WSR 17-05-078
[Filed February 14, 2017, 8:59 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 16-09-115.
Title of Rule and Other Identifying Information: WAC 458-20-269 Waiver of public disclosure of certain new tax preferences. The department is considering adopting a new rule under chapter 458-20 WAC explaining that amounts claimed by taxpayers for any new tax preference are subject to public disclosure, with certain limitations, pursuant to RCW 82.32.808(7). The proposed rule will also explain that the department, under certain circumstances, may waive this public disclosure requirement.
Hearing Location(s): Conference Room 114A, 6400 Linderson Way S.W., Tumwater, WA 98501, on March 21, 2017, at 1:00 p.m. Copies of draft rules are available for viewing and printing on our web site at
Call-in option can be provided upon request no later than three days before the hearing date.
Date of Intended Adoption: March 28, 2017.
Submit Written Comments to: Leslie Mullin, Department of Revenue, P.O. Box 47453, Olympia, WA 98504-7453, email, by March 21, 2017.
Assistance for Persons with Disabilities: Contact Julie King, (360) 704-5717, or Renee Cosare, (360) 725-7514, no later than ten days before the hearing date. For hearing impaired please contact us via the Washington relay operator at (800) 833-6384.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The department is proposing a new rule to chapter 458-20 WAC that:
Incorporates legislative changes from ESSB 5882, 2013 2nd sp. sess. (chapter 13, Laws of 2013);
Explains what tax preference information is subject to public disclosure;
Provides guidance to taxpayers on what the good cause waiver standard is, including the tax preferences eligible for the good cause waiver; and
Explains the procedure for applying for a good cause waiver.
Reasons Supporting Proposal: Creating a new rule outlining the process under which a taxpayer can apply for a good cause waiver is necessary to effectively implement legislation passed in 2013 (ESSB 5882) regarding the public disclosure of tax preference amounts.
Statutory Authority for Adoption: RCW 82.32.300 and 82.01.060(2).
Statute Being Implemented: RCW 82.32.808.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Department of revenue, governmental.
Name of Agency Personnel Responsible for Drafting: Leslie Mullin, 6400 Linderson Way S.W., Tumwater, WA, (360) 534-1589; Implementation and Enforcement: Marcus Glasper, 6400 Linderson Way S.W., Tumwater, WA, (360) 534-1615.
No small business economic impact statement has been prepared under chapter 19.85 RCW. This proposed rule is exempt from the Regulatory Fairness Act because it meets the exemption under RCW 34.05.310 (4)(c).
A cost-benefit analysis is not required under RCW 34.05.328. The proposed rules are not significant legislative rules as defined by RCW 34.05.328.
February 14, 2017
Kevin Dixon
Rules Coordinator
WAC 458-20-269 Waiver of public disclosure of certain new tax preferences.
(1) Introduction. RCW 82.32.808(7) explains that the amount claimed by a taxpayer for any new tax preference is subject to public disclosure, with certain limitations. Under certain circumstances, the department may waive this public disclosure requirement for those new tax preferences specifically provided in chapter 13, Laws of 2013 2nd sp. sess.
(2) Definitions.
(a) "New tax preference" means a "tax preference" as defined in (b) of this subsection that initially takes effect after August 1, 2013, or a tax preference in effect as of August 1, 2013, that is expanded or extended after August 1, 2013, even if the expanding or extending amendment includes any other change to the tax preference.
(b) "Tax preference" means, with respect to any state tax administered by the department (except for the Washington estate and transfer tax in chapter 83.100 RCW and chapter 458-57 WAC), an exemption, exclusion, or deduction from the base of a state tax; a credit against a state tax; a deferral of a state tax; or a preferential state tax rate.
(3) When will the department disclose new tax preference amounts?
(a) New tax preference amounts claimed by a taxpayer that do not require a survey under RCW 82.32.585 are subject to public disclosure, upon request, twenty-four months after the taxpayer first claimed the new tax preference reportable under RCW 82.32.808(6). Taxpayers reporting a tax preference requiring a survey should refer to RCW 82.32.585 and WAC 458-20-268 Annual surveys for certain tax preferences, for those requirements.
(b) Any new tax preference, other than a tax preference requiring a survey under RCW 82.32.585, claimed by a taxpayer in a calendar year that is less than ten thousand dollars is not subject to public disclosure.
(4) When may the department waive public disclosure of new tax preference amounts?
(a) Good cause waiver. RCW 82.32.808 (7)(b) provides that the department may waive public disclosure of new tax preference amounts for good cause. A waiver is available only for the following new tax preferences:
(i) Paymaster services business and occupation (B&O) tax deduction (RCW 82.04.43393);
(ii) Clay targets retail sales (RCW 82.08.205) and use (RCW 82.12.205) tax exemptions;
(iii) Food flavoring products retail sales (RCW 82.08.210) and use (82.12.210) tax exemptions;
(iv) Cooperative finance organizations B&O tax deduction (RCW 82.04.43394);
(v) Investment data for investment firms retail sales (RCW 82.08.207) and use (RCW 82.12.207) tax exemptions;
(vi) Large private airplane retail sales (RCW 82.08.215) and use (RCW 82.12.215) tax exemptions;
(vii) Blood banks B&O tax exemption (RCW 82.04.324); and
(viii) Mint growers retail sales (RCW 82.08.220) and use (RCW 82.12.220) tax exemptions.
(b) What is good cause? Good cause is demonstrated by a reasonable showing of economic harm to a taxpayer if public disclosure of the new tax preference amount were to occur. To make a reasonable showing of economic harm, the taxpayer must provide facts that demonstrate that economic harm is likely to occur, and not merely speculative or theoretical. Economic harm may include, but is not limited to, a quantifiable financial loss such as decreased income, lost profits, and diminished business value. It may also include a reduction in a business's goodwill or an unfair competitive advantage to the taxpayer's competitors if the tax preference information is released.
(5) What is the process for applying for the waiver?
(a) Taxpayers do not need to request a waiver for a new tax preference for any calendar year for which the amount claimed by the taxpayer for that new tax preference is less than ten thousand dollars. Such amounts are not subject to public disclosure as described in subsection (3)(b) of this rule.
(b) Taxpayers eligible to claim a waiver of disclosure under subsection (4) of this rule may apply to the department at any time, but should note that any reported new tax preference amount is no longer confidential twenty-four months after the tax preference is first claimed as described in subsection (3)(a) of this rule.
(c) To apply for the waiver, the taxpayer must provide the department with a completed waiver request form and include a detailed explanation describing how disclosure of the new tax preference information will cause economic harm. The required waiver request form can be found on the department's web site at
(d) Taxpayers who have their waiver requests approved prior to the date of disclosure, as described in subsection (3)(a) of this rule, will not have their new tax preference amount subject to public disclosure.
(e) An approval by the department to waive public disclosure of new tax preference information will remain in effect indefinitely unless the department has reason to believe that good cause no longer exists. If this occurs, the department will contact the taxpayer for additional information prior to any public disclosure of new tax preference information.
(6) Denial of good cause waiver request.
(a) Taxpayers who have their waiver requests denied may submit additional documentation to the department to support their eligibility for the waiver within thirty days of the postmark date of the department's determination. Upon receiving the additional information from the taxpayer, the department will conduct a second review and notify the taxpayer whether good cause exists. If additional documentation is not submitted, then the initial determination is considered the final determination.
(b) A final determination by the department to deny a waiver request is considered a final agency action for purposes of review under RCW 34.05.570(4) and may be appealed to superior court as provided in RCW 34.05.514.