BILL REQ. #:  Z-0013.1 

Read first time 02/03/2003.   Referred to Committee on Finance.

     AN ACT Relating to changing the definition of successor for state excise tax purposes; and amending RCW 82.04.180 and 82.32.140.

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

Sec. 1   RCW 82.04.180 and 1985 c 414 s 6 are each amended to read as follows:
     (1) "Successor" means:
     (a) Any person to whom a taxpayer quitting, selling out, exchanging, or disposing of a business sells or otherwise conveys, directly or indirectly, in bulk and not in the ordinary course of the taxpayer's business, ((a major part of the materials, supplies, merchandise, inventory, fixtures, or equipment)) more than fifty percent of the fair market value of either the (i) tangible assets or (ii) intangible assets of the taxpayer; or
     (b) A surviving corporation of a statutory merger.
     (2) Any person obligated to fulfill the terms of a contract shall be deemed a successor to any contractor defaulting in the performance of any contract as to which such person is a surety or guarantor.

Sec. 2   RCW 82.32.140 and 1985 c 414 s 7 are each amended to read as follows:
     (1) Whenever any taxpayer quits business, or sells out, exchanges, or otherwise disposes of ((his business or his stock of goods)) more than fifty percent of the fair market value of either its tangible or intangible assets, any tax payable hereunder shall become immediately due and payable, and such taxpayer shall, within ten days thereafter, make a return and pay the tax due((; and)).
     (2) Any person who becomes a successor shall ((become liable for the full amount of the tax and)) withhold from the purchase price a sum sufficient to pay any tax due from the taxpayer until such time as the taxpayer shall produce a receipt from the department of revenue showing payment in full of any tax due or a certificate that no tax is due ((and, if such)). If any tax is not paid by the taxpayer within ten days from the date of such sale, exchange, or disposal, the successor shall become liable for the payment of the full amount of tax((, and the payment thereof by such)). If the fair market value of the assets acquired by a successor is less than fifty thousand dollars, the successor's liability for payment of the unpaid tax is limited to the fair market value of the assets acquired from the taxpayer. The burden of establishing the fair market value of the assets acquired is on the successor.
     (3) The payment of any tax by a successor shall, to the extent thereof, be deemed a payment upon the purchase price((,)); and if such payment is greater in amount than the purchase price the amount of the difference shall become a debt due ((such)) the successor from the taxpayer.
     (4) No successor shall be liable for any tax due from the person from whom ((he)) the successor has acquired a business or stock of goods if ((he)) the successor gives written notice to the department of revenue of such acquisition and no assessment is issued by the department of revenue within six months of receipt of such notice against the former operator of the business and a copy thereof mailed to ((such)) the successor.