BILL REQ. #:  S-1059.1 

READ FIRST TIME 02/27/03.   

     AN ACT Relating to fuel tax evasion; amending RCW 82.36.380 and 82.38.270; adding new sections to chapter 82.36 RCW; adding new sections to chapter 82.38 RCW; creating a new section; repealing RCW 82.36.306 and 82.38.182; and prescribing penalties.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.36 RCW to read as follows:
     SEIZURE AND FORFEITURE. (1) The following are subject to seizure and forfeiture:
     (a) Motor vehicle fuel imported into this state by a person not licensed in this state in accordance with this chapter to import fuel;
     (b) Motor vehicle fuel that is blended or manufactured by a person not licensed in this state in accordance with this chapter to blend or manufacture fuel;
     (c) All conveyances that are used, or intended for use, to transport, or in any manner to facilitate the transportation, for the purpose of sale or receipt of property described in (a) and (b) of this subsection, except where the owner of the conveyance neither had knowledge of nor consented to the transportation of the fuel by an unlicensed importer, blender, or manufacturer of fuel.
     (2) Before seizing a common carrier conveyance, contract carrier conveyance, or a conveyance secured by a bona fide security interest where the secured party neither had knowledge of or consented to the unlawful act or omission, the state patrol or the department of licensing shall give the common carrier, contract carrier, or secured party, or their representatives within twenty-four hours, a notice in writing served by mail or other means to cease transporting fuel for any person not licensed to import, blend, or manufacture fuel in this state.
     (3) Property subject to forfeiture under this chapter may be seized by the state patrol upon process issued by a superior court or district court having jurisdiction over the property. Seizure without process may be made if:
     (a) The seizure is incident to an arrest or a search under a search warrant; or
     (b) The state patrol has probable cause to believe that the property was used or is intended to be used in violation of this chapter and exigent circumstances exist making procurement of a search warrant impracticable.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.36 RCW to read as follows:
     FORFEITURE PROCEDURE. In all cases of seizure of property made subject to forfeiture under this chapter, the state patrol shall proceed as follows:
     (1) Forfeiture is deemed to have commenced by the seizure.
     (2) The state patrol shall list and particularly describe in duplicate the conveyance seized. After the appropriate appeal period has expired, a seized conveyance must be sold at a public auction in accordance with chapter 43.19 RCW.
     (3) The state patrol shall list and particularly describe in duplicate the fuel seized. The selling price of the fuel seized will be the average terminal rack price for similar fuel, at the closest terminal rack on the day of sale, unless circumstance warrants that a different selling price is appropriate. The method used to value the fuel must be documented. The fuel will be sold at the earliest point in time, and the total price must include all appropriate state and federal taxes. The state patrol or the department may enter into contracts for the transportation, handling, storage, and sale of fuel subject to forfeiture. The money received must be deposited in the motor vehicle account, after deduction for expenses provided for in this section.
     (4) The state patrol shall, within five days after the seizure of a conveyance or fuel, cause notice to be served on the owner of the property seized, if known, on the person in charge of the property, and on any other person having any known right or interest in the property, of the seizure and intended forfeiture. The notice may be served by any method authorized by law or court rule including but not limited to service by mail. If service is by mail it must be by both certified mail with return receipt requested and regular mail. Service by mail is deemed complete upon mailing within the five-day period after the date of seizure.
     (5) If no person notifies the state patrol in writing of the person's claim of ownership or right to possession of the items seized within fifteen days of the date of the notice of seizure, the items seized are considered forfeited.
     (6) If any person notifies the state patrol, in writing, of the person's claim of ownership or right to possession of the items seized within fifteen days of the date of the notice of seizure, the person or persons must be given a reasonable opportunity to be heard as to the claim or right. The hearing must be before the director of licensing, or the director's designee. A hearing and any appeals must be in accordance with chapter 34.05 RCW. The burden of proof by a preponderance of the evidence is upon the person claiming to be the lawful owner or the person claiming to have the lawful right to possession of the items seized. The state patrol and the department shall promptly return the conveyance seized, and money from the sale of fuel seized, to the claimant upon a determination that the claimant is the present lawful owner and is lawfully entitled to possession of the items seized.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.36 RCW to read as follows:
     FORFEITED PROPERTY--RETENTION, SALE, OR DESTRUCTION--USE OF SALE PROCEEDS. When property is forfeited under this chapter, the state patrol or the department may use the proceeds of the sale and all moneys forfeited for the payment of all proper expenses of any investigation leading to the seizure and of the proceedings for forfeiture and sale, including expenses of seizure, maintenance of custody, advertising, and court costs. Proper expenses of investigation include costs incurred by a law enforcement agency or a federal, state, or local agency. The balance of the proceeds must be deposited in the motor vehicle account.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.36 RCW to read as follows:
     RETURN OF SEIZED PROPERTY--PENALTY, INTEREST. (1) The state patrol and the department may return property seized and proceeds from the sale of fuel under this chapter when it is shown that there was no intention to violate this chapter.
     (2) When property is returned under this section, the state patrol and the department may return the goods to the parties from whom they were seized if and when the parties pay all applicable taxes and interest.

NEW SECTION.  Sec. 5   A new section is added to chapter 82.36 RCW to read as follows:
     SEARCH AND SEIZURE. When the state patrol has good reason to believe that motor vehicle fuel is being unlawfully imported, kept, sold, offered for sale, blended, or manufactured in violation of this chapter or rules adopted under it, the state patrol may make an affidavit of that fact, describing the place or thing to be searched, before a judge of any court in this state, and the judge shall issue a search warrant directed to the state patrol commanding the officer diligently to search any place or vehicle designated in the affidavit and search warrant, and to seize the fuel and conveyance so possessed and to hold them until disposed of by law, and to arrest the person in possession or control of them.

NEW SECTION.  Sec. 6   A new section is added to chapter 82.36 RCW to read as follows:
     RULES. The department and the state patrol shall adopt rules necessary to implement sections 1 through 5 of this act.

NEW SECTION.  Sec. 7   A new section is added to chapter 82.38 RCW to read as follows:
     SEIZURE AND FORFEITURE. (1) The following are subject to seizure and forfeiture:
     (a) Special fuel imported into this state by a person not licensed in this state in accordance with this chapter to import fuel;
     (b) Special fuel that is blended or manufactured by a person not licensed in this state in accordance with this chapter to blend or manufacture fuel;
     (c) All conveyances that are used, or intended for use, to transport, or in any manner to facilitate the transportation, for the purpose of sale or receipt of property described in (a) and (b) of this subsection, except where the owner of the conveyance neither had knowledge of nor consented to the transportation of the special fuel by an unlicensed importer, blender, or manufacturer of fuel.
     (2) Before seizing a common carrier conveyance, contract carrier conveyance, or a conveyance secured by a bona fide security interest where the secured party neither had knowledge of or consented to the unlawful act or omission, the state patrol or the department of licensing shall give the common carrier, contract carrier, or secured party, or their representatives within twenty-four hours, a notice in writing served by mail or other means to cease transporting fuel for any person not licensed to import, blend, or manufacture fuel in this state.
     (3) Property subject to forfeiture under this chapter may be seized by the state patrol upon process issued by a superior court or district court having jurisdiction over the property. Seizure without process may be made if:
     (a) The seizure is incident to an arrest or a search under a search warrant or an administrative inspection; or
     (b) The state patrol has probable cause to believe that the property was used or is intended to be used in violation of this chapter and exigent circumstances exist making procurement of a search warrant impracticable.

NEW SECTION.  Sec. 8   A new section is added to chapter 82.38 RCW to read as follows:
     FORFEITURE PROCEDURE. In all cases of seizure of property made subject to forfeiture under this chapter, the state patrol shall proceed as follows:
     (1) Forfeiture is deemed to have commenced by the seizure.
     (2) The state patrol shall list and particularly describe in duplicate the conveyance seized. After the appropriate appeal period has expired, a seized conveyance must be sold at a public auction in accordance with chapter 43.19 RCW.
     (3) The state patrol shall list and particularly describe in duplicate the special fuel seized. The selling price of the fuel seized will be the average terminal rack price for similar fuel, at the closest terminal rack on the day of sale, unless circumstance warrants that a different selling price is appropriate. The method used to value the fuel must be documented. The fuel will be sold at the earliest point in time, and the total price must include all appropriate state and federal taxes. The state patrol or the department may enter into contracts for the transportation, handling, storage, and sale of fuel subject to forfeiture. The money received must be deposited in the motor vehicle account, after deduction for expenses provided for in this section.
     (4) The state patrol shall, within five days after the seizure of a conveyance or fuel, cause notice to be served on the owner of the property seized, if known, on the person in charge of the property, and on any other person having any known right or interest in the property, of the seizure and intended forfeiture. The notice may be served by any method authorized by law or court rule including but not limited to service by mail. If service is by mail it must be by both certified mail with return receipt requested and regular mail. Service by mail is deemed complete upon mailing within the five-day period after the date of seizure.
     (5) If no person notifies the state patrol in writing of the person's claim of ownership or right to possession of the items seized within fifteen days of the date of the notice of seizure, the items seized are considered forfeited.
     (6) If any person notifies the state patrol, in writing, of the person's claim of ownership or right to possession of the items seized within fifteen days of the date of the notice of seizure, the person or persons must be given a reasonable opportunity to be heard as to the claim or right. The hearing must be before the director of licensing, or the director's designee. A hearing and any appeals must be in accordance with chapter 34.05 RCW. The burden of proof by a preponderance of the evidence is upon the person claiming to be the lawful owner or the person claiming to have the lawful right to possession of the items seized. The state patrol and the department shall promptly return the conveyance seized, and money from the sale of fuel seized, to the claimant upon a determination that the claimant is the present lawful owner and is lawfully entitled to possession of the items seized.

NEW SECTION.  Sec. 9   A new section is added to chapter 82.38 RCW to read as follows:
     FORFEITED PROPERTY--RETENTION, SALE, OR DESTRUCTION--USE OF SALE PROCEEDS. When property is forfeited under this chapter, the state patrol or the department may use the proceeds of the sale and all moneys forfeited for the payment of all proper expenses of any investigation leading to the seizure and of the proceedings for forfeiture and sale, including expenses of seizure, maintenance of custody, advertising, and court costs. Proper expenses of investigation include costs incurred by a law enforcement agency or a federal, state, or local agency. The balance of the proceeds must be deposited in the motor vehicle fund.

NEW SECTION.  Sec. 10   A new section is added to chapter 82.38 RCW to read as follows:
     RETURN OF SEIZED PROPERTY--PENALTY, INTEREST. (1) The state patrol and the department may return property seized and proceeds from the sale of fuel under this chapter when it is shown that there was no intention to violate this chapter.
     (2) When property is returned under this section, the state patrol and the department may return the goods to the parties from whom they were seized if and when the parties pay all applicable taxes and interest.

NEW SECTION.  Sec. 11   A new section is added to chapter 82.38 RCW to read as follows:
     SEARCH AND SEIZURE. When the state patrol has good reason to believe that special fuel is being unlawfully imported, kept, sold, offered for sale, blended, or manufactured in violation of this chapter or rules adopted under it, the state patrol may make an affidavit of that fact, describing the place or thing to be searched, before a judge of any court in this state, and the judge shall issue a search warrant directed to the state patrol commanding the officer diligently to search any place or vehicle designated in the affidavit and search warrant, and to seize the fuel and conveyance so possessed and to hold them until disposed of by law, and to arrest the person in possession or control of them.

NEW SECTION.  Sec. 12   A new section is added to chapter 82.38 RCW to read as follows:
     RULES. The department and the state patrol shall adopt rules necessary to implement sections 7 through 11 of this act.

Sec. 13   RCW 82.36.380 and 2000 2nd sp.s. c 4 s 9 are each amended to read as follows:
     (1) It is unlawful for a person or corporation to:
     (a) Evade a tax or fee imposed under this chapter;
     (b) File a false statement of a material fact on a motor fuel license application or motor fuel refund application;
     (c) Act as a motor fuel importer, motor fuel blender, or motor fuel supplier unless the person holds an uncanceled motor fuel license issued by the department authorizing the person to engage in that business;
     (d) Knowingly assist another person to evade a tax or fee imposed by this chapter;
     (e) Knowingly operate a conveyance for the purpose of hauling, transporting, or delivering motor vehicle fuel in bulk and not possess an invoice, bill of sale, or other statement showing the name, address, and tax license number of the seller or consignor, the destination, the name, address, and tax license number of the purchaser or consignee, and the number of gallons.
     (2) ((Evasion of taxes or fees under this chapter)) A violation of subsection (1) of this section is a class C felony under chapter 9A.20 RCW. In addition to other penalties and remedies provided by law, the court shall order a person or corporation found guilty of violating subsection (1) of this section to:
     (a) Pay the tax or fee evaded plus interest, commencing at the date the tax or fee was first due, at the rate of twelve percent per year, compounded monthly; and
     (b) Pay a penalty of one hundred percent of the tax evaded, to the multimodal transportation account of the state.

Sec. 14   RCW 82.38.270 and 2000 2nd sp.s. c 4 s 10 are each amended to read as follows:
     (1) It is unlawful for a person or corporation to:
     (a) Have dyed diesel in the fuel supply tank of a vehicle that is licensed or required to be licensed for highway use or maintain dyed diesel in bulk storage for highway use, unless the person or corporation maintains an uncanceled dyed diesel user license or is otherwise exempted by this chapter;
     (b) Evade a tax or fee imposed under this chapter;
     (c) File a false statement of a material fact on a special fuel license application or special fuel refund application;
     (d) Act as a special fuel importer, special fuel blender, or special fuel supplier unless the person holds an uncanceled special fuel license issued by the department authorizing the person to engage in that business;
     (e) Knowingly assist another person to evade a tax or fee imposed by this chapter;
     (f) Knowingly operate a conveyance for the purpose of hauling, transporting, or delivering special fuel in bulk and not possess an invoice, bill of sale, or other statement showing the name, address, and tax license number of the seller or consignor, the destination, the name, address, and tax license number of the purchaser or consignee, and the number of gallons.
     (2) ((Evasion of taxes or fees under this chapter is)) (a) A single violation of subsection (1)(a) of this section is a gross misdemeanor under chapter 9A.20 RCW.
     (b) Multiple violations of subsection (1)(a) of this section and violations of subsections (1)(b) through (f) of this section are a class C felony under chapter 9A.20 RCW.
     (3) In addition to other penalties and remedies provided by law, the court shall order a person or corporation found guilty of violating subsection (1)(b) through (f) of this section to:
     (a) Pay the tax or fee evaded plus interest, commencing at the date the tax or fee was first due, at the rate of twelve percent per year, compounded monthly; and
     (b) Pay a penalty of one hundred percent of the tax evaded, to the multimodal transportation account of the state.

NEW SECTION.  Sec. 15   The following acts or parts of acts are each repealed:
     (1) RCW 82.36.306 (Remedies for violation of RCW 82.36.305 -- Rules--Coloring of fuel exclusively for marine use, samples may be taken) and 1973 c 96 s 4 & 1961 c 15 s 82.36.306; and
     (2) RCW 82.38.182 (Exemption -- Special authorization to farmers, logging companies, construction companies for purchases -- Application--Card lock facility use -- Refund -- Forms -- Termination of election--Renewal -- Records) and 1998 c 176 s 72.

NEW SECTION.  Sec. 16   Captions used in this act are not part of the law.

NEW SECTION.  Sec. 17   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.