Washington – Taxability of Charter Fishing Boat’s Bait Purchases

SALT Report 1893 – The Washington Department of Revenue ruled that a charter fishing business’ purchases of bait were subject to tax.  The Taxpayer operates a charter fishing boat business in Washington State and for a fee he takes his customers on fishing excursions.  Included in the fee is transportation to the fishing areas, the fishing rod, reel, tackle, and bait.  Occasionally, passengers will bring their own fishing rods and equipment and the Taxpayer will adjust the price.  In either situation, the Taxpayer charges his customers sales tax.

During an audit, it was discovered that the Taxpayer was purchasing bait from a vendor without paying sales tax.  Upon completion of the audit, the Department assessed sales tax, retailing B&O tax, and use tax, as well as interest and penalties on the untaxed purchases.  The Taxpayer appealed the assessment arguing that he should not have to pay sales tax on the bait because he charges his customers sales tax on the all-inclusive charter fee, which includes the bait.

The Department determined that the Taxpayer’s charter fishing boat service falls under the recreation and amusement services category and is subject to retail sales tax and retailing B&O tax under Rule 183(5)(c). The rule provides that: “retail sales tax applies upon the purchase or rental of all equipment and supplies by persons providing amusement, recreation, and physical fitness services, other than merchandise that is actually resold by them.”

Because the Taxpayer did not purchase the bait for resale in the ordinary course of business sales tax applied.  Therefore, the Taxpayer’s appeal was denied and the assessment was enforced.

For Further Information:

Washington Department of Revenue – Tax Determination No. 11-0313