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Tax amnesty program surprisingly successful in Washington State

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Posted by AccountingWEB in Tax, Sales & Use Tax on 05/18/2011 - 01:02

Hundreds of businesses that somehow eluded detection by state tax authorities helped boost Washington’s haul from a tax amnesty program that was far more successful than envisioned.

State officials were hoping businesses would pay $24 million in back taxes. Instead, the state received $263.4 million. Local governments were hoping for about $4 million but received just under $57 million.

Under the three-month-long program that ended April 30, businesses were allowed to pay their overdue taxes without having to pay accumulated interest and penalties.

The Seattle Post-Intelligencer reported that 10,968 applications were filed. Officials accepted 81 percent of those, mainly from small business with less than $1 million in annual gross revenue.

A number of these businesses – state revenue director Suzan DelBene said it was fewer than 1,000 – were not even registered on the state’s tax rolls. Those businesses contributed to the higher-than-expected revenue collected. Now, the state can make sure the businesses comply with tax rules in the future, DelBene told the Olympian.

Washington faces a $5 billion deficit, so the news of the successful amnesty program has been hailed as a way to help budget negotiations.

"This is money that has already been collected in this fiscal year," Gov. Chris Gregoire said at the Capitol, according to the Olympian. "It is cash on hand. It gives us critical dollars to close the current (budget) gap."

The program, a first for Washington, waived penalties and interest on state business and occupation tax, state public utility tax, and state and local sales and use taxes, which can include food and beverage taxes in King County, rental car taxes, and others, according to the Washington Department of Revenue.

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Gail Perry, CPA
Editor-in-Chief, AccountingWEB
editor@accountingweb.com

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