Brief Summary of Bill

Makes changes to the required qualifications, training, and duties of members of the Board of Tax Appeals (BTA).
Provides for the BTA to identify and publish decisions and orders of precedential value.
Authorizes the BTA to provide an informal voluntary and confidential mediation process.
Requires the BTA to report on the handling and disposition of its appeal docket.

Background:

The Board of Tax Appeals (BTA) was created in 1967 as an independent state agency. It is a full-time administrative tax court that adjudicates tax-related appeals. The BTA is made up of three board members who are appointed by the Governor, with the consent of the Senate. Each board member serves a six-year term. Board members qualify based on their training and experience in state and local tax matters. At the time of appointment, no more than two of the three board members may be members of the same political party. The BTA also includes three tax referees who hear and decide tax matters, and five supporting staff, including an executive director.

The BTA hears tax appeals from decisions of the County Board of Equalization and the Department of Revenue. The BTA processes 2,500 to 3,000 appeals annually. The most common types of appeals are property tax valuations, property tax exemptions, assessed value direct appeals, and excise tax appeals. Most appeals must be filed within 30 days of the mailing date of the decision or determination being appealed. The BTA has no authority to accept an appeal filed after the deadline.

An appeal can be informal or formal. A decision on an informal appeal cannot be appealed to superior court, but a party may challenge the BTA on its initial decision or may ask the BTA to reconsider a ruling. A final decision on a formal appeal may be appealed to superior court.

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Summary of Bill:

Future appointments of BTA board members must ensure that at least two of the BTA members are attorneys licensed to practice law in Washington and possess substantial knowledge of Washington tax laws. In addition, one attorney board member must have substantial experience in developing a record suitable for judicial review. Any nonattorney board member must have substantial experience in residential and commercial appraisals.

A tax referee must be competent to fulfill the duties of office and have substantial relevant experience.

Each BTA board member must attend at least 20 hours of judicial training, including Washington law, evidentiary procedures, and judicial practice and ethics. Board members will receive an annual salary equal to members of class four boards.

The BTA must operate on a full-time basis, and each board member must devote his or her full time and efforts in the discharge of their duties. The board members may delegate administrative powers to the executive director. Regular hearings must occur in King County and in Spokane County.

The BTA must publish all orders and decisions of precedential value made after the effective date of the act. The BTA may identify and publish orders and decisions of precedential value decided prior to the act. The decisions and orders shall be available for online research. All final orders and decisions will be maintained at BTA's principal office until transferred to the state archives.

If a party fails to elect either a formal or informal proceeding when filing an appeal with the BTA, the appeal will be treated as an election for an informal proceeding.

The BTA may require parties to attend a mandatory settlement conference. The BTA must also provide an informal voluntary and confidential mediation process. Any person appointed as a mediator must have substantial experience in Washington tax law or in residential and commercial appraisals.

The BTA must deliver a report to the Governor and appropriate legislative committees by November 1, 2018, that includes: the current number of pending appeals, the number of appeals closed since the effective date of the act, the number of appeals filed since the effective date of the act, and a detailed plan outlining how the BTA will address pending appeals.

Staff Summary of Public Testimony:

(In support) This bill is important for the administration of taxes in this state. Taxpayers need a reasonable process to resolve disputes. The BTA has the potential to be an effective forum; however, it is currently facing some staffing and procedural challenges. The BTA has a backlog of appeal cases of two to three years as the result of inefficiencies in the review process and the underfunding of the agency. This bill will go a long way towards increasing certainty for businesses and other taxpayers. The qualification requirements and mandated training, along with the creation of a body of precedential decisions, will improve the BTA. However, this legislation could go further by allowing direct appeals to the BTA, allowing the direct review by the Court of Appeals, having an office close to where most of the practitioners are located, creating a selection committee for new board members, and allowing the staying of collections pending an appeal.

(Opposed) None.