Current through Register Vol. 24-06, March 15, 2024
(1)
Introduction.
RCW
82.01.060(4) requires that
the department "provide by general regulations for an adequate system of
departmental review of the actions of the department or of its officers and
employees in the assessment or collection of taxes."
RCW
82.32.160 allows taxpayers to petition for
correction of taxes, interest, or penalties assessed by the department.
RCW
82.32.170 allows taxpayers to petition for a
determination as to whether a refund request was properly denied. Under
authority of these statutes, the department provides an informal,
nonadversarial administrative review of these actions. The department will make
such determination and resolve matters as may appear to the department to be
just and lawful under its statutory authority. The department's administrative
review is designed to be an expeditious and less costly means of review as
compared to the costs of an independent review by the board of tax appeals
(BTA) or a refund action in superior court.
Before requesting review, taxpayers are encouraged to request a
supervisor's conference when they disagree with an action proposed by the
department. Taxpayers should make their request for the conference with the
division of the department that proposes to issue an assessment or take some
other action in dispute. Supervisor's conferences can frequently resolve issues
prior to the informal administrative review explained in this rule.
(a)
Departmental actions subject to
informal administrative review under this rule. Actions subject to the
department's informal administrative review include, but are not limited to:
(i) An assessment of tax, interest, or
penalties;
(ii) The denial of a
refund, credit, or deferral request;
(iii) The issuance of a balance due notice or
a notice of delinquent taxes, including a notice of collection action;
and
(iv) The issuance of an adverse
ruling on future liability from the taxpayer information and education
(TI&E) section.
(b)
Departmental actions subject to formal administrative appeal. The
informal review provided under this rule should be distinguished from a formal
administrative appeal subject to the Administrative Procedure Act (chapter
34.05 RCW). A person may submit a formal administrative appeal of certain
actions by the department. Refer to the following rules for information
regarding the actions for which the department conducts formal administrative
appeal proceedings:
(i) WAC
458-20-10001 for information
regarding an appeal of:
*A revocation of a certificate of registration (tax
registration endorsement) under
RCW
82.32.215;
(ii) WAC
458-20-10002 for information
regarding an appeal of:
* Log export enforcement actions pursuant to chapter 240-15
WAC; or
* Orders to county officials issued under
RCW
84.08.120 and
84.41.120;
(iii) WAC
458-20-10003 for information
regarding an appeal of:
* A departmental request to the liquor and cannabis board to
suspend, not renew, or not issue a spirits license as defined in
RCW
66.24.010(3)(c);
(iv) WAC
458-20-10004 for information
regarding an appeal of the assessment of:
* The one-time business license application fee or annual
renewal application fee in
RCW
59.30.050(3)(a);
* The annual registration assessment fee in
RCW
59.30.050(3)(b); or
* The delinquency fee in
RCW
59.30.050(4);
(v) WAC
458-20-10202 for information
regarding an appeal of:
* Matters relating to the denial or revocation of reseller
permits; or
(vi) WAC
458-20-273 for information
regarding an appeal of:
* The denial or revocation of a renewable energy system
certification; or
* The denial or revocation of a manufacturer's certification of
a solar inverter, solar module, wind generator blade, or stirling converter
qualifying as made in Washington state.
(2)
How are informal reviews
started? A taxpayer starts a review of a departmental action by filing a
written petition. A petition must be sent to one of the following:
DORARHDadmin@dor.wa.gov
or
Administrative Review and Hearings Division
Washington State Department of Revenue
6400 Linderson Way S.W.
P. O. Box 47460
Olympia, Washington 98504-7460
or
Fax: 360-534-1340
(a)
Information required in a petition. A form petition is available
on the department's web site at
http://dor.wa.gov or upon request from the
administrative review and hearings division. Taxpayers may use the form
petition or prepare one of their own. The taxpayer or its authorized
representative must sign the petition, which must contain the following
information:
(i) The taxpayer's name, address,
registration/UBI number, telephone number, fax number, email address, and
contact person;
(ii) If
represented, the representative's name, address, telephone number, fax number,
and email address;
(iii)
Identifying information from the assessment notice, balance due notice, or
other document related to the action being reviewed;
(iv) The amount of tax, interest, or
penalties in controversy, and the time period at issue, however, if, in the
case of a denied refund request, the amount of interest or penalties is not
known, the amount of the tax in controversy;
(v) The type of review requested (see
subsection (4) of this rule);
(vi)
Whether the taxpayer requests an in-person hearing in Olympia or Seattle, a
telephone hearing, or no hearing; and
(vii) A description of each issue or area of
dispute and an explanation why each issue or area of dispute should be resolved
as the taxpayer requests. To the extent known or available, a taxpayer should
cite applicable statutes, rules, other public guidance issued by the
department, and case law that support the taxpayer's position. The taxpayer
should also submit with the petition documents supporting the taxpayer's
position, including:
* Contracts and invoices previously requested and not provided;
or
* Documents not previously provided that the taxpayer believes
substantiate the taxpayer's claims.
(b)
Incomplete petition. If a
petition does not provide the required information identified in subsection
(2)(a) of this rule, the department will notify the taxpayer in writing that
the petition is incomplete and not accepted for review. The notice will provide
a period of time for the taxpayer to provide the required petition information.
If the requested information is timely provided, the petition will be treated
as timely filed and accepted for review.
(c)
Authorization required for
taxpayer's representative. If a taxpayer is represented, the taxpayer
must have on file with the department a confidential tax information
authorization (CTIA) for that representative. Without a CTIA on file, the
department cannot share confidential taxpayer information with the
representative.
(3)
To be timely, when must a petition be filed or an extension
requested? A taxpayer must file a petition with the department within
thirty days after the date the departmental action has occurred.
(a) The department may grant an extension of
time to file a petition if the taxpayer's request is made within the thirty-day
filing period. Requests for extensions must be in writing. A petition or
request for extension is timely if it is postmarked or received within the
thirty-day period.
Requests must be in writing to either the email or mailing
address noted in subsection (2) of this rule.
(b) The department will not grant an
extension of time to file a petition for review of a denied refund that would
exceed the time limits in WAC
458-20-229 (Refunds). As
explained in WAC
458-20-229, a request for a
refund of taxes paid must be filed within four years after the close of the
calendar year in which the taxes were paid.
(c) The department will notify taxpayers in
writing when a petition is rejected as not timely.
(4)
What are the different types of
informal reviews? The agency conducts four different types of informal
reviews.
(a)
Mainstream review.
This is the most common type of review. A review is treated as a mainstream
review unless it fits within (b) through (d) of this subsection.
(b)
Small claims review. When
the tax at issue in the review is twenty-five thousand dollars or less and the
total amount of the tax plus penalties and interest at issue is fifty thousand
dollars or less, the review will normally be assigned as a small claims review,
unless the complexity of the issues requires assignment to another category.
The department will issue an abbreviated written determination
in a small claims review. This determination is the final action of the
department.
(c)
Executive level review.(i) If a
review involves an issue of first impression (one for which no agency precedent
has been established) or an issue that has industry-wide significance or
impact, a taxpayer may request that the review be considered at the executive
level. The request must specify the reasons why an executive level review is
appropriate. The department will grant or deny the request and will notify the
taxpayer of that decision in writing. If granted, the director or the
director's designee and a tax review officer will conduct an executive level
hearing. The department, on its own initiative, may also choose to consider a
review at the executive level.
(ii)
Following the executive level hearing, the department will issue a proposed
determination, which becomes final thirty days from the date of issuance unless
the taxpayer files an objection to the proposed determination within that
thirty-day period. Objections must specify mistakes in law or fact contained in
the proposed determination, and should also provide legal authority as to why
those mistakes necessitate a change to the proposed determination. Unless an
extension is granted, objections must be postmarked or received by the
department within thirty days from the date the proposed determination was
issued. The department will issue the final determination, which may or may not
reflect changes based on the objections. Although rare, the tax review officer
and the director's designee, in consultation with the director, may grant a
second executive level hearing on the objections. The determination in an
executive level review is the final action of the department.
(d)
Tax rulings issued by
TI&E section. Review of a tax ruling is limited to the documents and
records reviewed by TI&E and any written statements included with the
petition. This review is limited to correcting an error that occurred in the
course of the tax ruling process. A written determination will be issued
following review of all timely submissions without a hearing. The determination
is the final decision of the department. It is not eligible for reconsideration
and not appealable to the board of tax appeals under
RCW
82.03.130(1)(a) or
82.03.190.
(5)
The review process. The
department will acknowledge receipt of the petition and identify the tax review
officer assigned to the review.
(a)
Role and responsibility of tax review officers. Tax review
officers are attorneys trained in the interpretation of the Revenue Act, public
guidance issued by the department, and precedents established by prior rulings
and court decisions. The department's tax review officers are employed by the
department to determine whether the appropriate departmental procedures and
interpretations of law have been correctly applied to the issue(s). They are
responsible for providing a departmental (not independent) review. This
responsibility includes additional research about the taxpayer's activities
related to the tax issue under review when necessary.
(b)
Scheduling. The department
will notify the taxpayer or taxpayer's representative of the time and place for
the review hearing, if any, and establish timelines for the submission of
additional documents and written arguments. Before a submission date has
passed, the taxpayer may request an extension, which the tax review officer may
grant at the tax review officer's discretion. If a taxpayer fails to comply
with a scheduling letter or any extension, the tax review officer may dismiss
the petition or decline to consider arguments or documents submitted after the
scheduled timelines. A tax review officer may also contact the taxpayer to
clarify or narrow issues or request more information as needed for the orderly
resolution of the case.
(c)
Taxpayer requests to provide additional materials. If a taxpayer
asks to submit additional documents or written arguments after the deadlines
established in the scheduling letter, or any extension thereof, the taxpayer
must explain why they could not have been submitted in a timely manner. The tax
review officer has the discretion to allow late submissions by the taxpayer. If
additional documents or written argument is allowed by the tax review officer
after the hearing, they must be submitted within thirty days of the hearing.
The tax review officer has the discretion to allow additional time for
submitting additional documents or further fact-finding, including scheduling
an additional hearing, as necessary in a particular case.
(d)
Informal review hearings.
The hearing is an opportunity to discuss the documents and arguments submitted
and to clarify the reasons why the taxpayer believes it is entitled to receive
the requested relief. No record is made of the hearing. The hearing is not open
to the general public. Any person attending the hearing is not placed under
oath. The tax review officer has the discretion to decide the case without a
hearing if legal or factual issues are not in dispute, or the taxpayer fails to
appear at a scheduled hearing or otherwise fails to respond to inquiries from
the department. The taxpayer may appear personally or may be represented by an
attorney, accountant, or any other authorized person. All hearings before a tax
review officer are conducted informally and in a nonadversarial
manner.
(e)
Issuing a
determination. Following the hearing, if any, and review of all
materials, the department will issue a determination consistent with the
applicable statutes, rules, other public guidance issued by the department,
case law, and department precedents. The tax review officer will notify the
taxpayer of this decision in writing.
(f)
Additional information or research
identified by the department. The tax review officer may identify
additional facts or novel legal arguments not previously communicated to the
taxpayer. In this event, the tax review officer will provide the taxpayer with
an opportunity to respond.
(g)
Determination is final decision by the department. The
determination is the final decision of the department and is binding upon the
taxpayer unless a petition for reconsideration is timely filed by the taxpayer
and accepted by the department. All determinations issued by the department,
except those issued for a review of a TI&E tax ruling (subsection (4)(d) of
this rule), are appealable to the board of tax appeals (BTA) or, alternatively,
the Thurston County superior court. See subsections (8) and (9) of this rule
for additional information.
(6)
Request for reconsideration.
If a taxpayer believes that an error has been made in a mainstream
determination, the taxpayer may, within thirty days of the issuance of the
determination, petition in writing for reconsideration of the decision. Only
determinations issued from mainstream reviews are subject to reconsideration.
The request for reconsideration must specify mistakes in law or fact contained
in the determination and should also provide legal authority as to why those
mistakes necessitate the reconsideration of the determination. Any new
documents and explanations must be included with the petition.
The department may grant or deny the request for
reconsideration. If the request is denied, the department will send to the
taxpayer written notice of the denial and the reason for the denial. The denial
is then the final action of the department. If the request is granted, although
rare, the tax review officer may hold a reconsideration hearing or a
determination may be issued without a hearing. A reconsideration determination
is the final action of the department.
A taxpayer may request an executive level reconsideration when
the determination decided an issue of first impression or an issue that has
industry-wide impact or significance. The request for executive reconsideration
must also specify the reasons why executive level review is appropriate. Any
new documents and explanations must be included with the petition. The
department will grant or deny the request and will notify the taxpayer of that
decision in writing.
(7)
Settlements. At any time during the department's review process,
the taxpayer or the department may propose to compromise the matter by
settlement. A taxpayer interested in proposing settlement of a dispute must
submit a written offer to the department to the address noted in subsection (2)
of this rule. The taxpayer or its authorized representative must sign the
offer. A settlement offer may be made with the review petition or at any time
during the review process. All documents needed to evaluate the offer must be
submitted with the offer.
(a)
When will
the department consider an offer? Settlement may be appropriate when:
(i) The issue is nonrecurring. An issue is
nonrecurring when the law has changed so future periods are treated differently
than the periods under appeal; or the taxpayer's position or business activity
has changed so that in future periods the issue under consideration is changed
or does not exist; or the taxpayer agrees to a prospective change;
(ii) A conflict exists between precedents,
such as statutes, rules, other public guidance issued by the department, or
specific written instructions to the taxpayer;
(iii) A strict application of the law would
have unduly harsh consequences which may be only relieved by an equitable
doctrine; or
(iv) There is
uncertainty of the outcome if the matter were presented to a court.
(b)
When will the department
not consider an offer? Settlement is not appropriate when:
(i) The same issue raised by the taxpayer is
being litigated by the department;
(ii) The taxpayer presents issues that have
no basis upon which relief for the taxpayer can be granted or given. Settlement
will not be considered if the taxpayer's offer of settlement is simply to
eliminate the inconvenience or cost of further negotiation or litigation, and
is not based upon the merits of the case;
(iii) The taxpayer's only argument is that a
statute is unconstitutional; or
(iv) The taxpayer's only argument is
financial hardship. If a taxpayer claims financial hardship, the tax review
officer may refer the matter to the department's compliance division.
(c)
The closing
agreement. If the taxpayer and the department reach agreement, a
settlement is concluded by a closing agreement signed by both the department
and the taxpayer as provided by
RCW
82.32.350. A closing agreement is binding on
both parties as provided in
RCW
82.32.360. A closing agreement has no
precedential value.
(8)
Appeals to board of tax appeals. A taxpayer may appeal a denial of
a petition for correction of an assessment under
RCW
82.32.160 or a denial of a petition for
refund under
RCW
82.32.170 to the board of tax appeals. The
BTA also has jurisdiction to hear appeals taken from department decisions
rendered under
RCW
82.34.110 (relating to pollution control
facilities tax exemptions and credits) and
RCW
82.49.060 (relating to watercraft excise
tax). The BTA does not have jurisdiction to hear appeals from determinations
involving rulings of future tax liability issued by TI&E. See
RCW
82.03.130(1)(a) and
82.03.190. A taxpayer filing an
appeal with the BTA must pay the tax by the due date, unless arrangements are
made with the department for a stay of collection under
RCW
82.32.200. See WAC
458-20-228 (Returns, remittances,
penalties, extensions, interest, stay of collection).
(9)
Thurston County superior
court. A taxpayer may also pay the tax in dispute and petition for a
refund in Thurston County superior court. The taxpayer must comply with the
requirements of
RCW
82.32.180.
Statutory Authority:
RCW
82.32.300,
82.01.060(2) and
(4). 05-20-036, § 458-20-100, filed
9/29/05, effective 11/1/05. Statutory Authority:
RCW
82.32.300. 90-24-049, § 458-20-100,
filed 11/30/90, effective 1/1/91; 83-07-032 (Order ET 83-15), §
458-20-100, filed 3/15/83; Order ET 75-1, § 458-20-100, filed 5/2/75;
Order ET 70-3, § 458-20-100 (Rule 100), filed 5/29/70, effective
7/1/70.