AN ACT Relating to
penalty and interest administration of the department of revenue; amending RCW
82.32.050, 82.32.190, 82.32.200, 82.45.100, 82.45.150, 82.24.120, 82.24.180,
82.24.270, 82.24.280, 63.29.340, 54.28.060, 83.100.070, 83.100.130, 82.32.090,
54.28.040, 82.32.105, and 82.12.045; adding a new section to chapter 83.100
RCW; creating a new section; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF
WASHINGTON:
NEW SECTION. Sec.
1. The legislature finds
that a consistent application of interest and penalties is in the best interest
of the residents of the state of Washington. The legislature also finds that
the goal of the department of revenue's interest and penalty system should be
to encourage taxpayers to voluntarily comply with Washington's tax code in a
timely manner. The administration of tax programs requires that there be
consequences for those taxpayers who do not timely satisfy their reporting and
tax obligations, but these consequences should not be so severe as to
discourage taxpayers from voluntarily satisfying their tax obligations.
It is the intent of the
legislature that, to the extent possible, a single interest and penalty system
apply to all tax programs administered by the department of revenue.
Sec. 2. RCW 82.32.050 and 1992 c
169 s 1 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 on the tax only at the rate of nine percent
per annum from the last day of the year in which the deficiency is incurred
until the date of payment for tax liabilities arising before January 1, 1992.
For tax liabilities arising after December 31, 1991, until the date of payment,
the rate of interest shall be variable and computed as provided in subsection
(2) of this section. The rate so computed shall be adjusted on the first day
of January of each year. 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.
(2) For the purposes of
this section, the rate of interest to be charged to the taxpayer shall be an
average of the federal short-term rate as defined in 26 U.S.C. Sec. 1274(d)
plus two percentage points. The rate shall be computed by taking an
arithmetical average to the nearest percentage point of the federal short-term
rate, compounded annually, for the months of January, April, July, and October
of the immediately preceding calendar year as published by the United States
secretary of the treasury.
(3) No assessment or
correction of an assessment for additional taxes, penalties, or interest due
may be made by the department more than four years after the close of the tax
year, except (a) against a taxpayer who has not registered as required by this
chapter, (b) upon a showing of fraud or of misrepresentation of a material fact
by the taxpayer, or (c) where a taxpayer has executed a written waiver of such
limitation. The execution of a written waiver shall also extend the period for
making a refund or credit as provided in RCW 82.32.060(2).
(4) For the purposes
of this section, "return" means any document a person is required by
the state of Washington to file to satisfy or establish a tax or fee obligation
that is administered or collected by the department of revenue and that has a
statutorily defined due date.
Sec. 3. RCW 82.32.190 and 1971
ex.s. c 299 s 21 are each amended to read as follows:
(1) The
department, by its order, may hold in abeyance the collection of tax from any
taxpayer or any group of taxpayers when a question bearing on their liability
for tax hereunder is pending before the courts((: PROVIDED, That)).
The department may impose such conditions as may be deemed just and
equitable and shall require the payment of interest at the rate of
three-quarters of one percent of the amount of the tax for each thirty days or
portion thereof from the date upon which such tax became due until the date
of payment.
(2) Interest imposed
under this section for periods after the effective date of this act shall be
computed on a daily basis at the rate as computed under RCW 82.32.050(2). The
rate so computed shall be adjusted on the first day of January of each year.
Interest for taxes held in abeyance under this section before the effective
date of this act but outstanding after the effective date of this act shall not
be recalculated but shall remain at three‑quarters of one percent per
each thirty days or portion thereof.
Sec. 4. RCW 82.32.200 and 1975
1st ex.s. c 278 s 83 are each amended to read as follows:
(1) When any
assessment or additional assessment has been made, the taxpayer may obtain a
stay of collection, under such circumstances and for such periods as the
department of revenue may by general regulation provide, of the whole or any
part thereof, by filing with the department a bond in an amount, not exceeding
twice the amount on which stay is desired, and with sureties as the department
deems necessary, conditioned for the payment of the amount of the assessments,
collection of which is stayed by the bond, together with the interest thereon
at the rate of one percent of the amount of such assessment for each thirty
days or portion thereof from the ((due date thereof until paid)) date
the bond is filed until the date of payment.
(2)
Interest imposed under this section after the effective date of this act shall
be computed on a daily basis on the amount of tax at the rate as computed under
RCW 82.32.050(2). The rate so computed shall be adjusted on the first day of
January of each year. Interest for bonds filed before the effective date of
this act but outstanding after the effective date of this act shall not be
recalculated but shall remain at one percent per each thirty days or portion
thereof.
Sec. 5. RCW 82.45.100 and 1993
sp.s. c 25 s 507 are each amended to read as follows:
(1) Payment of the
tax imposed under this chapter is due and payable immediately at the time of
sale, and if not paid within ((thirty days)) one month thereafter
shall bear interest at the rate of one percent per month from the time of sale
until the date of payment.
(2) In addition to the
interest described in subsection (1) of this section, if the payment of any tax
is not received by the county treasurer or the department of revenue, as the
case may be, within ((thirty days)) one month of the date due,
there shall be assessed a penalty of five percent of the amount of the tax; if
the tax is not received within ((sixty days)) two months of the
date due, there shall be assessed a total penalty of ten percent of the amount
of the tax; and if the tax is not received within ((ninety days)) three
months of the date due, there shall be assessed a total penalty of twenty
percent of the amount of the tax. The payment of the penalty described in this
subsection shall be collectible from the seller only, and RCW 82.45.070 does
not apply to the penalties described in this subsection.
(3) If the tax imposed
under this chapter is not received by the due date, the transferee shall be
personally liable for the tax, along with any interest as provided in
subsection (1) of this section, unless:
(a) An instrument
evidencing the sale is recorded in the official real property records of the
county in which the property conveyed is located; or
(b) Either the
transferor or transferee notifies the department of revenue in writing of the
occurrence of the sale within thirty days following the date of the sale.
(4) If upon examination
of any affidavits or from other information obtained by the department or its
agents it appears that all or a portion of the tax is unpaid, the department
shall assess against the taxpayer the additional amount found to be due plus
interest and penalties as provided in subsections (1) and (2) of this section.
((If the department finds that all or any part of the deficiency resulted
from an intent to evade the tax payable under this chapter, an additional
penalty of fifty percent of the additional tax found to be due shall be added.))
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.
(5) No assessment or
refund may be made by the department more than four years after the date of
sale except upon a showing of:
(a) Fraud or
misrepresentation of a material fact by the taxpayer;
(b) A failure by the
taxpayer to record documentation of a sale or otherwise report the sale to the
county treasurer; or
(c) A failure of the
transferor or transferee to report the sale under RCW 82.45.090(2).
(6) Penalties collected
((pursuant to)) under subsection (2) of this section and RCW
82.32.090 (2) through (6) shall be deposited in the housing trust fund as
described in chapter 43.185 RCW.
Sec. 6. RCW 82.45.150 and 1994 c
137 s 1 are each amended to read as follows:
All of chapter 82.32
RCW, except RCW 82.32.030, 82.32.050, 82.32.140, ((and)) 82.32.270,
and ((except for the penalties and the limitations thereon imposed by RCW))
82.32.090(1) and (8), applies to the tax imposed by this chapter, in
addition to any other provisions of law for the payment and enforcement of the
tax imposed by this chapter. The department of revenue shall by rule provide
for the effective administration of this chapter. The rules shall prescribe
and furnish a real estate excise tax affidavit form verified by both the seller
and the buyer, or agents of each, to be used by each county, or the department,
as the case may be, in the collection of the tax imposed by this chapter,
except that an affidavit given in connection with grant of an easement or right
of way to a gas, electrical, or telecommunications company, as defined in RCW
80.04.010, or to a public utility district or cooperative that distributes
electricity, need be verified only on behalf of the company, district, or
cooperative. The department of revenue shall annually conduct audits of
transactions and affidavits filed under this chapter.
Sec. 7. RCW 82.24.120 and 1995 c
278 s 8 are each amended to read as follows:
(1) If any person,
subject to the provisions of this chapter or any rules adopted by the
department of revenue under authority hereof, is found to have failed to affix
the stamps required, or to have them affixed as herein provided, or to pay any
tax due hereunder, or to have violated any of the provisions of this chapter or
rules adopted by the department of revenue in the administration hereof, there
shall be assessed and collected from such person, in addition to any tax that
may be found due, a remedial penalty equal to the greater of ten dollars per
package of unstamped cigarettes or two hundred fifty dollars, plus interest ((thereon))
on the amount of the tax at the rate as computed under RCW 82.32.050(2)
from the date the tax became due until the date of payment, and upon
notice mailed to the last known address of the person. The amount shall become
due and payable in thirty days from the date of the notice. If the amount
remains unpaid, the department or its duly authorized agent may make immediate
demand upon such person for the payment of all such taxes, penalties, and
interest.
(2) The department, for
good reason shown, may ((remit)) waive or cancel all or any part
of penalties imposed, but the taxpayer must pay all taxes due and interest
thereon, at the rate as computed under RCW 82.32.050(2) from the date the tax
became due until the date of payment.
(3) The keeping of any
unstamped articles coming within the provisions of this chapter shall be prima
facie evidence of intent to violate the provisions of this chapter.
(4) This section does
not apply to taxes or tax increases due under RCW 82.24.270 and 82.24.280.
Sec. 8. RCW 82.24.180 and 1990 c
267 s 2 are each amended to read as follows:
(1) The
department of revenue may return any property seized under the provisions of
this chapter when it is shown that there was no intention to violate the
provisions thereof.
(2) When any
property is returned under this section, the department may return such goods
to the parties from whom they were seized if and when such parties affix the
proper amount of stamps thereto, and pay to the department as penalty an amount
equal to the greater of ten dollars per package of unstamped cigarettes or two
hundred fifty dollars, and interest ((thereon at the rate of one percent for
each thirty days or portion thereof)) on the amount of the tax at the
rate as computed under RCW 82.32.050(2) from the date the tax became due until
the date of payment, and in such cases, no advertisement shall be made or
notices posted in connection with said seizure.
Sec. 9. RCW 82.24.270 and 1995 c
278 s 12 are each amended to read as follows:
(1) All cigarettes
taxed under this chapter that are given away for advertising or other purposes
are not required to have the state tax stamp affixed. Instead, the
manufacturer of the cigarettes shall pay the tax on a monthly tax return to be
supplied by the department.
(2) The tax is due on
or before the twenty-fifth day of the month following the month in which the
taxable activities, that is the providing of cigarette samples, occur. If not
paid by the due date, interest applies to any unpaid tax ((or penalty)).
Interest shall be calculated at the rate as computed under RCW 82.32.050(2)
from the date the tax became due until the date of payment.
(3) 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 the additional amount found to be due. The
department shall notify the taxpayer by mail of the additional amount due,
including any applicable penalties and interest. The taxpayer shall pay the
additional amount within thirty days from the date of the notice, or within
such further time as the department may provide.
(4) All the cigarettes
must evidence the payment of the tax by having printed on their packages
wording to the following effect: "Complimentary, not for sale, all
applicable state taxes paid by manufacturer."
(5) All of
chapter 82.32 RCW applies to taxes due under this section except: RCW
82.32.050(1) and 82.32.270.
Sec. 10. RCW 82.24.280 and 1995 c
278 s 13 are each amended to read as follows:
(1) Any additional tax
liability arising from a tax rate increase under this chapter shall be paid,
along with reports and returns prescribed by the department, on or before the
last day of the month in which the increase becomes effective.
(2) If not paid by the
due date, interest shall apply to any unpaid tax ((or penalty)).
Interest shall be calculated at the rate as computed under RCW 82.32.050(2)
from the date the tax became due until the date of payment.
(3) 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. The
department shall notify the taxpayer by mail of the additional amount due,
including any applicable penalties and interest. The taxpayer shall pay the
additional amount within thirty days from the date of the notice, or within
such further time as the department may provide.
(4) All of chapter
82.32 RCW applies to tax rate increases except: RCW 82.32.050(1) and
82.32.270.
Sec. 11. RCW 63.29.340 and 1983 c
179 s 34 are each amended to read as follows:
(1) A person who fails
to pay or deliver property within the time prescribed by this chapter shall be
required to pay to the department interest at the ((maximum rate permitted
under RCW 19.52.020)) rate as computed under RCW 82.32.050(2) from
the date the property should have been paid or delivered until the property
is paid or delivered.
(2) A person who willfully
fails to render any report, to pay or deliver property, or to perform other
duties required under this chapter shall pay a civil penalty of one hundred
dollars for each day the report is withheld or the duty is not performed, but
not more than five thousand dollars, plus one hundred percent of the value of
the property which should have been reported, paid or delivered.
(3) A person who willfully
refuses after written demand by the department to pay or deliver property to
the department as required under this chapter or who enters into a contract to
avoid the duties of this chapter is guilty of a gross misdemeanor and upon
conviction may be punished by a fine of not more than one thousand dollars or
imprisonment for not more than one year, or both.
Sec. 12. RCW 54.28.060 and 1957 c
278 s 6 are each amended to read as follows:
Interest at the rate ((of
six percent per annum)) as computed under RCW 82.32.050(2) shall be
added to the tax hereby imposed ((after)) from the due date until
the date of payment. The tax shall constitute a debt to the state and may
be collected as such.
Sec. 13. RCW 83.100.070 and 1988
c 64 s 8 are each amended to read as follows:
(1) Any tax due under
this chapter which is not paid by the due date under RCW 83.100.060(1) shall
bear interest at the rate of twelve percent per annum from the date the tax is
due until ((paid)) the date of payment.
(2) Interest imposed
under this section for periods after the effective date of this act shall be
computed at the rate as computed under RCW 82.32.050(2). The rate so computed
shall be adjusted on the first day of January of each year.
(3) If the
Washington return is not filed when due under RCW 83.100.050, then the person
required to file the federal return shall pay, in addition to interest, a
penalty equal to five percent of the tax due for each month after the date the
return is due until filed. No penalty may exceed twenty-five percent of the
tax.
Sec. 14. RCW 83.100.130 and 1988
c 64 s 12 are each amended to read as follows:
(1) Whenever the
department determines that a person required to file the federal return has
overpaid the tax due under this chapter, the department shall refund the amount
of the overpayment, together with interest at the then existing rate under RCW
83.100.070(1). If the application for refund, with supporting documents, is
filed within four months after an adjustment or final determination of federal
tax liability, the department shall pay interest until the date the refund is
mailed. If the application for refund, with supporting documents, is filed
after four months after the adjustment or final determination, the department
shall pay interest only until the end of the four-month period.
(2) Interest
refunded under this section for periods after the effective date of this act
shall be computed on a daily basis at the rate as computed under RCW
82.32.050(2) less one percentage point, and shall be refunded from the date of
overpayment until the date the refund is mailed. The rate so computed shall be
adjusted on the first day of January of each year.
Sec. 15. RCW 82.32.090 and 1992 c
206 s 3 are each amended to read as follows:
(1) If payment of any
tax due on a return to be 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)) on or before the last day of the month following 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)) on
or before the last day of the second month following 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 five dollars.
(2) If payment of any
tax assessed by the department of revenue 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. No penalty so added shall be less than five dollars.
(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 ten dollars.
(4) If the department
finds that all or any part of a deficiency resulted from the disregard of
specific written instructions as to reporting or tax liabilities, the
department shall add a penalty of ten percent of the amount of the additional
tax found due because of the failure to follow the instructions. A taxpayer
disregards specific written instructions when the department of revenue has
informed the taxpayer in writing of the taxpayer's tax obligations and the
taxpayer fails to act in accordance with those instructions unless the
department has not issued final instructions because the matter is under appeal
pursuant to this chapter or departmental regulations. The department shall not
assess the penalty under this section upon any taxpayer who has made a good
faith effort to comply with the specific written instructions provided by the
department to that taxpayer. Specific written instructions may be given as a
part of a tax assessment, audit, determination, or closing agreement, provided
that such specific written instructions shall apply only to the taxpayer
addressed or referenced on such documents. Any specific written instructions
by the department of revenue shall be clearly identified as such and shall
inform the taxpayer that failure to follow the instructions may subject the
taxpayer to the penalties imposed by this subsection.
(5) 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.
(6) The aggregate of
penalties imposed under subsections (1), (2), and (3) of this section ((for
failure to pay a tax due on a return by the due date, late payment of any tax,
increase, or penalty, or issuance of a warrant)) shall not exceed
thirty-five percent of the tax due, or twenty dollars, whichever is greater. This
subsection does not prohibit or restrict the application of other penalties
authorized by law.
(7) The department of
revenue may not impose both the evasion penalty and the penalty for
disregarding specific written instructions on the same tax found to be due.
(8) For the purposes
of this section, "return" means any document a person is required by
the state of Washington to file to satisfy or establish a tax or fee obligation
that is administered or collected by the department of revenue, and that has a
statutorily defined due date.
Sec. 16. RCW 54.28.040 and 1982
1st ex.s. c 35 s 20 are each amended to read as follows:
((Prior to)) (1)
Before May 1st, the department of revenue shall compute the tax imposed by
this chapter for the last preceding calendar year and notify the district of
the amount thereof, which shall be payable on or before the following June 1st.
(2) If payment of
any tax is not received by the department on or before the due date, there
shall be assessed a penalty of five percent of the amount of the tax; if the
tax is not received within one month of 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 two months of the due date, there shall be assessed a total
penalty of twenty percent of the amount of the tax.
(3) Upon receipt
of the amount of each tax imposed the department of revenue shall deposit the
same with the state treasurer, who shall deposit four percent of the revenues
received under RCW 54.28.020(1) and 54.28.025(1) and all revenues received
under RCW 54.28.020(2) and 54.28.025(2) in the general fund of the state and
shall distribute the remainder in the manner hereinafter set forth. The state
treasurer shall send a duplicate copy of each transmittal to the department of
revenue.
Sec. 17. RCW 82.32.105 and 1975
1st ex.s. c 278 s 78 are each amended to read as follows:
(1) If the
department of revenue finds that the payment by a taxpayer of a tax less than
that properly due or the failure of a taxpayer to pay any tax by the due date
was the result of circumstances beyond the control of the taxpayer, the
department of revenue shall waive or cancel any ((interest or))
penalties imposed under this chapter with respect to such tax. ((The
department of revenue shall prescribe rules for the waiver or cancellation of
interest or penalties imposed by this chapter. Notwithstanding the foregoing
the amount of any interest which has been waived, canceled or refunded prior to
May 1, 1965 shall not be reassessed according to the provisions of this
chapter.))
(2) The department
shall waive or cancel the penalty imposed under RCW 82.32.090(1) when the
circumstances under which the delinquency occurred do not qualify for waiver or
cancellation under subsection (1) of this section if:
(a) The taxpayer
requests the waiver for a tax return required to be filed under RCW 82.32.045,
82.23B.020, 82.27.060, 82.29A.050, or 84.33.086; and
(b) The taxpayer has
timely filed and remitted payment on all tax returns due for that tax program
for a period of twenty‑four months immediately preceding the period
covered by the return for which the waiver is being requested.
(3) The department
shall waive or cancel interest imposed under this chapter if:
(a) The failure to
timely pay the tax was the direct result of written instructions given the
taxpayer by the department; or
(b) The extension of
a due date for payment of an assessment of deficiency was not at the request of
the taxpayer and was for the sole convenience of the department.
(4) The department
of revenue shall adopt rules for the waiver or cancellation of penalties and
interest imposed by this chapter.
NEW SECTION. Sec.
18. A new section is added
to chapter 83.100 RCW to read as follows:
The department may
enter into closing agreements as provided in RCW 82.32.350 and 82.32.360.
Sec. 19. RCW 82.12.045 and 1983 c
77 s 2 are each amended to read as follows:
(1) In the
collection of the use tax on motor vehicles, the department of revenue may
designate the county auditors of the several counties of the state as its
collecting agents. Upon such designation, it shall be the duty of each county
auditor to collect the tax at the time an applicant applies for the registration
of, and transfer of title to, the motor vehicle, except in the following
instances:
(((1))) (a)
Where the applicant exhibits a dealer's report of sale showing that the retail
sales tax has been collected by the dealer;
(((2))) (b) Where
the application is for the renewal of registration;
(((3))) (c) Where
the applicant presents a written statement signed by the department of revenue,
or its duly authorized agent showing that no use tax is legally due; or
(((4))) (d) Where
the applicant presents satisfactory evidence showing that the retail sales tax
or the use tax has been paid by him on the vehicle in question.
(2) The term
"motor vehicle," as used in this section means and includes all motor
vehicles, trailers and semitrailers used, or of a type designed primarily to be
used, upon the public streets and highways, for the convenience or pleasure of
the owner, or for the conveyance, for hire or otherwise, of persons or
property, including fixed loads, facilities for human habitation, and vehicles
carrying exempt licenses.
(3) It shall be
the duty of every applicant for registration and transfer of certificate of
title who is subject to payment of tax under this section to declare upon his
application the value of the vehicle for which application is made, which shall
consist of the consideration paid or contracted to be paid therefor. ((Any
person wilfully misrepresenting, or failing or refusing to declare upon his
application, such value shall be guilty of a gross misdemeanor.))
(4) Each county
auditor who acts as agent of the department of revenue shall at the time of
remitting license fee receipts on motor vehicles subject to the provisions of
this section pay over and account to the state treasurer for all use tax
revenue collected under this section, after first deducting as his collection
fee the sum of two dollars for each motor vehicle upon which the tax has been
collected. All revenue received by the state treasurer under this section
shall be credited to the general fund. The auditor's collection fee shall be
deposited in the county current expense fund. A duplicate of the county
auditor's transmittal report to the state treasurer shall be forwarded
forthwith to the department of revenue.
(5) Any
applicant who has paid use tax to a county auditor under this section may apply
to the department of revenue for refund thereof if he has reason to believe
that such tax was not legally due and owing. No refund shall be allowed unless
application therefor is received by the department of revenue within ((two
years after payment of the tax)) the statutory period for assessment of
taxes, penalties, or interest prescribed by RCW 82.32.050(3). Upon receipt
of an application for refund the department of revenue shall consider the same
and issue its order either granting or denying it and if refund is denied the
taxpayer shall have the right of appeal as provided in RCW 82.32.170, 82.32.180
and 82.32.190.
(6) The
provisions of this section shall be construed as cumulative of other methods
prescribed in chapters 82.04 to 82.32 RCW, inclusive, for the collection of the
tax imposed by this chapter. The department of revenue shall have power to
promulgate such rules ((and regulations)) as may be necessary to
administer the provisions of this section. Any duties required by this section
to be performed by the county auditor may be performed by the director of
licensing but no collection fee shall be deductible by said director in
remitting use tax revenue to the state treasurer.
NEW
SECTION. Sec. 20. This act shall take
effect January 1, 1997.
