Image: Hallie Balch/Let’s Go Washington
Even if Washington voters reject an initiative seeking to repeal the state’s new income tax, the Department of Revenue expects significant work to determine how the tax will be implemented and enforced.
At an Aug. 24 meeting, DOR’s income tax advisory group discussed the challenge of defining who qualifies as a Washington resident and therefore is subject to the tax. Senior Assistant Director of Tax Policy Tim Jennrich said the department has identified numerous issues requiring further discussion and must develop recommendations on a relatively short timeline.
The 9.9% income tax applies to certain income above $1 million annually. Under Senate Bill 6346, residency generally is based on where an individual is domiciled during the tax year, with exceptions for people who maintain no permanent home in Washington, maintain a permanent home elsewhere and spend no more than 30 days in the state.
Tax attorneys told the advisory group that determining domicile involves weighing multiple factors and can be difficult to apply consistently. Those factors can include an individual’s homes, time spent in different states, family connections and charitable activity.
Experts also noted that Washington’s approach could create particular enforcement challenges for high-income individuals who maintain homes in multiple states and may not spend six months of the year in any one location.
The advisory group is required to submit two reports with recommendations to the Legislature’s fiscal committees in December.
