Tesoro Refining & Marketing Co. v. Department of Revenue

¶1 Washington’s Business and Occupation (B&O) tax system imposes taxes on refining of oil products and, separately, on sales. The gross income from activities, from which each tax is calculated, can be reduced by certain statutory deductions. The issue here is whether the RCW 82.04.433(1) deduction applies to reduce B&O tax on sales and whether the statute allows a reduction of B&O tax for processing the same product (i.e., manufacturing activities).

¶2 The Court of Appeals held that Tesoro Refining and Marketing could deduct the amount of its “offshore”1 bunker fuel sales from its B&O taxes…