entire estate. Thus, the DOR properly included the gift tax paid in its assessment of Ackerley's estate. View "Estate of Ackerley v. Dep't of Revenue" on Justia Law

At issue in this case was whether a certain governmental charge imposed on Indian tribes was a tax. After the legislature amended a statute to expand the types of tribal property that were eligible for a property tax: exemption, the Muckleshoot Indian Tribe applied for and received an exemption on its Salish Lodge property pursuant to the amendment. As required by statute, the tribe negotiated and paid an amount to the county in lieu of taxes. The issue before the Washington Supreme Court centered on the constitutionality of this payment in lieu of tax (PILT). The Court found that the PILT was not a tax at all but, rather, a charge that tribes pay to compensate municipalities for public services provided to the exempt property. View "City of Snoqualmie v. King County Exec. Constantine" on Justia Law

Avnet Inc. was a New York corporation, headquartered in Arizona, and a major distributor of electronic components and computer technology worldwide. Avnet sold products through its headquarters in Arizona and through its many regional sales offices, including one in Redmond, Washington. Following an audit, the Washington State Department of Revenue (Department) determined that from 2003 to 2005, Avnet underreported its business and operations (B&O) tax liabilities by failing to include its national and drop-shipped sales in its tax filings. At issue in this appeal was whether national and drop-shipped sales were subject to Washington's B&O tax under the dormant commerce clause and the Department former "Rule 193." The Washington Supreme Court concluded that neither the dormant commerce clause nor Rule 193 barred the imposition of a B&O tax to Avnet's national and drop-shipped sales delivered in Washington. View "Avnet, Inc. v. Dep't of Revenue" on Justia Law