The Administrative Review and Hearings Division of the Washington Department of Revenue recently issued Determination No. 21-0055 in which it determined receipts from the provision of genealogy services should be apportioned based on the customer location for purposes of the Business and Occupation Tax. The genealogy company performs research, primarily online, investigating the customer’s ancestry, and sourced its receipts based on where the benefit was received, which it believed was the location of the ancestry, which is the location where the research was focused. Following an audit, the Department issued an assessment apportioning the company’s receipts according to the customers’ state of residence. On appeal, the Hearings Division upheld the assessment, reasoning that the benefit of the service is the result of the company’s research, and the customer “does not experience this benefit of increased knowledge about their family history” at the location where the genealogy research was focused. The Hearings Division concluded that because the service does not relate to a specific location, the benefit of the service is received where the customer resides.
