S-100                 _______________________________________________

                                                   SENATE BILL NO. 3006

                        _______________________________________________

State of Washington                              49th Legislature                              1985 Regular Session

By Senator Barr

Prefiled with Secretary of the Senate 12/24/84.  Read first time 1/15/85 and referred to Committee on Ways and Means.

AN ACT Relating to revenue and taxation; amending RCW 82.32.070; adding a new section to chapter 39.34 RCW; and adding a new section to chapter 82.32 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.  There is added to chapter 39.34 RCW a new section to read as follows:

          Nothing in this chapter authorizes the department of revenue to obtain returns or return information, as defined in section 2 of this act, from the United States internal revenue service.

NEW SECTION. Sec. 2.  There is added to chapter 82.32 RCW a new section to read as follows:

          (1) The department shall not request or in any way obtain, directly or indirectly, returns or return information on any person from the United States internal revenue service.

          (2) As used in this section:

          (a) "Return" means any tax or information return, declaration of estimated tax, or claim for refund required by, provided for, or permitted under the federal internal revenue code which is filed with the United States internal revenue service by, on behalf of, or with respect to any person, and any amendment or supplement thereto, including supporting schedules, attachments, or lists which are supplemental to, or part of, the return so filed.

          (b) "Return information" means (i) a taxpayer's identity; the nature, source, or amount of the taxpayer's income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments; whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing; or any other data received by, recorded by, prepared by, furnished to, or collected by the United States internal revenue service with respect to a return or with respect to the determination of the existence, or possible existence, of liability, or the amount thereof, of any person under the federal internal revenue code for any tax, penalty, interest, fine, forfeiture, or other imposition, or offense; and (ii) any part of any written determination or any background file document relating to the written determination which is not open to public inspection under section 6110 of the federal internal revenue code.

          "Return information" does not include data in a form which cannot be associated with, or otherwise identify, directly or indirectly, a particular taxpayer.

          (3) This section does not apply to returns filed under RCW 83.100.050.

        Sec. 3.  Section 82.32.070, chapter 15, Laws of 1961 as last amended by section 221, chapter 3, Laws of 1983 and RCW 82.32.070 are each amended to read as follows:

          Every person liable for any fee or tax imposed by chapters 82.04 through 82.27 RCW shall keep and preserve, for a period of five years, suitable records as may be necessary to determine the amount of any tax for which he may be liable, which records shall include copies of all ((federal income tax and)) state tax returns and reports made by him.  All his books, records, and invoices shall be open for examination at any time by the department of revenue.  In the case of an out-of-state person or concern which does not keep the necessary books and records within this state, it shall be sufficient if it produces within the state such books and records as shall be required by the department of revenue, or permits the examination by an agent authorized or designated by the department of revenue at the place where such books and records are kept.  Any person who fails to comply with the requirements of this section shall be forever barred from questioning, in any court action or proceedings, the correctness of any assessment of taxes made by the department of revenue based upon any period for which such books, records, and invoices have not been so kept and preserved.

          Any person claiming a credit against the tax imposed by chapter 82.04 RCW by reason of the provisions of RCW 82.04.435 shall keep and preserve until the claim has been verified or allowed by the department of revenue sufficient books, records and invoices to prove the right to and amount of such claim for credit, and no such claim shall be allowed by the department of revenue unless such books, records and invoices have been kept and preserved.

Nothing in this section authorizes the department to require a taxpayer to keep and preserve copies of federal income tax returns and reports, and the department shall not require the disclosure of any information contained in any federal income tax return or report.