Can an aircraft buyer obtain a Washington use-tax penalty waiver because an accountant failed to complete the payment process?

Plain-English summary

The Washington Department of Revenue denied an aircraft owner's request to waive use-tax penalties after the owner's accountant failed to complete the payment process. A mistake by a contracted representative is not ordinarily a circumstance beyond the taxpayer's control under WAC 458-20-228.

The taxpayer bought an airplane on April 6, 2021, brought it into Washington, and first used it in the state on April 16. The taxpayer said he contacted his accountant within three weeks and expected the accountant's contact with the Department to start the payment process. The accountant later left the firm, however, and the use tax remained unpaid throughout 2021.

The Department assessed use tax, aircraft excise tax, interest, a 29% delinquent penalty, and a 5% substantial-underpayment penalty. The determination held that the delinquent penalty was required because the tax remained unpaid after its due date, and that the substantial-underpayment penalty applied because less than 80% of the tax was paid and the underpayment exceeded $1,000. The taxpayer's correspondence with the Department in February and March 2022 did not help: the maximum delinquent penalty had already accrued during 2021.

What this means for you

Aircraft and other high-value property buyers

Assigning a tax task to an accountant does not transfer the legal payment obligation. Confirm that Washington use tax was actually filed and paid by the applicable due date, especially when the purchase did not include Washington retail sales tax.

Accountants and tax departments

Use a closed-loop process: calculate the liability, file, pay, and retain confirmation. If the responsible professional leaves, the taxpayer should have a control that identifies unfinished filings and payments.

Tax professionals handling penalties

Timing matters. Later cooperation may not undo penalties that already accrued. A waiver request should identify a qualifying immediate, unexpected, or emergency circumstance under RCW 82.32.105 and WAC 458-20-228—not merely adviser error or delayed follow-up.

Common questions

Q: Is an accountant's failure to pay use tax beyond the taxpayer's control?

A: Not in this determination. WAC 458-20-228 lists mistakes or misconduct by employees and contracted persons among circumstances generally not beyond the taxpayer's control.

Q: Why did the 5% substantial-underpayment penalty apply?

A: RCW 82.32.090(2) applied because the taxpayer timely paid less than 80% of the tax determined due and the underpayment was at least $1,000.

Q: Did the taxpayer's later attempts to work with the Department support a waiver?

A: No. Use tax first became due on May 25, 2021, based on the April 16 first-use date, and the 29% maximum delinquent penalty accrued before the taxpayer's 2022 correspondence.

Q: Would specific written Department instructions matter?

A: Potentially. The waiver statutes recognize reliance on qualifying written Department instructions, but the determination found no such instructions here.

Citations and references

• RCW 82.32.045, .050, .090, and .105 (payment, assessment, penalties, and waiver)
• RCW 82.32A.005 and .020 (voluntary compliance and written instructions)
• WAC 458-20-178(5)(b)(ii) (use-tax due date applied in the determination)
• WAC 458-20-228(9) (circumstances beyond taxpayer control)
• Det. No. 14-0197, 33 WTD 551 (2014) (third-party tax advice)

Source

• Landing page: Washington Tax Decisions ZIP files
• Original PDF: 45WTD009.pdf
• Source archive: Volume 45 ZIP (member wtdvol45/45WTD009.pdf)

Original ruling text

Det. No. 22-0228, 45 WTD 009 (March 6, 2026)

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Cite as Det. No. 22-0228, 45 WTD 009 (2026)
BEFORE THE ADMINISTRATIVE REVIEW AND HEARINGS DIVISION
DEPARTMENT OF REVENUE
STATE OF WASHINGTON
In the Matter of the Petition for Refund of

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DETERMINATION
No. 22-0228
Registration No. . . .

WAC 458-20-228; RCW 82.32.105: PENALTIES –WAIVER – MISTAKES BY THIRD PARTIES. A taxpayer who owes use tax on the purchase of tangible personal property and contacts their representative about the purchase in order for the representative to arrange for the payment of use tax to the Department, does not qualify for a circumstances beyond the taxpayer’s control penalty waiver when the representative does not finish arranging for the payment of use tax to the Department. Headnotes are provided as a convenience for the reader and are not in any way a part of the decision or in any way to be used in construing or interpreting this Determination. Sattelberg, T.R.O. – An individual airplane owner protests the Department’s assessment of penalties imposed as part of a use tax assessment. The owner argues that the Department should consider his efforts to pay the use tax sufficient to qualify for a waiver of penalties. We deny the petition. 1 ISSUE Whether an individual airplane owner qualifies for a waiver of penalties, under RCW 82.32.105 and WAC 458-20-228, when he contacted his accountant about state tax liabilities shortly after purchasing an airplane, but his accountant left the firm and use tax went unpaid for many months. FINDINGS OF FACT
. . . (Taxpayer) is a resident of Washington. 2 On April 6, 2021, Taxpayer closed on his purchase of . . . airplane (Plane) with a contract sales price of $. . . . Taxpayer took possession of the Plane and flew it to [Washington] airport . . . . Taxpayer subsequently hangared the Plane in Washington as well.

1

Identifying details regarding the taxpayer and the assessment have been redacted pursuant to RCW 82.32.410. Most of the correspondence from the Department during this action was sent to Taxpayer’s [City 1], Washington, address, but later correspondence shows Taxpayer with an address in [City 2], Washington.

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Det. No. 22-0228, 45 WTD 009 (March 6, 2026)

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In late 2021, the Department’s Compliance Division (Compliance) discovered that Taxpayer had hangared the Plane in Washington, and, in looking further into it, could not verify that Taxpayer had paid sales tax on its purchase. Compliance sent Taxpayer a tax inquiry letter on January 12, 2022, and further correspondence between Compliance and Taxpayer showed that Taxpayer had not paid sales or use tax on the Plane. On May 26, 2022, Compliance issued an assessment to Taxpayer that totaled $. . . . The assessment includes a 29 percent delinquent penalty of $ . . . and a five percent substantial underpayment penalty of $. . . .3 The assessment cited April 16, 2021, as the day Taxpayer first used the Plane in Washington, which triggered use tax liability. Taxpayer claims that he contacted his accountant about his purchase of the Plane within three weeks of making it, and Taxpayer states that his accountant contacted the Department around that time. However, Taxpayer states that this accountant left the accounting firm sometime thereafter, and Taxpayer did not end up paying use tax in 2021. Taxpayer states that he expected his accountant’s inquiry to the Department to begin the process toward paying tax to Washington, but that it did not happen as he’d expected. Taxpayer also provided correspondence he later had with the Department in February and March of 2022. Taxpayer states that he corresponded with the Department in early 2022 in an effort to pay the use tax owed, which was prior to the Department issuing its assessment that included penalties. Taxpayer states that in 2022 the Department was often either nonresponsive, slow to respond, or Taxpayer had technical difficulties establishing an online tax account with the Department. Taxpayer argues that the Department should consider his efforts from 2021 and 2022 as a sufficient basis to waive the penalties assessed. ANALYSIS The Washington tax system is based largely on voluntary compliance. RCW 82.32A.005. The Revenue Act imposes on taxpayers the responsibility to inform themselves about applicable tax laws, register with the Department, and accurately and timely pay taxes. Ch. 82.32A RCW. If the Department obtains information from which it appears a person has not paid the amount of tax properly due, then the Department is required to assess any additional amounts found due against that person and is also required to add interest to the tax due. RCW 82.32.050. The Department is also required to assess any applicable penalties under RCW 82.32.090. Det. No. 01-193, 21 WTD 264 (2002); Det. No. 99-279, 20 WTD 149 (2001). The delinquent penalty applies if the amount of tax properly due is not paid to the Department by its due date. RCW 82.32.045; RCW 82.32.090(1). The amount of the penalty varies depending on how long payment is delinquent. RCW 82.32.090(1). The Department must apply the delinquent penalty. Id. In this case, since the amount of tax properly due was not filed and paid for over a year after the Plane’s purchase, the Department correctly applied the maximum amount of delinquent penalties. The substantial underpayment penalty is found in RCW 82.32.090(2). The substantial underpayment penalty must be applied when the Department finds “that any tax has been The assessment consists of $. . . in use tax, $. . . in aircraft excise tax, a five percent substantial underpayment penalty of $. . . . , delinquent penalties of $. . . , and $. . . in interest.

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Det. No. 22-0228, 45 WTD 009 (March 6, 2026)

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substantially underpaid.” RCW 82.32.090(2). “‘Substantially underpaid’ means that the taxpayer has paid less than eighty percent of the amount of tax determined by the department to be due . . . and the amount of the underpayment is at least one thousand dollars.” Id. The Department correctly applied the substantial underpayment penalty since the amount of the underpayment is greater than one thousand dollars and less than eighty percent of the tax due was paid timely. The Department has limited authority to waive or cancel penalties, set out in RCW 82.32.105 and RCW 82.32A.020. Generally, the Department will not cancel penalties unless the failure that triggered the penalty was due to reliance on written instructions given to the taxpayer by the Department, or was the result of “circumstances beyond the control of the taxpayer.” RCW 82.32A.020; RCW 82.32.105(1). There were no [“specific, official . . . written tax reporting instructions”] given to Taxpayer by the Department that Taxpayer relied on in this case, so RCW 82.32A.020 does not apply. The Department’s administrative rule, WAC 458-20-228 (Rule 228), explains that “[c]ircumstances beyond the control of the taxpayer are generally those which are immediate, unexpected, or in the nature of an emergency. Such circumstances result in the taxpayer not having reasonable time or opportunity to obtain an extension of the due date or otherwise timely file and pay.” Rule 228(9)(a)(ii). The same rule section gives examples of circumstances that are generally considered beyond the control of the taxpayer, including: A. The payment was mailed on time but [inadvertently sent] to the wrong governmental agency; B. Erroneous written information from the Department; C. Death or serious illness of the taxpayer or a family member; D. Unplanned unavoidable absence of the taxpayer or key employee; E. Destruction of the business or records by fire or other casualty; and F. An act of fraud or conversion by the taxpayer’s employee or contract helper which the taxpayer could not immediately detect or prevent. Rule 228(9)(a)(ii). Here, none of the examples listed in Rule 228(9)(a)(ii) apply, nor does the general proposition that the payments were late because the circumstances were “immediate, unexpected, or in the nature of an emergency.” Rule 228 also provides examples of circumstances that are generally not considered beyond the control of the taxpayer, including: A. Financial hardship; B. A misunderstanding or lack of knowledge of a tax liability; C. The failure of the taxpayer to receive a tax return form; D. Registration of an account that is not considered a voluntary registration; E. Mistakes or misconduct on the part of employees or other persons contracted with the taxpayer; and F. Reliance upon unpublished, written information from the Department that was issued to and specifically addresses the circumstances of some other taxpayer.

Det. No. 22-0228, 45 WTD 009 (March 6, 2026)

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Rule 228(9)(a)(iii) (emphasis added).
Here, Taxpayer claims he contacted his accountant within three weeks of purchasing the Plane, and states that his accountant contacted the Department around that time. However, Taxpayer states that his accountant left the firm not long thereafter, and the facts show that use tax went unpaid throughout 2021. Because of these facts, this case fits into Rule 228(9)(a)(iii)(E)’s example of “mistakes . . . on the part of . . . other persons contracted with the taxpayer,” which is a circumstance that is not beyond a taxpayer’s control. See Det. No. 14-0197, 33 WTD 551 (2014), (upholding taxes and penalties even though the taxpayer had been advised by a third party that it would not incur a tax liability in Washington). As for Taxpayer’s correspondence from 2022, this happened after the maximum amount of delinquent penalties had already accrued. As mentioned above, Audit used April 16, 2021, as Taxpayer’s date of first use. Use tax, therefore, first became due on May 25, 2021. WAC 458-20178(5)(b)(ii). Over the next few months of 2021, Taxpayer accrued delinquent penalties up to the 29 percent maximum. RCW 82.32.090(1). Thus, by the time Taxpayer began corresponding with the Department in 2022, all of the penalties that would be issued had already accrued. While we appreciate Taxpayer’s proactive efforts in 2022, they do not meet the criteria available in RCW 82.32.105 for a penalty waiver in this situation. Accordingly, we deny Taxpayer’s petition. DECISION AND DISPOSITION We deny Taxpayer’s petition. Dated this 30th day of November 2022.