WAC 458-20-100
Appeals. (1) Introduction.
(a) This rule explains the procedures for administrative
review of actions of the department or of its officers and
employees in the assessment or collection of taxes, as
provided in RCW 82.01.060(4), including, but 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 section.
(b) Persons seeking administrative review of a business
license revocation, a cigarette license revocation or
suspension, a log export enforcement action, or orders to
county officials under Title 84 RCW should refer to the
following rules:
(i) WAC 458-20-10001 for information on the revocation of
a certificate of registration or the revocation or suspension
of a cigarette license; or
(ii) WAC 458-20-10002 for information on log export
enforcement actions and orders to county officials issued
under RCW 84.08.120 and 84.41.120.
(2) Preappeal supervisor's conference and preappeal
rulings on future liability.
(a) Supervisor's conferences. 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 provide an
opportunity to resolve issues prior to the review provided in
this rule.
(b) Rulings. Taxpayers may request an opinion on future
reporting instructions and tax liability from the department's
taxpayer information and education section of the taxpayer
services division. The request must be in writing, contain
all pertinent facts concerning the question presented, and may
contain a statement of the taxpayer's views concerning the
correct application of the law. The department will advise
the taxpayer in writing of its opinion in a tax ruling. The
tax ruling must state all pertinent facts upon which the
opinion is based and, if the taxpayer's name has been
disclosed, is binding upon both the taxpayer and the
department under the facts stated. It will remain binding
until the facts change, the applicable statute or rule
changes, a published appellate court decision not subject to
review changes a prior interpretation of law, the department
publicly announces a change in the policy upon which this
ruling is based, or the taxpayer is notified in writing that
the ruling is no longer valid. Any change in the ruling will
have prospective application only. Rulings on future tax
liability are subject to review as provided in this rule.
(3) How are appeals started? A taxpayer starts a review
of a departmental action by filing a written petition.
Petitions should be addressed to:
Appeals Division
Washington State Department of Revenue
P.O. Box 47460
Olympia, Washington 98504-7460
A form petition is available on the department's web site at
http://dor.wa.gov or upon request from the appeals 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:
(a) The taxpayer's name, address, registration/UBI
number, telephone number, fax number, e-mail address, and
contact person;
(b) If represented, the representative's name, address,
telephone number, fax number, and e-mail address;
(c) Identifying information from the assessment notice,
balance due notice, or other document being appealed;
(d) The amount of tax, interest, or penalties in
controversy, and the time period at issue;
(e) The type of appeal requested (see subsection (6) of
this section);
(f) Whether an in-person hearing in Olympia or Seattle, a
telephone hearing, or no hearing is requested; and
(g) A brief explanation of each issue or area of dispute
and an explanation why each issue or area of dispute should be
decided in the taxpayer's favor. To the extent known or
available, taxpayers should cite applicable rules, statutes,
or supporting case law and provide copies of records that
support the taxpayer's position.
If a petition does not provide the required information,
the department will notify the taxpayer in writing that the
petition is not accepted for review. The notice will provide
a period of time for the taxpayer to cure the defects in the
petition. If a taxpayer is represented, the taxpayer should
also have on file with the department a confidential tax
information authorization.
(4) To be timely, when must a petition be filed or
extensions requested? A taxpayer must file a petition with
the department within thirty days after the date the
departmental action has occurred.
(a) The appeals division 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 may be
in writing or by telephone, and must be directed to the
department's appeals division.
(b) A petition or request for extension is timely if it
is postmarked or received within the thirty-day filing period.
(c) The appeals division may not grant an extension of
time to file a petition for refund that would exceed the time
limits in WAC 458-20-229 (Refunds). A request for a refund of
taxes paid must be filed within four years after the close of
the tax year in which the taxes were paid. See WAC 458-20-229
for procedures on seeking a refund.
(d) The appeals division will notify taxpayers in writing
when a petition is rejected as not timely.
(5) How are appeals scheduled, heard, and decided? The
appeals division will acknowledge receipt of the petition and
identify the administrative law judge (ALJ) assigned to the
appeal. ALJs are attorneys trained in the interpretation of
the Revenue Act and precedents established by prior rulings
and court decisions. They are employed by the department to
provide an informal, final review of agency actions.
(a) Scheduling. The ALJ will notify parties of the time
when any additional documents or arguments must be submitted.
If a party fails to comply with a scheduling letter or
established timelines, the ALJ may decline to consider
arguments or documents submitted after the scheduled
timelines. A status conference in complex cases may be
scheduled to provide for the orderly resolution of the case
and to narrow issues and arguments for hearing.
(b) Hearings. Hearings may be by telephone or in-person.
The ALJ may decide the case without a hearing if legal or
factual issues are not in dispute, the taxpayer does not
request a hearing, or the taxpayer fails to appear at a
scheduled hearing or otherwise fails to respond to inquiries
from the department. The appeals division will notify the
taxpayer by mail whether a hearing will be held, whether the
hearing will be in-person or by telephone, the location of any
in-person hearing, and the date and time for any hearing in
the case. The date and time for a hearing may be continued at
the ALJ's discretion. Other departmental employees may attend
a hearing, and the ALJ will notify the taxpayer when other
departmental employees are attending. The taxpayer may appear
personally or may be represented by an attorney, accountant,
or any other authorized person. All hearings before an ALJ
are conducted informally and in a nonadversarial, uncontested
manner.
(c) Hearing and posthearing submissions. If a taxpayer
asks to submit additional records or documents at a hearing,
the taxpayer must explain why they were not submitted under
the deadlines established in the scheduling letter. The ALJ
has the discretion to allow late submissions by the taxpayer
or the department and, if allowed, will provide the other
party with additional time to respond. If additional document
production or additional briefing is allowed by the ALJ,
posthearing, such briefing or documents usually must be
submitted within thirty days after the hearing, unless good
cause is shown for additional time. ALJs have the discretion
to allow additional time for further fact-finding, including
scheduling an additional hearing, as necessary in a particular
case.
(d) Determinations. Following the hearing, if any, and
review of all submissions, the ALJ will issue a determination
consistent with the applicable statutes, rules, case law, and
department precedents. The appeals division will notify the
taxpayer in writing of the decision. The determination of the
ALJ 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.
(6) Are all appeals the same? No, in addition to regular
appeals, called mainstream appeals, an appeal may also be
assigned as a small claims or executive level appeal based on
the amount at issue or the complexity of the issues. In
addition, an appeal may be expedited under certain urgent
circumstances.
(a) Small claims appeals. Except as set forth in (a)(i),
(ii), or (iii) of this subsection, when the tax at issue in
the appeal is twenty-five thousand dollars or less and the
total amount of the tax plus penalties and interest at issue
in the appeal is fifty thousand dollars or less, the appeal
will be heard as a small claims appeal.
(i) The department may decline to hear an appeal as a
small claims appeal if the department finds the appeal is not
suitable for small claims resolution. Appeals with multiple
or complex issues, issues of first impression, issues of
industry-wide application, or constitutional issues are
generally not suitable for small claims resolution.
(ii) The appeals division will notify the taxpayer in
writing when an appeal is to be heard as a small claims
appeal. The taxpayer may request in writing that the matter
not be heard as a small claims appeal. Such requests will be
granted if received or postmarked within fifteen days
following the date of the notice.
(iii) In the petition the taxpayer may affirmatively
request that the petition not be heard as a small claims
appeal. Such requests will be granted.
Taxpayers should provide all evidence and supporting
authority prior to or during the small claims hearing. Within
ten working days of a small claims hearing, the department
will issue an abbreviated written decision (determination)
containing only the department's conclusions. The
determination in a small claims appeal is the final action of
the department.
(b) Executive level appeals. If an appeal 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
petition be heard at the executive level. The request must
specify the reasons why an executive level appeal is
appropriate. The appeals division 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 an ALJ will hear the matter. The appeals division, on its
own initiative, may also choose to hear an appeal at the
executive level. The appeals division will notify the
taxpayer if the department chooses to hear an appeal at the
executive level.
Following the executive level hearing, the appeals
division will issue a proposed determination, which becomes
final thirty days from the date of issuance unless the
taxpayer or another division of the department timely files an
objection to the proposed determination. Objections must
identify specific errors of law or fact. Unless an extension
is granted, objections must be postmarked or received by the
appeals division within thirty days from the date the proposed
determination was issued. The taxpayer or operating division
filing objections must also provide the other party with a
copy of its objections. The ALJ will issue the final
determination, which may or may not reflect changes based on
the objections. Although rare, the ALJ and the director's
designee, in consultation with the director, may grant a
second hearing to hear argument on the objections. The
determination in an executive level appeal is the final action
of the department.
(c) Expedited appeals. On a very limited basis it may be
necessary to expedite the review of a petition. Taxpayers or
other divisions in the department requesting expedited review
must make the request in writing to the appeals division, with
a copy supplied to the other party. The appeals division will
grant or deny such requests solely at its discretion. The
appeals division will advise the taxpayer and the affected
division of its decision pertaining to the expedited review
request. This decision is not subject to appeal. Expedited
review will be limited to appeals where it is clear that:
(i) There is a particular and extraordinary business
necessity;
(ii) Document review is the only issue;
(iii) Only a legal issue remains in an appeal following a
remand to an operating division;
(iv) A jeopardy warrant or bankruptcy is likely; or
(v) Urgent review is necessary within the department.
If expedited review is at the taxpayer's request, the
determination in an expedited appeal is the final action of
the department. If expedited review is requested by the
department, the taxpayer may petition for reconsideration as
provided in subsection (7) of this section.
(7) Request for reconsideration. If a taxpayer believes
that an error has been made in a determination, the taxpayer
may, within thirty days of the issuance of the determination,
petition in writing for reconsideration of the decision.
Small claim appeals, executive appeals, and appeals expedited
at the request of the taxpayer are not 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. 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.
The appeals division may, without a hearing, grant or
deny the request for reconsideration. If the request is
denied, the department will mail 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, a hearing on reconsideration may be
conducted or a determination may be issued without a hearing.
A reconsideration determination is the final action of the
department.
(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 board of tax
appeals 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) and82.49.060
(relating to watercraft excise tax). The board of
tax appeals does not have jurisdiction to hear appeals from
determinations involving rulings of future tax liability
issued by the taxpayer information and education section. See
RCW 82.03.130 (1)(a) and 82.03.190. A taxpayer filing an
appeal with the board of tax appeals 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.
(10) Settlements. At any time during the appeal process,
the taxpayer or the department may propose to compromise the
matter by settlement. Taxpayers interested in settling a
dispute should submit a written offer to the ALJ. The offer
should identify the amount in dispute, why the dispute should
be settled, the amount offered in settlement, and why the
amount being offered is reasonable.
(a) 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, excise tax bulletins, 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 of the appeal if
it were presented to a court. Factors to be considered
include the relative degrees of certainty and the costs for
both the taxpayer and the state. This category includes cases
which involve factual issues that might require extensive
expert testimony to resolve.
(b) Settlement is not appropriate when:
(i) The same issue in the taxpayer's appeal is being
litigated by the department;
(ii) The taxpayer challenges a long-standing departmental
policy or a rule that the department will not change unless
the policy or rule is declared invalid by a court of record;
(iii) 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;
(iv) The taxpayer's only argument is that a statute is
unconstitutional; or
(v) The taxpayer's only argument is financial hardship.
Financial hardship issues are properly discussed with the
department's compliance division.
(c) Each settlement is concluded by a closing agreement
signed by both the department and the taxpayer as provided by
RCW 82.32.350 and is binding on both parties as provided in
RCW 82.32.360. A closing agreement has no precedential value.
[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.]