Washington Legislature creates voluntary tax disclosure program to boost revenue

On April 2, 2025, the Washington State Senate introduced Senate Bill 5806, aimed at enhancing tax administration and generating additional revenue through a new voluntary disclosure program. This initiative seeks to encourage taxpayers to register with the Department of Revenue by waiving penalties and interest for a limited time, thereby promoting compliance and increasing tax contributions.

The bill's primary objective is to replicate the success of Washington's previous tax amnesty program, which ran from February to April 2011 and resulted in over $345 million in revenue from more than 5,000 participating taxpayers. By offering a similar opportunity, the legislature hopes to accelerate taxpayer registration and compliance, ultimately benefiting state revenue.

Key provisions of Senate Bill 5806 include the establishment of a formal agreement between the Department of Revenue and voluntary registrants, wherein penalties and interest will be waived. This approach is designed to incentivize taxpayers who may have previously been hesitant to come forward due to fear of financial repercussions.

Debate surrounding the bill has focused on its potential effectiveness and implications for state revenue. Supporters argue that the program could significantly boost tax compliance and revenue, while critics express concerns about the fairness of waiving penalties for those who have not complied with tax obligations in the past. Amendments to the bill may arise as discussions continue, particularly regarding the duration of the waiver period and the criteria for eligibility.

The economic implications of Senate Bill 5806 could be substantial, as increased tax compliance may lead to enhanced funding for public services and infrastructure. Socially, the bill aims to create a more equitable tax system by encouraging all taxpayers to fulfill their obligations without the burden of additional penalties.

As the legislative process unfolds, stakeholders will be closely monitoring the bill's progress and potential amendments. If passed, Senate Bill 5806 could mark a significant step toward improving tax administration in Washington State, with lasting effects on both revenue generation and taxpayer engagement.