(The Center Square) – When the Washington State Department of Revenue heard public comment on the state’s new capital gains tax, officials took several questions and offered few answers.
“The purpose of this public meeting is to gather feedback on the draft language,” said Michael Hwang, WSDOR tax policy specialist.
The department held the virtual meeting on July 12 to collect public comment on administrative rulemaking for the state’s new capital gains tax.
The meeting drew more than 160 attendees, including representatives from the City of Seattle, H&R Block, Bloomberg Tax, the Washington Retail Association, the Washington State Budget and Policy Center and the Washington Society of CPAs.
The state Legislature passed the new capital gains tax in 2021, which sets a 7% tax on profits of more than $250,000 from selling some assets like stocks and bonds.
The Washington State Supreme Court upheld the new tax in March, which faced legal challenges under the state constitution’s clause barring different rates of income taxation.
Bea Nahon with WSCPA said the department should clarify capital loss carryovers and revisit how the capital gains tax will be applied.
“You have some sections there that you provided some examples, but you didn’t provide the answers and you’re asking for feedback,” she said. “We believe that the answer there is in plain sight.”
“Thank you for your feedback. I appreciate it,” Hwang said.
Rebecca Hang, representing DME CPA, asked Hwang how the federal extension applies to the capital gains tax.
“Clients have paid the tax due but did not file extension under our interpretation that the federal extension extends to Washington state capital gains return and were penalized,” Hang said. “Can you elaborate on that?”
Hwang directed her to another rule and said the department required an extension application.
“I think it would be best to respect others’ time to follow up with you outside of this meeting,” Hwang said.
Attendee Satish Gupta asked whether he needed to prove a change of residence.
“Information can be found in section two under the definitions, but it sounds like you have a very specific question,” Hwang said. “I think I did receive an email from you, but if you’d like to follow up on that.”
Hwang said those with questions or needing guidance on the capital gains tax should use the WSDOR’s online ruling portal.
Before public comment, roll call took nearly 20 minutes of the 45-minute meeting. Some attendees left, but not before objecting.
“Leaving, this will take too long to go through names,” attendee Mary Kedzie said.
“Is this Parks & Rec?” asked attendee Mark Remeikis, referencing a television satire on local bureaucracy.
“We apologize,” said WSDOR Assistant Director of Interpretations and Technical Advice Tim Jennrich. “This information is needed as part of the official rule file.”
Jennrich said there is no deadline for comment, but the public should submit them as quickly as possible.
“Our hope is to get those comments, turn this around into the next step in the process, which is the public hearing, and then try to get a rule adoption,” Jennrich said.
Administrative rules become effective 31 days after filing for adoption, according to Hwang.
