International banking facilities

From the 2024 DOR Tax Exemption Study

Det. No. 14-0094, 34 WTD 92 (February 26, 2015) 93 2012, the Taxpayer Account Administration (“TAA”) Division of the Department of Revenue (“Department”) allowed the refund for the period June 1, 2010 through December 31, 2011,2 but denied the refund of all B&O taxes paid prior to June 1, 2010. Taxpayer maintains a Washington address, business location, and a bank account in Washington, and its activities consist of generating a federal tax benefit on commissions of certain export sales of its Affiliate’s goods. Taxpayer has no employees and exists for the sole purpose of capturing federal income tax benefits. Taxpayer does not lease any property or maintain physical facilities either in Washington or in any other state. Taxpayer has no sales customers and makes no sales but, instead, receives commission income from its Affiliate in an amount calculated to take advantage of the federal tax benefits conferred to DISCs by federal law. Those tax benefits arise from statutorily defined “commissions” earned on export sales. 26 U.S.C § 994. A DISC, as a tax-exempt entity, pays no federal tax on the commission income. 26 U.S.C. § 992, 995. When the DISC distributes income to individual sh