Employee wages paid directly by hotel owners to a payroll processing company were taxable to hotel management companies as gross income of the business for Washington business and occupation (B&O) tax purposes even though the hotel management companies never actually received the employee wages. Such amounts were not deductible because the payment of employee wages is a cost of doing business. Further, the wages were not deductible under WAC 458-20-111 as advances or reimbursements because the taxpayers did not establish that they each had an agency relationship with the hotel owners and that their liability to pay employee wages was solely in their capacity as the hotel owners’ agents. (Tax Determination No. 13-0336, Washington Department of Revenue, May 30, 2014.)
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