Whistleblower: Million-dollar tax bills made 'to simply disappear'

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.