Washington State New Investment Income Voluntary Disclosure Program

This is a significant opportunity to get your tax affairs in order, so lets break down the key aspects of this new program.

 

 

 

 

This program offers a unique chance for businesses to voluntarily disclose unreported investment income that is subject to B and O tax. The best part? For qualifying disclosures, the DOR will waive penalties and interest on that income.

 

 

While the primary focus is investment income, you might also get relief for other income streams reportable on combined excise tax returns. However, it is crucial to remember that if you have collected retail sales tax but have not remitted it, penalties will still apply to those amounts.

 

 

To ensure a smooth process, the program will be administered in two distinct 10-month phases over the next two fiscal years:

 

 

 

 

 

 

Generally, any registered or unregistered business with unreported investment income subject to B and O tax can qualify. There is a key exception: you wont qualify if you have already been notified of an audit or agency enforcement action as of July 1, 2025. Interestingly, affiliates of entities currently under audit might still be eligible for this beneficial treatment.

 

 

 

 

Businesses primarily engaged in banking, lending, and security (as defined in RCW 82.04.4281) typically do not qualify for this program. The Department of Revenue may also update its website with additional businesses that are excluded. If you are unsure about your eligibility, the Department advises submitting a letter ruling request for clarity.

 

 

 

 

Participating in this temporary expansion can offer your business substantial advantages:

 

 

• Limited "Look Back" Period: Your tax liability will only be assessed for the prior four years plus the current year, providing a clear boundary for past obligations.

 

 

• Waiver of Penalties: You could see a waiver of up to 39% in potential penalties, including:

o A 5% assessment penalty for substantially underpaid tax.

o A 5% unregistered penalty.

o A 29% late payment of a return penalty.

 

 

• Simplified Assessment: The Department can summarize your unreported tax liability into a single, straightforward tax assessment.

 

 

• Interest Waiver: All interest on the unreported investment income will be waived.

 

 

Important Note: For any collected but unremitted retail sales or use tax, there is an unlimited "look back" period, and the 29% late payment penalty will still apply to those specific amounts.

 

 

 

 

Stay tuned for more from SGM - https://dor.wa.gov/open-business/apply-business-license/voluntary-disclosure-program/investment-income-voluntary-disclosure-program

 

 

 

 

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