Articles Posted in Washington Supreme Court

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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

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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of fuel without holding an importer's license and without paying state fuel taxes under former chapter 82.36 RCW, repealed by LAWS OF 2013, ch. 225, section 501, and former chapter 82.38 RCW (2007).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

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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

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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

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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

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Historically, sovereigns were not subject to statutes of limitations without their explicit consent. Washington State consented to some statutes of limitations but not to others. The issue this case presented for the Washington Supreme Court's review in this case was whether Washington consented to a statute of limitations that would bar this antitrust suit filed by the Washington State attorney general on behalf of the State against more than 20 foreign electronics manufacturing companies. The State alleged that between at least March 1, 1995, through at least November 25, 2007, the defendants violated RCW 19.86.030, which prohibited any "contract, combination ... or conspiracy in restraint of trade or commerce," by agreeing to raise prices and agreeing on production levels in the market for CRTs (cathode ray tubes) used in televisions and computer monitors before the advent of LCD (liquid crystal display) panels and plasma display technologies. Due to this unlawful conspiracy, the State alleges, Washington consumers and the State of Washington itself paid supracompetitive prices for CRT products. Ten of the defendants filed a motion to dismiss, arguing the claims were time barred because Washington's Consumer Protection Act (CPA) must be brought within four years. The State responded that RCW 19.86.120's statute of limitations did not apply to its claims under RCW 19.86.080. After review, the Supreme Court concluded the State's action for injunctive relief and restitution was exempt from the statute of limitations in RCW 19.86.120 and from the general statutes of limitations in chapter 4.16 RCW. View "Washington v. LG Elecs., Inc." on Justia Law

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New Cingular Wireless PCS LLC, an affiliate of AT&T Mobility LLC, provides both wireless voice telephone services and data services to customers in the city of Clyde Hill. Clyde Hill imposes a local utility tax on wireless telephone services, which applies to both voice and data services. New Cingular had for years collected utility taxes from Clyde Hill's residents on all charges for wireless and telephone voice and data services, and paid the tax to the city. In this case, the issue presented for the Supreme Court's review was whether the cellular service provider could challenge a city fine through an action for declaratory judgment in superior court. The trial court dismissed, holding that a declaratory judgment action was improper and judicial review should have been sought by way of a statutory writ of review under RCW 7 .16.040. The Court of Appeals reversed, reinstating the declaratory action and remanding for a decision on the merits. Finding no reversible error in the Court of Appeals' judgment, the Supreme Court affirmed. View "New Cingular Wireless PCS, LLC v. City of Clyde Hill" on Justia Law

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The issue this case presented for the Supreme Court's review centered on whether the legislature's amendment to a business and occupation (B&O) tax exemption, applied retroactively, violated a taxpayer's rights under the due process clause of the Fourteenth Amendment, collateral estoppel, or separation of powers principles. Taxpayer Dot Foods contended that it should have remained eligible for a B&O tax exemption pursuant to the Washington Supreme Court's decision in "Dot Foods, Inc. v. Department of Revenue," (215 P.3d 185 (2009) (Dot Foods I)), despite an intervening, contrary amendment to the applicable law. Because Dot Foods I did not encompass the tax periods at issue in this case, the Supreme Court held that retroactive application of the legislative amendment to Dot Foods did not violate due process, collateral estoppel, or separation of powers principles. View "Dot Foods, Inc. v. Dep't of Revenue" on Justia Law

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In late 2008, Cost Management Services Inc. (CMS) reviewed its years of tax payments made to the City of Lakewood. In examining the relevant regulations, CMS decided that it did not in fact owe the tax that it had been paying. In November 2008, it stopped paying the tax and it submitted a claim to Lakewood for a refund of taxes it had previously paid from 2004 to September 2008. Lakewood did not respond to the request for a refund of the 2004-2008 tax payments. But six months later, in May 2009, it issued a notice and order to CMS demanding payment of past due taxes for a different time period-October 2008 to May 2009. CMS did not respond to the notice and order from Lakewood. Instead, CMS sued Lakewood in superior court on its refund claim, asserting a state common law claim of money had and received. The trial court held a bench trial and found in favor of CMS, ruling that CMS did not owe the taxes it had paid to Lakewood. In addition (in a separate action), the trial court granted CMS 's petition for a writ of mandamus ordering Lakewood to respond to the refund claim. The Court of Appeals affirmed, reasoning that since Lakewood had never actually responded to the refund claim, CMS had no further administrative steps available to it on the refund claim, and thus exhaustion was not required. The appellate court also ruled that the trial court had properly issued the writ of mandamus. Lakewood sought review of the Court of Appeals' decisions on the exhaustion and the mandamus issues. After careful consideration, the Supreme Court affirmed the Court of Appeals as to the exhaustion issue, but reversed the Court of Appeals as to the mandamus issue. View "Cost Mgmt. Servs. v. City of Lakewood" on Justia Law

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The issue before the Supreme Court in this case was a challenge to two provisions of the voter-enacted RCW 43.135.034 (2011) (Initiative 1053). The first provision required that any bill containing tax increases be passed by a two-thirds majority vote of the legislature, and the second provision required that any tax bill increasing state spending above a prescribed limit be approved by the voters. The Court addressed only whether the challenges to the provisions were justiciable and whether they violated the Washington Constitution. A superior court found both provisions justiciable but that the supermajority requirement and referendum requirement both violated the Constitution. The State appealed. Upon review, the Supreme Court affirmed in part, and reversed in part. The Court affirmed the superior court's holding that one provisions were justiciable, and that justiciable provision, the supermajority requirement, violated Article II, section 22 of the state Constitution. However, the Court reversed the superior court's decision that the referendum provision was justiciable. Accordingly, the Court made no determination as to its constitutionality. View "League of Educ. Voters v. Washington" on Justia Law