Business inventories

From the 2024 DOR Tax Exemption Study

Det. No. 00-007, 19 WTD 694 (2000) 695 Schedule 6: Unreported Internal Distribution In this schedule, Audit assessed internal distributions tax on distributions of inventory from Taxpayer’s own Washington office/warehouse to its . . . retail stores located in Washington. Audit valued the transfers based on Taxpayer’s purchases of inventory. CONTENTIONS AND ARGUMENTS: Taxpayer states that the internal distributions tax and WAC 458-20-231(Rule 231) were in effect from April 1, 1990 through July 1, 1998. In 1998, the Washington State Legislature passed Senate Bill 6270, Laws of 1998, ch. 329, §1 and amended RCW 82.04.270 to delete the internal distributions tax. Taxpayer asserts in its petition: In effect, the tax that was established in 1990, in an attempt to treat any transfers from warehouses to retail stores the same (whether from wholesalers or the same business), was not being applied equitably. There was a double tax being assessed on the same item. One wholesale tax was being paid when the product transferred from the wholesaler to the business warehouse (when title also transferred), and another wholesale tax was being assessed when the business further transferred those same