Washington sales tax debt: what the Department of Revenue can do and your options

The Washington Department of Revenue administers retail sales and use tax. The state rate is 6.5%. Cities, counties and transit districts add local rates, and Washington uses destination-based sourcing, so a seller delivering across the state can owe at many local rates on one return.

Washington has no personal or corporate income tax. Instead most businesses pay business and occupation (B&O) tax on gross receipts, filed on the same excise tax return as sales tax. A business that falls behind on its excise return is usually behind on both — and B&O is owed even when no sales tax applies, so a balance can exist on purely wholesale or service income.

When an excise tax balance goes unpaid, the Department can file a tax warrant in superior court, which becomes a lien on the business's property, and can then levy bank accounts and receivables. The Department publishes how to set up a payment plan through its collections staff; current returns must keep being filed and paid while a plan runs.

RCW 82.32.145 lets the Department assess responsible individuals — officers, members, managers or others with control over tax reporting and payment — personally for unpaid trust-fund taxes (collected retail sales tax) when a business is terminated, dissolved or abandoned and the failure to pay was willful. It works much like the federal Trust Fund Recovery Penalty.

Washington assessments can be disputed by filing a petition for review with the Department's Administrative Review and Hearings Division by the deadline on the notice, with further appeal to the independent Board of Tax Appeals.

Before calling, file any missing returns, keep the current period paid, and run the free business tax relief assessment to see which routes may be worth raising.