[WSBARP] Tax Issue: Estoppel and Waiver

Sat Jan 16 12:20:39 PST 2016

Ron,

Here's an Estoppel WAC for DSHS - not sure if there is a similar one for
DOR.

WAC 388-02-0495      

What is equitable estoppel?

(1) Equitable estoppel is a legal doctrine defined in case law that may
only be used as a defense to prevent the department from taking some
action against you, such as collecting an overpayment. Equitable
estoppel may not be used to require the department to continue to
provide something, such as benefits, services, or a license, or to
require the department to take action contrary to a statute.

(2) There are five elements of equitable estoppel. The standard of proof
is clear and convincing evidence. You must prove all of the following:

(a) The department made a statement or took an action or failed to take
an action, which is inconsistent with a later claim or position by the
department. For example, the department gave you money based on your
application, then later tells you that you received an overpayment and
wants you to pay the money back based on the same information.

(b) You reasonably relied on the department's original statement, action
or failure to act. For example, you believed the department acted
correctly when you received money.

(c) You will be injured to your detriment if the department is allowed
to contradict the original statement, action or failure to act. For
example, you did not seek help from health clinics or food banks because
you were receiving benefits from the department, and you would have been
eligible for these other benefits.

(d) Equitable estoppel is needed to prevent a manifest injustice.
Factors to be considered in determining whether a manifest injustice
would occur include, but are not limited to, whether:

(i) You cannot afford to repay the money to the department;

(ii) You gave the department timely and accurate information when
required;

(iii) You did not know that the department made a mistake;

(iv) You are free from fault; and

(v) The overpayment was caused solely by a department mistake.

(e) The exercise of government functions is not impaired. For example,
the use of equitable estoppel in your case will not result in
circumstances that will impair department functions.

(3) If the ALJ concludes that you have proven all of the elements of
equitable estoppel in subsection (2) of this section with clear and
convincing evidence, the department is stopped or prevented from taking
action or enforcing a claim against you.

Sincerely,

Tom

Thomas J. Westbrook

Attorney at Law

Rodgers, Kee & Card

324 West Bay Drive NW, Suite 201

Olympia, Washington  98502

Phone: 360-352-8311

Facsimile: 360-352-8501

Email: tjw at buddbaylaw.com

Skype: thomas.westbrook

www.buddbaylaw.com

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From: wsbarp-bounces at lists.wsbarppt.com
[mailto:wsbarp-bounces at lists.wsbarppt.com] On Behalf Of Ron Housh
Sent: Friday, January 15, 2016 4:14 PM
To: 'WSBA Real Property Listserv'
Subject: Re: [WSBARP] Tax Issue: Estoppel and Waiver

Friday afternoon tax issue:

Client seeks real property tax exemption as a tax exempt organization
requesting a refund of real property taxes previously paid

Dept. of Revenue repeatedly asks for proof that client is a 501(c)(3)
and has an IRS approval letter

Client never produces the same but says "we are a Washington not for
profit corp."

Dept. of Revenue grants exemption and refunds taxes - a very substantial
sum

Per a contingent fee agreement client pays Sketchy Business [not a
lawyer] 33% of the refund for their "services" in recovering the refund

4 months later - Department of Revenue announces "we made a mistake - we
really did need to obtain the proof of 501(c)(3) status which is
required under the WAC;  pay the refund amount back to us - Department
of Rev.- or else we will lien and foreclose..."

In the meantime it is determined that recovery of the 1/3 fee from
Sketchy Business will likely not occur -why?  Again, the business is
really "sketchy" [or worse]......

I feel there is a good estoppel argument against the Department of
Revenue for the 1/3 of the refund that was paid to Sketchy Business -
client will gladly assign its claim against Sketchy Business to
Department of Revenue.

But wonder if there is a waiver argument that applies to a governmental
entity, i.e. there is clear evidence Department of Rev. knew of the WAC
reg. that required the proof of the 501(c)(3) status, they asked for the
records, never received them and then approved the exemption and
refunded the tax.

Any experience out there asserting waiver and/or estoppel claims against
D of Revenue (or other agencies)?

Thanks!

I AM TYPICALLY IN THE SEATTLE OFFICE ON TUESDAY AND THURSDAY AND IN THE
MOUNT VERNON OFFICE ON MONDAY, WEDNESDAY AND FRIDAY 

Ronald G. Housh, P.S.

Attorney at Law

Seattle Office:

1420 Fifth Avenue, Suite 3000

Seattle, WA 98101-2393

Phone:   206-381-1341

Fax:        206-464-0461

Email:    ron at housh.org <mailto:ron at housh.org> 

Mount Vernon Office:

21411 Bluejay Place

Mount Vernon, WA 98274

Phone:  206-235-2459

Email:   ron at housh.org <mailto:ron at housh.org> 

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