Wash. Court of Appeals published opinion — D2 60254-7-II Published Opinion.pdf

Citation: Wash. Court of Appeals published opinion — D2 60254-7-II Published Opinion.pdf
Jurisdiction: Washington (state)
Source: Official source
Original Source: https://www.courts.wa.gov/opinions/pdf/D2%2060254-7-II%20Published%20Opinion.pdf ↗

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If the taxpayer can demonstrate an agency relationship, “a second condition must be

satisfied—the taxpayer’s liability to pay must constitute ‘solely agent liability.’” Wash. Imaging

Servs., 171 Wn.2d at 562 (emphasis in original) (quoting Rho, 113 Wn.2d at 573). “If a taxpayer

assumes any liability beyond that of an agent, the payments it receives are not ‘pass through’

payments, even if the taxpayer uses the payments to pay costs related to the services it provided to

its client.” William Rogers Co., 148 Wn.2d at 178 (quoting Walthew, Warner, Keefe, Arron,

Costello & Thompson v. Dep’t of Revenue, 103 Wn.2d 183, 189, 691 P.2d 559 (1984)).

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For the current opinion, go to https://www.lexisnexis.com/clients/wareports/.

No. 60254-7-II

2. AMC is the Employer of the Onsite Employees

AMC argues that “[b]ased on the PMAs, the written evidence supports AMC’s position

that the Owners employed the on-site employees, not AMC.” Br. of Appellant at 18. Thus,

according to AMC, the funds used for the onsite employee payroll are the Owners’ taxable receipts

and should not be included in AMC’s gross income. AMC identifies sections 8.1 (Manager’s

Authority to Hire) and 8.3 (Manager’s Authority to File Returns) of the PMA as supporting its

contention. The Department argues that the superior court correctly concluded that AMC was the

employer of the onsite employees and the wage payments made from the operating account were

part of AMC’s gross income. We agree with the Department.

Here, Section 8.1 of the PMA states: