Thursday, July 19, 2018
Hawai'i Free Press

Current Articles | Archives

Sunday, December 11, 2016
Taxes Reaching Back into the Past?
By Tom Yamachika @ 4:01 AM :: 1625 Views :: Taxes

Reaching Back into the Past, Part 1

by Tom Yamachika, President Tax Foundation Hawaii

Imagine that you are a business in this scenario.

It’s the mid-1990’s. You would like to begin operations in the State of Washington. You research the rules and you find that Washington has a tax on business (which is called the Business and Occupations Tax, and is very similar to the Hawaii General Excise Tax). However, there is an exemption from the tax if your business in the state is exclusively through a local agent. The exemption has been on the books since 1983. You ask the Washington Department of Revenue for a ruling on whether this exemption would apply to you if you did this, and they say in 1996 that it does.

At the turn of the century, the Department of Revenue hands out a notice to you and those in your industry. It says that the Department is changing its mind about how the exemption works. Consequently, the ruling that you have is no longer worth the paper it’s printed on. A couple of years later, you get audited. The Department denies the exemption. You decide that you aren’t going to simply roll over and take this punishment, so you file suit.

In 2009, the Supreme Court of Washington rules that the exemption you were relying on is clear, and that you qualified for it. (There is some question as to how clear the statute actually is. The trial court ruled for the Department on this issue, the Washington Court of Appeals came to the same decision, and the Washington Supreme Court’s decision was the result of a 5-4 vote.) The years involved in the litigation are tax years 2000 to 2006.

The Department of Revenue, however, doesn’t stop there. It goes to the Washington Legislature and asks them to declare that the dumb old court was wrong, and that the statute means now, and always has meant, what the Department has concluded. In other words, the Department asked the Legislature to pass a bill to change the exemption law, retroactive to the date the exemption was originally passed. Again, this is now 2010, and the bill is retroactive to 1983. (Only one of the 147 current legislators was also a legislator in 1983.) The Department argues that unless the bill is passed, the Supreme Court’s horrid decision will saddle the State with large and devastating revenue losses. The bill is passed, and signed into law.

You now get audited for years 2007 to present, and the Department is adamant that the revised law applies. You scream bloody murder, and are back in the courts. In 2016, the Washington Supreme Court upholds the law, ruling that the Legislature needs a good reason to enact retroactive laws, but the prospect of debilitating revenue losses was a good reason. “If that’s a good reason,” you argue, “will there ever be a tax case without a good reason?” You go to the U.S. Supreme Court, thinking that one good definition of “Due Process violation” is your case.

The ending to this story has not yet been written. It’s now in the queue for consideration. Dot Foods, Inc. v. Washington Department of Revenue, No. 16-308.

If Dot Foods loses, none of us is safe. We all make decisions about how to conduct our affairs based on the rules that the government lays out before us. If we properly rely on those rules, should our government be able to upend them years later with a shout of, “You believed us when we told you it was okay? What a dummy!”

And what does this say about the role of the courts? Does the court decision mean anything when the losing agency can just go to the legislature to have a do-over no matter how much time has elapsed in the meantime?

Our constitutions need to be there to stop outrages like this from ever happening. Let’s see if the case will play out that way.

---30---

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

808 State Update AM940

ABCDEFG Blog

ACA Signups Hawaii

ACCE

ALEC

Alliance Defending Freedom

Aloha Conservative Alliance

Aloha Life Advocates

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

American Mothers of Hawaii

AMVETS-Hawaii

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Audit The Rail

Ballotpedia Hawaii

Better Hawaii 

Blaisdell Memorial Project

Broken Trust

CAFR Hawaii

Castaway Conservative

Children's Alliance Hawaii

Children's Rights Institute

Christian Homeschoolers of Hawaii

Citizens for Recall

Cliff Slater's Second Opinion

Coffee Break

Conservative Forum for Hawaii

CSIS Pacific Forum

DAR Hawaii

DeedySupport.com

DVids Hawaii

E Hana Kakou Kelii Akina

E Māua Ola i Moku o Keawe

Farmers For Choice Hawaii

FIRE

Fix Oahu!

Follow the Money Hawaii

Frank in Hawaii

Front Page Magazine

Frontline: The Fixers

Genetic Literacy Project

Get Off Your Butts!

God, Freedom, America

Grassroot Institute

Habele.org

Hawaii Aganst Assisted Suicide

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crime Victims' Rights

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defending Marriage

Hawaii Defense Foundation

Hawaii Families for Educational Choice

Hawaii Family Advocates

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Firearm Community

Hawaii Fishermen's Alliance

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii March for Life

Hawaii Meth Project

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Right to Life -- Big Island

Hawaii Right to Life -- Oahu

Hawaii Senate Informer

Hawaii Shield Law Coalition

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

Hawaii Votes

Heritage Foundation

HI Coalition Against Legalized Gambling

HIEC.Coop

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Homeless Crisis

Honolulu Navy League

Honolulu Traffic

Horns of Jericho Blog

House Minority Blog

House Republican Caucus YouTube

HPACC

Hump Day Report

Hunting, Farming and Fishing Assoc.

I Vote Hawaii

If Hawaii News

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

Iowa Meets Maui

Jackson v Abercrombie

Jihad Watch

Judgepedia Hawaii

July 4 in Hawaii

Kahle v New Hope

Kakaako Cares

Kau TEA Party

Kauai Co GOP

Keep Hawaii's Heroes

KeyWiki

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

Mauna Kea Recreational Users Group

MentalIllnessPolicy.org

Middle East Forum--The Legal Project

Mililani Conservatives for Change

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

Muslim Brotherhood in America

NAMI Hawaii

NARTH

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

National Wind Watch

New Zeal

NFIB Hawaii News

No GMO Means No Aloha

Northwest Economic Policy Seminar

Not Dead Yet, Hawaii

Now What I Really Think

NRA-ILA Hawaii

Oahu Alternative Transport

ObamaCare Abortion Hawaii

OHA Lies

Ohana Policy Group

OurFutureHawaii.com

Pacific Aviation Museum

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons 

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

Republican Party -- Hawaii State

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Salvage The Rail

Save the Plastic Bag

School Choice in Hawaii

SenatorFong.com

SIFE Remington

SIFE W. Oahu 

Sink the Jones Act

Smart About Marijuana--Hawaii

St Marianne Copenull

State Budget Solutions Hawaii

State Policy Network

Statehood for Guam

Tax Foundation of Hawaii

TEA Party Maui

TFB Micronesia

The Harriet Tubman Agenda

The Long War Journal

The Real Hanabusa

Time Out Honolulu

Truth About Trade & Technology - Hawaii

UCC Truths

Union Members Know Your Rights

United Veterans Hawaii

US Tax Foundation Hawaii Info

Valor in the Pacific

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT