SeeSALT Blog
On September 30, 2021, the Washington Supreme Court upheld the constitutionality of the state’s 1.2% Business & Occupation (“B&O”) surtax on large financial institutions. Wash. Bankers Ass’n v. State, No. 98760-2 (Wash. 2021). The surtax, which went into effect January 1, 2020, applies to every “specified financial institution,” which is defined in relevant part as a financial institution that is a member of a consolidated financial institution group with consolidated annual net income of $1 billion or more. 
The Washington Bankers Association and the American Bankers Association (collectively, the “Associations”) filed a declaratory relief action seeking to invalidate the surtax on the grounds that the measure discriminates against interstate commerce in violation of the Commerce Clause. In 2020, a Washington trial court entered summary judgment for the Associations, holding that the statute discriminates against interstate commerce in purpose and effect. The trial court also held that the Associations had standing under the state’s Uniform Declaratory Judgments Act (the “UDJA”) to bring an action on behalf of their members challenging the surtax. Continue Reading ›
to include with their sales tax returns an additional schedule that reports gross receipts based on the “ship to” or destination location. The bill targeted online retailers with over $50 million in annual sales of tangible personal property. Qualifying online retailers that failed to report this information would have been subject to a penalty of $5,000.
California’s Court of Appeal held a local sales tax ordinance (Measure K) was a general tax, not a special tax, and therefore its adoption did not require a two-thirds vote (supermajority) under California’s Constitution. A tax is “special” and therefore would require a two-thirds vote, when the expenditure of its revenues is dedicated to a specific project or projects. The plaintiffs argued that Measure K was a special tax because the funds were earmarked for the funding of the county’s public safety services and essential services. The Court of Appeal disagreed, concluding tax proceeds that are deposited in a separate account for unspecified “other essential services” could be used for any and all government services that qualify as an “essential service” and are therefore not dedicated to a specific project or purpose, indicative of a general tax. Thus, the court held Measure K was valid.
