[atlas:bill]

AN ACT Relating to revising laws impacting retailer tax collection and remittance; amending RCW 82.32.045, 82.08.050, and 82.12.040; adding a new section to chapter 35.58 RCW; adding a new section to chapter to 44.04 RCW; adding a new section to chapter 81.104 RCW; adding new sections to chapter 82.14 RCW; creating new sections; and declaring an emergency.

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

Sec. 1. RCW 82.32.045 and 1996 c 111 s 3 are each amended to read as follows:

(1) Except as otherwise provided in this chapter, payments of the taxes imposed under chapters 82.04, 82.08, 82.12, 82.14, and 82.16 RCW, along with reports and returns on forms prescribed by the department, are due monthly within twenty-five days after the end of the month in which the taxable activities occur.

(2) The department of revenue may relieve any taxpayer or class of taxpayers from the obligation of remitting monthly and may require the return to cover other longer reporting periods, but in no event may returns be filed for a period greater than one year. For these taxpayers, tax payments are due on or before the last day of the month next succeeding the end of the period covered by the return.

(3) The department of revenue may implement through rule a procedure for the remittance of estimated tax if, after review and examination of the advantages and disadvantages to the department and to taxpayers, the department finds that the advantages outweigh the disadvantages and that implementation would be an improvement over the existing reporting system. As part of the review and examination, the department shall seek input from taxpayers on this issue and shall consult with other states regarding experience with estimated tax. The department must make a "yes" or "no" decision regarding whether it will implement an estimated tax procedure by December 1, 1999, and shall in writing inform the fiscal committees of the senate and the house of representatives of the decision to proceed or not proceed with a rule.

(4) The department of revenue may also require verified annual returns from any taxpayer, setting forth such additional information as it may deem necessary to correctly determine tax liability.

((~~(4)~~)) (5) Notwithstanding subsections (1) and (2) of this section, the department may relieve any person of the requirement to file returns if the following conditions are met:

(a) The person's value of products, gross proceeds of sales, or gross income of the business, from all business activities taxable under chapter 82.04 RCW, is less than twenty-four thousand dollars per year;

(b) The person's gross income of the business from all activities taxable under chapter 82.16 RCW is less than twenty-four thousand dollars per year; and

(c) The person is not required to collect or pay to the department of revenue any other tax or fee which the department is authorized to collect.

NEW SECTION. Sec. 2. The legislature finds that retailers have an important role in the state's tax system by collecting sales tax from consumers and remitting it to the state. Changes to the tax system, such as rate or exemption changes place an accounting and organizational burden on these businesses. In recognition of that burden, it is the intent of the legislature to limit changes to state and local sales and use tax to once a year. Additionally, it is the intent of the legislature to require the local government enacting or revising a tax to give advance notice to the department of revenue of any such change so that the department may provide adequate notice to retailers of pending changes. Sections 3 through 6 of this act are intended to minimize the retailer computer reprogramming costs that result from changes in the tax.

NEW SECTION. Sec. 3. A new section is added to chapter 35.58 RCW to read as follows:

In order to lessen the disruption on sellers, ordinances enacting or revising a sales and use tax under the authority of this chapter shall require ordinances to take effect October 1st. Ordinances must be enacted no later than July 1st to take effect the following October 1st. The department of revenue must receive notice of any changes to taxes authorized under this chapter no later than fifteen days after the date of enactment of such changes. The department of revenue must notify the sellers responsible for collecting the tax of the change not less than sixty days prior to the effective date.

NEW SECTION. Sec. 4. A new section is added to chapter 44.04 RCW to read as follows:

In order to lessen the disruption on sellers, legislation enacting or revising a sales and use tax under chapters 82.08, 82.12, and 82.14 RCW shall provide that the act take effect October 1st. The department of revenue must notify the sellers responsible for collecting the tax of the change not less than sixty days prior to the effective date.

NEW SECTION. Sec. 5. A new section is added to chapter 81.104 RCW to read as follows:

NEW SECTION. Sec. 6. A new section is added to chapter 82.14 RCW to read as follows:

Sec. 7. RCW 82.08.050 and 1993 sp.s. c 25 s 704 are each amended to read as follows:

The tax hereby imposed shall be paid by the buyer to the seller, and each seller shall collect from the buyer the full amount of the tax payable in respect to each taxable sale in accordance with the schedule of collections adopted by the department pursuant to the provisions of RCW 82.08.060. The tax required by this chapter, to be collected by the seller, shall be deemed to be held in trust by the seller until paid to the department, and any seller who appropriates or converts the tax collected to his or her own use or to any use other than the payment of the tax to the extent that the money required to be collected is not available for payment on the due date as prescribed in this chapter shall be guilty of a gross misdemeanor.

In case any seller fails to collect the tax herein imposed or having collected the tax, fails to pay it to the department in the manner prescribed by this chapter, whether such failure is the result of his or her own acts or the result of acts or conditions beyond his or her control, he or she shall, nevertheless, be personally liable to the state for the amount of the tax, unless the seller has taken from the buyer in good faith a properly executed resale certificate under RCW 82.04.470.

The amount of tax, until paid by the buyer to the seller or to the department, shall constitute a debt from the buyer to the seller and any seller who fails or refuses to collect the tax as required with intent to violate the provisions of this chapter or to gain some advantage or benefit, either direct or indirect, and any buyer who refuses to pay any tax due under this chapter shall be guilty of a misdemeanor. The tax required by this chapter to be collected by the seller shall be stated separately from the selling price in any sales invoice or other instrument of sale. On all retail sales through vending machines, the tax need not be stated separately from the selling price or collected separately from the buyer. For purposes of determining the tax due from the buyer to the seller and from the seller to the department it shall be conclusively presumed that the selling price quoted in any price list, sales document, contract or other agreement between the parties does not include the tax imposed by this chapter, but if the seller advertises the price as including the tax or that the seller is paying the tax, the advertised price shall not be considered the selling price.

Where a buyer has failed to pay to the seller the tax imposed by this chapter and the seller has not paid the amount of the tax to the department, the department may, in its discretion, proceed directly against the buyer for collection of the tax, in which case a penalty of ten percent may be added to the amount of the tax for failure of the buyer to pay the same to the seller, regardless of when the tax may be collected by the department; and all of the provisions of chapter 82.32 RCW, including those relative to interest and penalties, shall apply in addition; and, for the sole purpose of applying the various provisions of chapter 82.32 RCW, the twenty-fifth day of the month following the tax period in which the purchase was made shall be considered as the due date of the tax.

In any year that a seller is required to reprogram cash registers as a result of statutory revisions to the rate and to exemptions under this chapter, the seller may take a deduction, from the amount of the tax to be remitted to the department under this chapter. The deduction is equal to .3 percent of the retail sales tax collected on the first four hundred thousand dollars of taxable sales and .7 percent of the retail sales tax collected on taxable sales over four hundred thousand dollars, but not exceeding three million dollars of taxable sales reported for the calendar year in which the reprogramming was required. This deduction is meant to offset cash register reprogramming costs attributable to legislative revisions to the rate and to exemptions under this chapter. No refunds shall be granted in place of the deduction. A person may not take a deduction under this section if the person claims a deduction under RCW 82.12.040 or section 9 of this act. This yearly deduction must be taken by the due date of the last tax return for the calendar year.

Sec. 8. RCW 82.12.040 and 1986 c 48 s 1 are each amended to read as follows:

(1) Every person who maintains in this state a place of business or a stock of goods, or engages in business activities within this state, shall obtain from the department a certificate of registration, and shall, at the time of making sales, or making transfers of either possession or title or both, of tangible personal property for use in this state, collect from the purchasers or transferees the tax imposed under this chapter. For the purposes of this chapter, the phrase "maintains in this state a place of business" shall include the solicitation of sales and/or taking of orders by sales agents or traveling representatives. For the purposes of this chapter, "engages in business activity within this state" includes every activity which is sufficient under the Constitution of the United States for this state to require collection of tax under this chapter. The department shall in rules specify activities which constitute engaging in business activity within this state, and shall keep the rules current with future court interpretations of the Constitution of the United States.

(2) Every person who engages in this state in the business of acting as an independent selling agent for persons who do not hold a valid certificate of registration, and who receives compensation by reason of sales of tangible personal property of his principals made for use in this state, shall, at the time such sales are made, collect from the purchasers the tax imposed under this chapter, and for that purpose shall be deemed a retailer as defined in this chapter.

(3) The tax required to be collected by this chapter shall be deemed to be held in trust by the retailer until paid to the department and any retailer who appropriates or converts the tax collected to his own use or to any use other than the payment of the tax provided herein to the extent that the money required to be collected is not available for payment on the due date as prescribed shall be guilty of a misdemeanor. In case any seller fails to collect the tax herein imposed or having collected the tax, fails to pay the same to the department in the manner prescribed, whether such failure is the result of his own acts or the result of acts or conditions beyond his control, he shall nevertheless, be personally liable to the state for the amount of such tax. In any year that a seller is required to reprogram cash registers as a result of statutory revisions to the rate and to exemptions under this chapter, the seller may take a deduction, from the amount of the tax to be remitted to the department under this chapter. The deduction is equal to .3 percent of the retail sales tax collected on the first four hundred thousand dollars of taxable sales and .7 percent of the retail sales tax collected on taxable sales over four hundred thousand dollars, but not exceeding three million dollars of taxable sales reported for the calendar year in which the reprogramming was required. This deduction is meant to offset cash register reprogramming costs attributable to legislative revisions to the rate and to exemptions under this chapter. No refunds shall be granted in place of the deduction. A person may not take a deduction under this section if the person claims a deduction under RCW 82.08.050 or section 9 of this act. This yearly deduction must be taken by the due date of the last tax return for the calendar year.

(4) Any retailer who refunds, remits, or rebates to a purchaser, or transferee, either directly or indirectly, and by whatever means, all or any part of the tax levied by this chapter shall be guilty of a misdemeanor.

NEW SECTION. Sec. 9. A new section is added to chapter 82.14 RCW to read as follows:

In any year that a seller is required to reprogram cash registers as a result of statutory revisions to the rate and to exemptions under this chapter, the seller may take a deduction, from the amount of the tax to be remitted to the department under this chapter. The deduction is equal to .3 percent of the retail sales tax collected on the first four hundred thousand dollars of taxable sales and .7 percent of the retail sales tax collected on taxable sales over four hundred thousand dollars, but not exceeding three million dollars of taxable sales reported for the calendar year in which the reprogramming was required. This deduction is meant to offset cash register reprogramming costs attributable to legislative revisions to the rate and to exemptions under this chapter. No refunds shall be granted in place of the deduction. A person may not take a deduction under this section if the person claims a deduction under RCW 82.08.050 or 82.12.040. This yearly deduction must be taken by the due date of the last tax return for the calendar year.

NEW SECTION. Sec. 10. (1) The department of revenue shall conduct a study of the administration of exemptions from state and local sales taxes.

(2) The department shall:

(a) Examine the current processes used by the department, retailers, and customers for providing and claiming sales tax exemptions;

(b) Review sales tax exemption administration processes in other states and British Columbia;

(c) Review sales tax exemption statutes for clear and concise language that gives guidance in the administration of sales tax exemptions;

(d) Identify and analyze alternative processes that would lessen the costs and burdens for retailers of honoring sales tax exemptions requests, including the administration of exemptions through refunds to taxpayers, and development of forms to be used by buyers;

(e) Examine the fairness of penalties imposed on retailers resulting from improper administration of sales tax exemptions;

(f) Examine the incidences of fraud of each sales tax exemption and determine the primary contributing factors leading to the fraud; and

(g) Make recommendations to the legislature for improving the efficiency of administering state and local sales and use tax exemptions.

(3) The department shall report its findings to the fiscal committees of the house of representatives and senate by September 1, 1999.

NEW SECTION. Sec. 11. If specific funding for the purposes of section 10 of this act, referencing section 10 of this act by bill or chapter number, is not provided by June 30, 1999, in the omnibus appropriations act, section 10 of this act is null and void.

NEW SECTION. Sec. 12. Section 10 of 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.