One of the articles, published on November 24, raises several transparency concerns. The Department of Revenue’s (or DOR’s) Appeals Division is an administrative adjudicatory body that issues opinions on a variety of tax matters, including appeals of assessments for the state's sales and use tax and its business and occupation tax. Appeals Division matters are considered by an administrative law judge, who meets separately with the taxpayer and the DOR to develop the case's facts and legal arguments. A hearing is typically held, although representatives for the department generally are not present.
Although a written decision is issued, the department does not publish most of its decisions – even though those decisions have precedential value in cases against other taxpayers. Taxpayers are left to defend against precedents they have never seen.
Like many states, Washington argues that it is impossible or impractical to sufficiently redact decisions to protect taxpayer confidentiality. But that argument is difficult to believe. Most states have an adequate system for redacting and publishing rulings by administrative adjudicatory bodies. The Washington Department of Revenue can too.
Another article from the Washington State Wire notes an additional problem with the appeals process: Taxpayers almost always lose. Retiring ALJ Dave Dressel wrote in his departure e-mail to staff: “Appeals management needs to lose its rubber-stamp-whatever-the-operating-division-does mentality.” Dressel said he believes taxpayers don’t stand a chance and that the “current structure is an affront to due process.”
Those are harsh words from someone very close to the process. Yet Gil Brewer, the DOR’s senior director of tax policy, said the department needs to “speak with one voice.” In other words, the appeal process is designed to be a rubber stamp.
This is not the first time I’ve looked into transparency in Washington state. In June 2012 I wrote an article suggesting that the department’s refusal to release most of its written determinations has created a sense that tax policy is being administered behind closed curtains, leaving the public unable to discern whether similarly situated taxpayers are being treated as such.
In fairness to the DOR, it has recently increased the number of decisions it publishes. And for that it deserves praise. But the department needs to further commit to a more transparent appeal process. Its current course of hiding guidance from taxpayers does nothing but foster a culture of secrecy and inefficiency.