Summary
The Ninth Circuit certified a question of Washington law to the Washington Supreme Court concerning whether a seller may recoup business and occupation taxes through a disclosed surcharge on a monthly service contract. The court considered Washington Revised Code section 82.04.500 and compared the circumstances to Washington decisions addressing disclosure and itemization of business and occupation taxes. Further proceedings in the federal appeal were stayed pending the Washington Supreme Court's decision on whether to accept and answer the certified question.
Topics
Practice areas
Questions Presented
- Whether, under Washington Revised Code section 82.04.500, a seller may recoup business and occupation taxes by disclosing before sale of a monthly service contract that it will collect a surcharge to cover gross receipts taxes.
- Whether the unsettled issue of Washington law should be certified to the Supreme Court of Washington.
Holdings
- The Ninth Circuit certified to the Supreme Court of Washington the question whether a seller may recoup its business and occupation taxes under Revised Code of Washington section 82.04.500 when, before the sale of a monthly service contract, the seller discloses that it will collect a surcharge to cover gross receipts taxes.
Key quotations
“Under Revised Code of Washington section 82.04.500, may a seller recoup its business and occupation taxes where, prior to the sale of a monthly service contract, the seller discloses that in addition to the monthly service fee, it collects a surcharge to cover gross receipts taxes?” (1333)
Factual background
In November 2004, James Bowden purchased three cellular telephones and monthly service plans from a Cingular kiosk. The written service agreement disclosed a regulatory cost recovery fee, gross receipts surcharge, and applicable taxes and governmental fees, but did not disclose the amount of the Washington business and occupation tax surcharge. Bowden was subsequently billed varying monthly amounts identified as a State B & O Surcharge. The district court held that Cingular's billing practice did not violate Washington Revised Code section 82.04.500.
Procedural history
Peck initially filed suit in Washington state court, and Cingular removed the case to federal court. After the district court dismissed the claims on federal-preemption grounds, the Ninth Circuit reversed and remanded to state court. Bowden later joined the action and sought class certification; Cingular again removed the case and obtained summary judgment. The Ninth Circuit certified a question concerning recovery of Washington business and occupation taxes and stayed the appeal pending the Washington Supreme Court's response.
Remand instructions
The court certified the question to the Supreme Court of Washington, ordered the clerk to transmit the order and appellate materials, and stayed further proceedings in the Ninth Circuit pending the Washington Supreme Court's decision whether to accept review and, if accepted, its answer. The parties were ordered to file joint reports concerning the status of the certified question.