In a taxpayer-friendly decision, a Washington State administrative law judge ruled that an out-of-state food products company did not have nexus with the state. The case, however, involved unique circumstances: a sales manager made two visits over a five-year period to an international wholesale buyer in Washington to promote sales of a product, and the product was shipped from out-of-state through the buyer’s location outside Washington to overseas locations. The administrative law judge applied the state’s nexus regulation, which turns on whether “the activity carried on by a seller in Washington is significantly associated with the seller’s ability to establish or maintain a market for its products in Washington.” The administrative law judge concluded that the company did not have nexus with the state because its visits to Washington were for the purpose of making out-of-state sales and not for the purpose of making sales in Washington. You can read the full decision here.
This case appears to follow a recent taxpayer-friendly trend in Washington. While it related to a different type of tax (utility tax on gross income), the recent case CMS v. City of Lakewood also limited the scope of nexus in the State of Washington by noting that the taxpayer was not selling, brokering, or furnishing natural gas “in the City” of Lakewood, despite occasional visits (less than three per year) to the city.