BILL REQ. #:  H-5836.1 

Read first time 04/02/10.   Referred to Committee on Finance.

     AN ACT Relating to a Washington small business taxpayer bill of rights; amending RCW 82.32.105; and adding a new chapter to Title 82 RCW.

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

NEW SECTION.  Sec. 1   This chapter shall be known and cited as the "Washington small business taxpayer bill of rights."

NEW SECTION.  Sec. 2   (1) The legislature finds that taxes are one of the most sensitive points of contact between citizens and their government, and that there is a delicate balance between revenue collection and taxpayers' rights and responsibilities.
     (2) The legislature further finds that the Washington tax system is based largely on voluntary compliance. The legislature also finds that compliance is best achieved when: (a) The department provides accurate tax information, instructions, and procedures to assist taxpayers to voluntarily comply with applicable state excise tax laws; and (b) taxpayers are not penalized for inadvertent mistakes.
     (3) The legislature further finds that our excise tax system is complicated and as a consequence, small businesses, often lacking sophisticated tax advice, are especially at risk of making unintentional mistakes with respect to their state tax obligations.
     (4) The legislature intends to provide a small business taxpayer bill of rights that: (a) Provides relief from unintentional mistakes regarding state tax obligations; (b) requires the department to provide information about a business's industry specific tax obligations at the time of tax registration; and (c) requires the department to adhere to any specific official written advice unless the department later modifies the advice in writing.

NEW SECTION.  Sec. 3   The department must administer this chapter. The department must adopt rules as may be necessary to fully implement this chapter and the rights established under this chapter.

NEW SECTION.  Sec. 4   Small business taxpayers of the state of Washington have:
     (1) The right to receive industry specific tax guidance by the department at the time the taxpayer initially registers his or her business with the state;
     (2) The right to a written explanation of the basis for any tax deficiency assessments, interest, and penalties at the time the assessments are issued;
     (3) The right to have any interest and penalties on an assessment waived if the assessment was a result of an unintentional act of the taxpayer; and
     (4) The right to rely on specific official written advice and written tax reporting instructions from the department to that taxpayer, and to have interest, penalties, and tax deficiency assessments waived when the taxpayer has so relied to their proven detriment unless the department provided later written tax reporting instructions modifying the initial instructions.

NEW SECTION.  Sec. 5   Unless the context clearly requires otherwise, the definition in this section applies throughout this chapter.
     "Small business taxpayer" means: (1) A taxpayer operating as a sole proprietorship; (2) a taxpayer in its first year of business operations and operating as a limited liability business where the initial capital contributions to the business were less than five hundred thousand dollars; or (3) a taxpayer with less than five hundred thousand dollars in gross income in the prior calendar year.

Sec. 6   RCW 82.32.105 and 1998 c 304 s 13 are each amended to read as follows:
     (1) If the department ((of revenue)) finds that the payment by a taxpayer of a tax less than that properly due or the failure of a taxpayer to pay any tax by the due date was the result of circumstances beyond the control of the taxpayer, the department ((of revenue shall)) must waive or cancel any penalties imposed under this chapter with respect to such tax.
     (2) The department ((shall)) must waive or cancel the penalty imposed under RCW 82.32.090(1) when the circumstances under which the delinquency occurred do not qualify for waiver or cancellation under subsection (1) of this section if:
     (a) The taxpayer requests the waiver for a tax return required to be filed under RCW 82.32.045, 82.14B.061, 82.23B.020, 82.27.060, 82.29A.050, or 84.33.086; and
     (b) The taxpayer has timely filed and remitted payment on all tax returns due for that tax program for a period of twenty-four months immediately preceding the period covered by the return for which the waiver is being requested.
     (3) The department ((shall)) must waive or cancel interest imposed under this chapter if:
     (a) The failure to timely pay the tax was the direct result of written instructions given the taxpayer by the department; or
     (b) The extension of a due date for payment of an assessment of deficiency was not at the request of the taxpayer and was for the sole convenience of the department.
     (4) The department must waive or cancel interest and penalties imposed under this chapter for a small business taxpayer if the failure to pay taxes due was not intentional. For the purposes of this subsection, "small business taxpayer" has the same meaning as provided in section 5 of this act.
     (5) The department ((of revenue shall)) must adopt rules for the waiver or cancellation of penalties and interest imposed by this chapter.

NEW SECTION.  Sec. 7   Sections 1 through 5 of this act constitute a new chapter in Title 82 RCW.