Court Opinion

ID: 9623692
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:40:31.438556+00
Date Added: 2024-06-11T18:05:33.747113
License: Public Domain

Dore, J.
(concurring) — I agree with the result reached by the majority. In Christensen, O'Connor, Garrison & Havelka v. Department of Rev., 97 Wn.2d 764, 649 P.2d 839 (1982), we interpreted WAC 458-20-111 (Rule 111) as excluding from a taxpayer's gross income payments from the taxpayer's client made to the taxpayer if
(1) it is a customary reimbursement for an advance made to procure a service for the client, (2) the taxpayer does not or cannot render the service, and (3) the taxpayer was not liable for the payment.
Christensen, at 768. Here, the first two criteria were clearly met by the taxpayer. Reimbursement to an attorney for the costs of court reporters, medical examinations and witnesses, messengers, and process servers is a regular practice *191in the legal profession. In addition, these services cannot be rendered by a law firm. It is not as clear under the record presented in this case whether the taxpayer was liable to the third party service providers. There was some evidence presented upon which a rational trier of fact could have found that the taxpayer was liable to such parties. If that conclusion had been reached, then the reimbursements to the taxpayer would not be exempt from the business and occupation tax. In the subject case, however, the trial court found that the taxpayer was not liable for the services provided to its clients. This court will not overturn a finding of fact that is supported by substantial evidence. Beggs v. Pasco, 93 Wn.2d 682, 611 P.2d 1252 (1980); Holland v. Boeing Co., 90 Wn.2d 384, 583 P.2d 621 (1978). Since there is sufficient evidence to support the trial court's findings, they become verities.
In order to avoid future factual disputes as to whether a taxpayer is liable to a third party service provider, it would be prudent for the Department of Revenue to require, or the taxpayer on his own initiative to provide, proof of non-liability. By the simple act of notifying the third party service provider that he will not be liable for his client's expenses, the attorney can ensure that reimbursements he receives from his client will not be subject to the B & O tax. Such a requirement is not novel as many jurisdictions presently require an attorney to notify a third party service provider that the attorney will not be liable for the client's expenses if he wishes to escape liability. Monick v. Melni-coff, 144 A.2d 381 (D.C. 1958); Burt v. Gahan, 351 Mass. 340, 220 N.E.2d 817 (1966); Molezzo Reporters v. Patt, 94 Nev. 540, 579 P.2d 1243 (1978); Gaines Reporting Serv. v. Mack, 4 Ohio App. 3d 234, 447 N.E.2d 1317 (1982); C.C. Plumb Mixes, Inc. v. Stone, 108 R.I. 75, 272 A.2d 152 (1971).
Explicit notification to the third party service provider will not impose an undue burden on attorneys. Moreover, notification will ensure that the taxpayer, the Department of Revenue, and third party service providers will not have *192to litigate whether the taxpayer, in any particular circumstance, is liable to the third party service provider for services provided to the taxpayer's client.