BILL REQ. #:  H-3651.3 

Read first time 01/22/10.   Referred to Committee on Finance.

     AN ACT Relating to allowing the department of revenue to issue a notice of lien to secure payment of delinquent excise taxes in lieu of a warrant; amending RCW 82.32.210; adding a new section to chapter 82.32 RCW; and providing an effective date.

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

Sec. 1   RCW 82.32.210 and 2001 c 146 s 12 are each amended to read as follows:
     (1) If any fee, tax, increase, or penalty or any portion thereof is not paid within fifteen days after it becomes due, the department ((of revenue)) may issue a warrant in the amount of ((such)) the unpaid sums, together with interest thereon from the date the warrant is issued until the date of payment. If, however, the department ((of revenue)) believes that a taxpayer is about to cease business, leave the state, or remove or dissipate the assets out of which fees, taxes or penalties might be satisfied and that any tax or penalty will not be paid when due, it may declare the fee, tax or penalty to be immediately due and payable and may issue a warrant immediately.
     (a) Interest imposed before January 1, 1999, ((shall be)) is computed at the rate of one percent of the amount of the warrant for each thirty days or portion thereof.
     (b) Interest imposed after December 31, 1998, ((shall be)) is computed on a daily basis on the amount of outstanding tax or fee at the rate as computed under RCW 82.32.050(2). The rate so computed ((shall)) must be adjusted on the first day of January of each year for use in computing interest for that calendar year. As used in this subsection, "fee" does not include an administrative filing fee such as a court filing fee and warrant fee.
     (2) Except as provided in section 2 of this act, the department ((shall)) must file a copy of the warrant with the clerk of the superior court of any county of the state in which real and/or personal property of the taxpayer may be found. The clerk is entitled to a filing fee under RCW 36.18.012(10). Upon filing, the clerk ((shall)) will enter in the judgment docket, the name of the taxpayer mentioned in the warrant and in appropriate columns the amount of the fee, tax or portion thereof and any increases and penalties for which the warrant is issued and the date when the copy is filed((, and thereupon)). The amount of the warrant so docketed ((shall become)) is a specific lien upon all goods, wares, merchandise, fixtures, equipment, or other personal property used in the conduct of the business of the taxpayer against whom the warrant is issued, including property owned by third persons who have a beneficial interest, direct or indirect, in the operation of the business, and no sale or transfer of the personal property in any way affects the lien.
     (3) The lien ((shall)) is not ((be)) superior, however, to bona fide interests of third persons ((which had)) that vested ((prior to)) before the filing of the warrant when the third persons do not have a beneficial interest, direct or indirect, in the operation of the business, other than ((the securing of the)) to secure payment of a debt or ((the receiving of)) to receive a regular rental on equipment. The phrase "bona fide interests of third persons" does not include any mortgage of real or personal property or any other credit transaction that results in the mortgagee or the holder of the security acting as trustee for unsecured creditors of the taxpayer mentioned in the warrant who executed the chattel or real property mortgage or the document evidencing the credit transaction.
     (4) The amount of the warrant so docketed ((shall thereupon)) is also ((become)) a lien upon the title to and interest in all other real and personal property of the taxpayer against whom it is issued the same as a judgment in a civil case duly docketed in the office of the clerk. The warrant so docketed ((shall be)) is sufficient to support the issuance of writs of garnishment in favor of the state ((in the manner)) as provided by law ((in the case of)) for judgments wholly or partially unsatisfied.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.32 RCW to read as follows:
     (1) To secure payment of a tax warrant issued by the department under RCW 82.32.210, the department may issue a notice of lien against any real property in which the taxpayer against whom the warrant was issued has an ownership interest, if the total amount for which the warrant was issued exceeds twenty-five thousand dollars and the department determines that issuing the notice of lien would best protect the state's interest in collecting the amount due on the warrant. The department must file the notice of lien with the recording officer of the county where the real property is located. The recording officer is entitled to a filing fee as provided under RCW 36.18.010.
     (2)(a) Except as otherwise provided in this section, recording a notice of lien as authorized in this section is in lieu of filing with the clerk of the superior court a copy of the warrant secured by the notice of lien.
     (b) Notwithstanding (a) of this subsection (2), the department may file with the superior court a warrant that is secured by a notice of lien under this section if: (i) The department determines that filing the warrant is in the best interests of collecting the amount due on the tax warrant; or (ii) the warrant remains unpaid six months after the notice of lien was issued.
     (3) If a warrant has been filed with the clerk of the superior court, the department may issue and record a notice of lien against real property of the taxpayer and file a conditional satisfaction of the warrant with the clerk of the superior court of the county in which the warrant was filed, if the department determines that such actions are in the best interest of collecting the amount due on the warrant.
     (a) A warrant for which a conditional satisfaction is filed will continue to accrue interest on the unpaid balance as provided in RCW 82.32.210.
     (b)(i) The department may refile a warrant for which a conditional satisfaction has been filed if: (A) The department determines that refiling the warrant is in the best interest of collecting the amount due on the warrant; or (B) the warrant remains unpaid six months after the notice of lien was issued.
     (ii) A warrant is refiled in the same manner as it was originally filed.
     (c) A warrant that is refiled as provided in this subsection (3) reinstates the liens provided under RCW 82.32.210 as of the date the warrant is refiled.
     (d) For the purposes of this subsection (3), a "conditional satisfaction" is a document issued by the department, which, when filed with the clerk of the superior court of the county in which the warrant was filed, releases the liens provided under RCW 82.32.210 without prejudice to refile the warrant at a later date.
     (4) When a taxpayer has requested the department to use the collection authority under this section, in order to determine if the issuance of a notice of lien would best protect the state's interest in collecting the amount due on the warrant, the department may require the taxpayer to:
     (a) Provide, at the taxpayer's expense, the department with a current abstract of title as defined by RCW 48.29.010 from a title insurer that possesses a certificate of authority issued under Title 48 RCW; and
     (b) Authorize the department to obtain the taxpayer's current credit report.
     (5) A notice of lien issued under this section must include the following information:
     (a) The name of the taxpayer who has an interest in the real property against which the notice of lien is filed;
     (b) The taxpayer's tax registration number issued as provided in RCW 82.32.030;
     (c) The number of the warrant issued by the department;
     (d) The amount for which the warrant was issued;
     (e) The legal description, tax parcel number assigned under RCW 84.40.160, and the street address, if available, of the real property against which the notice of lien is issued; and
     (f) Any other information the department determines would be useful.
     (6) The notice of lien issued under this section is superior to all other liens and encumbrances, except:
     (a) Bona fide interests of third persons that had vested prior to the recording of the notice of lien, if the third persons do not have a beneficial interest, direct or indirect, in the operation of the taxpayer's business, other than the securing of the payment of a debt or the receiving of a regular rental on equipment. For purposes of this subsection, "bona fide interests of third persons" has the same meaning as in RCW 82.32.210; and
     (b) Property taxes and special assessments against the property.
     (7) The department must release a notice of lien issued under this section as soon as practicable after receipt of payment in full of the amount due on the warrant secured by the notice of lien, including interest accrued as provided in RCW 82.32.210(1) and all recording fees claimed by the recording officer for the recording of the notice of lien and the release of the lien.
     (8) The department must release a notice of lien issued under this section within fourteen days if the notice of lien was issued in error.

NEW SECTION.  Sec. 3   This act takes effect January 1, 2011.