SENATE BILL REPORT

SB 5266

BYSenators McDermott and Gaspard; by request of Department of Revenue

Providing for retail sales tax trust fund accountability.

Senate Committee on Ways & Means

Senate Hearing Date(s):January 28, 1987; February 9, 1987

Majority Report:  That Substitute Senate Bill No. 5266 be substituted therefor, and the substitute bill do pass.

      Signed by Senators McDermott, Chairman; Gaspard, Vice Chairman; Kreidler, Lee, Moore, Owen, Rasmussen, Rinehart, Talmadge, Vognild, Williams, Wojahn.

Senate Staff:Stephen Rose (786-7443)

                  February 10, 1987

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 9, 1987

BACKGROUND:

The sales taxes that consumers pay are collected by private businesses in trust for the state.  Currently, more than $5 million a year in sales taxes paid to corporations are not remitted to the state.

California, Idaho, Utah, Wyoming, and many other states hold corporate officers personally liable for taxes collected in trust for their state revenue agencies.

SUMMARY:

Upon termination, dissolution, or abandonment of a corporate business, all corporate officers or other persons having a proprietary interest in the business or controller dominion over state and local sales tax funds collected are made personally liable in the event of nonpayment.

Revenue:    yes

Fiscal Note:      available

EFFECT OF PROPOSED SUBSTITUTE:

New language (from the California Legal Code) is proposed to clarify the personal liability for state retail sales taxes held in trust by corporations.

Only officers or other persons who had control or supervision over taxes collected and who wilfully fail to pay or to cause to be paid are personally liable.  The joint and severally liable clause is deleted.

An emergency clause making the bill effective immediately is added.

Senate Committee - Testified: Roger Dodd, Barney McClure, Department Revenue