H-1349

AN ACT Relating to the decriminalization of license fraud violations and establishing a license fraud task force in the Washington state patrol; amending RCW 47.68.240, 47.68.255, 82.48.020, 82.49.010, 82.50.400, 88.02.118, and 82.32.090; reenacting and amending RCW 46.16.010; creating new sections; and prescribing penalties.

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

NEW SECTION. Sec. 1. The legislature recognizes that there are residents of this state who intentionally register motor vehicles in other states to evade payment of taxes and fees required by the laws of this state. This results in a substantial loss of revenue to the state. It is the intent of the legislature to decriminalize license fraud and impose stronger civil penalties upon residents who defraud the state, thereby enhancing compliance with state registration laws and increasing state revenues. To further enhance enforcement and collection efforts, the legislature intends to create a license fraud task force within the Washington state patrol.

NEW SECTION. Sec. 2. The task force will consist of one sergeant who will oversee: (1) Six task force detectives to investigate license fraud; (2) two department of revenue tax discovery agents to assess and recover delinquent taxes, penalties, and fees; (3) an assistant attorney general to provide legal services to the task force; and (4) one clerical support position for administrative support.

NEW SECTION. Sec. 3. A penalty assessed pursuant to RCW 46.16.010 is due and payable when the person incurring it receives a notice in writing from the state patrol stating the violation and advising the person that the penalty is due. The state patrol may, upon written application for review received within fifteen days from the date of the penalty assessment, remit or mitigate a penalty. Procedures for these actions are governed by chapter 34.05 RCW. The penalty notice has the effect of an agency order.

Sec. 4. RCW 46.16.010 and 1997 c 328 s 2 and 1997 c 241 s 13 are each reenacted and amended to read as follows:

(1) It is ((~~unlawful~~)) a violation for a person to operate any vehicle over and along a public highway of this state without first having obtained and having in full force and effect a current and proper vehicle license and display vehicle license number plates therefor as by this chapter provided. ((Failure to make initial registration before operation on the highways of this state is a misdemeanor, and any person convicted thereof shall be punished by a fine of no less than three hundred thirty dollars, no part of which may be suspended or deferred.)) Failure to make initial registration of a vehicle before operating it on the highways of this state is a violation of this section. Anyone who violates this section is liable for a penalty of three hundred fifty dollars for each violation in addition to all other penalties provided by law. Persons violating this subsection shall make payment as prescribed in subsection (2)(b) of this section. Failure to renew an expired registration before operation on the highways of this state is a traffic infraction.

(2)(a) The licensing of a vehicle in another state by a resident of this state, as defined in RCW 46.16.028, ((~~evading~~)) to avoid the payment of any tax or license fee imposed in connection with registration, is a ((~~gross misdemeanor punishable as follows:~~)) violation of this section, and violators are liable for a monetary penalty not less than one thousand dollars but not more than ten thousand dollars for each violation.

((~~(a) For a first offense, up to one year in the county jail and a fine equal to twice the amount of delinquent taxes and fees, no part of which may be suspended or deferred;~~))

(b) ((~~For a second or subsequent offense, up to one year in the county jail and a fine equal to four times the amount of delinquent taxes and fees, no part of which may be suspended or deferred;~~)) The penalty provided in this section is due and payable when the person incurring it receives a notice in writing from the state patrol describing the violation and advising the person that the penalty is due. The state patrol may, upon written application for review, received within fifteen days, remit or mitigate a penalty provided for in this section or discontinue an action to recover the penalty upon such terms it deems proper and may ascertain the facts in a manner and under rules it deems proper. If the amount of the penalty is not paid to the state patrol within fifteen days after receipt of the notice imposing the penalty, or application for remission or mitigation has not been made within fifteen days after the violator has received notice of the disposition of the application, the attorney general shall bring an action in the name of the state of Washington in the superior court of Thurston county or of any other county in which the violator resides or does business, to recover the penalty, administrative fees, and attorneys' fees and costs incurred in recovering the penalties. All penalties recovered under this section shall be paid into the state treasury and credited to the state patrol highway account of the motor vehicle fund for the license fraud task force.

(c) ((~~For fines levied under (b) of this subsection, an amount equal to the avoided taxes and fees owed shall be deposited in the vehicle licensing fraud account created in the state treasury;~~

~~(d)~~)) The avoided taxes and fees shall be deposited and distributed in the same manner as if the taxes and fees were properly paid in a timely fashion.

(3) These provisions shall not apply to the following vehicles:

(a) Electric-assisted bicycles;

(b) Farm vehicles if operated within a radius of fifteen miles of the farm where principally used or garaged, farm tractors and farm implements including trailers designed as cook or bunk houses used exclusively for animal herding temporarily operating or drawn upon the public highways, and trailers used exclusively to transport farm implements from one farm to another during the daylight hours or at night when such equipment has lights that comply with the law;

(c) Spray or fertilizer applicator rigs designed and used exclusively for spraying or fertilization in the conduct of agricultural operations and not primarily for the purpose of transportation, and nurse rigs or equipment auxiliary to the use of and designed or modified for the fueling, repairing, or loading of spray and fertilizer applicator rigs and not used, designed, or modified primarily for the purpose of transportation;

(d) Fork lifts operated during daylight hours on public highways adjacent to and within five hundred feet of the warehouses which they serve: PROVIDED FURTHER, That these provisions shall not apply to vehicles used by the state parks and recreation commission exclusively for park maintenance and operations upon public highways within state parks;

(e) "Special highway construction equipment" defined as follows: Any vehicle which is designed and used primarily for grading of highways, paving of highways, earth moving, and other construction work on highways and which is not designed or used primarily for the transportation of persons or property on a public highway and which is only incidentally operated or moved over the highway. It includes, but is not limited to, road construction and maintenance machinery so designed and used such as portable air compressors, air drills, asphalt spreaders, bituminous mixers, bucket loaders, track laying tractors, ditchers, leveling graders, finishing machines, motor graders, paving mixers, road rollers, scarifiers, earth moving scrapers and carryalls, lighting plants, welders, pumps, power shovels and draglines, self-propelled and tractor-drawn earth moving equipment and machinery, including dump trucks and tractor-dump trailer combinations which either (i) are in excess of the legal width, or (ii) which, because of their length, height, or unladen weight, may not be moved on a public highway without the permit specified in RCW 46.44.090 and which are not operated laden except within the boundaries of the project limits as defined by the contract, and other similar types of construction equipment, or (iii) which are driven or moved upon a public highway only for the purpose of crossing such highway from one property to another, provided such movement does not exceed five hundred feet and the vehicle is equipped with wheels or pads which will not damage the roadway surface.

Exclusions:

"Special highway construction equipment" does not include any of the following:

Dump trucks originally designed to comply with the legal size and weight provisions of this code notwithstanding any subsequent modification which would require a permit, as specified in RCW 46.44.090, to operate such vehicles on a public highway, including trailers, truck-mounted transit mixers, cranes and shovels, or other vehicles designed for the transportation of persons or property to which machinery has been attached.

(4) The following vehicles, whether operated solo or in combination, are exempt from license registration and displaying license plates as required by this chapter:

(a) A converter gear used to convert a semitrailer into a trailer or a two-axle truck or tractor into a three or more axle truck or tractor or used in any other manner to increase the number of axles of a vehicle. Converter gear includes an auxiliary axle, booster axle, dolly, and jeep axle.

(b) A tow dolly that is used for towing a motor vehicle behind another motor vehicle. The front or rear wheels of the towed vehicle are secured to and rest on the tow dolly that is attached to the towing vehicle by a tow bar.

Sec. 5. RCW 47.68.240 and 1993 c 238 s 3 are each amended to read as follows:

Any person violating any of the provisions of this chapter, or any of the rules, regulations, or orders issued pursuant thereto, shall be guilty of a misdemeanor and shall be punished as provided under chapter 9A.20 RCW, except that any person violating any of the provisions of RCW 47.68.220((,)) or 47.68.230((~~, or 47.68.255~~)) shall be guilty of a gross misdemeanor which shall be punished as provided under chapter 9A.20 RCW. In addition to, or in lieu of, the penalties provided in this section, or as a condition to the suspension of a sentence which may be imposed pursuant thereto, for violations of RCW 47.68.220 and 47.68.230, the court in its discretion may prohibit the violator from operating an aircraft within the state for such period as it may determine but not to exceed one year. Violation of the duly imposed prohibition of the court may be treated as a separate offense under this section or as a contempt of court.

Sec. 6. RCW 47.68.255 and 1996 c 184 s 3 are each amended to read as follows:

(1)(a) A person who is required to register an aircraft under this chapter and who registers an aircraft in another state or foreign country ((~~evading~~)) avoiding the Washington aircraft ((~~excise tax is guilty of a gross misdemeanor~~)) taxes, commits a violation of this section and is liable for those unpaid taxes and for a monetary penalty not less than one thousand dollars but not more than ten thousand dollars for each violation. ((~~For a second or subsequent offense, the person convicted is also subject to a fine equal to four times the amount of avoided taxes and fees, no part of which may be suspended or deferred. Excise~~))

(b) Taxes owed and fines assessed shall be deposited in the manner provided under RCW 46.16.010(2).

(2) The penalty provided in this section is due and payable when the person incurring it receives a notice in writing from the state patrol describing the violation and advising the person that the penalty is due. The state patrol may, upon written application for review, received within fifteen days, remit or mitigate a penalty provided for in this section or discontinue an action to recover the penalty upon such terms it deems proper and may ascertain the facts in a manner and under rules it deems proper. If the amount of the penalty is not paid to the state patrol within fifteen days after receipt of the notice imposing the penalty, or application for remission or mitigation has not been made within fifteen days after the violator has received notice of the disposition of the application, the attorney general shall bring an action in the name of the state of Washington in the superior court of Thurston county or of any other county in which the violator does business, to recover the penalty, administrative fees, and attorneys' fees. In all such actions, the procedure and rules of evidence are the same as an ordinary civil action except as otherwise provided in this chapter. All penalties recovered under this section shall be paid into the state treasury and credited to the state patrol highway account of the motor vehicle fund for the license fraud task force. The department of revenue may assess and collect the unpaid excise tax under chapter 82.32 RCW, including the penalties and interest provided in chapter 82.32 RCW.

Sec. 7. RCW 82.48.020 and 1993 c 238 s 5 are each amended to read as follows:

(1) An annual excise tax is hereby imposed for the privilege of using any aircraft in the state. A current certificate of air worthiness with a current inspection date from the appropriate federal agency and/or the purchase of aviation fuel shall constitute the necessary evidence of aircraft use or intended use. The tax shall be collected annually or under a staggered collection schedule as required by the secretary by rule. No additional tax shall be imposed under this chapter upon any aircraft upon the transfer of ownership thereof, if the tax imposed by this chapter with respect to such aircraft has already been paid for the year in which transfer of ownership occurs. A violation of this subsection is a misdemeanor punishable as provided under chapter 9A.20 RCW.

(2)(a) Persons who are required to register aircraft under chapter 47.68 RCW and who register aircraft in another state or foreign country and avoid the Washington aircraft ((~~excise tax are liable for such unpaid excise tax~~)) taxes, violate this section and are liable for a monetary penalty of not less than one thousand dollars but not more than ten thousand dollars for each violation. ((~~A violation of this subsection is a gross misdemeanor.~~))

(b) The penalty provided in this section is due and payable when the person incurring it receives a notice in writing from the state patrol describing the violation and advising the person that the penalty is due. The state patrol may, upon written application for review, received within fifteen days, remit or mitigate a penalty provided for in this section or discontinue an action to recover the penalty upon such terms it deems proper and may ascertain the facts in a manner and under rules it deems proper. If the amount of the penalty is not paid to the state patrol within fifteen days after receipt of the notice imposing the penalty, or application for remission or mitigation has not been made within fifteen days after the violator has received notice of the disposition of the application, the attorney general shall bring an action in the name of the state of Washington in the superior court of Thurston county or of any other county in which the violator resides or does business, to recover the penalty, administrative fees, and attorneys' fees. In all such actions, the procedure and rules of evidence are the same as an ordinary civil action except as otherwise provided in this chapter. All penalties recovered under this section shall be paid into the state treasury and credited to the state patrol highway account of the motor vehicle fund for the license fraud task force.

(3) The department of revenue may assess and collect the unpaid excise tax under chapter 82.32 RCW, including the penalties and interest provided in chapter 82.32 RCW.

((~~(3)~~)) (4) Except as provided under subsections (1) and (2) of this section, a violation of this chapter is a misdemeanor punishable as provided in chapter 9A.20 RCW.

Sec. 8. RCW 82.49.010 and 1993 c 238 s 6 are each amended to read as follows:

(1) An excise tax is imposed for the privilege of using a vessel upon the waters of this state, except vessels exempt under RCW 82.49.020. The annual amount of the excise tax is one-half of one percent of fair market value, as determined under this chapter, or five dollars, whichever is greater. Violation of this subsection is a misdemeanor.

(2)(a) A person((s)) who ((~~are~~)) is required under chapter 88.02 RCW to register a vessel in this state and who registers the vessel in another state or foreign country and avoids the Washington watercraft ((~~excise tax are guilty of a gross misdemeanor and are liable for such unpaid excise tax~~)) taxes, violates this section and is liable for those taxes and a monetary penalty not less than one thousand dollars but not more than ten thousand dollars for each violation. ((~~The department of revenue may assess and collect the unpaid excise tax under chapter 82.32 RCW, including the penalties and interest provided in chapter 82.32 RCW.~~))

(3) The excise tax upon a vessel registered for the first time in this state shall be imposed for a twelve-month period, including the month in which the vessel is registered, unless the director of licensing extends or diminishes vessel registration periods for the purpose of staggered renewal periods under RCW 88.02.050. A vessel is registered for the first time in this state when the vessel was not registered in this state for the immediately preceding registration year, or when the vessel was registered in another jurisdiction for the immediately preceding year. The excise tax on vessels required to be registered in this state on June 30, 1983, shall be paid by June 30, 1983.

Sec. 9. RCW 82.50.400 and 1993 c 238 s 7 are each amended to read as follows:

(1) An annual excise tax is imposed on the owner of any travel trailer or camper for the privilege of using such travel trailer or camper in this state. The excise tax hereby imposed shall be due and payable to the department of licensing or its agents at the time of registration of a travel trailer or camper. Whenever an application is made to the department of licensing or its agents for a license for a travel trailer or camper there shall be collected, in addition to the amount of the license fee or renewal license fee, the amount of the excise tax imposed by this chapter, and no dealer's license or license plates, and no license or license plates for a travel trailer or camper may be issued unless such tax is paid in full. No additional tax shall be imposed under this chapter upon any travel trailer or camper upon the transfer of ownership thereof, if the tax imposed by this chapter with respect to such travel trailer or camper has already been paid for the registration year or fractional part thereof in which such transfer occurs. Violation of this subsection is a ((~~misdemeanor~~)) violation of RCW 46.16.010, and penalties apply.

(2) Persons who are required to license travel trailers or campers under chapter 46.16 RCW and who license travel trailers or campers in another state or foreign country to avoid the Washington travel trailer or camper tax are ((~~guilty of a gross misdemeanor and are liable for such unpaid excise tax~~)) in violation of RCW 46.16.010, and penalties apply. The department of revenue may assess and collect the unpaid excise tax under chapter 82.32 RCW, including the penalties and interest provided in chapter 82.32 RCW.

Sec. 10. RCW 88.02.118 and 1996 c 184 s 4 are each amended to read as follows:

(1)(a) It is a ((~~gross misdemeanor punishable as provided under chapter 9A.20 RCW~~)) violation for any person owning a vessel subject to taxation under chapter 82.49 RCW to register a vessel in another state to avoid Washington state vessel ((~~excise tax~~)) taxes required under chapter 82.49 RCW or to obtain a vessel dealer's registration for the purpose of ((~~evading excise tax~~)) avoiding taxes on vessels under chapter 82.49 RCW. ((For a second or subsequent offense, the person convicted is also subject to a fine equal to four times the amount of avoided taxes and fees, no part of which may be suspended or deferred. Excise taxes owed and fines assessed shall be deposited in the manner provided under RCW 46.16.010(2).))

(b) The monetary penalty is not less than one thousand dollars but not more than ten thousand dollars for each violation.

(2) The penalty provided in this section is due and payable when the person incurring it receives a notice in writing from the state patrol describing the violation and advising the person that the penalty is due. The state patrol may, upon written application for review, received within fifteen days, remit or mitigate a penalty provided for in this section or discontinue an action to recover the penalty upon such terms it deems proper and may ascertain the facts in a manner and under rules it deems proper. If the amount of the penalty is not paid to the state patrol within fifteen days after receipt of the notice imposing the penalty, or application for remission or mitigation has not been made within fifteen days after the violator has received notice of the disposition of the application, the attorney general shall bring an action in the name of the state of Washington in the superior court of Thurston county or of any other county in which the violator resides or does business, to recover the penalty, administrative fees, and attorneys' fees. In all such actions, the procedure and rules of evidence are the same as an ordinary civil action except as otherwise provided in this chapter. All penalties recovered under this section shall be paid into the state treasury and credited to the state patrol highway account of the motor vehicle fund for the license fraud task force.

Sec. 11. RCW 82.32.090 and 1996 c 149 s 15 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 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 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)(a) 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.

(b) There is an irrebuttable presumption of a tax deficiency and intent to avoid and evade the tax under the motor vehicle excise tax under chapter 82.44 RCW, the aircraft excise tax under chapter 82.48 RCW, the watercraft excise tax under chapter 82.49 RCW, the trailers and campers excise tax under chapter 82.50 RCW, or use tax under chapter 82.12 RCW, if there is a finding resulting from a proceeding brought under RCW 46.16.010, 47.68.255, 82.48.020, 82.49.010, or 88.02.118, that the person failed to properly register or license a motor vehicle, an aircraft, a watercraft, a trailer, or a camper.

(6) The aggregate of penalties imposed under subsections (1), (2), and (3) of this section 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.