On April 25, the Washington Court of Appeals held that a company that arranges and manages displays for installation and placement in multiple retail brands’ stores through subcontractors was subject to the state’s retailing business and occupation tax (the “B&O tax”) and retail sales tax as a retailer making retail sales, rather than a provider of “services and other activities.” According to the court, the company made “retail sales” by arranging and managing such “roll-out” work in Washington.

The company, Dynamic Resources, Inc. (DRI), performs services for various brands and retailers. When one of its clients has a marketing campaign, DRI arranges and manages the installation of visual displays, window displays, branding elements, vinyl decals and in-store marketing promotions in the brands’ locations throughout the country by subcontracting with its network of contractors.

DRI argued that its visual display work did not meet the definition of a “retail sale” and instead fell within the catchall B&O tax classification for “services and other activities” subject to different tax rate and sourcing rules. The court disagreed and held that DRI’s business activities constituted “retail sales” based on a plain reading of the statute. According to the court, DRI: (1) “clearly ‘installed’ personal property performing its roll-out work,” and (2) made statutory “retail sales” in connection with its visual display work by decorating “‘new or existing buildings or other structures under, upon, or above real property.’”

Dynamic Res., Inc. v. Dep’t of Revenue, No. 83281-6-I, Wash. Ct. App. (Apr. 25, 2022).