Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


Olympia - The U.S. Supreme Court today announced that it will not review a Washington Supreme Court decision upholding Washington's Business and Occupation (B&0) tax on manufacturing and sales activities inside and outside of Washington.

The high court's decision to deny certiorari in two related B&O-tax cases means that the decision in those cases last April by the Washington Supreme Court will stand. The case involved hundreds of millions of dollars in potential tax refunds to the plaintiffs.

The state Supreme Court opinion upheld a credit system adopted by the Legislature in 1987 to excuse taxes that companies are required to pay on multiple business activities in more than one state. The credit system provides for the issuance of B&O tax credits against payments the companies would otherwise have to pay.

In the April opinion, the state Supreme Court also denied relief to corporations that were seeking refunds for double payments made before the U.S. Supreme Court held such taxation unconstitutional in 1987.

Today's denial of "cert" covered two Washington cases: Buffelen Woodworking Co., et al v. Washington Department of Revenue and W.R. Grace & Co.—Conn. v. Washington Department of Revenue. The plaintiff-appellants include more than 100 corporations that were seeking reimbursement for taxes paid on gross receipts derived from their manufacturing and sales activities inside and outside of Washington.

The appellants argued that the tax-credit system developed by the Legislature did not adequately resolve the constitutional problems identified by the U.S. Supreme Court in 1987.

The 1987 case, Tyler Pipe Industries, Inc., v. Washington State, found provisions of the B&O tax unconstitutionally discriminated against corporations that had to pay taxes on manufacturing and selling activities in more than one state. The Legislature adopted the tax-credit system to correct the problem.

The Washington Supreme Court subsequently upheld the legislative remedy in two opinions that the U.S. Supreme Court allowed to stand without review.