Legislative information - Quarter 2, 2024

Interim guidance: What to do when we’re still figuring out what to do

Tax law is constantly changing. Evolving business practices and new technologies often prompt DOR to update rules and guidance within the parameters of what’s permitted under current law. Those updates can take time, and taxpayers often need answers from us sooner than later.

When this happens, the Department of Revenue may release an interim guidance statement (IGS), which taxpayers can rely on as official guidance and best practice from the department while we research an issue and craft more formal and long-term instruction.

For example, the department has an IGS regarding the taxability of nonfungible tokens, or NFTs, which in the age of the blockchain have become an increasingly common way to sell unique access to or ownership of goods and events, either digital-only or tangible. NFTs reflect an evolving technology and business model. We use the IGS to define terms, point to relevant RCW and WAC sections, guide taxpayers in assessing their own tax liability, give example scenarios to illustrate the guidance, and share the department’s next steps.

Washington’s tax code is based on voluntary taxpayer compliance, and the goal of an IGS is to help taxpayers know what they need to do to remain in good standing. As always, if a taxpayer needs more specific help from the department, they may call our phone center or request a ruling that is based on the facts of their specific circumstance.

Learn about Washington’s 786 tax exemptions

If you missed the January release of our 2024 Tax Exemption Study, we encourage you to check it out. We’ve posted it on our website here.

The study covers the 786 tax exemptions for Washington’s major state and local tax sources in law at the time of publication and is required to be updated every four years in accordance with RCW 43.06.400. The report was a significant undertaking by our Research & Fiscal Analysis division last interim; we hope you find it useful and insightful.

WFTC: Building on the success of year 1

The April tax filing deadline is now behind us, and for our Working Families Tax Credit division, that means the busiest period of applications is likewise in the rearview mirror. As of the end of April, the number of tax refunds paid (127,498) was up 27% over the same time last year, and the total dollar amount refunded ($98,837,981) was up 34%.

After a successful first year for the tax credit in calendar year 2023, DOR is striving for an even more successful second year, with encouraging results so far. We’ve incorporated lessons learned, with the goal of improving the customer experience and reducing staff review time.

Most importantly, this year we are able to offer WFTC applicants the option to receive their tax credit via a prepaid debit card, in addition to a paper check or direct deposit. A card may be more convenient for Washingtonians and may help individuals with limited or no access to a bank.

Looking back on the first year, we have analyzed the recurring friction points in the application process and have used what we learned to streamline and improve the application for this year. We’re providing more multilingual support and we also updated our Where’s My Refund online tool, which applicants may use to check on the status of their credit.

Our WFTC division is dedicated to making the program as successful for the people of Washington as possible. Last year alone, there were more than 250,000 Washington children living in households that received a tax credit from the program. We are committed to building on that success and are excited about this second year. We may be past peak application season, but Washingtonians can still check their eligibility and apply for the WFTC by going to workingfamiliescredit.wa.gov.

Shameless back-patting

Legislative session is an all-hands effort at the Department of Revenue, and we take very seriously our mandate in RCW 82.01.060 to provide nonpartisan assistance to the legislature on tax and fiscal matters.

For the 2024 session, our Legislation & Policy division analyzed 590 bills, 485 amendments, drafted seven bills for legislators, and this interim, is leading department implementation teams on 31 bills that passed. Our Research & Fiscal Analysis division produced 349 fiscal notes, 96% of which were provided timely to committees. They also generated 147 revenue and/or expenditure fiscal estimates, which, unlike fiscal notes, are tied to a query instead of a bill.

Our service to the legislature does not stop at sine die. Lawmakers and staff are welcome to contact me if DOR can be of assistance during the interim period.