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WAC 230 Statutory limitations on assessments.  
SOURCE DOCUMENT DETER. NO DATE OF ISSUE DESCRIPTION
WAC: 458-20-230   01/08/1993 Statutory limitations on assessments.Effective 2/8/93
RCW:    
  82.32.050   1992 Deficient tax or penalty payments-interest-Limitations.
  82.32.100   1992 Failure to file returns or provide records-Assessment of tax by department-Penalties and interest.
  82.32.090   1996 Late payment--Disregard of written instructions--Evasion--Penalties.
  82.32.060   1997 Excess payment of tax, penalty, or interest--Credit or refund--Payment of judgments for refund.
  82.32.160   1989 Correction of tax--Administrative procedure--Conference--Determination by department.
  82.32.105   1996 Waiver or cancellation of penalties or interest--Rules.
ETA:      
  3042.2009 2/2/09 Statute of limitations not a defense when material fact misrepresented
  156.32.230 8/19/66 STATUTE OF LIMITATION AND PAST PERFORMANCE Cancelled Effective 03/28/08. This document explains the application of the statute of limitations to amounts received in settlement between the contracting parties after completion of the project.  WAC 458-20-197 (When tax liability arises) and 458-20-199 (Accounting methods) sufficiently address when income is to be reported for Washington tax purposes.
  301.32.230 12/16/66 STATUE OF LIMITATIONS NOT A DEFENSE WHEN MATERIAL FACT MISREPRESENTED Revised 2/2/09 See ETA 3042.2009
  310.32.101.230 1/20/67 TAXPAYER HAS DUTY TO OBTAIN KNOWLEDGE OF TAX LIABILITY Cancelled 1/29/09. This ETA correctly states the principle that taxpayers have the responsibility to know their obligations. This matter is adequately addressed in Chapter 82.32A RCW (Taxpayer Rights and Responsibilities) and numerous publications of the Department.
INDUSTRY GUIDES:      
SPECIAL NOTICES:      
DIRECTIVE: None      
TAX TOPICS:      
RPM: None      
WTD: 2 WTD 325 87-66   EXCISE TAX -- INTEREST -- PENALTIES -- STATUTE OF LIMITATIONS -- UNREGISTERED TAXPAYER. The four-year statute of limitations for the assessment of excise tax does not apply in favor of a previously unregistered taxpayer Registration just prior to tax assessment does not reactivate the statute of limitations.
  2 WTD 325 87-66   EXCISE TAX -- INTEREST -- PENALTIES -- STATUTE OF LIMITATIONS -- UNREGISTERED TAXPAYER -- REGISTRATION WITH OTHER AGENCIES -- ESTOPPEL. The four-year statute of limitations for the assessment of excise tax does not apply in favor of a previously unregistered taxpayer. The Department of Revenue is not estopped from assessing tax outside the statute of limitations by virtue of the taxpayer's registration with other state agencies or offices.
  2 WTD 397 86-161A   STATUTE OF LIMITATION'S -- TAX REFUNDS -- CREDITS -- OFFSETS. There is no distinction at law between a request for refund or credit of taxes overpaid and a request for offset or adjustment of deficient taxes assessed for payment. All such requests are governed by thestatute of limitations of RCW 82.32.060.
  2 WTD 397 86-161A   INVENTORY TAX CREDITS -- STATUTE OF LIMITATIONS. The former provisions of RCW 82.04.442 (repealed in 1983) for the taking of inventory tax credits were governed by the provisions of RCW 82.32.060 establishing the period of limitation for using such credits.
  2 WTD 397 86-161A   OFFSETS IN LIEU OF TAX CREDITS. RCW 82.32.060 formerly provided for offsets in lieu of unused tax credits against tax deficiencies discovered and assessed for period beyond the statute of limitations, but was amended in 1979 to repeal such offset provisions.
  2 WTD 453 87-104   B&O TAX -- CREDITS -- ADMINISTRATION OF -- DUTY TO INFORM. Although the Department attempted to inform businesses of the B&O tax credits available under Chapter 82.62, the Department has no discretion to grant credits to a business who failed to make a timely application because it was unaware of the credits.
  4 WTD 229 87-342   ASSESSMENT -- FOUR YEAR NON-CLAIM PERIOD -- EXCEPTION -- UNREGISTERED TAXPAYER. An assessment of taxes for a period more than four years after the close of the tax year upheld where and out-of-state seller did not register as required by the Revenue Act, even though the Department had previously advised the seller that it did not need to register. Assessment upheld because Department's earlier advice was based on the taxpayer's incorrect answer on the Business Activities Statement about its activities in Washington.
  5 WTD 107 88-37   B&O TAX -- STATUTE OF LIMITATIONS -- TIME OF IMPOSITION. The manufacturing tax is due when the article has been manufactured. Thus, expenditures made before the audit period and outside of the statute of limitations are includable in the measure of the tax because the tax is imposed when the manufactured for commercial use article is completed.
  5 WTD 107 88-37   USE TAX -- STATUTE OF LIMITATIONS -- TIME OF IMPOSITION. The use tax on an article manufactured for commercial use arises at the time the completed article is used, even though some of the expenses were incurred and paid outside the four-year statute of limitations. Credit against the tax will be allowed for actual sales or use tax paid.
  5 WTD 107 88-37   RETAIL SALES TAX -- USE TAX -- EXEMPTION -- CERTIFICATE -- STATUTE OF LIMITATIONS -- MISREPRESENTATION. The use, by Washington corporation, of an exemption certificate, claiming exemption from tax on the purchase of a water vessel because it is a "non-resident [purchasing] for use outside the state" is a misrepresentation of a material fact sufficient to toll the statute of limitations and subject the sale to deferred sales tax.
  9 WTD 286-1 90-144   TAX ASSESSMENT -- TIME LIMITATION -- UNREGISTERED TAXPAYER. While generally a tax assessment is limited to a four year period, the time limitation does not apply to a taxpayer who was not registered with the Department.
  10 WTD 410 91-053   B&O TAX -- UBI -- UNREGISTERED TAXPAYER -- PERIOD OF LIMITATION. Taxpayer voluntarily registered with some state agencies before the new Uniform Business Identifier program was implemented. However, the taxpayer was not registered with Department of Revenue and did not voluntarily file for an identification number under the new UBI program. DOR discovered taxpayer's status through the UBI system and assigned him a registration number. Because DOR discovered the taxpayer was doing business in this state and was unregistered, he is subject toa seven year period for tax assessments rather than four years.
  12 WTD 105 92-056   STATUTE OF LIMITATIONS. Assessment made timely when mailed to taxpayer's registered address within statute of limitations regardless of taxpayer's claim that it was not received.
  12 WTD 553 93-004   B&O TAX -- UNREGISTERED TAXPAYER -- PERIOD OF LIMITATION. Taxpayer was not registered with Department of Revenue and did not voluntarily do so until after its presence in Washington was discovered by the Department during an audit of an affiliate conducting the same business in this state. The affiliate was also required to register following discovery by the Department of its activity. Because DOR discovered the taxpayer was doing business in this state and was unregistered, it is subject to a seven-year period for tax assessments, plus applicable penalties and interest, rather than the four-year period granted to voluntary registrants. ACCORD: Det. No. 91-53,10WTD 410 (1991).
  13 WTD 160 92-295   RETAIL SALES TAX -- NONCLAIM PERIOD -- COLLECTED BUT NOT REMITTED. Under RCW 82.08.050 retail sales tax collected is deemed to be held in trust until paid to the Department. Therefore, a taxpayer is liable for all retail sales tax collected and not remitted to the Department notwithstanding the nonclaim period in RCW 82.32.050.
  13 WTD 203 BTA 41913   [1] STATUTE OF LIMITATIONS -- TRUST FUND EXCEPTION -- "IMPLIED EXCEPTION". Although the sales tax trust fund statute, RCW 82.08.050, without more, does not automatically create a de jure fourth "implied exception" to the operation of the four-year statute of limitations set forth in WAC 458-20-230, this conclusion does not imply that the rule is in excess of statutory authority. To the extent that the rule sets out the Department's position on sales tax trust funds it operates as "fair warning" to sales tax trustees who might claim ignorance of the consequences of their breach of trust. Under the BTA's construction of RCW 82.32.050, "garden variety" failure to remit sales taxes actually collected from a seller's customers would invariably toll the statute of limitations.
  13 WTD 203 BTA 41913   [2] STATUTE OF LIMITATIONS -- TRUST FUND EXCEPTION. Unexcused failure of a taxpayer to properly account for and timely pay over sales tax funds collected from customers as a matter of law tolls the statute of limitations until the Department discovers, or in the exercise of reasonable diligence could have discovered, the sales tax trustee's breach of duty.
  13 WTD 203 BTA 41913   [3] STATUTE OF LIMITATIONS -- TRUST FUND EXCEPTION -- FRAUD OR MISREPRESENTATION -- ELEMENTS OF ACTIONAL FRAUD V. INFERENCE. Fraud or misrepresentation may be inferred in the case of unexcused failure of a trustee to disclose and pay over funds collected on behalf of another. It is not necessary to demonstrate all the elements of "actionable fraud" in order to fit within the definition of "fraud or... misrepresentation of a material fact" in the case of a trustee's unexcused clear breach of a fiduciary duty to account for a turn over trust funds collected on behalf of another.
  13 WTD 203 BTA 41913   [4] STATUTE OF LIMITATIONS -- TRUST FUND EXCEPTION -- FRAUD -- BURDEN OF PROOF. In order to bear the burden of establishing by clear, cogent, and convincing evidence the existence of fraud on the part of a taxpayer who has collected but not remitted sales taxes, it is sufficient that theDepartment show fraud as a prima facie matter to which the taxpayer may submit evidence in rebuttal.
  14 WTD 77 93-322   B&O TAX -- EXEMPTION -- MINIMUM TAXABLE AMOUNT -- "PERSON" DEFINED -- HUSBAND AND WIFE -- REGISTERED TAXPAYER -- UNREGISTERED TAXPAYER. Where one spouse has registered and reported its taxes, that spouse is entitled to have its business treated as a separate "person" provided the other spouse is not actively involved in the registered spouse's business. In that case, the Department will treat the unregistered spouse's activities as a separate business and will assess tax up to seven years prior to the assessment date plus the current year, and will impose penalties. However, where spouses operate separate businesses and one spouse is registered and the other is not, the Department cannot treat them as a single unregistered person for tax assessmentpurposes. The Department must be consistent in its treatment of taxpayers.
  14 WTD 210 94-047   The scope of an audit is not limited to the records initially provided by a taxpayer. Rather, the Department is given this broad authority to review a taxpayer's books and records in order to verify the accuracy of a return. Except for unregistered taxpayers orupon a showing of fraud or misrepresentation, the period of an assessment is limited to four years after the close of the tax year.
  17 WTD 36 93-287R   MISCELLANEOUS -- UNPUBLISHED DETERMINATIONS -- STARE DECISIS.Except for purposes of collateral estoppel in subsequent proceedings involving the same taxpayer, unpublished determinations are not precedent, may not be cited as such in proceedings before the Department, and do not become part of the body of administrative law governing Departmental actions.
  17 WTD 359 98-065   MOTION TO DISMISS; FAILURE TO PROMPTLY CONSIDER PETITION -- WAIVER OF INTEREST.RCW 82.32.100 does not address the period in which the Department must resolve a petition for correction of assessment.While RCW 82.32.160 does state that the Department should “promptly consider the petition and may grant or deny it,” it does not require that the assessment be waived simply because the Department delayed in addressing the taxpayer’s petition.However, where the delay in issuing a decision was for the sole convenience of the Department, the Department will waive interest for the period commencing one year after the taxpayer filed its petition through the payment due date.
  18 WTD 93 98-144   EQUITABLE ESTOPPEL:If the taxpayer previously purchased a vehicle at retail, without paying retail sales tax, and subsequently used it in Washington without paying a use tax, the auditor’s failure to assess the tax was certainly an oversight.An omission of a tax in a previous audit will not prevent the state from collecting the tax in subsequent audit.
  18 WTD 110 98-117   EVASION PENALTY -- MOTOR HOME.A husband and wife, who are residents of Washington and who also live at their beach-front property in Oregon several months a year, did not have the necessary intent to act in a false or fraudulent manner to evade their Washington use tax and motor vehicle excise tax obligations when they erroneously believed their motor home needed to be registered solely in Oregon because that is where they used it much of the time.
  18 WTD 163 97-134R   EVASION PENALTY.Evidence of drug addiction shows only the motivation for tax evasion, it is insufficient to overcome proof that taxpayer knew taxes were due, collected but did not remit retail sales tax trust funds, and under reported income.
  18 WTD 188 97-192R   REFUNDS -- STATUTES -- NONCLAIM STATUTES.RCW 82.32.060 is a nonclaim statute which is procedural in nature.Unless a taxpayer strictly complies with the terms of RCW 82.32.060, the Department of Revenue cannot make any tax refunds.
  19 WTD 101 (Part 1 of 2) 98-039   RETAIL SALES TAX – ASSESSMENT PERIOD –STATUTE OF LIMITATIONS – COLLECTED BUT UNREMITTED SALES TAX – LAUNDRIES.In general, the assessment period may be extended when retail sales tax is collected and not remitted to the state.This tolling of the statute of limitations results from the fraud or misrepresentation inferred from the unexcused failure of a taxpayer holding trust funds to pay over such funds to the state.Such an inference is reasonable because sales tax, with limited exception, is separately stated from the selling price and collected from the buyer.
  19 WTD 101 (Part 2 of 2) 98-039   An exception occurs with respect to sales tax levied on sales by coin-operated laundries, where sales tax is not separately stated and collected from the buyer.Under such circumstances, the Department must show by clear, cogent, and convincing evidence that the failure to remit sales tax to the state was the result of fraud or misrepresentation before the assessment period can be extended beyond four years after the close of the tax period.
  19 WTD 212 98-224   USE TAX -- LIMITATION FOR ASSESSMENTS -- TIME AND PLACE OF SALE -- DELIVERY -- TITLE TRANSFER.Use tax was not due on the plate-making machine originally sold and delivered in 1988 even though title did not actually transfer until 1991.
  19 WTD 367 99-239R   USE TAX – CHARTER BOAT – PERSONAL USE – STATUTE OF LIMITATIONS.A charter boat put to personal or intervening use is subject to use tax.It is only the first such use in this state, however, that is taxable.If the statute of limitations runs on that first use, the Department may not, thereafter, assert use tax on a subsequent use by the same person during a period of continuous ownership.
  20 WTD 410 01-005   EXCISE TAXES – CREDITING OR COMPENSATING TAXPAYER FOR COSTS INCURRED.The Department cannot grant a credit, or otherwise compensate, a taxpayer for out-of-pocket expenses the taxpayer incurs in connection with a Department examination of the taxpayer’s books and records, or in connection with appeals within the Department.
  21 WTD 48 00-085   REVIEW OF DEPARTMENTAL ACTIONS – ASSESSMENTS AND REFUNDS – EXHAUSTION OF ADMINISTRATIVE REMEDIES.The review procedures authorized by RCW 82.01.060(4), 82.32.160, 82.32.170, and Rule 100 may be used by taxpayers to review tax assessments and refund requests.However, there is no duty to exhaust administrative remedies with regard to the Department’s review processes before challenging the Department in a refund action under RCW 82.32.180.
  21 WTD 48 00-085   DEPARTMENT OF REVENUE -- ADMINISTRATION OF STATUTORY LAW -- PRESUMED CONSTITUTIONALITY OF STATUTES.An administrative body does not have the authority to determine the constitutionality of the law it administers, but must presume the statute is constitutional.
  22 WTD 131 02-002   B&O TAX – SALES TAX – USE TAX – CREDIT ASSESSMENT – INCREASE ADJUSTMENT -- STATUTE OF LIMITATIONS.A credit assessment will not be increased from the amount originally credited for those years for which the statute of limitations would have expired, unless a refund claim was filed or a waiver executed prior to the expiration date.An assessment may be reduced after the expiration date, but not increased.
  23 WTD 13 02-0130   MISCELLANEOUS -- B&O TAX -- EQUITABLE ESTOPPEL – ELEMENTS -- INACTION.Where DOR had originally contacted a manufacturer three years earlier and notified it that it had nexus and was required to register, DOR’s failure to issue a tax assessment at that time, did not preclude DOR from making a current tax assessment for all years still open under RCW 82.32.050.
  23 WTD 257 01-198   VALIDITY OF ASSESSMENT THAT INCORRECTLY STATES DATE OF FIRST USE.Proof that first taxable use did not occur on the exact date stated in the use tax assessment does not necessarily invalidate the assessment.An assessment of use tax is valid so long as the evidence establishes a date of first use within the statute of limitations.
  23 WTD 331 04-0098   EVASION PENALTY.Evidence that the taxpayer knew he had a tax liability and knew he was required to report and pay, but deliberately did not file tax returns because he intended to defer payment of the taxes until his financial situation improved, establishes intent to evade.
  23 WTD 331 04-0098   EVASION PENALTY.Even if a taxpayer intends to evade payment of taxes only on a temporary basis, the taxpayer is subject to the evasion penalty.
  23 WTD 331 04-0098   EVASION PENALTY.A taxpayer’s ignorance or mistake about the amount of penalty the taxpayer incurs by not timely filing tax returns and remitting collected retail sales tax is not the sort of ignorance or mistake that overcomes a finding of intent to evade.
  24 WTD 247 04-0120   STATUTE OF LIMITATIONS – FRAUD – EVASION.The statute of limitations was tolled by a fraudulent misstatement of fact.An owner of an airplane made a fraudulent misstatement of fact when it told the Department it had purchased the plane for resale only, when evidence demonstrated that the plane had been put to intervening use.
  26 WTD 6 05-0139   MISREPRESENTATION – ASSESSMENT OF ADDITIONAL TAX.DOR is not time-barred from amending an assessment due to the taxpayer’s misrepresentation of a material fact.
OTHER: