BP BHEAD INT S [atlas:bill]

AN ACT Relating to administrative appeals of tax assessments; and amending RCW 4.84.340 and 4.84.350.

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

Sec. 1. RCW 4.84.340 and 1995 c 403 s 902 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout RCW 4.84.340 through 4.84.360.

(1) "Administrative appeals of tax assessments" means any appeal by a qualified party, other than by judicial review, of a tax assessment made by the department of labor and industries, the department of revenue, or the employment security department. "Tax assessment" includes any notice to a qualified party that a determination has been made by the agency that taxes are due and owing or any demand for payment of taxes.

(2) "Agency" means any state board, commission, department, institution of higher education, or officer, authorized by law to make rules or to conduct adjudicative proceedings, except those in the legislative or judicial branches, the governor, or the attorney general except to the extent otherwise required by law.

((~~(2)~~)) (3) "Agency action" means agency action as defined by chapter 34.05 RCW.

((~~(3)~~)) (4) "Fees and other expenses" includes the reasonable expenses of expert witnesses, the reasonable cost of a study, analysis, engineering report, test, or project that is found by the court to be necessary for the preparation of the party's case, and reasonable attorneys' fees. Reasonable attorneys' fees shall be based on the prevailing market rates for the kind and quality of services furnished, except that (a) no expert witness shall be compensated at a rate in excess of the highest rates of compensation for expert witnesses paid by the state of Washington, and (b) attorneys' fees shall not be awarded in excess of one hundred fifty dollars per hour unless the court determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.

((~~(4)~~)) (5) "Judicial review" means a judicial review as defined by chapter 34.05 RCW.

((~~(5)~~)) (6) "Qualified party" means (a) an individual whose net worth did not exceed one million dollars at the time the initial petition for an administrative appeal of a tax assessment or a judicial review was filed or (b) a sole owner of an unincorporated business, or a partnership, corporation, association, or organization whose net worth did not exceed five million dollars at the time the initial petition for an administrative appeal of a tax assessment or a judicial review was filed, except that an organization described in section 501(c)(3) of the federal internal revenue code of 1954 as exempt from taxation under section 501(a) of the code and a cooperative association as defined in section 15(a) of the agricultural marketing act (12 U.S.C. 1141J(a)), may be a party regardless of the net worth of such organization or cooperative association.

Sec. 2. RCW 4.84.350 and 1995 c 403 s 903 are each amended to read as follows:

(1) Except as otherwise specifically provided by statute, a court shall award a qualified party that prevails in a judicial review of an agency action fees and other expenses, including reasonable attorneys' fees, unless the court finds that the agency action was substantially justified or that circumstances make an award unjust. A qualified party shall be considered to have prevailed if the qualified party obtained relief on a significant issue that achieves some benefit that the qualified party sought.

(2) Except as otherwise specifically provided by statute, an agency shall award, or a qualified party may apply to the superior court and the court shall award a qualified party that prevails in a decision in an administrative appeal of a tax assessment, fees and other expenses, including reasonable attorneys' fees and fees and other expenses incurred in the appeal to the superior court, unless the court finds that the tax assessment was substantially justified or that circumstances make an award unjust. A qualified party shall be considered to have prevailed if upon appeal the tax assessment was reduced by at least an amount equal to the fees and other expenses requested by the qualified party, by at least fifty percent of the tax assessment, or by at least five thousand dollars.

(3) The amount awarded a qualified party under subsection (1) or (2) of this section shall not exceed twenty-five thousand dollars. Subsection (1) or (2) of this section shall not apply unless all parties challenging the agency action or making an administrative appeal of a tax assessment are qualified parties. If two or more qualified parties join in an action, the award in total shall not exceed twenty-five thousand dollars. The court, in its discretion, may reduce the amount to be awarded pursuant to subsection (1) of this section, or deny any award, to the extent that a qualified party during the course of the proceedings engaged in conduct that unduly or unreasonably protracted the final resolution of the matter in controversy.