Washington Capital Gains tax is Income tax, not Sales tax, says IRS Expert

Washington state’s capital gains tax is an income tax, not a sales tax, according to Steven Hankin, former managing attorney in the Office of Chief Counsel of the IRS. His opinion adds weight to the argument that the tax is unconstitutional, a matter the Washington Supreme Court will consider next year.

Hankin offered the opinion to the Washington Policy Center regarding the law passed last year by the Legislature, RCW 82.87, which mandates a 7% tax on capital gains above $250,000 beginning this year.

The law was immediately challenged in court and was declared unconstitutional by Douglas County Superior Court Judge Brian Huber on March 1.