Avnet, Inc. v. Department of Revenue

González, J.

(concurring)

¶36 I concur with the lead opinion in result. Neither the dormant commerce clause nor the Department of Revenue’s former “Rule 193” (former WAC 458-20-193 (1992)) precludes imposition of business and occupation (B&O) tax on Avnet’s national and drop-shipped sales. U.S. Const. art. I, § 8, cl. 3. I write separately to stress that for B&O taxation purposes, the “purchaser” in Rule 193 is the entity that ultimately takes possession of goods in Washington, regardless of the fact that there was a broker in the middle who placed the order on behalf of the ultimate purchaser.

¶37 The Washington Legislature manifested a clear intent to impose the B&O tax on virtually all business activities carried on in the state. Time Oil Co. v. State, 79 Wn.2d 143, 146, 483 P.2d 628 (1971). Washington courts have repeatedly ruled that the B&O tax applies to all business activities not expressly excluded. Id. Construing “purchaser” as narrowly as the dissent advocates would be inconsistent with the relevant regulations, the legislature’s expressed intent, and our precedent finding B&O taxation *68covers virtually every business activity in Washington. Rule 193(7); RCW 82.04.220; Steven Klein, Inc. v. Dep’t of Revenue, 183 Wn.2d 889, 896, 357 P.3d 59 (2015) (“Washington’s B&O tax system is extremely broad.”); Simpson Inv. Co. v. Dep’t of Revenue, 141 Wn.2d 139, 149-50, 3 P.3d 741 (2000); Budget Rent-A-Car of Wash.-Or., Inc. v. Dep’t of Revenue, 81 Wn.2d 171, 172-73, 500 P.2d 764 (1972); Time Oil Co., 79 Wn.2d at 146.

¶38 Washington does not assert B&O tax on sales of goods originating outside the state unless the goods are received by the purchaser in our state and the seller has a sufficient nexus to our state. Rule 193(7). Avnet has a nexus with the state because its in-state activities were not separate and independent from its sales to Washington customers. See Norton Co. v. Dep’t of Revenue, 340 U.S. 534, 71 S. Ct. 377, 95 L. Ed. 517 (1951); Gen. Motors Corp. v. Washington, 377 U.S. 436, 84 S. Ct. 1564, 12 L. Ed. 2d 430 (1964), overruled on other grounds by Tyler Pipe Indus., Inc., v. Wash. State Dep’t of Revenue, 483 U.S. 232, 107 S. Ct. 2810, 97 L. Ed. 2d 199 (1987); Standard Pressed Steel Co. v. Dep’t of Revenue, 419 U.S. 560, 95 S. Ct. 706, 42 L. Ed. 2d 719 (1975); Tyler Pipe, 483 U.S. 232; Chi. Bridge & Iron Co. v. Dep’t of Revenue, 98 Wn.2d 814, 816-17, 659 P.2d 463 (1983). The goods at issue in Avnet’s drop-shipped sales were received by the purchaser in our state because the entity ultimately taking possession of those goods was a Washington purchaser, regardless of the fact that there was a facilitator elsewhere. Construing “purchaser” to encompass the ultimate Washington purchaser follows our precedent and follows the legislature’s clear intent to impose B&O tax on virtually all business in our state.

¶39 With these observations, I join the lead opinion in result.

Yu, J., concurs with González, J.