[atlas:bill]

AN ACT Relating to the collection of federal taxes; adding a new chapter to Title 82 RCW; prescribing penalties; and declaring an emergency.

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

NEW SECTION. Sec. 1. This chapter may be known and cited as the state sovereignty act.

NEW SECTION. Sec. 2. The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

(1) "Person" means natural persons, corporations, partnerships, limited liability companies, associations, and other legal entities.

(2) "Excise tax" means any tax that forms a component of the highway users tax fund.

NEW SECTION. Sec. 3. (1) The tenth amendment of the United States Constitution defines the total scope of federal power as being that specifically granted by the federal Constitution and no more. The legislature recognizes that the United States congress has the right to lay and collect taxes under the federal Constitution. The legislature finds, however, that the congress does not have the right under the federal Constitution to withhold from the states the benefits of those taxes through unconstitutional mandates.

(2) The legislature further finds that most unconstitutional mandates prohibit Washington from implementing programs of excellence that would exceed federal expectations. Washington has significant technical expertise in resource management in the areas of air, earth, and water, but the persistent threat of sanctions renders that expertise ineffective.

(3) In light of the continuing unconstitutional withholding of the benefits of the taxes, the state of Washington hereby asserts its claim of sovereignty.

NEW SECTION. Sec. 4. (1) There is created in the Washington state treasury the federal tax fund, which shall be an escrow account. Any interest earned on the deposit of moneys in the fund along with any civil penalties assessed under section 5 of this act shall remain in the fund and shall not revert to the general fund of the state at the end of any fiscal year. The interest earned on the deposit of moneys and any civil penalties shall be used to pay any necessary administrative costs incurred under this chapter and any excess interest and penalties shall be transferred to the highway users tax fund.

(2) Any person liable for any excise tax shall remit the tax when due along with the person's federal taxpayer number to the department of revenue for deposit into the fund.

(3) All moneys collected under subsection (2) of this section shall be transmitted to the state treasurer who, as a fiduciary agent, shall credit the same to the federal tax fund on behalf of the person that remitted the tax.

(4)(a) Except as provided in (b) of this subsection, the state treasurer shall transfer at the end of each month the moneys held in the federal tax fund less any interest earned on the deposit to the internal revenue service in payment of the tax obligation of those persons who remitted the tax to the department of revenue. As a part of the transfer, the state treasurer shall identify the federal taxpayer number and amount received from each person who remitted any tax to the department of revenue.

(b) If the federal government imposes any sanctions on the state of Washington for failing to enact legislation required by federal law, which the legislature deems to be unconstitutional, by withholding or reprogramming any federal aid moneys from, among other things, highway construction to highway safety or other programs, the state treasurer shall not transfer any taxes held in the federal tax fund but shall retain the moneys in the fund until such time as the sanctions are lifted. If the lifting of the sanctions occurs within ninety days, the state treasurer shall transfer the amounts held in the fund to the internal revenue service within ten days of the lifting of the sanctions. If the sanctions are not lifted within ninety days, the state shall impose a surcharge on the moneys in the fund to be used for payment to continue highway project funding.

NEW SECTION. Sec. 5. Any person who fails to comply with section 4 of this act is subject to a civil penalty in an amount equal to one hundred fifty percent of the tax owed for each day the person fails to comply with section 4 of this act. Any civil penalties assessed under this section shall be deposited into the federal tax fund established in section 4 of this act.

NEW SECTION. Sec. 6. This chapter applies to federal taxes to be collected on or after the effective date of this section.

NEW SECTION. Sec. 7. Sections 1 through 6 of this act constitute a new chapter in Title 82 RCW.

NEW SECTION. Sec. 8. 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 takes effect immediately.