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A whole lot of tax money is going uncollected

One wouldn’t have to delve too deeply into the writing I produce to know I am not a fan of taxes. Well, some taxes anyway.

We, as residents here in Washington state, have a covenant with the powers-that-be in the hallowed halls of Olympia. That being — you stay away from a state income tax and we will pay a healthy retail sales tax. Nobody complains too much. Even me. The state has to fund itself somehow, and believe me after having to live in the once great state of California for a number of years doing business, it can get a whole lot worse.

Our covenant only works, however, if we do pay the retail sales tax as required. Allow me to relate a story.

I currently operate a business that has three suppliers. I purchase small things that are tax exempt. The state supplies me with a tax certificate that expires every three – four years as it does for all businesses doing business here in Washington State. We have to justify our purchases tax free. They do this to keep an eye on things, weed out people who abuse the system, etc.

As my recent tax exempt certificate was recently set to expire. I received notices from two of my suppliers reminding me to stop in and bring in my new certificate so that they could update their in-store records, otherwise, they would not be able to continue to sell to me tax free. They required a copy of the new certificate in case of an audit to verify that I was, indeed, allowed to purchase certain items tax free. I did as instructed with the two establishments and as I had not heard from the third, a major big-box store that I am not naming here, I decided to stop in and just do it while out and about.

After being told by the customer service desk that they weren’t interested in updating said tax exempt certificates I asked to speak to a manager. One approached me and was very nice and also completely ignorant on the subject. When I related that without updating legal tax exempt certificates they were probably no more than 50/50 compliant with people authorized. In other words, the store was selling tax exempt to probably thousands of Harbor individuals, each using old numbers from businesses either not authorized, or even out of business. Just to double check, I opened and closed a business back in 2005 and that number is still active in their system. I could walk into any of their stores across the country and buy anything I wanted tax free. I wouldn’t, but I could. But there are a lot of people who would abuse the system.

In this day and age, I am somewhat stunned that a corporation as large as what I am referring to would both be so sloppy as not to require active legal tax exempt certificates, weeding out those that expire and the such, but putting themselves in a position to be audited by the state Department of Revenue. It would not surprise me in the least to learn that stores that do not even purge expired certificates, yet continue to sell tax free, would not be subject to past due amounts due the state — even fines for non compliance. As this particular store has many stores in Washington state, I am going to estimate the state is probably failing to collect millions, if not tens of millions of dollars – from this one group of stores alone. It’s probably enough to fully fund our public transportation — or at least restore the cut weekend Transit service. The voters recently increased the sales tax on everyone to do that.

This is just one store. There are other big box outlets and I expect one would find the same circumstances.

Taxes are important. If put to the people in a fair situation, we don’t fret and complain too much. I have to wonder, however, if the state was actually collecting what was coming to them, perhaps they would not be as high as they are?

In a private correspondence, I did relay the store information to a county official, I just don’t feel it appropriate to list here. Considering the dire financial strait the county is in, I would be going after this tax money not even being collected.

Tom Frederiksen grew up in Montesano and lives here today with an active blog at Contact him at