Credit Card Processor Tax Suit Favored by Washington State Court

A Washington appeals court appeared receptive during oral arguments Wednesday to a credit card processing company’s claim it wasn’t liable for business and occupation taxes on interchange fees.

First Data Merchant Services LLC told the Washington Court of Appeals, Division III that it only passes along the fees to credit card issuing banks which kept the charges, so it shouldn’t be held liable for the funds. The interchange fees cover the banks funding the cardholders’ transactions upfront.

Judge Robert Lawrence-Berrey scrutinized the Department of Revenue’s argument that First Data was legally entitled to the interchange fee as evident by their ...