In 2013, the Legislature established new tax preference transparency requirements. Under the laws:
- New tax preferences automatically expire in 10 years, unless an express expiration date applies (RCW 82.32.805)
- The amount claimed by a taxpayer for a new tax preference may be publicly disclosed 24 months after preference is claimed, with some exceptions (RCW 82.32.808)
"Tax preference” means an exemption, exclusion, deduction, credit, deferral, or preferential rate, for a tax administered by the Department of Revenue.
A number of tax preferences will automatically expire. If a new tax preference does not have an expiration date in the legislation, it will automatically expire on January 1 of the calendar year after the calendar year 10 years from the effective date. For example, if a new tax preference takes effect on July 1, 2017, it will expire on January 1, 2028.
Generally, tax return information is considered confidential (RCW 82.32.330). In 2013, the legislature passed Engrossed Substitute Senate Bill (ESSB) 5882. This legislation allows certain tax preference amounts reported to be disclosed 24 months after they are reported or claimed (RCW 82.32.808).
The disclosure requirements do not apply to:
- Property tax exemptions
- Tax preferences required by constitutional law
- Tax preferences where the amount claimed by the taxpayer is less than $10,000 per year
- Taxpayers who are annual filers
- For taxpayers who don’t have to electronically file any documents with the department, tax preferences not listed on the combined excise tax return
- Taxpayers with a good cause waiver
Good cause waiver
Taxpayers taking certain tax preferences may apply for a good cause waiver. If granted, tax preference amounts will not be publicly disclosed. Taxpayers must explain in detail how their business will suffer economic harm if their tax preference amounts are publicly disclosed.
Economic harm may include decreased income, lost profits, or diminished business value. It may also include a reduction in a business’s goodwill or a competitive disadvantage if the information is released.
If approved, the waiver will be granted permanently from the time it was issued.
A good cause waiver is available for these tax preferences:
- Paymaster services B&O tax deduction (RCW 82.04.43393)
- Clay targets sales and use tax exemptions (RCW 82.08.205, RCW 82.12.205)
- Food flavoring products sales and use tax exemptions (RCW 82.08.210, RCW 82.12.210)
- Cooperative finance organizations B&O tax deduction (RCW 82.04.43394)
- Investment data for investment firms sales and use tax exemptions (RCW 82.08.207, RCW 82.12.207)
- Large private airplane sales and use tax exemptions (RCW 82.08.215, RCW 82.12.215)
- Blood banks B&O tax exemption (RCW 82.04.324)
- Mint growers sales and use tax exemptions (RCW 82.08.220, RCW 82.12.220)
How to apply for a good cause waiver
To apply for a good cause waiver, complete a waiver request form. Include a detailed explanation describing how disclosure will cause economic harm.