BILL REQ. #:  S-4111.1 

READ FIRST TIME 01/31/14.   

     AN ACT Relating to modifying the tax appeal process; amending RCW 82.03.020, 82.03.030, 82.03.050, 82.03.090, 84.08.130, 34.05.518, and 34.05.522; adding new sections to chapter 82.03 RCW; adding a new section to chapter 82.32 RCW; creating new sections; and providing effective dates.

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

NEW SECTION.  Sec. 1   It is the intent of the legislature that this act foster the settlement or other resolution of tax disputes to the extent possible and, in cases in which litigation is necessary, to provide the people of this state with a fair, independent, prepayment procedure to determine a dispute with tax administration agencies. This act must be interpreted and construed to further this intent.

Sec. 2   RCW 82.03.020 and 1967 ex.s. c 26 s 31 are each amended to read as follows:
     (1) The board of tax appeals, hereinafter in chapter 26, Laws of 1967 ex. sess. referred to as the board, ((shall)) must consist of three members ((qualified by experience and training in the field of state and local taxation,)) appointed by the governor with the advice and consent of the senate((, and no more than two of whom at the time of appointment or during their terms shall be members of the same political party)).
     (2) No person may be appointed as a member of the board unless at the time of appointment the individual has substantial knowledge of the tax law and substantial experience making the record in a tax case suitable for judicial review.

Sec. 3   RCW 82.03.030 and 1967 ex.s. c 26 s 32 are each amended to read as follows:
     (1) Members of the board ((shall)) must be appointed for a term of six years and until their successors are appointed and have qualified. In case of a vacancy, it ((shall)) must be filled by appointment by the governor for the unexpired portion of the term in which said vacancy occurs((: PROVIDED, That the terms of the first three members of the board shall be staggered so that one member shall be appointed to serve until March 1, 1969, one member until March 1, 1971, and one member until March 1, 1973)).
     (2) Whenever a member of the board is absent, disqualified, or for any other reason unable to perform his or her duties, and it appears to the governor that it is advisable that the services of an additional member be provided, the governor may appoint a member, pro tempore of the board. Any person appointed member pro tempore of the board must have the qualifications set forth in RCW 82.03.020(2) and may not serve for a term longer than one year. This appointment may be renewed once.

Sec. 4   RCW 82.03.050 and 2013 c 23 s 311 are each amended to read as follows:
     The board ((shall)) must operate on ((either a part-time or)) a full-time basis((, as determined by the governor. If it is determined that the board shall operate on a full-time basis, each member of the board shall receive an annual salary to be determined by the governor. If it is determined that the board shall operate on a part-time basis, each member of the board shall receive compensation on the basis of seventy-five dollars for each day spent in performance of his or her duties, but such compensation shall not exceed ten thousand dollars in a fiscal year)). Each member of the board must receive an annual salary no less than that provided for superior court judges under RCW 2.08.092, which salary may not be diminished during the member's term of appointment except to the extent such reduction applies to all superior court judges. Each board member ((shall)) must receive reimbursement for travel expenses incurred in the discharge of his or her duties in accordance with RCW 43.03.050 and 43.03.060 as now existing or hereafter amended.

Sec. 5   RCW 82.03.090 and 1967 ex.s. c 26 s 38 are each amended to read as follows:
     (1) The principal office of the board ((shall)) must be at the state capital, but it may sit or hold hearings at any other place in the state. The board must maintain at least one hearing office where it regularly conducts hearings in both King and Spokane counties.
     (2) A majority of the board ((shall)) constitutes a quorum for making orders or decisions, promulgating rules and regulations necessary for the conduct of its powers and duties, or transacting other official business, and may act though one position on the board be vacant. One or more members may hold hearings and take testimony to be reported for action by the board when authorized by rule or order of the board. The board ((shall)) must perform all the powers and duties specified in this chapter or as otherwise provided by law.

NEW SECTION.  Sec. 6   A new section is added to chapter 82.03 RCW to read as follows:
     (1) A party electing a formal hearing pursuant to RCW 82.03.140 or 82.03.190, must pay to the clerk of the board a fee in the amount of two hundred fifty dollars within thirty days of filing a notice of appeal or a notice of intent that the hearing be held pursuant to chapter 34.05 RCW.
     (2) A party electing an informal hearing pursuant to RCW 82.03.140 or 82.03.190, must pay to the clerk of the board a fee in the amount of fifty dollars within thirty days of filing a notice of appeal.
     (3) The board may waive the fees provided for in subsections (1) and (2) of this section upon affidavit by a party that the party is unable to pay the fee due to financial hardship.
     (4) If a party does not pay the fees provided for in subsections (1) and (2) of this section or file an affidavit of financial hardship pursuant to subsection (3) of this section within forty-five days of filing a notice of appeal, the board must dismiss the case.
     (a) The board must notify the party at least ten days in advance of the deadline that it will dismiss the case unless the party pays the fee or files an affidavit of financial hardship.
     (b) If the board fails to notify the party in writing at least ten days in advance of the forty-fifth day, the party will have ten days from the date on which the board notifies the party in writing to pay the fee or file an affidavit of financial hardship.
     (5) If a party does not pay the fee provided for in subsection (1) of this section or file an affidavit of financial hardship pursuant to subsection (3) of this section within forty-five days of filing a notice of intent that the hearing be held pursuant to chapter 34.05 RCW, the notice must be considered untimely.
     (a) The board must notify the party at least ten days in advance of the deadline that it will not hear the case pursuant to chapter 34.05 RCW unless the party pays the fee or files an affidavit of financial hardship.
     (b) If the board fails to notify the party in writing at least ten days in advance of the forty-fifth day, the party will have ten days from the date on which the board notifies the party in writing to pay the fee or file an affidavit of financial hardship.
     (6) This section does not apply to notices of appeal, or notices of intent that the hearing be held pursuant to chapter 34.05 RCW, filed before July 1, 2014.

Sec. 7   RCW 84.08.130 and 1998 c 54 s 3 are each amended to read as follows:
     (1) Any taxpayer or taxing unit feeling aggrieved by the action of any county board of equalization may appeal to the board of tax appeals by filing with the board of tax appeals in accordance with RCW 1.12.070 a notice of appeal within thirty days after the mailing of the decision of such board of equalization, which notice ((shall)) must specify the actions complained of; and in like manner any county assessor may appeal to the board of tax appeals from any action of any county board of equalization. ((There shall be no fee charged for the filing of an appeal.)) The board ((shall)) must transmit a copy of the notice of appeal to all named parties within thirty days of its receipt by the board. Appeals ((which)) that are not filed as provided in this section ((shall)) must be dismissed. The board of tax appeals ((shall)) must require the board appealed from to file a true and correct copy of its decision in such action and all evidence taken in connection therewith, and may receive further evidence, and ((shall)) must make such order as in its judgment is just and proper.
     (2) The board of tax appeals may enter an order, pursuant to subsection (1) of this section, that has effect up to the end of the assessment cycle used by the assessor, if there has been no intervening change in the value during that time.

NEW SECTION.  Sec. 8   A new section is added to chapter 82.03 RCW to read as follows:
     (1) The board must stay collection of any assessment or additional assessment of the department, or any part thereof, on petition of the taxpayer, unless it finds:
     (a) There is inadequate assurance that the full amount of the assessment will be collectable at the conclusion of the stay; or
     (b) The taxpayer's appeal lacks merit and is brought for purposes of delaying payment of the assessment.
     (2) The board must establish rules governing the circumstances and conditions under which collection will be stayed. The board may impose interest on the amount of any assessment for which collection is stayed.
     (3) No stay of collection ordered by the board may stay collection for more than sixty days past the date on which the board issues its final decision or rules on a motion for reconsideration, whichever is later.
     (4) Interest imposed under this section is in addition to the interest imposed under other provisions of law. The interest rate may be adjusted on the first day of January of each year.
     (5) The board must adopt the rules required by subsection (2) of this section no later than December 1, 2014.
     (6) The board may not stay collection in hearings where the notice of appeal was filed before December 1, 2014.

NEW SECTION.  Sec. 9   A new section is added to chapter 82.03 RCW to read as follows:
     (1) In a formal hearing where the decision is made pursuant to RCW 82.03.130(1)(a), the board must award fees and other expenses to the prevailing party, including reasonable attorneys' fees, unless (a) the parties stipulate that fees and other expenses should not be awarded, (b) the board finds that both parties prevailed on significant issues, or (c) the department's action was substantially justified. A taxpayer seeking review must be considered a prevailing party if the taxpayer obtained relief on a significant issue that achieves some benefit that the taxpayer sought. The department must be considered a prevailing party if the board affirms the determination, order, or decision under review on a significant issue.
     (2) The amount awarded to a taxpayer under subsection (1) of this section may not exceed fifty thousand dollars. If two or more taxpayers join in an action, the award in total may not exceed fifty thousand dollars.
     (3) The amount awarded to the department under subsection (1) of this section may not exceed two thousand five hundred dollars. However, the amount awarded to the department under subsection (1) of this section may not exceed five hundred dollars if:
     (a) The taxpayer is a qualified party under RCW 4.84.340(5); or
     (b) The department elected to convert an informal hearing to a formal hearing pursuant to RCW 82.03.190.
     (4) The board, in its discretion, may reduce the amount to be awarded pursuant to subsection (1) of this section, or deny any award, to the extent that a prevailing party during the course of the proceedings engaged in conduct that unduly or unreasonably protracted the final resolution of the matter in controversy.
     (5) Fees and other expenses awarded to or against the department must be deposited into or withdrawn from the general fund.
     (6) For purposes of this section, "fees and other expenses" includes the reasonable expenses of expert witnesses, the reasonable cost of a study, analysis, appraisal report, test, or project that is found by the board to be necessary for the preparation of the party's case, and reasonable attorneys' fees. Reasonable attorneys' fees must be based on the prevailing market rates for the kind and quality of services furnished, except that:
     (a) No expert witness may be compensated at a rate in excess of the highest rates of compensation for expert witnesses paid by the state of Washington; and
     (b) Attorneys' fees may not be awarded in excess of two hundred fifty dollars per hour unless the board determines that an increase in the cost of living or a special factor, such as the limited availability of qualified attorneys for the proceedings involved, justifies a higher fee.
     (7) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
     (a) "Reasonable attorneys' fees" includes fees paid to third-party representatives authorized to represent parties in formal proceedings before the board.
     (b) "Substantially justified" has the same meaning as the term in RCW 4.84.350(1).
     (8) This section does not apply to hearings where the notice of appeal is filed before July 1, 2014.

NEW SECTION.  Sec. 10   A new section is added to chapter 82.03 RCW to read as follows:
     (1) The board must establish practices and procedures for conducting mediation conferences between parties. The board must adopt rules establishing the practices and procedures for conducting mediation conferences by December 1, 2014.
     (2) A party may request a mediation conference at any time up to thirty days before the hearing.
     (3) The board may not make mediation conferences mandatory.
     (4) The mediation conference must be conducted by a tax referee who will not participate in the hearing.
     (5) The board must establish a fee schedule for conducting mediations under subsection (1) of this section by December 1, 2014. The fee schedule must be updated at least every two years to recoup at least sixty percent of the anticipated cost of conducting mediations under subsection (1) of this section.
     (6) No party may request a mediation conference under this section until the board has adopted the rules required by subsection (1) of this section.

NEW SECTION.  Sec. 11   A new section is added to chapter 82.03 RCW to read as follows:
     Any taxpayer having filed a petition for correction of assessment under RCW 82.32.160 or a refund petition under RCW 82.32.170, may request a mediation conference to be held by a tax referee under section 10 of this act.

NEW SECTION.  Sec. 12   A new section is added to chapter 82.32 RCW to read as follows:
     (1) The department must grant or deny a taxpayer's petition under RCW 82.32.110, 82.32.160, 82.32.170, or 82.49.060 within one hundred twenty days of the date of filing, unless the taxpayer agrees in writing to an extension.
     (2) If the department fails to issue a denial or determination within one hundred twenty days, the petition may be deemed denied and the taxpayer may file an appeal to the board of tax appeals pursuant to RCW 82.03.190.
     (a) Unless the taxpayer files an appeal with the board of tax appeals, nothing in this section removes the department's obligation to grant or deny the taxpayer's petition under RCW 82.32.110, 82.32.160, 82.32.170, or 82.49.060.
     (b) Nothing in this section may prevent a taxpayer from filing an appeal to the board of tax appeals under RCW 82.03.190 within thirty days of the mailing of a denial or determination under RCW 82.32.110, 82.32.160, 82.32.170, or 82.49.060.
     (3) This section does not apply to petitions filed before January 1, 2015.

Sec. 13   RCW 34.05.518 and 2010 c 211 s 15 are each amended to read as follows:
     (1) The final decision of an administrative agency in an adjudicative proceeding under this chapter may((, except as otherwise provided in chapter 43.21L RCW,)) be directly reviewed by the court of appeals ((either)):
     (a) Upon certification by the superior court pursuant to this section ((or));
     (b) If the final decision is from an environmental board as defined in subsection (((3))) (4) of this section, upon acceptance by the court of appeals after a certificate of appealability has been filed by the environmental board that rendered the final decision; or
     (c) If the final decision is from the board of tax appeals, upon acceptance by the court of appeals after a certificate of appealability has been filed by the board of tax appeals.
     (2) For direct review upon certification by the superior court, an application for direct review must be filed with the superior court within thirty days of the filing of the petition for review in superior court. The superior court may certify a case for direct review only if the judicial review is limited to the record of the agency proceeding and the court finds that:
     (a) Fundamental and urgent issues affecting the future administrative process or the public interest are involved which require a prompt determination;
     (b) Delay in obtaining a final and prompt determination of such issues would be detrimental to any party or the public interest;
     (c) An appeal to the court of appeals would be likely regardless of the determination in superior court; and
     (d) The appellate court's determination in the proceeding would have significant precedential value.
     (3) Procedures for certification ((shall)) under this section must be established by court rule.
     (((3))) (4)(a) For the purposes of direct review of final decisions of environmental boards, environmental boards include those boards identified in RCW 43.21B.005 and the growth management hearings board as identified in RCW 36.70A.250.
     (b) An environmental board may issue a certificate of appealability if it finds that delay in obtaining a final and prompt determination of the issues would be detrimental to any party or the public interest and either:
     (i) Fundamental and urgent statewide or regional issues are raised; or
     (ii) The proceeding is likely to have significant precedential value.
     (((4))) (5) The environmental board ((shall)) must state in the certificate of appealability which criteria it applied, explain how that criteria was met, and file with the certificate a copy of the final decision.
     (((5))) (6) For purposes of direct review of final decisions of the board of tax appeals, the board of tax appeals must issue a certificate of appealability, unless it finds that:
     (a) The proceeding is unlikely to have significant precedential value; or
     (b) Direct review by the court of appeals would be detrimental to any party or the public interest.
     (7) If the board of tax appeals denies a request for a certificate of appealability, it must state in its denial which criteria it applied and explain how that criteria supported its decision to deny the request.
     (8) For an appellate court to accept direct review of a final decision of an environmental board, it ((shall)) must consider the same criteria outlined in subsection (((3))) (4) of this section((, except as otherwise provided in chapter 43.21L RCW)).
     (((6))) (9) For an appellate court to accept direct review of a final decision of the board of tax appeals, it must consider the same criteria outlined in subsection (5) of this section.
     (10) The procedures for direct review of final decisions of environmental boards or the board of tax appeals include:
     (a) Within thirty days after filing the petition for review with the superior court, a party may file an application for direct review with the superior court and serve the board of tax appeals or the appropriate environmental board and all parties of record. The application ((shall)) must request that the board of tax appeals or the environmental board ((to)) file a certificate of appealability.
     (b) If an issue on review is the jurisdiction of the environmental board or the board of tax appeals, the board with jurisdiction may file an application for direct review on that issue.
     (c) The environmental board ((shall have)) or the board of tax appeals has thirty days to grant or deny the request for a certificate of appealability and its decision ((shall)) must be filed with the superior court and served on all parties of record.
     (d) If a certificate of appealability is issued, the parties ((shall)) must have fifteen days from the date of service to file a notice of discretionary review in the superior court, and the notice ((shall)) must include a copy of the certificate of appealability and a copy of the final decision.
     (e) If the appellate court accepts review, the certificate of appealability ((shall)) must be transmitted to the court of appeals as part of the certified record.
     (f) If a certificate of appealability is denied, review ((shall)) must be by the superior court. The superior court's decision may be appealed to the court of appeals.

Sec. 14   RCW 34.05.522 and 1995 c 382 s 6 are each amended to read as follows:
     The court of appeals may refuse to accept direct review of a case pursuant to RCW 34.05.518 if it finds that the case does not meet the applicable standard in RCW 34.05.518 (2) ((or (5))), (4), or (6). Rules of Appellate Procedure 2.3 do not apply in this instance. The refusal to accept such review is not subject to further appellate review, notwithstanding anything in Rule 13.3 of the Rules of Appellate Procedure to the contrary.

NEW SECTION.  Sec. 15   (1) A joint task force on the reform of the tax appeals process is created.
     (2) The membership of the joint task force consists of the following five persons:
     (a) The chairs and ranking members of the respective tax policy committees within the senate and house of representatives;
     (b) A representative of the governor's office.
     (3) The joint task force must appoint an advisory committee consisting of at least one representative from the following organizations:
     (a) The administrator for the courts;
     (b) The board of tax appeals;
     (c) The department of revenue;
     (d) The office of the attorney general;
     (e) The association of Washington counties;
     (f) The Washington state bar association;
     (g) The association of Washington business;
     (h) The counsel on state taxation; and
     (i) The University of Washington school of law.
     (4) Staff support for the joint task force must be provided by the senate committee services and the house of representatives office of program research.
     (5) The joint task force must make recommendations regarding potential improvements to the tax appeal process in Washington. The joint task force must evaluate the performance of the current tax appeal process including access to a fair and impartial prepayment hearing, the time and costs needed to resolve tax disputes, and the precedential value of decisions rendered by taxing authorities and tax tribunals. The joint task force must at a minimum evaluate the feasibility of creating an independent tax court in the judicial branch. The joint task force must make recommendations to the appropriate committees of the legislature and the governor by December 1, 2014.

NEW SECTION.  Sec. 16   (1) Except for section 4 of this act, this act takes effect July 1, 2014.
     (2) Section 4 of this act takes effect July 1, 2015.