Washington Liquor Distributor Must Pay Tax on Termination Fees

A liquor wholesaler failed to convince a Washington appeals court to reject the state revenue department’s tax treatment of payments it received after brands including Bacardi and Stoli revoked its rights in favor of another distributor.

Young’s Market Co. of Washington LLC had asked the Washington Court of Appeals, Division I, to agree that more than $20 million the brands’ new supplier paid it from 2014 to 2016 isn’t compensation for business activity and therefore isn’t subject to the state’s business and occupation tax. The Department of Revenue argued the $315,000 assessment on those amounts should stand because the payments ...