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Washington State, is of the seven states with no income tax. Although it doesn’t have an income tax, the majority of its tax revenue is collected through sales or excise taxes along with a gross receipts tax of about 1% on businesses.
Consequences of Unpaid Taxes in Washington State
If a business is caught owing excise or sales taxes, generally interest and penalties will start to accrue on any unpaid balance. The Washington Department of Revenue (WDR) normally sends letters or notices to notify taxpayers of any unpaid taxes or tax balances. If the letters are ignored, a revenue agent may call or visit the place of business.
If the taxes remain unpaid, the Washington Department of Revenue will issue a tax warrant and the taxpayer has 10 days to address the unpaid taxes before the tax warrant is filed in a county Superior Court which places a tax lien against real and personal property and provides the legal framework for WDR to seize assets such as bank accounts, wages, or personal property. It is important to understand that if a tax warrant remains unpaid after a 30 day period, there may be a hearing to revoke the business’s tax registration which is required to legally operate in the state of Washington.
Resolutions If a Taxpayer Cannot Pay Unpaid Taxes
If a taxpayer is unable to unpaid taxes, the WDR will generally file a tax warrant (lien) anyway. However, setting up a payment plan will generally stop or prevent any further enforced collection efforts.
Payment Arrangement or Partial Payment Arrangement
If a taxpayer is unable to pay in full, the department will generally allow for a payment arrangement where the unpaid taxes are paid off over time. However, the WDR will require a financial statement that shows the business is unable to make the payment in full and what monthly payment the business can actually make.
Solutions If You Need to File Late
If a taxpayer is unable to file on time, in certain cases the WDR will provide an extension for the due date of an excise tax return as long as the request is made before the due date of the return. Normally extensions are less than 30 days. If an extension that is greater than 30 days is needed, the taxpayer must make an estimated sales tax payment until the returns are filed and the actual liability is calculated. There are some reasons WDR will accept for filing late which include but are not limited to computer failures, lost, destroyed or stolen documents, medical reasons, natural disasters and so forth.
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