Lynnwood's J and R Auto Body owner gets jail for sales-tax avoidance

The owner of a Lynnwood body shop was sentenced to three months in jail Friday after pleading guilty to altering another business' permit to avoid sales tax.

Jose R. Guevara, 30, owns J and R Auto Body. He had been charged with a gross misdemeanor by the state's Attorney General's Office at the request of the Washington State Department of Revenue, the first prosecution of a business owner since reseller permits were introduced in January.

Guevara was charged with altering another's reseller permit so he could buy parts without paying sales tax.

According to Mike Gowrylow, spokesman with the Revenue Department, when businesses buy products they plan to resell, they aren't charged sales tax because the tax is collected when the product is resold.

But he said that led to abuse, where the resell certificates were downloaded off the department's website with little oversight. Gowrylow said, for example, some people would buy big-screen TVs without paying sales tax and others would buy tires for their family cars, asserting they planned to resell them.

Now the Revenue Department reviews those seeking reseller permits and decides whether they are legitimate.

Retailers will usually be given a permit, but other businesses are more tightly regulated. Building contractors, for example, should be paying the tax but often weren't.

The Revenue Department will look at applicants' tax returns to determine if they deserve a reseller permit.

The state estimated $100 million a year was lost in sales-tax revenue under the old system.

Businesses that sell to resellers can verify that a company's permit is legitimate at http://www.dor.wa.gov/content/doingbusiness/registermybusiness/brd/.