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The Department of Revenue held its first public meeting (as required by law) to discuss proposed changes to the capital gains income tax WACs. This change would add a new section, WAC 458-20-301 (rule 301) regarding definitions, deductions, exemptions, and allocations of gains and losses. The Center for Government Reform previously provided an initial review.
The meeting was called to order and facilitated by Michael Hwang, Tax Policy Specialist, and drafter of the proposed rules. The meeting was attended by a variety of parties including local governments, business associations, tax professionals, and the public.
A topic of concern highlighted by the Washington Society of CPAs is capital loss carryovers (something we flagged) and how they impact federal net long-term capital gain in the year per legislative intent in RCW 82.87.040.
Another area of concern regarded taxes paid to other jurisdictions. There is confusion on how to apply this exclusion with how other states apply tax deductions. This issue highlights the difficulty in making an income tax an excise tax that reaches across state lines.
As noted during the meeting, the current rule draft is provided for discussion purposes only. Comments on the initial draft can still be made via email here. The Department will review comments made during this meeting and those emailed to potentially amend Rule 301. They will file the adjusted rule and will hold another public hearing. They noted in the meeting they are trying to have rules completed by October.
You can watch the public hearing here. There was some additional news coverage of the meeting.
