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.’”