OLYMPIA – Washington collected $321 million in delinquent taxes from nearly 9,000 businesses through an amnesty program that ended Saturday. The success of the program surprised state officials, who were expecting to pick up about $24 million when the program was proposed in December.
The money could help legislators figure out a solution to the state’s budget problems, Gov. Chris Gregoire said in announcing the results of the tax amnesty Tuesday.
In February, the state opened a 90-day amnesty for businesses that owed back taxes, allowing them to pay up without penalty or interest. Just under 11,000 applied, and 8,888 were accepted. Most were small businesses with gross income of less than $1 million, but more than 400 were large businesses with income above $20 million, including one that had taken the state to court over its tax bill.
That company, which Gregoire said she couldn’t name because tax information is confidential, dropped the lawsuit and settled with the state for “tens of millions of dollars.”
Businesses had to pay their overdue taxes in full, but were spared penalties and interest. Some businesses weren’t registered with the state and had not paid taxes previously.
Gregoire insisted that the uncollected tax revenues were not a sign the Department of Revenue was lax on collections, but that businesses struggling in a difficult economy were putting off tax payments while they paid other bills and “kept the doors open.”
Of the money collected, the state keeps $263 million for the general fund and will send $57 million to local governments that were also stiffed by the businesses. Gregoire suggested to legislative leaders they apply $182 million of the tax windfall to the state’s monthly payment to schools in June, reducing the amount they were planning to shift into July in an accounting maneuver.
The announcement comes as legislators start their second week of a special session with limited activity in both chambers and talk of need for a second 30-day overtime period.
“I’m not interested in a second special session,” Gregoire said. With the added tax revenue they should be able to pass a budget and “go home.”