Washington – Whistleblower’s Case Against the Department Dismissed

SALT Report 2990 – The Washington State Auditor’s Office released their findings in a whistleblower investigation, which claimed that, the Department of Revenue grossly mismanaged a use tax assessment against a Taxpayer.

Specifically, the Whistleblower asserted that after the Department determined that the Taxpayer owed use tax, the Department’s assistant director of compliance, regional compliance manager, and the compliance program manager placed a hold on the tax assessment. The hold was for more than 11 months, which resulted in the expiration of the time in which the Department was statutorily authorized to assess the tax.  The Whistleblower claims that the Department did this because of the Taxpayer’s identity.

During the investigation the Auditor’s Office reviewed the entire case file and all case notes relevant to the assessment in question.  In addition, they reviewed the e-mails and phone records of the assistant director of compliance, the regional compliance manager, and the compliance program manager. The Auditor concluded that Department personnel discussed the case, but an assessment was never created, due to insufficient evidence.

Further, the Department stated that the level of proof required to create an assessment for this case had increased because:

  • The Department had issued the Taxpayer a binding letter ruling regarding the use tax issue in 2009, and
  • There was a similar tax case in 2009 that was appealed, and the assessment was overturned by the Department, in the taxpayer’s favor

Because of this, the Auditor concluded that the Department had never made a determination that the Taxpayer owed use tax, that no hold had been placed on the case that prevented an assessment, and no Department employees intentionally delayed the case to let the statutory time bar to lapse.

For Further Information

Washington State Auditor’s Office – Whistleblower Investigation Report #1010371