He had no idea you had to pay taxes in Washington state if you ran a home business.*
*please ignore the video from when he moved to Washington and claimed the previous tenants were running a business out of their garage and were getting mailed bills for not paying business tax. Also ignore that they were getting actual bills because the government literally never gives you a number on how much you owe. Only idiot children would think that.
As much as I love to shit on DSP, I have to give him the benefit of the doubt over the state taxes. The main intention of the taxes and much of the legal wording is directed towards people who make use of Washington and its residents to generate income.
The biggest problem is that the laws haven't caught up with the 21st century. So Phil is probably not alone in having some sort of "internet business" suddenly become liable for state taxes.
I do think he was aware of state business taxes, but I do not think he was aware that his "business" was liable for them. I also think its very plausible that in the event of an audit (which is what has essentially happened) that exact figures will not be forthcoming until the papers have passed under the eyes of a few people. DSP often talks about writing things off for tax purposes, so its very possible that the number of items he writes off make the federal and state taxes not be interchangeable.
However, if you're making money through cutting edge methods (and YouTube has only been paying out for about 10 years, so its still cutting edge) then you have to be prepared for situations like this to happen. The same things happened to many internet businesses because of changes or differing interpretations of the law.
DSP is still trying to use these taxes as something that is "unfair" but he really is
never prepared. He wasn't prepared for the YouTube adpocalypse, he wasn't prepared for sudden taxes, he wasn't prepared to play Getting Over It when it was actually popular.
Being prepared is largely boring and not rewarding. Its the reason why most people choose a 9 to 5 job over DSP's "career". DSP is
particularly bad at being prepared, but "being prepared" and having astute foresight is a skill that few people have. If it was easy or commonplace then everyone would be starting their own fortune 500 companies.