A contractor was subject to the 50% evasion penalty because it collected sales tax from customers but failed to remit it to the Washington Department of Revenue. The evasion penalty is imposed when a taxpayer knows a tax is due but tries to escape detection through deceit, fraud or other intentional wrongdoing. The taxpayer knew the tax was due since it billed and collected the sales tax pursuant to its invoices. The taxpayer then altered its QuickBooks records from “sales tax due” to “material costs.” The taxpayer used the collected sales tax for its own business purposes as it admitted to retaining the sales tax to meet payroll obligations. The taxpayer reported the sales that is adjusted as wholesale sales on its periodic sales tax returns. The Audit Division assessed the evasion penalty based on the fact that the pattern of invoice modification shown in the “Audit Trail Report” is clear evidence of an intent to evade. While the taxpayer may have initially billed many customers retail sales tax, the taxpayer explains it “modified” invoices in QuickBooks by removing the sales tax charges to “correct legitimate errors” based on new or updated information. After being notified of the audit, the taxpayer further modified some of the invoices by changing the customer name from that of a home owner consumer to that of a contractor for whom the taxpayer had a reseller’s permit. The taxpayer argues those name changes were also proper. Because the modifications were so extensive, the Audit Division did not accept reseller permits for some contractors where the invoices were significantly modified. Though the taxpayer did not submit evidence that its actions were due to honest mistake or lack of knowledge, the case was remanded to adjust the assessment where the taxpayer has shown that a transaction was a wholesale sale and it did not collect sales tax on the sale. The evasion penalty was upheld on all transactions where a valid adjustment was not documented. (Determination No. 16-0066, Washington Department of Revenue, December 1, 2016)