Washington: Penalties/interest may be imposed for unclaimed property non-compliance

Due to changes in Washington’s unclaimed property law in 2015, businesses that are not compliant with the law may now be subject to new mandatory penalty and interest charges for non-compliance.^[1] The new penalty and interest provisions require the Washington Department of Revenue (“DOR”) to assess both penalties and interest for failure to:

• File reports or file reports electronically;
• Timely or electronically deliver property; or
• Timely pay examination assessments.

The DOR’s imposition of the penalties and interest is mandatory unless the failure is due to circumstances beyond the business’s control. Additional penalties apply for willful failure to comply. Under the new law, the DOR was permitted to waive imposition of these new penalty and interest provisions until October 31, 2017. ^[2] 

The DOR issued “emergency” administrative rules on December 29, 2017 setting forth an administrative process for a business to appeal the imposition of penalties.^[3] The emergency rules became effective immediately upon filing. The emergency rules set forth a process that includes a “brief adjudicative” review and initial order, review of the initial order, or conversion of a brief adjudicative review to a “formal proceeding.” At each administrative review level, the reviewer is a particular employee of the DOR. Once a final order has been issued through a DOR administrative tribunal may pursue a further appeal through the court system. The rules authorize a business to skip the administrative appeals process and file an action in court only if the business first pays the assessment to DOR.   

On March 21, 2018, the DOR filed proposed “permanent” rules pertaining to the administrative process for seeking abatement of penalty and interest assessments.  These proposed rules are substantially similar to the emergency rules. The proposed permanent rules were scheduled for public hearing on April 26, 2018.[4] For further information on the Washington Unclaimed Property penalty and interest changes, please contact Samantha Petersen at 303-382-7220, Karen Anderson at 303-382-7020, or Will King at 214-840-6107.

[1] Senate Bill 6057 Part XXI; Chapter 6 Laws of 2015; Wash. Rev. Code § 63.29.340.

[2] Wash. Rev. Code § 63.29.191.

[3] 18-02 Wash. Reg. 057; Washington Rule-Making Order CR-103E; Wash. Admin. Code § 458-65A-10001, et seq.

[4] 18-07 Wash. Reg. 104; Washington Rule-Making Order CR-102; Wash. Admin. Code § 458-65A-10001, et seq.