TAXATION ‑- STATE ‑- FISH ‑- APPLICABILITY OF FISH SALES TAX AND PRIVILEGE FEE TO COLD STORAGE FACILITIES
(1) When a cold storage facility receives, processes or stores fish caught either within or without the state of Washington, on behalf of others who retain ownership of the fish, that cold storage facility is not obligated to pay or collect either the fish sales tax (RCW 75.32.065) or the privilege fee (RCW 75.32.030).
(2) The exemption from the fish sales tax and privilege fee created by RCW 75.32.065(1) for ". . . frozen food fish . . . packaged for retail sales . . . previously landed in another state, territory or county . . ." does not include fish transported to the state of Washington packaged in ice.
(3) The Department of Fisheries, in collecting taxes and fees due but unpaid, may not administratively waive penalties and interest prescribed by RCW 75.32.101.
- - - - - - - - - - - - -
May 10, 1979
Honorable Gordon Sandison
Department of Fisheries
General Administration Bldg.
Olympia, Washington 98504 Cite as: AGLO 1979 No. 20
By letter previously acknowledged you requested our opinion on several questions involving the fish sales tax and privilege fee under chapter 75.32 RCW. We paraphrase your questions as follows:
(1) When a cold storage facility receives, processes or stores fish caught either within or without the state of Washington, on behalf of others who retain ownership [[Orig. Op. Page 2]] of the fish, is that cold storage facility obligated to pay or collect either the fish sales tax (RCW 75.32.065) or the privilege fee (RCW 75.32.030)?
(2) Does the exemption from the fish sales tax and privilege fee created by RCW 75.32.065(1) for ". . . frozen food fish . . . packaged for retail sales . . . previously landed in another state, territory or county . . ." include fish transported to the state of Washington packaged in ice?
(3) May the Department of Fisheries, in collecting taxes and fees due but unpaid, administratively waive penalties and interest prescribed by RCW 75.32.101?
We answer all three question in the negative for the reasons set forth in our analysis.
By your reference to a cold storage facility we understand that you have in mind the following type of operation: Fish caught in Alaska, Canada, Washington and Oregon are transported to cold storage facilities in the state of Washington. Either prior to their transportation or while en route, the fish may be partially or fully dressed, frozen in the round, glazed, or simply maintained in a controlled atmosphere to avoid spoilage. When the fish are received by the cold storage facility, it may provide a variety of services, including sorting, dressing, freezing, packaging and storing the fish. The services performed by the cold storage facility are requested by the owner of the fish (normally a wholesale dealer) and that owner is charged, generally, on the basis of the time required to perform the the service, the weight of the product or the time in storage. The fish remain in the cold storage facility until the owner requests the facility either to deliver or make the fish available for delivery.
[[Orig. Op. Page 3]]
The Privilege Fee:
The State has since 1949 imposed and collected a privilege fee, based upon the value of fish, on those engaged in the fishing industry.1/ See, chapter 107, Laws of 1949. While that fee was, and is, imposed on ". . . canners, curers, freezers, wholesale dealers, retail fish dealers, or fish by-products manufacturers . . .," the responsibility for collection and payment has been placed upon the "original receiver"‑-a term which is statutorily defined. Recently, by chapter 327, Laws of 1977, 1st Ex. Sess., the legislature substantially increased the privilege fee, which now varies from 2% to 5% (by species of fish) of the primary market value.
The specific statutes involved now read as follows:
"In addition to all other taxes, licenses or fees provided by law there shall be paid to the state of Washington by those engaged in the fishing industry in this state the privilege fees as provided for in this chapter."
"Canners, curers, freezers, wholesale dealers and retail dealers of food fish and shell fish, other than oysters, and manufacturers of food fish and shellfish byproducts, other than oyster byproducts, (1) shall pay a privilege fee equal to five percent of theprimary market value on all fresh or frozen chinook, coho, and chum salmon, or parts thereof, which they receive, handle, deal in, or deal with asoriginal receiver in the state; (2) shall [[Orig. Op. Page 4]] pay a privilege fee equal to three percent of the primary market value on all fresh or frozen pink and sockeye salmon, or parts thereof, which they receive, handle, deal in, or deal with as original receiver in the state; and (3) shall pay a privilege fee equal to two percent of the primary market value on all other fresh or frozen food fish and shellfish, or parts thereof, except oysters, which they receive, handle, deal in or deal with, as original receiver in the state: PROVIDED, That any person or sales agency selling fresh or frozen food fish or shellfish, or parts thereof, to purchasers of food fish or shell fish residing outside the state of Washington which had been previously landed in the state, shall be responsible for and shall pay the privilege fees herein provided." (Emphasis supplied)
". . .
"'Original receiver' means the persons first receiving, handling, dealing in, or dealing with the fresh or frozen food fish or shellfish within the jurisdiction of the state of Washington as a canner, curer, freezer, retail dealer, wholesale dealer, byproducts manufacturer, or branch plant."
In examining the foregoing statutes, it is important to note that while the privilege fee may be collected from various participants in the fisheries industry, that fee is only paid once and there are no additional fee payments by subsequent handlers. A second important element to be noted is that the privilege fee is expressed as a percentage of the price paid, and the fish purchaser is to deduct the fee from the amount paid to the seller. The purchaser, therefore, has the obligation to transmit the fee to the state. This is the converse of the collection mechanism for the general state retail sales tax which is paid by the purchaser and collected by the seller. RCW 82.08.050.
The Fish Sales Tax:
In addition to substantially increasing the privilege fee as above noted, the 1977 legislature, by its enactment of [[Orig. Op. Page 5]] chapter 327, Laws of 1977, 1st Ex. Sess., also established a fish sales tax which varies from 1% to 2 1/2% of the primary market value. The applicable statutes with regard to this tax include both RCW 75.32.001 (defining "primary market value") and RCW 75.32.080 (defining "original receiver") as above quoted. The tax itself is imposed by RCW 75.32.055 which reads, in pertinent part:
". . . there is hereby imposed a fish sales tax on the privilege of selling food fish or shellfish, or parts thereof, to an original receiver as defined in RCW 75.32.080, as now or hereafter amended. The tax shall be as follows:
"(a) Two and one‑half percent of the primary market value on all fresh or frozen chinook, coho, and chum salmon, or parts thereof; [subsections b and c respectively impose a one and one‑half and a one percent tax on other species of fish]."
In addition, note is to be made of the opening paragraph of RCW 75.32.080 (the second paragraph of which defines "original receiver"), providing as follows:
"The fish sales tax provided for herein shall be deducted from the payments made by the original receiver to the person selling the food fish or shellfish to the original receiver, and the original receiver shall collect the taxes and remit them to the director."
And finally, note must also be made of RCW 75.32.033, codifying § 23, chapter 327,supra, which provides, in subsection (1) that:
". . .
"(1) In respect to each transaction in which the fish sales tax is collected pursuant to RCW 75.32.080, as now or hereafter amended, and a privilege fee is owed, the amount of the sales tax collected shall be credited against such privilege fee.
". . ."
[[Orig. Op. Page 6]]
Thus, it will readily be seen that the privilege fee and the fish sales tax are to a considerable degree interrelated; this relationship being highlighted by the last quoted statutory language permitting a credit for the sales tax collected to be taken against the amount of the privilege fee which would be payable with respect to the same fish.
We will divide our consideration of your first question into two parts, taking up, first, the matter of the fish sales tax.
The Fish Sales Tax:
This tax is an excise tax imposed on a transaction; i.e., the selling of food fish. RCW 75.32.055 expressly declares that the "fish sales tax" is imposed "on the privilege of selling food fish." Consistent with the sales tax being a transactional tax is the collection mechanism provided in RCW 75.32.080 which states that "The fish sales tax . . . shall be deducted from the payments made by the original receiver to the person selling the food fish . . ." In the situation you have described, however, the cold storage facility is simply not involved in either the purchase or sale of fish. Instead, the facility merely handles fish owned by someone who may have acquired the fish by a prior purchase. Therefore, the cold storage facility being neither a seller nor a purchaser, it has no obligation either to pay or to collect the fish sales tax. To that extent, we thus may readily respond to your first question in the negative.
The Privilege Fee:
This tax or fee, on the other hand, poses a somewhat more difficult problem. At first blush the applicable statutes, as above quoted, would appear to indicate that the cold storage facility would be subject to the privilege fee. Accord, RCW 75.32.030 which imposes the privilege fee on "canners, curers, freezers, . . ." when they are the "original receiver" which, as defined in RCW 75.32.080, is the ". . . person first receiving, handling [etc.] . . . fish . . . within the jurisdiction of the state of Washington . . . ." InVita Food Products v. State, 91 Wn.2d 132, . . . . P.2d . . . . (1978) the court observed as follows:
[[Orig. Op. Page 7]]
"The statute is clear on its face. It defines the original receiver as the first person actually, physically receiving the fish." (Supra, at 133.)
Nevertheless, it is our understanding that the Department of Fisheries (which administers and collects both the privilege fee and the fish sales tax) has consistently, in the past, collected the privilege fee from those who own the fish but not from cold storage facilities which, although in possession of the fish, do not own them. Indeed, we are informed that this has been the practice of the department for at least the last 30 years. In our opinion, based upon a closer reading of the statutes, the department's longstanding administrative construction and practice is correct and, accordingly, we would also answer this facet of your first question in the negative.
Let us quote, once again, the definition of "original receiver" from RCW 75.32.080, supra:
"'Original receiver' means the person first receiving, handling, dealing in, or dealing with the fresh or frozen food fish or shellfish within the jurisdiction of the state of Washington as a canner, curer, freezer, retail dealer, wholesale dealer, byproducts manufacturer, or branch plant."
Under RCW 75.32.080, the operative verbs subjecting one to the privilege fee are "receive, handle, deal in, or deal with" food fish. But the privilege fee is imposed only upon the first such person, i.e., the "original receiver." Who is this first person in the situation contemplated by your question? While the cold storage facility may well be the first place in which the fish entering the State come to rest, those fish when in transit are handled by either the owner of the fish or a transporter acting as an agent of the owner of the fish‑-delivering them to some location within the state. The owner (normally the wholesale fish buyer who purchased the fish from fishermen either within or without the state) has directed that his fish be transported to a cold storage plant for processing and storage. When such fish enter the state on behalf of that owner, the owner is "dealing in or dealing with" the fish‑-which is within the definition of an original receiver in RCW 75.32.080.
[[Orig. Op. Page 8]]
It will readily be noted that the foregoing emphasis upon the owner of the fish is consistent with the statutory method for calculating and collecting the privilege fee. The fee, under RCW 75.32.030, is computed with reference to the "primary market value" of the fish being processed. That term, as we have seen, is also statutorily defined (RCW 75.32.001) and refers to
". . . the exvessel price paid by the purchasers of food fish and shellfish to the seller at the point where ownership or title to the food fish or shellfish passes."
This definition thus refers to a sale which establishes the value upon which the privilege fee is imposed. The owner (unless the owner is the original fisherman) has, of course, obtained ownership by virtue of a sale.
Finally, the imposition of a fee which is based upon the gross value of the fish is consistent with the imposition of that fee upon the owner since it relates to the value of the product and not the value of the services performed. For example, with reference to a cold storage facility, the total charge by such a facility on a per pound basis for its services is substantially less than would be the privilege fee which is imposed on the value of the fish.
Thus, in summary, for the foregoing reasons we answer question (1),supra, in the negative. Moreover, we believe this conclusion is consistent with the advice rendered by this office in AGO 1945-46, page 976, a copy of which is enclosed. In that opinion it was concluded that under similar facts a buyer bringing fish into the state for storage and resale was subject to the payment of the (then) privilege fee. That analysis is also consistent with RCW 75.32.033(2), which reads as follows:
"(2) Any sales tax, catch tax, landing tax, or other tax or fee on food fish or shellfish, or parts thereof, purchased by an original receiver, as defined in RCW 75.32.080, as now or hereafter amended, in another state and imposed on the receiver by such state shall be credited against the amount of privilege fees owed in respect to such food fish or shellfish, or parts thereof."
[[Orig. Op. Page 9]]
It is the owner who is in a position to document and take credit for taxes collected at the time of his purchase.
Next you have asked:
Does the exemption from the fish sales tax and privilege fee created by RCW 75.32.065(1) for ". . . frozen food fish . . . packaged for retail sales . . . previously landed in another state, territory or county . . ." include fish transported to the state of Washington packaged in ice?
We believe that another prior opinion of this office, AGO 59-60 No. 71 (copy enclosed), is determinative of this question. In that opinion we advised that the term "fresh fish" should be interpreted as commonly understood in the fishing industry. Fish which are cooled or packed in ice are considered fresh, not frozen, in the industry. This distinction was later noted by our state supreme court inBornstein Sea Foods v. State, 60 Wn.2d 169, 372 P.2d 547 (1962), wherein the court observed as follows with reference to fish products:
". . . It is therefore necessary to distinguish between that portion of appellant's production that is packaged and frozen and delivered to the market and that portion of appellant's production that is iced, placed in tins, and sold on the fresh market.
. . ."
We thus conclude that fish which are transported to the state packed in ice do not qualify for the "frozen fish" exemption provided for in RCW 75.32.065(1), the full text of which reads as follows:
"(1) The privilege fees and fish sales taxes provided for in this chapter shall be paid on all fresh or frozen food fish or shellfish handled by the original receivers regardless of where the fish or shellfish were caught: PROVIDED, That no fee or tax shall be paid on frozen food fish or frozen shellfish or on food fish or shellfish which has been packaged for retail sales and that has been previously landed in another state, territory, or country."
This question asks:
May the Department of Fisheries, in collecting taxes and fees due but unpaid, administratively waive penalties and interest prescribed by RCW 75.32.101?
RCW 75.32.101 requires that when the fees and taxes payable under chapter 75.32 RCW become delinquent ". . . the schedule of penalties stated belowshall be invoked." (Emphasis supplied) Those penalties are specifically stated with reference to the period of time for which the fees and taxes have been delinquent.2/ It has long been the recognized rule in this state that an administrative officer, in the absence of authority from the legislature, has no power to waive the collection of taxes lawfully provided for or to compromise a tax bill which is owing to the State. As stated by the court inMonroe Logging Co. v. Dept. of L&I, 21 Wn.2d 800, 803, 153 P.2d 511 (1944),
". . . That an administrative officer has no power to waive the collection of taxes provided for by legislative enactment, is elementary."
In the instant case, by RCW 75.32.101, the legislature has mandated (as evidenced by the word "shall") the collection of the penalties and interest, if applicable, and has not provided any statutory authority for an administrative waiver of such penalties or interest. We should also note that inUnited States Steel Corp. v. State, 65 Wn.2d 385, 397 P.2d 440 (1964), it was concluded that a permissive rather than mandatory statutory provision (RCW 82.32.050) relating to [[Orig. Op. Page 11]] the business and occupation tax was constitutionally invalid insofar as it provided that the State Tax Commission "may" add interest at the rate of 6% to delinquent taxes. That invalidation was predicated on a lack of any standards prescribing the exercise of discretion by the Tax Commission. Similarly, the reasoning of that case would require legislative standards if the director of Fisheries was deemed to be empowered to waive penalties which are otherwise mandatory. In the present situation, however, there are neither any legislative standards nor any authorization to waive. We therefore conclude that the director does not have the administrative authority to compromise or waive the penalties and interest required by the statute. Accordingly, we also answer this question in the negative.
This completes our consideration of the issues raised by your opinion request. We trust that the foregoing will be of assistance to you.
Very truly yours,
EDWARD B. MACKIE
Deputy Attorney General
*** FOOTNOTES ***
1/Prior to 1949 the privilege fee was measured by the weight not the value of fish. See, § 9, chapter 90, Laws of 1923 and chapter 222, Laws of 1937.
2/It should also be noted that the interest rate of 8% only applies when the payment has been delinquent for 90 or more days.