WSR 06-23-064



[ Filed November 9, 2006, 10:48 a.m. ]


The department of revenue has issued Excise Tax Advisory 2037.32.228 Substantial Underpayment Penalty (ETA 2037).

Chapter 256, Laws of 2006, changed the penalties related to tax assessments by amending RCW 82.32.090(2). Prior to July 1, 2006, the law imposed a 5% penalty anytime the department issued an assessment of underpaid taxes. This penalty applied regardless of the amount of the underpayment. Effective July 1, 2006, the 5% penalty applies only when there is a substantial underpayment of taxes due. The law defines substantial underpayment as the payment of "less than eighty percent of the amount of tax determined by the department to be due for all types of taxes included in, and for the entire period of time covered by, the department's examination, and the amount of underpayment is at least one thousand dollars." The substantial underpayment penalty is imposed only when both tests are satisfied.

The purpose of this ETA is to explain how the department will determine whether the 80% threshold is met.

A copy of this document is available via the internet at or a request for copies may be directed to Roseanna Hodson, Interpretations and Technical Advice Division, P.O. Box 47453, Olympia, WA 98504-7453, phone (360) 570-6119, fax (360) 586-5543.

Alan R. Lynn

Washington State Code Reviser's Office