In its Feb. 22 petition for review, Citibank argued that the Court of Appeals “announced new law when it reached the novel and incorrect conclusion that the department may impose tax on a service business that carries on all of the activities in generating its gross income at locations outside of Washington for years prior to the legislative enactment of the economic nexus standard.”
The Department of Revenue noted in a March 27 response to the petition that Citibank earned nearly $1.7 million from credit card loans it made to Washington customers in the 2½-year period, filed more than 3,000 lawsuits in state court to collect on unpaid balances, and used in-state merchants to get new cardholders.
Affirming a ruling by the Board of Tax Appeals, a three-judge panel for the Court of Appeals concluded in its November ruling that the company satisfied the physical presence criteria during the period because it used Evergreen State courts and attorneys for collections and contracted with Washington retailers, including Sears and Home Depot, to promote private label credit cards.
