Gregoire beefs up collection force for business taxes

OLYMPIA – Facing revenue shortfalls for the next 30 months, Washington state is making changes in its tax collecting agency to go after businesses that aren’t paying what they owe, Gov. Chris Gregoire said Tuesday.

The state Department of Revenue will get a new director, hire extra auditors to contact out-of-state companies that aren’t paying the correct business taxes, and possibly offer an amnesty period in which delinquent taxpayers can avoid interest and penalties if they pay up.

Gregoire named Suzan DelBene, an unsuccessful candidate for Congress in this year’s election, to lead the department. A former Microsoft executive, DelBene said she wants to bring her experience as a businesswoman and entrepreneur to “do everything possible to help business thrive.”

DelBene lost a race against Republican Rep. Dave Reichert in suburban King County’s 8th Congressional District. State GOP Chairman Luke Esser questioned whether she would be friendly to business after saying in the campaign that she would oppose extending federal tax cuts to people making more than $200,000 and couples making more than $250,000.

The department is trying to simplify the state’s tax system, which involves a 6.5 percent sales tax levied by the state plus a local sales tax that varies in some 300 different local taxing districts. Its business and occupation tax has 50 different tax classifications, and 39 of its cities also have B&O taxes with their own rates, exemptions and deductions.

The department will hire six new auditors to search for national companies that do business in Washington and seven new excise tax examiners to check for unregistered companies avoiding taxes, Gregoire said. She’ll also ask the Legislature to approve a four-month amnesty program next year to allow tax scofflaws to pay taxes they owe without fines or interest.

The department estimates the state could collect an extra $44 million over the next seven months and bring in another $6 million for local governments through those actions.

Washington currently faces a gap of nearly $1 billion between what it expects to collect in revenue and what it was scheduled to spend as recently as this September. Gregoire ordered across-the-board budget cuts in October to cover the shortfall that was then projected to be about $520 million, but a more recent forecast has revenue continuing to drop by another $385 million.

The state can’t handle that through more across-the-board cuts, Gregoire has said. She will meet today with Democratic and Republican leaders of the Senate and House to discuss other options and a special session.