Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-111 - Advances and reimbursements

Current through Register Vol. 24-14, July 15, 2024
The word "advance" as used herein, means money or credits
				received by a taxpayer from a customer or client with which the taxpayer is to
				pay costs or fees for the customer or client.
The word "reimbursement" as used herein, means money or credits
				received from a customer or client to repay the taxpayer for money or credits
				expended by the taxpayer in payment of costs or fees for the client.
The words "advance" and "reimbursement" apply only when the
				customer or client alone is liable for the payment of the fees or costs and
				when the taxpayer making the payment has no personal liability therefor, either
				primarily or secondarily, other than as agent for the customer or
				client.
There may be excluded from the measure of tax amounts
				representing money or credit received by a taxpayer as reimbursement of an
				advance in accordance with the regular and usual custom of his business or
				profession.
The foregoing is limited to cases wherein the taxpayer, as an
				incident to the business, undertakes, on behalf of the customer, guest or
				client, the payment of money, either upon an obligation owing by the customer,
				guest or client to a third person, or in procuring a service for the customer,
				guest or client which the taxpayer does not or cannot render and for which no
				liability attaches to the taxpayer. It does not apply to cases where the
				customer, guest or client makes advances to the taxpayer upon services to be
				rendered by the taxpayer or upon goods to be purchased by the taxpayer in
				carrying on the business in which the taxpayer engages.
For example, where a taxpayer engaging in the business of
				selling automobiles at retail collects from a customer, in addition to the
				purchase price, an amount sufficient to pay the fees for automobile license,
				tax and registration of title, the amount so collected is not properly a part
				of the gross sales of the taxpayer but is merely an advance and should be
				excluded from gross proceeds of sales. Likewise, where an attorney pays filing
				fees or court costs in any litigation, such fees and costs are paid as agent
				for the client and should be excluded from the gross income of the
				attorney.
On the other hand, no charge which represents an advance
				payment on the purchase price of an article or a cost of doing or obtaining
				business, even though such charge is made as a separate item, will be construed
				as an advance or reimbursement. Money so received constitutes a part of gross
				sales or gross income of the business, as the case may be. For example, no
				exclusion is allowed with respect to amounts received by (1) a doctor for
				furnishing medicine or drugs as a part of his treatment; (2) a dentist for
				furnishing gold, silver or other property in conjunction with his services; (3)
				a garage for furnishing parts in connection with repairs; (4) a manufacturer or
				contractor for materials purchased in his own name or in the name of his
				customer if the manufacturer or contractor is obligated to the vendor for the
				payment of the purchase price, regardless of whether the customer may also be
				so obligated; (5) any person engaging in a service business or in the business
				of installing or repairing tangible personal property for charges made
				separately for transportation or traveling expense.
Revised May 1, 1947.
Order ET 70-3, § 458-20-111 (Rule 111), filed 5/29/70,
				  effective 7/1/70.