TAXATION ‑- RETAIL SALES AND BUSINESS AND OCCUPATION TAX ‑- AUTOMOBILE PARKING AND STORAGE GARAGE BUSINESS

TAXATION ‑- RETAIL SALES AND BUSINESS AND OCCUPATION TAX ‑- AUTOMOBILE PARKING AND STORAGE GARAGE BUSINESS

(1) Municipal corporations which operate "automobile parking and storage garage businesses" are subject to the retail sales tax imposed by § 1, chapter 24, Laws of 1961, (RCW 82.04.050) regardless of whether the collections are made by meters.

(2) Municipal corporations are required to pay the business and occupation tax when they operate a parking lot.  However, when they lease the operation of the facilities to private parties the operator rather than the municipality must pay the tax.

(3) Agencies of the state of Washington, such as the University of Washington, are not required to collect the sales tax and are not subject to the business and occupation tax.

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                                                                  August 8, 1961

Honorable August P. Mardesich
State Representative, 38th District
4712 Mermont Drive
Everett, Washington

                                                                                                                Cite as:  AGO 61-62 No. 52

Dear Sir:

            By letter previously acknowledged you requested an opinion of this office on several questions concerning the interpretation of § 1, chapter 24, Laws of 1961, Ex. Sess.  Specifically you desire to know:

            (1) Are municipal corporations which operate "automobile parking and garage businesses" required to collect the sales tax?

            (2) If Question (1) is answered in the affirmative, does it make any difference if collections are made by meters?

            (3) Are municipal corporations required to pay business and occupation taxes:  (a) When they lease real property to another for operation of a parking lot; (b) when they operate a parking lot?

            (4) Are agencies of the state of Washington, such as the University of Washington, required to collect the sales tax, and are they subject to the payment of the business and occupation tax?

             [[Orig. Op. Page 2]]

            We answer questions (1) and (3) (b) in the affirmative; questions (2), (3) (a) and (4) in the negative.

                                                                     ANALYSIS

            During its last session the legislature enacted chapter 24, Laws of 1961, Ex. Sess., relating to the general subject of revenue and taxation.  In § 1 of the act, the scope of the business and occupation tax was extended so as to include "automobile parking and storage garage businesses."  This was accomplished simply by expanding the definition of the term "sale at retail" by amending RCW 82.04.050 to read in pertinent part as follows:

            "The term 'sale at retail' or 'retail sale' shall include the sale of or charge made for personal, business or professional services, including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, received by persons engaging in the following business activities: . . . (d) automobile parking and storage garage businesses."

            Question (1):

            In order to answer your first question it is only necessary to determine whether municipal corporations are included within the term "person" as it is used in the above statute.  The legislature has defined this term as it is used in chapter 82.04 RCW (RCW 82.04.030) and chapter 82.08 RCW (See 82.08.010 (2) (4)) as follows:

            "'Person' or 'company,' herein used interchangeably, means any individual, receiver, assignee, trustee in bankruptcy, trust, estate, firm, copartnership, joint venture, club, company, joint stock company, business trust, municipal corporation, corporation, association, society, or any group of individuals acting as a unit, whether mutual, cooperative, fraternal, nonprofit, or otherwise and the United States or any instrumentality thereof."  (Emphasis supplied.)  (RCW 82.04.030.)

            Thus it is clear that a municipal corporation is a person within the meaning of RCW 82.04.050,supra, and, therefore, subject to the tax imposed thereby when it operates a parking business or storage garage business.  Since the latter terms are not defined in the act they must be given their plain and ordinary meaning.  Crown Zellerbach Corp. v. State, 53 Wn. (2d) 813, 328 P. (2d) 884 (1958);Miller v. Pasco, 50 Wn. (2d) 229, 310 P. (2d) 863 (1957).

             [[Orig. Op. Page 3]]

            It must be borne in mind, however, that the question of whether a municipal corporation is engaged in an activity coming within RCW 82.04.050,supra, is one of fact which will have to be determined by the state tax commission in each case with the advice of this office.

            Question (2):

            In the event that it be determined that the activity carried on by a municipal corporation falls within the provisions of RCW 82.04.050, supra, the fact that "meters" are employed would not, in our opinion, affect in any way the application of the statute and the conclusion stated above.  Or to state it another way, the fact that the charge is collected through the use of a meter does not exempt the charge from the imposition of the sales tax.

            It should be noted, however, that under the provisions of RCW 82.08.080, a municipal corporation, like any other operator, may be allowed, upon proper application to the tax commission and upon a finding by the tax commission that the collection of the tax from the customer as a separate item is impracticable, to waive collection of the tax from the customer.

            Question (3):

            (a) When city-owned parking facilities are leased, for operation, to private individuals pursuant to RCW 35.86.040, the city, in our opinion, can hardly be said to be engaged in the "automobile parking business."  The lessee‑operator of the facilities is, of course, engaged in said activity and, therefore, must pay the business and occupation tax and collect the retail sales tax.

            In this connection, you have asked "if a contractor carries on the activity, is he entitled to a resale certificate from the municipality to exempt him from the sales tax?"  A resale certificate is obtained by a seller from a buyer who certifies that he is purchasing property for resale.  This relieves the seller from the necessity of collecting the sales tax from the buyer.  The city, of course, is not buying anything from the lessee‑operator.  Accordingly, we fail to see why the lessee‑operator should be entitled to a resale certificate from the city.

            (b) This portion of Question (3) has been answered by what we have previously said in answer to Question (1).

            Question (4):

            Your fourth question is whether agencies of the state of Washington, such as the University of Washington, which operate parking lots for which a charge is made, are required to collect the sales tax and whether they are subject to the payment of the business and occupation tax.

             [[Orig. Op. Page 4]]

            Although the legislature in RCW 82.04.030, supra, included municipal corporations within the definition of the term "person" it did not so include the state of Washington or its agencies.  Thus agencies of the state of Washington, such as the University of Washington (see,State ex rel. Pate v. Johns, 170 Wash. 125, 15 P. (2d) 693 (1932)) are exempt from the payment of the business and occupation tax and the duty of collecting the retail sales tax.

            We trust the foregoing will be of assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

JOHN W. RILEY
Assistant Attorney General