The Washington Department of Revenue held that a taxpayer's provision of skydiving services was taxable.
A taxpayer provided parachute services, training, and equipment for skydivers. Skydivers paid "upjumper" fees to board the taxpayer's planes, jump, and land. Taxpayer provided extra training at no additional cost.
Washington taxes receipts from amusement and recreation services, including bungee jumping and skiing. Washington assessed tax on skydiving receipts as receipts from an amusement or recreation service. The taxpayer argued that federal law prevented Washington from taxing its skydiving services. Federal law prohibits states from taxing the transportation of an individual traveling in air commerce. "Air commerce" means "interstate, overseas, or foreign air commerce or ... any operation or navigation of aircraft within the limits of any Federal airway or any operation or navigation of aircraft which directly affects, or which may endanger safety in, interstate, overseas, or foreign air commerce." The taxpayer argued that it charged for transportation on the taxpayer's planes, making the transaction a sale of transportation in air commerce.
The Department held that the taxpayer's services were not "transportation" in air commerce. The essence of the service was skydiving, which is not transportation. Skydivers paid the taxpayer "for the thrill of going down, not the ride up." Skydiving services, therefore, were taxable amusement and recreation services.