Washington – Evasion Penalty Upheld Due to Failure to Document Business Activities

SALT Report 1302 – The Washington Department of Revenue upheld a ruling against a taxpayer for evasion of unpaid sales tax and retail business and occupation tax (B&O) because the taxpayer had knowledge of his tax liabilities and intentionally avoided payment.

After the ruling, the business owner petitioned the Department for a waiver of the penalties assessed for collected and unremitted retail sales tax, and asked for a credit for the sales tax paid on his business purchases. The taxpayer alleged that he should not be penalized for evasion because he claimed he did not collect retail sales tax from his customers and that his purchase receipts should establish an allowable sales tax credit.

However, the taxpayer’s petition was denied based on the Department’s determination that the taxpayer was aware of his liabilities since he had reported income and remitted sales tax in previous years. Furthermore, the taxpayer reported an absence of business activity for periods during which he was engaged in business and failed to provide written documentation of the work performed and the amounts charged. Additionally, the taxpayer was not allowed to deduct any sales tax paid because he could not produce records showing where and how the purchases were used.

For Further Information:

Washington Department of Revenue – Tax Determination No. 10-0358