New tax laws plagued by errors

Jun 12, 2019
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Written by Mark Johnson, Senior Vice President of Policy and Government Affairs
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The myriad of new tax laws, 16 to be exact, passed by the Legislature and Governor this year are full of errors and ambiguities.

The Department of Revenue, the agency in charge of administering the tax laws of Washington State, will have a bear of a time addressing the flood of questions and appeals from taxpayers regarding the poorly written laws that were passed during the 2019 Legislative Session.

Not only were the implementation dates unreasonable. For example, the non-resident sales tax exemption remittance program goes into effect on July 1. Most retailers and shoppers have no idea that it is now the law and will soon go into effect. Soon, Oregon shoppers and others who have qualified for a sales tax exemption will lose the tax incentive they had to buy in Washington State. They would have to apply for a tax refund later in the year.

Can you imagine the angst and frustration when a formerly qualified customer questions why they are being forced to pay the sales tax? This will definitely affect the $850 million in sales that are made each year from non-residents.

To make matters worse, the new Business and Occupation tax increase on services is so confusing businesses are asking if they are in or out and how much they’re supposed to pay. There will undoubtedly be audits, inquiries, lawsuits, appeals and thousands of unintended mistakes as taxpayers muddle their way through the process.

Perhaps the legislature should heed the Department’s guidelines that suggest tax policy should be reliable, economically neutral, both horizontally and vertically equitable, simple, and accountable.

Retailers are happy to pay their fair share of taxes for the necessary services that the state provides. All they ask is a stable, easy-to-understand and predictable system. The tax laws that passed in 2019 challenge these principles.