Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-229 - Refunds

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
This rule explains the procedures relating to
			 refunds or credits for the overpayment of taxes, penalties, or interest. It
			 describes the statutory time limits for refunds and the interest rates that
			 apply to those refunds.
References to a "refund application" in this rule include a
				request for a credit against future tax liability as well as a refund to the
				taxpayer.
Examples provided in this rule should be used only as a general
				guide. The tax results of other situations must be determined after a review of
				all facts and circumstances.
(2)
What are the time limits for a tax
			 refund or credit?
(a)
Time
			 limits.
No refund or credit may be made for taxes, penalties, or
			 interest paid more than four years before the beginning of the calendar year in
			 which a refund application is made or examination of records by the department
			 is completed. See
			 RCW
			 82.32.060. This is a nonclaim statute rather
			 than a statute of limitations. This means a valid application must be filed
			 within the statutory period, which may not be extended or tolled, unless a
			 waiver extending the time for assessment has been entered into as described in
			 (c) of this subsection.
For example, a refund or credit may be granted for any
				overpayment made in a shaded year in the following chart:
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Refund application is filed no later than December
						  31st
(b)
Relation back to date paid.
Because the time limits relate to the
			 date the taxes, penalties, or interest is paid, a refund application can be
			 timely even though the payment concerned liabilities for a tax year normally
			 outside the time limits. For example, Taxpayer P owes $1,000 in B&O tax for
			 activity undertaken in December 2000. In January 2001, Taxpayer P makes an
			 arithmetic error and submits a payment of $1,500 with its December 2000 tax
			 return. In December 2005, Taxpayer P requests a refund of $500 for the
			 overpayment of taxes for the December 2000 period. This request is timely
			 because the overpayment occurred within the time limits, even though the
			 payment concerned tax liabilities incurred (December 2000) outside the time
			 limits.
Fact situations can be complicated. For example, Taxpayer P
				pays B&O taxes in Years 1 through 4. The department subsequently conducts
				an audit of Taxpayer P that includes Years 1-4. The audit is completed in Year
				5. As a result of the audit, the department issues an assessment in Year 5 for
				$50,000 in additional retail sales taxes that were due from Years 1-4. Taxpayer
				P pays the assessment in full in Year 6. In Year 10, Taxpayer P files an
				application requesting a refund of B&O taxes. Taxpayer P's application is
				timely because it relates to a payment (payment of the assessment in Year 6)
				made no more than four years before the year in which the application is filed.
				It does not matter that the taxes relate to years outside the time limits; the
				actual payment occurred within four years before the refund application. Nor
				does it matter that the refund is based on an overpayment of B&O taxes
				while the assessment involved retail sales taxes, because both taxes relate to
				the same tax years. However, the amount of any refund is limited to $50,000 -
				the amount of the payment that occurred within the time limits.
Assume the same facts as described above. When the department
				reviews Taxpayer P's refund application, it determines that the refund is
				valid. After reviewing the new information, however, the department also
				determines that Taxpayer P should have paid $20,000 in additional B&O taxes
				during Years 1-4. Because Taxpayer P paid $30,000 more than the amount properly
				due ($50,000 overpayment less $20,000 underpayment), the amount of the refund
				will be $30,000.
(c)
Waiver.
Under
			 RCW
			 82.32.050 or
			 82.32.100, a taxpayer may agree to
			 waive the time limits and extend the time for the assessment of taxes,
			 penalties and interest. If the taxpayer executes such a waiver, the time limits
			 for a refund or credit are extended for the same period.