Dave Hardy                                                                                 Dale W.         Steager 
    Secretary of Revenue                                                                  State Tax Commissioner 
                                     STATE TAX DEPARTMENT 

                                                 August 6, 2018 

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The Honorab   le Mac Warner                                                                         '              ..,.., 
                                                                                                                            ''l 
Secretary of State 
Building   I, Suitel57-K 
1900 Kanawha Boulevard, Eas        t                                                                               F 
Charleston,   West Virginia  25305                                                                                 ........ '  ! 1 
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Dear Mr. Secretary:                                                                                 ::.i :    ':   !? 
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     Attached please find     an original and           two    copies of the West Virginia State Tax 
Commissioner's Notice      ofNonacquie      sce  nce to       theDeci ions ofthe West Virginia Office                     ofTax 
Appeals in Docket No.  15-31 OCU.         The original         is submitted for filing in       the West Virginia 
Register.  Please indicate on the two     copies the          date offiling a   nd return the cop sie           to the    Legal 
Division.  1001 Lee Street East,,    4th  Floor, Charleston WV,            2530I. 

     We    thank  you in   advance for      your assistance. 

                                                                   Very truly      yours, 

                                                               ~).~ 
                                                                   Mark S.  Morton 
                                                                   General Counsel 

MSM 
Attachment 

                    Legal  Division, I00I Lee Stree Et sa t,P.O.Box I005 ,Charleston, WV 25324-1005 
                                               Teleph     one 304-558-5330 
                                                    Fax   304-558-8728 

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         Dave Hardy                                                                                    Dale W     . Steager    -        .J 
     Secretary ofReve   nu  e                                                                       State Tax Commi     ssione r 
                                      STATE TAX DEPARTMENT 

                                      NOTICE OF NONACQUIESCENCE                                                                  r-•\r,~ 
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   West Virginia State Tax Department Notice of Nonacquiescence to the West Virginia                                             · .~'..TE 
                  Office of Tax Appeals Decision in Docket Number 15-310CU 

        Pursuant to West Virginia Code §11-10-10a the,                           West Virginia  State Tax Commissioner 
hereby gives notice that although,       not appealing the decision of the West Virginia Office of Tax 
Appeals  rendered in Docket         No.  15-310CU,               issued      May 3,2018      ,  he  has adopted  a position  of 
Nonacquiescence      in regard to that Decision            . 

        Nonacquiescence means that the Tax Commissioner does not accept one                                         or more of the 
adverse conclusions reached           by the Office of Tax Appeals,even though                         no appeal    is  taken from 
the decision.The decision     is binding        on   the Tax Commissioner in the case                     not appealed,but       is 
not binding  in  any other case.W        .Va.     Code§ 11-10-10a(c)              . 

        The  issue reviewed   in      the subject Decision [Docket Number 15-310CU] was whether an 
out of state travel   accommodation  business  conducting  business                             in  West Virginia   is  subject to 
sales tax on   the  commissions and fees it earned for its services .                            The  Petitioner    in  this matter 
contacts  hotels  in West Virginia  and  obtains  lodging  accommodations for                             its corporate    clients. 
These clients request    lodgingfor their employees                    on jobsites inWest Virginia often,          for extended 
time periods   . Petitioner makes the  reservations  for its clients employees '                          with  hotels     in West 
Virginia.    Petitioner  monitors     the     accommodations  and  ensures  that  certain                           occupancy    is 
maintainedin those accommodations.The hotels bill Petitioner for the rooms Petitioner.                                  reviews 
the bills for accuracy and addresses any errors or issues directly with the hotel.  Petitioner then 
forwards  the  bills to its clients,after including charges for Petitioner s'services The.                         clients     then 
remit total  payment to  Petitioner.Petitioner                   keeps       the portion  of the payment attributable to         its 
fees,and then    remitsthe balance of the payment to the hotels                         . In cases where Petitioner         is paid 
a  commission  by  the  hotels,     after payment                is received  by  the  hotel, the  hotel          then  remits the 
commissions back to Petitioner. 

        The  Office  of  Tax  Appeals  erred               in    both        its analysis  of  the     relevant    facts,and  the 
application of the law to those facts         in     its decision.The Office of Tax Appeals expressly                      ignores 
two  of its  own previous   decisions,both  dealing with  out  of state  entities  providing  services  or 
selling tang ible personal  property in         West Virginia,but without being  physically  located                       in West 
Virginia. In Decisions 12-432U and  14-081CU,the Office of Tax Appeals prev ouslyi                                      ruledd that 
entities that  provided  services     (such       as  snow removal               from   parking  lots)  or that  sold  tangi     ble 
personal  propertyin    West Virginia,but that did not have a physical location                           , nor   any employees 
in West Virginia  (facts identical to the instant case),had sufficient nexus with West Virginia such 
that the services or sales were subject to sales tax                       . In  both prior cases,entities contracted with 
businesses   in  West Virginia to provide services or sell property                         in  West Virginia .     In both cases , 
the  Office  of Tax Appeals  ruled the services                  were        subject to West Virginia  Sales Tax partially, 
relying  on Scripto.  Inc., v.Carson 362,            US    207,80  S         .Ct. 619   (1960).     In Decision  12-432U,the 
Office of Tax Appeals stated : 

                  Tax Commi ssioner"s Office, I 00 I Lee S eettr East P, O.. Box 11771, Charleston, WV 25339-1771 
                                                     Telephone 304-558-0751 
                                                         Fax 304-558-8999 

              Three  times  the  U.S.  Supreme  Court  has been  confronted  with  facts  like 
       those before this Tribunal and each time it has ruled for the taxing authority.        To be 
       clear,  those facts are an , out  ofstate seller with no employees,  property or other 
       direct presence in the taxing state but,  with some person         orpersons operating on 
       the seller's behalf ,orhelping the seller establish a market  thein taxing state      .When 
       one looks    at all the cases cited above this, matter could be decided         on the basis 
       of National Geographic alone. The sales at issue there were mail order sales, just 
       like Bel/as Hess and    Quill. Nonetheless the,  Court found nexus there based upon 
       two offices; two offices in  a state of approximately twenty million people and that 
       did not support the mail order business      in any fashion.Even  oneif  were to rely just 
       on   ScriptoorTyler Pipe    the Petitioner's argument would still be unpersuasive The. 
       bottom line is this based,  upon the facts;  a citizen of Florida could certainly buy a 
       Scripto writing  instrument without dealing with  one  of the  company's salesmen. 
       Someone in Washington could have no contact with a Tyler Pipe salesperson, and 
       still purchase a pipe or fitting from that company. And everyone in California who 
       bought  maps books ,    or  globes  from  a  National  Geographic  catalogue  had  no 
       contact whatsoever with the Society's two advertising sales offices. Yet in all three 
       cases the Supreme Court found sufficient nexus. Here as,the Tax Commissioner 
       correctly  points  out without , the  independent  contractors  operating  on  the 
       Petitioner's behalf nothing, happens. The Petitioner call sell all the window washing 
       services it wants but,  without people in West Virginia to do the washing it's out,        of 
       business   . If the  U.S.  Supreme  Court found  sufficient  nexus      for California to tax 
       National Geographic's catalogue sales when,      the Society's employees        in that state 
       did nothingto support those sales how,       can there be insufficient nexus here when, 
     without the independent contractors the.    Petitioner before  us is out of business? 
       [Emphasis added]. 

Decision 12-432U, 9-10. 

       In the instant case without, the hotels located in West Virginia Petitioner, would be unable 
to provide any of its services .   Independent contractors located in West Virginia in  Decision  12-
432U were sufficient to impart sales tax nexus.  Consequently the hotels,          in  West Virginia   (and 
the  hotels employees ' located  in  West  Virginia as ,well  as  Petitioner s  customers 'and  their 
employees) allow Petitioner to conduct business        in West Virginia Without.   the hotels Petitioner, 
is unable to provide any services to its clients in West Virginia just, as the independent contractors 
were  necessary for the taxpayer  in  Decision  12-432U to provide  its  services  in West Virginia. 
Further,the entire purpose     ofPetitioner's services is to procure lodging to allow its clients to have 
many employees located and,    often residing    forextended periods       oftime,in West Virginia   . 

       In Decision  12-432U the ,   Office    of Tax Appeals  also  declared  the taxpayer's  situation 
identical to that ofinternet travel companies and,  stated further      : 

               Of particular interest to this Tribunal are the cases involving internet travel 
     companies.  While the  facts  of those  cases  are  different conceptually ,      they  are 
     identical to the case before  us    . We    can see no legal difference    for tax purposes 
     between the Taxpayer who says "I,can get you a hotel room in Morgantown" and 
     one  who  says,       "I  can  have  someone  plow  the  snow  in  your  parking  lot        in 
     Morgantown." This conceptual similarity is critical because it distinguishes the few 
     cases where a service is being provided from the cases involving sales of tangible 
     personal  property.  There  are  a  lot  of the latter cases but,     in  many    of those the 

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       substantial  nexus questions hinges  on  how much  the  Taxpayer's  representative 
       helps them  sell  stuff.The implicit question    in  many  of those cases    is, could  the 
       Taxpayer  sell  as  much  stuff without the  help   ?   In the  case  before us, as  in  the 
       internet travel cases,that is not the question.Hotels com.    is not going to build hotels 
       and the Taxpayer before us is not going to plow snow [Emphasis.         added]     . 

Decision 12-432U,10-11 The.   Office    ofTax Appeals stated,We"     can see no legal difference fo    r 
tax purposes between the Taxpayer who says I,can'       get you  a hote rooml       in Morgantown'and 
one  who says,I'can  have  someone  plow the  snow          in your parking  otl in Morgantown."'   The 
Petitioner in this case is mirroring internet travel companies Petitioner. is telling his customers I ,"
can  get  you  many  hotel  rooms    in Morgantown   ," just  as  an  internet  travel  company  tells  its 
customers, "I can get you a hotel room   in   Morgantown    ." 

       Further,Petitioner contacts the hotels to obtain the lowest price accommodations for its 
clients.Petitioner reserves the rooms.  Petitioner monitors the lodging situation to ensure that      all 
rooms have suitable occupancy.Petitioner receives the bill for the rooms.  Petitioner reviews the 
bill  for accuracy  and  addresses  any  irregularities  directly with  the  hotel.  Petitioner eventually 
remits the money to the hotel.  Petitioner has more contact with the hotels in West Virginia than, 
any internet travel  company yet, the  Office ofTaxAppeals  simply declares  Petitioner a  travel"
agency,ignoring" identical facts   in a previous case,and its previous legal analysis     ofthose facts. 

       Because the Office   ofTax Appeals failed to identify the relevant facts and to correct yl   and 
consistently  apply  those  facts  to  previous  decisions  of  the  Office of   Tax  Appeals,the  Ta  x 
Commissioner unequivocally adopts this position      of Nonacquiescence. 

Issued : 'ir- 0 ~ -  '2.0 ti                  o.(Z~~ 
                                              Dale W.     SteaQer~ 
                                              State Tax Commissioner 

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