Z-0330

AN ACT Relating to excise tax penalties and interest; amending RCW 82.32.050, 82.32.060, and 82.32.090; providing an effective date; and declaring an emergency.

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

Sec. 1. RCW 82.32.050 and 1989 c 378 s 19 are each amended to read as follows:

(1) If upon examination of any returns or from other information obtained by the department it appears that a tax or penalty has been paid less than that properly due, the department shall assess against the taxpayer such additional amount found to be due and shall add thereto interest at the rate of nine percent per annum from the last day of the year in which the deficiency is incurred until date of payment or July 1, 1991, whichever is the earliest. From July 1, 1991, until the date of payment, the rate of interest shall be variable and adjusted as provided by subsection (2) of this section. The department shall notify the taxpayer by mail of the additional amount and the same shall become due and shall be paid within thirty days from the date of the notice, or within such further time as the department may provide. ((If payment is not received by the department by the due date specified in the notice, or any extension thereof, the department shall add a penalty of ten percent of the amount of the additional tax found due. If the department finds that all or any part of the deficiency resulted from an intent to evade the tax payable hereunder, a further penalty of fifty percent of the additional tax found to be due shall be added.))

(2) For the purposes of this section, the rate of interest to be charged the taxpayer shall be an average of short-term federal rates plus two percentage points. The rate shall be computed by taking an arithmetical average to the nearest percentage point of the short-term federal rates for the months of January, April, July, and October as published by the United States secretary of the treasury. That computed interest rate shall be applicable to the next calendar year beginning January 1 of each year, except for the year 1991 when it shall be applicable starting July 1, 1991.

(3) No assessment or correction of an assessment for additional taxes due may be made by the department more than four years after the close of the tax year, except ((~~(1)~~)) (a) against a taxpayer who has not registered as required by this chapter, ((~~(2)~~)) (b) upon a showing of fraud or of misrepresentation of a material fact by the taxpayer, or ((~~(3)~~)) (c) where a taxpayer has executed a written waiver of such limitation.

Sec. 2. RCW 82.32.060 and 1990 c 69 s 1 are each amended to read as follows:

If, upon receipt of an application by a taxpayer for a refund or for an audit of the taxpayer's records, or upon an examination of the returns or records of any taxpayer, it is determined by the department that within the statutory period for assessment of taxes prescribed by RCW 82.32.050 a tax has been paid in excess of that properly due, the excess amount paid within such period shall be credited to the taxpayer's account or shall be refunded to the taxpayer, at the taxpayer's option. No refund or credit shall be made for taxes paid more than four years prior to the beginning of the calendar year in which the refund application is made or examination of records is completed.

Notwithstanding the foregoing limitations there shall be refunded or credited to taxpayers engaged in the performance of United States government contracts or subcontracts the amount of any tax paid, measured by that portion of the amounts received from the United States, which the taxpayer is required by contract or applicable federal statute to refund or credit to the United States, if claim for such refund is filed by the taxpayer with the department within one year of the date that the amount of the refund or credit due to the United States is finally determined and filed within four years of the date on which the tax was paid: PROVIDED, That no interest shall be allowed on such refund.

Any such refunds shall be made by means of vouchers approved by the department and by the issuance of state warrants drawn upon and payable from such funds as the legislature may provide. However, taxpayers who are required to pay taxes by electronic funds transfer under RCW 82.32.080 shall have any refunds paid by electronic funds transfer.

Any judgment for which a recovery is granted by any court of competent jurisdiction, not appealed from, for tax, penalties, and interest which were paid by the taxpayer, and costs, in a suit by any taxpayer shall be paid in like manner, upon the filing with the department of a certified copy of the order or judgment of the court. Except as to the credits in computing tax authorized by RCW 82.04.435, interest at the rate of three percent per annum shall be allowed by the department and by any court on the amount of any refund or recovery allowed to a taxpayer for taxes, penalties, or interest paid by the taxpayer.

For interest on refunds for time periods beginning after July 1, 1991, the rate of interest shall be the average of short-term federal rates as computed for assessments under RCW 82.32.050, plus one percentage point.

Sec. 3. RCW 82.32.090 and 1987 c 502 s 9 are each amended to read as follows:

(1) If payment of any tax due on a return filed by a taxpayer is not received by the department of revenue by the due date, there shall be assessed a penalty of five percent of the amount of the tax; and if the tax is not received within thirty days after the due date, there shall be assessed a total penalty of ten percent of the amount of the tax; and if the tax is not received within sixty days after the due date, there shall be assessed a total penalty of twenty percent of the amount of the tax. No penalty so added shall be less than two dollars.

(2) If payment of a tax assessed by the department of revenue is not received by the department by the due date specified in the notice, or an extension thereof, the department shall add a penalty of ten percent of the amount of the additional tax found due.

(3) If a warrant be issued by the department of revenue for the collection of taxes, increases, and penalties, there shall be added thereto a penalty of five percent of the amount of the tax, but not less than five dollars.

((~~Notwithstanding the foregoing,~~)) (4) If the department finds that all or a part of a deficiency resulted from the knowing disregard of specific written instructions as to reporting or tax liabilities, the department shall add a penalty of twenty-five percent of the amount of the additional tax found due because of the failure to follow such instructions. A taxpayer acts with knowing disregard where the department of revenue has informed the taxpayer in writing of its tax obligations and the taxpayer fails to act in accordance with those instructions. Such instructions may be given as a part of tax assessment, audit, determination, closing agreement, or through written correspondence to a taxpayer.

(5) If the department finds that all or a part of the deficiency resulted from an intent to evade the tax payable under this section, a further penalty of fifty percent of the additional tax found to be due shall be added.

(6) The aggregate of penalties imposed under this ((~~chapter~~)) section for failure to file a return, late payment of any tax, increase, or penalty, or issuance of a warrant shall not exceed ((~~twenty-five~~)) thirty-five percent of the tax due, or ((~~seven~~)) twenty dollars, whichever is greater.

(7) The aggregate of penalties imposed under this section for failure to file a return, late payment of any tax, increase, or penalty, issuance of a warrant, failure to follow written instructions, or evasion, shall not exceed eighty-five percent of the tax due, or fifty dollars, whichever is greater.

NEW SECTION. Sec. 4. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 5. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1991.