Whistleblower: Million-dollar tax bills made ‘to simply disappear’
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SEATTLE -- The Problems Solvers have uncovered allegations from several insiders that the state's tax agency is sometimes going easy on the rich and powerful.
State tax agent Dennis Redmon is among those making the allegations.
"Money that is properly owing and due to the state has been made to simply disappear by Department of Revenue senior management, due to political influence," Redmon said.
Redmon accuses the state of going easy on the rich and powerful at times. In one case, a $20 million private jet owned by the firm of a well-known businessman was about to get a $2 million tax bill. Redmon said senior Department of Revenue managers sat on the bill until days after the statute of limitations expired.
"They just sat on it for the better part of a year," he said. "It's impossible not to believe that they had full knowledge (that it was too late)."
Redmon isn't alone in accusing his own agency of sometimes letting the rich get richer. Several other current or former tax agents say some members of the senior management are willing to let powerful people and companies off the hook when tax is due on items ranging from jets to pricey artwork to yachts.
For years, Publishers Clearing House was selling items through the mail to Washington residents without paying a number of taxes, penalties and interest, according to internal documents. A $10.7 million tax bill was approved, but a senior manager inexplicably dropped it with little or no explanation.
When others objected, Redmon said they were told to "shut up."
Redmond and other colleagues estimate the state has lost $35 million in the last three years alone. That's enough money to fund the Washington State Patrol for a year or pay the base annual salary for 1,000 new teachers. It's also enough money to suspend tolls on the 520 and Tacoma Narrows Bridges for spring, summer and fall.
"This is a pattern for something that's been going on for years," Redmon said.
Linda Fryant is another person from the Department of Revenue who's speaking out. Fryant, who's now retired and living in Baltimore, echoed many of Redmon's concerns about the culture at the agency.
"My argument always was whenever I was told I couldn't do a case or couldn't pursue a case, was that the law applies to everyone. It doesn't say 'except for a few really rich,'" she said.
Multiple sources say the problem transcends any one governor or department director. They blame the revolving door between senior managers and powerful accounting firms, which are oftentimes the same firms negotiating tax bills for big clients. Ethics do not prevent that sort of interaction.
And what happens to agents who object?
"Well, let's see. I was put on paid administrative leave twice," Fryant said. So, you get bad performance reviews and no promotions."
Department of Revenue officials say field-level workers often are not aware of complex legal reasons behind management decisions such as the those made in cases similar to the jet and Publishers Clearing House cases.
Neither Redmon nor Department of Revenue officials would divulge names or identifying information about the taxpayers in the KOMO News investigation, complying with state law and department policy. However, other sources with direct knowledge did provide specifics to KOMO.
In a statement, the department went on to say "we are not aware of any incidents" of special treatment, and "that's not the way we do business."
Thanks to the whistleblower, the state auditor is now investigating.
After watching this story, I was inclined to agree with the response from the Department of Revenue spokesman. Â Certainly with the Publisher's Clearing House, they would not be subject to any of this states taxation laws because they have no physical presence here. Â This is one of the issues that many states are attempting to address by the Uniform Sales Tax Initiative, but until it is resolved, our state does not have the ability to assess tax on a business unless they have nexus in this state.
Regarding the airplanes, yachts, etc, part of our ability to tax depends on whether they are purchased and/or used in this state. Â If they are not, we simply do not have laws that enable our government to assess tax.
It's disturbing when I watch stories like this, that seem specifically designed to inflame people, without informing them of the facts of our state's laws.
 @T2q Mom Certainly with the Publisher's Clearing House they do have a presence here. Every time that little packet gets thrown into my mail box would consist of presence. Be part of the solution and quit making excuses to justify the corruption that has been overlooked by people who feel entitled to keep letting it slide.
T2q Mom - I agree with your conclusions. It seems KOMO was sucked into a sensationalist story with little substance. The two insiders featured in this story are well known to those who work regularly with the DOR as malcontents with a history of personnel run-ins with DOR management. It is also a bit ironic that Dennis is featured in this story. He was one of the subjects in another story (I believe also featured in a breathless KOMO scoop about waste in state government) about 12 years ago where he was accused of being part of a group of DOR employees partying on state time on his houseboat tied up to the log boom at SeaFair.
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The job of law enforcement personnel (like DOR auditors and revenue agents) is to investigate possible noncompliance with state law and take action based on their best judgement. Not all claimed violations of law, however, are ultimately upheld. Audit assessments are routinely overturned in the DOR's administrative appeal process for a variety of reasons - usually because the auditor/agent misapplies the law or doesn't have/understand all the facts. Even actions upheld in the DOR's administrative appeal process are regularly overturned in the courts because the DOR at higher levels gets it wrong. The fact that DOR managers settle assessments is nothing new. We expect state officials to avoid wasteful efforts to pursue actions that have a low probability of ultimate success.
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I have serious doubts that Dennis has his facts straight. It makes no sense that DOR managers would intentionally hold an assessment until the statute of limitations expired only to later conclude that it should be issued. For anyone that knows anything about the process, that just doesn't have a ring of truth to it. As far as the Publisher's Clearinghouse matter is concerned, whether someone within the Interpretations and Technical Advice Division was "upset" at the outcome, as Dennis suggests in his comments below, is not compelling. People disagree on lots of things. I'll bet there were those in the Division that supported the result. What is more troubling is that someone within the agency violated the law by disclosing confidential information about the settlement.
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The fact that Dennis filed a whistleblower complaint may be newsworthy, but the way KOMO spun the story was over the top. It should have been reported straight up. There is just not enough from the reported facts to justify KOMO's sensationalist approach. Also, in my opinion the dramatic music and sinister images casting a shadow against the DOR office building were just silly. But apprently it sells advertising.
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The State Auditor will thorougly investigage Dennis' claims and if any DOR managers are found to have abused their authority they will be held accountable.
 @SPQR1959 Not that I care one way or the other on your assumption of Dennis or his motives in bringing this thievery to the public's attention. What I do find interesting is your statement in trying to cast doubt on the evidence and the fact that you try to throw a negative light on someone trying to uncover what ever it is you may have tried to hide.
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Having run ins with corruption always tends to ruffle the feathers of the Managers that try to hide the facts. SPQR1959, you sound as if your feathers are getting ruffled here. I applaud Dennis for his efforts to clean up the cronyism that goes with that old adage " You scratch my back " Because you don't like it only leads me to believe you may be part of the problem. Instantly trying to throw negatives at the two people who have had the courage to stand up and call BS to what you might call a small oversight to save your neck.
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Millions of dollars in budget cuts, family's ripped apart by layoffs, homes lost because you, or the others like you have been making shady deals behind closed doors for years. Maybe a complete revamping of the DOR with Dennis at the top leading the charge is exactly what the State needs. Someone who knows what is wrong with the system, but has always been shot down when they have spoken up.
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Can you hear me now ? That is the problem with BIG GOVERNMENT. The people who know how to fix the problem are always the first to become the problem in the eyes and minds of the corrupt.
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Keep up the good work Dennis.
Manshoon - Your assessment of the situation makes many more assumptions than mine. You speak as though you know all the facts.  If so, and if they are as you characterize them, then they should all come out in the State Auditor's investigation. Perhaps you can offer your knowledge of the facts as part of the investigation. I have noted from your postings that you haven't offered any facts - only assertions of wrong doing.
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I know Dennis and Linda. They are pefectly pleasant people. They've never ruffled a single feather of mine. I am not convinced, however, the world is as they see it. I know many people both within and outside the DOR that don't see the world as Dennis and Linda see it. I may have been unfair in characterizing them as malcontents, but I don't see their efforts as being as noble as you apparently do. You, on the other hand, do not know me.  You can only draw conclusions from my post. I'll leave it to others to decide whether, in light of my post, your wild speculations have any merit.Â
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My purpose in commenting was to suggest that there is more than one side to this matter and that KOMO's story doesn't contain enough facts to support their characterization of the situation.  Your posts have this in common with the KOMO story. If it is discovered that there are misdeeds once all the facts come out, then no one will be louder than me in calling for accountability.
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I, for one, am not a proponent of big government. I battle big government on behalf of regular people every day. I am a firm believer in the rule of law and in the right of every taxapyer to due process of law. Our tax system is deeply flawed on many levels and could do with a substantial overhaul. Administration of the tax is not as black and white as you apparently imagine.
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To your point about PCH's presence due to its mailings, read the U.S. Supreme Court's decision in Quill v. North Dakota, 504 U.S. 298 (1992). PCH may have a physical presence in Washington for all I know, but a mailing into the state isn't sufficient.
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Here is a concept.....Why dont all of us call our reps in government and demand that they do thier job and investigate. Or is it easier to just complain and rag on each other?????? Thats what appears to happen in these comment sections. The government loves it when we argue among ourselves. Its the right hand not watching what the left hand is doing..........................
Isn't this what the State auditor's office is supposed to do?
This is a example of what our State Government has become, the root of all evil. With no care for anything but their own. This is where special interest in politics should become illegal, 1 Billion dollars to secure the seat of who will spend the next four years in the White House.
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The People need to REVOLT and clean the system of the corruption that promises us that they have our backs, but in turn do nothing but find better ways to oppress the middle, and stomp on the weak. Militias, need to step up and in and perform old fashioned Vigilant justice to scum that do nothing but Oppress the lives of others for their own good.
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This is exactly why the Government has built FEMA camps in USA, because they know the people are tired of their Oppressors and it just might be the end of their time. We the People, No, not anymore, it's the " We the Haves " and " You the Have Not ".
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Because they can doesn't make it right.
the FBI should be on this one these people need to go to jail. There's no question follow the money
I appreciate komo running this story. A few comments. I strongly support criminal investigation and prosecution. It is not a compliacated investigation. Aiding and abetting evasion or avoidance of $2,000,000 in taxes. Specific DOR managers. WSP or Attorney General office. Bigger picture there is a very legit RICO case going back to 2004. RICO has a 10 year statute of limitations. I'd like to state I did not provide or confirm, even hint at any taxpayer identity as well. I take the RCW 82.32.330 confidentiality law seriously, even for taxpayers who are dirty.
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The DOR comment on field agents not knowing the complex legal issues. I was 17 years in management at DOR and have inside information in these cases. The $2 million aircraft use tax case has NO complex legal issues. That is why after statute of limitations passed management told the agent there were no problems with the assessment being issued. The aircraft was owned by a WA state entity, controlled by a WA state citizen, and was hangered in WA. Before bringing the aircraft to WA taxpayer, well represented, got written advice on how to properly use the aircraft without paying use tax. A legal leasing transaction can be done. Got caught violating those terms. The $10.9 million case was fully vetted by DOR Interpretations and Tax Advice (ITA) staff before the assessment was issued. ITA was very upset about the tax giveaway is my definite information. There were NO legal issues. TP representative simply stated TP would not make several million dollars in contributions to WA state entities/parties if DOR made them pay. DOR deputy director Tremaine Smith made the tax go away. Tremaine left DOR in July 2011. Unclear if it was forced out or voluntary. 3 months later he went to work for Earnst and Young as VP state and Local Tax. Not a complicated legal issue. It does not appear that DOR actually says THESE cases had complicated legal issues.
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Taxpayers in this state deserve a DOR that stands for equal and honest administering of tax laws, regardless of influence. Our governors need DOR to take that position because often they are subject to influencing. DOR management today has been staffed with folks who serve government and their careers first, the public second. I call it corruption when criminal behavior is involved, like in this case.
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There is a lot more. Penalty waivers, much easier for well connected, very strict for others. Just ending a multi million dollar audit and having the (non) taxpayer file going forward. Try getting that deal unconnected business. Legeslative public hearings might help. I believe things can be improved, which is why I have spoken out. DOR is definitely paying attention to this case.
 @Dennis Redmon and everybody in Audit knows that Trim left DOR for a better paycheck at Earnst & Young
 @luv2mash  @Dennis Redmon @Luv2mash, you sound a little biased towards what should be have been done in the first place. Do you have something to loose here ? Regardless of who left and what doesn't justify the criminal wrongs they may have permitted when they were in office. It may seem a little ironic now that you mention a Coward and a Cat in a bag waiting to drown. Could that be your career in that bag, because you are a part of the corruption that let's it slide by when eyes are closed.
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Talk about Cowards.
 @Dennis Redmon Dennis, you took a demotion for trying to gain support for decertifying the employees union, you want some sort of sick restituition and now you're like a cat in a bag waiting to drown, you coward
w t f , and those bitches made me go thriugh hell when i owed the 2,500 after i was injured and couldnt pay. i had to pay way more when i payed it , so ithink some body should see jail time , Â
Linda F is the daughter oif a friend and we know how hurtful this whole thing was. Please Don't let these guys get away with this ......It is this kind of thing which lost Mitt the election...Please don'[t tell me Patty Murry and Maria Cantwell are involved in this coverup.....Kep up the good work...don't let us down . JoAnn Osborn
Should we be surprised...?.. I am not... there should be to statue of limitations on uncollected taxes! Of course what government watches the government?... oh yes no one...
Not surprised our government is crooked. Make the heads of the tax division that let the rich get away with this go to jail and pay the taxes. This is why people you should not vote for special levies! The state could have money but instead state employes are taking bribes.
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 @People Need To Wake Up  @TruthinAdverts  @Willie69 Everybody gets defensive when they get attacked, whether or not the attack is justifiable or mere smoke blowing.
 @TruthinAdverts  @Willie69 Where there is smoke, there is fire.  You must be one of those said state employees, being defensive like that.
 @Willie69 Yes, and the State employees will get more and more venal as we continue to cut their pay, put them on work furloughs, and cut their health care benefit packages. Sad, but true, and largely to be expected.
These rich people should be made to pay back taxes after this. Since the statute of limitations was allowed to run out, these cases should be reopened.
Flat tax everyone! that way everyone pays their percentage and nobody gets writeoffs etc.Â
Since this is a story about the state DOR are you advocating a state income tax. Right now only people who own businesses or the rich who have to pay luxery tax are involved in having to pay the DOR and these taxes. I pay enough federal tax and sales tax I don't want a state income tax.
Talk about really p#%@ing off the public! Â I hear the ads on the radio all the time for assistance in beating the government out of taxes due. These guys should spend time in jail. I, and most other citizens, pay what's due in taxes every year. Everyone should too. We, the people, should rise up and demand fairness from the government.
EQUAL TREATMENT UNDER THE LAW.
 @tucsonbill  @ing It's really all about living in a plutocracy (not a democracy), where the wealthy rule. The wealthy have bought the very best legislators that money can buy in order to craft some of the finest tax code loopholes. The radio ads and the tax attorneys behind them are just legitimate attempts to capitalize on those loopholes so that the wealthy can exploit all the rest of us.
Just more corruption. But hey - taxes are evil and we certainly have no business paying them.
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Personal accountability people.
Another thing I"ve heard from DOR agents is how certain State legislators are able to get nice property tax exemptions for influential citizens (read wealthy political donors) living in high end real estate. How easy it is to have your mansion declared "historical" so that you don't have to pay the same property taxes as everyone else. I'd sure like to see KOMO look into this too.
Shouldn't McKenna be on top of this?
 @Klondiko He's been much too busy running for Governor and fighting Obamacare.
@Klondiko McKenna not the state auditor.
@justsayin It's beyond the auditor. Time for the ATTORNEY general.
Wouldn't the actions of these managers be considered a major crime (theft) and be prosecutable? Â My fear is that many of these people, both past and present, will be allowed to retire and collect pensions.
 @Bruce ...AND take post-retirement consulting positions with some of the entities they were giving tax breaks too.
Why so many favors for the rich? They can certainly more than afford to foot their part of the bill. Absolutely ridiculous. Enough is enough. And I hope those responsible for allowing/encouraging this to happen get the boot.
 @skepticaloptimist Take a look at who many State employees go to work for when they retire or otherwise leave State service. There resides your answer. The broader problem doesn't reside just with the Dept. of Revenue. If you read the stories on KOMO's investigation of the leaking SR 520 pontoons, you'll understand what I mean.
 @skepticaloptimist IMHO  I'm afraid this disclosure just scratches the surface of the back scratching going on in government. . .  what can we do about it???  well, first off - VOTE, 2nd be informed voters.  KNow your rights, and responsibilities, and stand up and do both. Â
Un-FRICKING-believable. Â Disgusting.
 @Doxie Disgusting, yes. But VERY believable.
 @RN1 True - just boggles the mind.
WOW, so WHO is pandering to the rich? Oh, that's right, this is a BLUE state. HAHAH!!! Hypocrites.
@hologram5 I was thinking the same thing. Obama ran on the platform of tax the rich yet the democrats have been in control forever and they are allowing this. My conclusion is this.. they define the rich as people making above $250,000 the people who make between that and a million are the ones who are going to be taxed heavily, not the 1%. Would love to Beyounce's and Jay-Z's 1040.
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@TruthinAdverts @hologram5 Seriously! The democrats have been in control of Washington for at least 40 years.
I can't believe anyone is surprised at this. It's been happening for decades, maybe longer. The difference now is that We now know about it. You don't really think the rich and powerful sponsor political campaigns because they like the person running do you? They do it because then they can come back to the politician and say "Hey, remember that favor I did for you? Well it's time to return the favor if you want me to help you again."
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This has been a big issue in politics for a long time; the corrupt and greedy run this country. People need to get a grip with the fact the those who run the states and country could give a crap about the people. This is just another piece of evidence to support that. I'm sure if we were to dig, and nobody of importance will, then we'd see Boeing, Microsoft, etc all were catered to in similar manners. Now let's see if those in places of political importance will act on this. Good luck!
 @Brahma37 This "ethos" comes from both sides of the Political spectrum. When elections costs millions of dollars to get a $175K per year job, you have to expect things like this to happen. Take the money out of politics, and you "might" get people will to do the job they were elected to. Otherwise, they end up "owing" these election funds favors.
 @RTNavy Exactly my point and a big reason why our entire political system, if you can call it a system, is flawed.
Complex legal reasons are unethical. Just a scam by scum. Washington tax code should be so simple a monkey could understand it.Â
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Or maybe even a caveman.
 @realdeal599  @codetalker Or a legislator...no, scratch that. There's no way.
Nobody has mentioned the Boeing trick of flying out past the international boundary to sign purchase orders so Washington State collects NO tax revenues over the sale of billions of dollars worth of airplanes manufactured right here and sold for no tax revenue.
There needs to be a hell of a lot more transparency than there is now.Â