SENATE BILL REPORT

SB 6753

BYSenators Cantu, Gaspard and Sutherland; by request of Department of Revenue

Requiring electronic transfer of funds for certain large tax payments.

Senate Committee on Ways & Means

Senate Hearing Date(s):January 31, 1990

Majority Report:     That Substitute Senate Bill No. 6753 be substituted therefor, and the substitute bill do pass.

     Signed by Senators McDonald, Chairman; Amondson, Bailey, Bluechel, Cantu, Fleming, Gaspard, Hayner, Johnson, Lee, Moore, Newhouse, Niemi, Owen, Saling, Smith, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:Bill Freund (786-7715)

                February 1, 1990

AS REPORTED BY COMMITTEE ON WAYS & MEANS, JANUARY 31, 1990

BACKGROUND:

The Department of Revenue collects the state's major excise taxes, such as the sales tax and business and occupation tax.  Payment of these taxes is made by check.  The Efficiency Commission has recommended that the state require payment of excise taxes by electronic funds transfer (EFT) from large taxpayers.  Use of EFT would result in quicker receipt of state taxes and an increase in interest earnings on such funds.

Many corporations and the financial community use EFT.  The Department of Licensing currently requires large taxpayers of motor vehicle fuel tax to remit taxes through EFT.  According to the department ten states require use of EFT.

SUMMARY:

Beginning January 1, 1991, taxpayers with annual tax liability of $1.8 million or more are required to remit taxes by EFT.  Beginning January 1, 1992, the department may require use of EFT from taxpayers with tax liability of more than $240,000 annually.

EFT must be completed so that the state receives the funds on or before the next banking day following the due date.

EFFECT OF PROPOSED SUBSTITUTE:

Taxpayers required to remit taxes by electronic funds transfer shall have refunds paid the same way.

Appropriation:  none

Revenue:   yes

Fiscal Note:    available

Effective Date:January 1, 1991

Senate Committee - Testified:   Russ Brubaker and Marb Ostby, Department of Revenue (pro); John Cadoo, Efficiency Commission (pro)