Opinion ID: 2603565
Heading Depth: 1
Heading Rank: 9

Heading: reversal of auditor; departmental estoppel

Text: In an audit covering April 1, 1972 to September 30, 1975 a Department examiner verified a nonprofit hospital deduction, provided by RCW 82.04.4289, [4] taken by Group Health. In a later audit another examiner reversed the Department's position and denied Group Health this deduction. The Department retroactively assessed the taxes which had not been paid, notifying Group Health of this reversal in position on July 1, 1980. Group Health paid but challenged this assessment. Thereafter, the Department refunded tax amounts assessed through June 30, 1980, but refused to refund tax amounts assessed after July 1, 1980. The Department did not adopt the change of position as an official position until May 6, 1981. Group Health argues that it is entitled to a refund for taxes paid between July 1, 1980, and May 6, 1981. We disagree. [7] The doctrine of estoppel will not be lightly invoked against the state to deprive it of the power to collect taxes. Kitsap-Mason Dairymen's Ass'n v. State Tax Comm'n, 77 Wn.2d 812, 818, 467 P.2d 312 (1970). The elements of estoppel are stated as follows: Three elements must be present to create an estoppel: (1) an admission, statement, or act inconsistent with the claim afterwards asserted, (2) action by the other party on the faith of such admission, statement, or act, and (3) injury to such other party resulting from allowing the first party to contradict or repudiate such admission, statement, or act. Harbor Air Serv., Inc. v. Board of Tax Appeals, 88 Wn.2d 359, 366-67, 560 P.2d 1145 (1977). Group Health's reliance on the prechange position was not justified. Group Health was not entitled to rely on the prechange position after July 1, 1980, the date it received notification of the reversal in position. This approach allows for certainty between the parties and assures that the taxpayer has received notice. To hold as Group Health argues would make the date upon which a taxpayer could rely upon an examiner's position depend on factors such as whether the matter was appealed. Additionally, there would be no assurance that the taxpayer would receive notice. The date of notification, not the date the Department officially adopts a change of position, is the crucial date for purposes of estoppel. Reliance on the initial Department position by Group Health after July 1, 1980 was not justified; estoppel is inappropriate. We affirm the trial court's ruling that Group Health is a health or social welfare organization entitled to take the deduction pursuant to RCW 82.04.4297. We also affirm the trial court's rulings in favor of the Department on the partial summary judgment motions. DOLLIVER, C.J., and UTTER, BRACHTENBACH, DORE, PEARSON, ANDERSEN, GOODLOE, and DURHAM, JJ., concur.