SENATE BILL REPORT

SB 6668

BYSenator Nelson; by request of Department of Licensing

Revising special fuel bonding requirements.

Senate Committee on Transportation

Senate Hearing Date(s):February 4, 1988; February 5, 1988

Majority Report:  Do pass.

      Signed by Senators Patterson, Chairman; von Reichbauer, Vice Chairman; Barr, Bender, McMullen, Metcalf, Owen, Sellar.

Senate Staff:Cathy Mayo (786-7304)

                  March 3, 1988

AS PASSED SENATE, FEBRUARY 12, 1988

BACKGROUND:

Special Fuels under Washington law include diesel, propane and natural gas.

The Washington State Special Fuel Tax Act requires all special fuel users based out of the state to furnish a fuel tax bond.  The bond can be a corporate surety bond payable to the state of Washington conditioned upon compliance with requirements for payment of all taxes, or a deposit with the state treasurer of cash or bonds or other legal tender with a market value not less than that required by the Department of Licensing.  Many states do not have bonding requirements for interstate carriers.  When bonds are required in other states, other options, such as certificates of deposit (CDs) are offered, providing the user with interest income from the money that is being held as a bond.

A special committee of the National Governor's Association has recommended administrative uniformity of the fuel tax laws among states wherever possible.  The U.S. Department of Transportation has indicated that if the states cannot comply with the NGA recommendations there will be federal intervention.

The proposed legislation is one of the recommendations of the Washington State Motor Carrier Advisory Committee, an advisory group composed of state agency officials and an equal number of members of the motor carrier industry.  The advisory committee was established as part of the NGA's Consensus Agenda to create uniformity in fuel tax reporting in the individual states.

SUMMARY:

Existing provisions are modified to allow the Department of Licensing to prescribe by rule other methods to protect the state's interest, in lieu of requiring a special fuel user to obtain a surety bond from a bonding company.  The department is authorized to establish rules for requiring bonds when the interests of the state are at stake.

The department may require a special fuel user to post a bond if the user fails to file timely reports or remit taxes when due or when an investigation indicates problems severe enough to cause the department to determine that a bond is required.

Appropriation:    none

Revenue:    none

Fiscal Note:      available

Senate Committee - Testified: No one

HOUSE AMENDMENT:

If it is necessary for the Department of Licensing to collect delinquent special fuel taxes and related interest or penalty fees through a collection agency or through the courts, the department may recover the actual costs incurred, including attorney fees.