AN
ACT Relating to interest and penalty administration of the department of
revenue; and amending RCW 82.32.050, 82.32.060, 82.32.210, 82.45.100,
83.100.070, and 83.100.130.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
82.32.050 and 1996 c 149 s 2 are each amended to read as follows:
(1)
If upon examination of any returns or from other information obtained by the
department it appears that a tax or penalty has been paid less than that
properly due, the department shall assess against the taxpayer such additional
amount found to be due and shall add thereto interest on the tax only. The
department shall notify the taxpayer by mail of the additional amount and the
additional amount shall become due and shall be paid within thirty days from
the date of the notice, or within such further time as the department may
provide.
(a)
For tax liabilities arising before January 1, 1992, interest shall be computed
at the rate of nine percent per annum from the last day of the year in which
the deficiency is incurred until the earlier of December 31, 1998, or
the date of payment ((for tax liabilities arising before January 1, 1992)).
After December 31, 1998, the rate of interest shall be variable and computed
as provided in subsection (2) of this section. The rate so computed shall be
adjusted on the first day of January of each year for use in computing interest
for that calendar year.
(b)
For tax liabilities arising after December 31, 1991, ((until the date of
payment,)) the rate of interest shall be variable and computed as provided
in subsection (2) of this section from the last day of the year in which the
deficiency is incurred until the date of payment. The rate so computed
shall be adjusted on the first day of January of each year((. The
department shall notify the taxpayer by mail of the additional amount and the
same shall become due and shall be paid within thirty days from the date of the
notice, or within such further time as the department may provide)) for
use in computing interest for that calendar year.
(c)
Interest imposed after December 31, 1998, shall be computed from the last day
of the month following each calendar year included in a notice, and the last
day of the month following the final month included in a notice if not the end
of a calendar year, until the due date of the notice. If payment in full is
not made by the due date of the notice, additional interest shall be computed
until the date of payment. The rate of interest shall be variable and computed
as provided in subsection (2) of this section. The rate so computed shall be
adjusted on the first day of January of each year for use in computing interest
for that calendar year.
(2)
For the purposes of this section, the rate of interest to be charged to the
taxpayer shall be an average of the federal short-term rate as defined in 26
U.S.C. Sec. 1274(d) plus two percentage points. The rate shall be computed by
taking an arithmetical average to the nearest percentage point of the federal
short-term rate, compounded annually, for the months of January, April, July, and
October of the immediately preceding calendar year as published by the United
States secretary of the treasury.
(3)
No assessment or correction of an assessment for additional taxes, penalties,
or interest due may be made by the department more than four years after the
close of the tax year, except (a) against a taxpayer who has not registered as
required by this chapter, (b) upon a showing of fraud or of misrepresentation
of a material fact by the taxpayer, or (c) where a taxpayer has executed a
written waiver of such limitation. The execution of a written waiver shall
also extend the period for making a refund or credit as provided in RCW
82.32.060(2).
(4)
For the purposes of this section, "return" means any document a
person is required by the state of Washington to file to satisfy or establish a
tax or fee obligation that is administered or collected by the department of
revenue and that has a statutorily defined due date.
Sec.
2. RCW
82.32.060 and 1992 c 169 s 2 are each amended to read as follows:
(1)
If, upon receipt of an application by a taxpayer for a refund or for an audit
of the taxpayer's records, or upon an examination of the returns or records of
any taxpayer, it is determined by the department that within the statutory
period for assessment of taxes, penalties, or interest prescribed by RCW
82.32.050 any amount of tax, penalty, or interest has been paid in excess of
that properly due, the excess amount paid within, or attributable to, such
period shall be credited to the taxpayer's account or shall be refunded to the
taxpayer, at the taxpayer's option. Except as provided in subsections (2) and
(3) of this section, no refund or credit shall be made for taxes, penalties, or
interest paid more than four years prior to the beginning of the calendar year
in which the refund application is made or examination of records is
completed.
(2)
The execution of a written waiver under RCW 82.32.050 or 82.32.100 shall extend
the time for making a refund or credit of any taxes paid during, or
attributable to, the years covered by the waiver if, prior to the expiration of
the waiver period, an application for refund of such taxes is made by the
taxpayer or the department discovers a refund or credit is due.
(3)
Notwithstanding the foregoing limitations there shall be refunded or credited
to taxpayers engaged in the performance of United States government contracts
or subcontracts the amount of any tax paid, measured by that portion of the
amounts received from the United States, which the taxpayer is required by
contract or applicable federal statute to refund or credit to the United
States, if claim for such refund is filed by the taxpayer with the department
within one year of the date that the amount of the refund or credit due to the
United States is finally determined and filed within four years of the date on
which the tax was paid: PROVIDED, That no interest shall be allowed on such
refund.
(4)
Any such refunds shall be made by means of vouchers approved by the department
and by the issuance of state warrants drawn upon and payable from such funds as
the legislature may provide. However, taxpayers who are required to pay taxes
by electronic funds transfer under RCW 82.32.080 shall have any refunds paid by
electronic funds transfer.
(5)
Any judgment for which a recovery is granted by any court of competent
jurisdiction, not appealed from, for tax, penalties, and interest which were
paid by the taxpayer, and costs, in a suit by any taxpayer shall be paid in the
same manner, as provided in subsection (4) of this section, upon the filing
with the department of a certified copy of the order or judgment of the court.
((Except as to the credits in computing tax authorized by RCW 82.04.435,))
(a)
Interest at the rate of three percent per annum shall be allowed by the
department and by any court on the amount of any refund, credit, or other
recovery allowed to a taxpayer for taxes, penalties, or interest paid by the
taxpayer before January 1, 1992. This rate of interest shall apply for all
interest allowed through December 31, 1998. Interest allowed after December
31, 1998, shall be computed at the rate as computed under RCW 82.32.050(2).
The rate so computed shall be adjusted on the first day of January of each year
for use in computing interest for that calendar year.
(b)
For refunds or credits of amounts paid or other recovery allowed to a taxpayer
after December 31, 1991, the rate of interest shall be the rate as computed for
assessments under RCW 82.32.050(2)((, less one percentage point)). The
rate so computed shall be adjusted on the first day of January of each year for
use in computing interest for that calendar year.
Sec.
3. RCW
82.32.210 and 1987 c 405 s 15 are each amended to read as follows:
(1)
If any fee, tax, increase, or penalty or any portion thereof is not paid within
fifteen days after it becomes due, the department of revenue may issue a
warrant under its official seal in the amount of such unpaid sums, together
with interest thereon ((at the rate of one percent of the amount of such
warrant for each thirty days or portion thereof after the date of such warrant))
from the date the warrant is issued until the date of payment. If,
however, the department of revenue believes that a taxpayer is about to cease
business, leave the state, or remove or dissipate the assets out of which fees,
taxes or penalties might be satisfied and that any tax or penalty will not be
paid when due, it may declare the fee, tax or penalty to be immediately due and
payable and may issue a warrant immediately.
(a)
Interest imposed before January 1, 1999, shall be computed at the rate of one
percent of the amount of the warrant for each thirty days or portion thereof.
(b)
Interest imposed after December 31, 1998, shall be computed on a daily basis on
the amount of outstanding tax or fee at the rate as computed under RCW
82.32.050(2). The rate so computed shall be adjusted on the first day of
January of each year for use in computing interest for that calendar year. As
used in this subsection, "fee" does not include an administrative
filing fee such as a court filing fee and warrant fee.
(2)
The department shall file a copy of the warrant with the clerk of the superior
court of any county of the state in which real and/or personal property of the
taxpayer may be found. Upon filing, the clerk shall enter in the judgment
docket, the name of the taxpayer mentioned in the warrant and in appropriate
columns the amount of the fee, tax or portion thereof and any increases and
penalties for which the warrant is issued and the date when the copy is filed,
and thereupon the amount of the warrant so docketed shall become a specific
lien upon all goods, wares, merchandise, fixtures, equipment, or other personal
property used in the conduct of the business of the taxpayer against whom the
warrant is issued, including property owned by third persons who have a
beneficial interest, direct or indirect, in the operation of the business, and
no sale or transfer of the personal property in any way affects the lien.
(3)
The lien shall not be superior, however, to bona fide interests of third
persons which had vested prior to the filing of the warrant when the third
persons do not have a beneficial interest, direct or indirect, in the operation
of the business, other than the securing of the payment of a debt or the
receiving of a regular rental on equipment((: PROVIDED, HOWEVER, That)).
The phrase "bona fide interests of third persons" does not
include any mortgage of real or personal property or any other credit
transaction that results in the mortgagee or the holder of the security acting
as trustee for unsecured creditors of the taxpayer mentioned in the warrant who
executed the chattel or real property mortgage or the document evidencing the
credit transaction.
(4)
The amount of the warrant so docketed shall thereupon also become a lien upon
the title to and interest in all other real and personal property of the
taxpayer against whom it is issued the same as a judgment in a civil case duly
docketed in the office of the clerk. The warrant so docketed shall be
sufficient to support the issuance of writs of garnishment in favor of the
state in the manner provided by law in the case of judgments wholly or
partially unsatisfied.
Sec.
4. RCW
82.45.100 and 1996 c 149 s 5 are each amended to read as follows:
(1)
Payment of the tax imposed under this chapter is due and payable immediately at
the time of sale, and if not paid within one month thereafter shall bear
interest ((at the rate of one percent per month)) from the time of sale
until the date of payment.
(a)
Interest imposed before January 1, 1999, shall be computed at the rate of one
percent per month.
(b)
Interest imposed after December 31, 1998, shall be computed on a monthly basis
at the rate as computed under RCW 82.32.050(2). The rate so computed shall be
adjusted on the first day of January of each year for use in computing interest
for that calendar year. The department of revenue shall provide written
notification to the county treasurers of the variable rate on or before
December 1 of the year preceding the calendar year in which the rate applies.
(2)
In addition to the interest described in subsection (1) of this section, if the
payment of any tax is not received by the county treasurer or the department of
revenue, as the case may be, within one month of the date due, there shall be
assessed a penalty of five percent of the amount of the tax; if the tax is not
received within two months of the date due, there shall be assessed a total
penalty of ten percent of the amount of the tax; and if the tax is not received
within three months of the date due, there shall be assessed a total penalty of
twenty percent of the amount of the tax. The payment of the penalty described
in this subsection shall be collectible from the seller only, and RCW 82.45.070
does not apply to the penalties described in this subsection.
(3)
If the tax imposed under this chapter is not received by the due date, the
transferee shall be personally liable for the tax, along with any interest as
provided in subsection (1) of this section, unless:
(a)
An instrument evidencing the sale is recorded in the official real property
records of the county in which the property conveyed is located; or
(b)
Either the transferor or transferee notifies the department of revenue in
writing of the occurrence of the sale within thirty days following the date of
the sale.
(4)
If upon examination of any affidavits or from other information obtained by the
department or its agents it appears that all or a portion of the tax is unpaid,
the department shall assess against the taxpayer the additional amount found to
be due plus interest and penalties as provided in subsections (1) and (2) of
this section. The department shall notify the taxpayer by mail of the
additional amount and the same shall become due and shall be paid within thirty
days from the date of the notice, or within such further time as the department
may provide.
(5)
No assessment or refund may be made by the department more than four years
after the date of sale except upon a showing of:
(a)
Fraud or misrepresentation of a material fact by the taxpayer;
(b)
A failure by the taxpayer to record documentation of a sale or otherwise report
the sale to the county treasurer; or
(c)
A failure of the transferor or transferee to report the sale under RCW
82.45.090(2).
(6)
Penalties collected on taxes due under this chapter under subsection (2)
of this section and RCW 82.32.090 (2) through (6) shall be deposited in the
housing trust fund as described in chapter 43.185 RCW.
*Sec.
5.
RCW 83.100.070 and 1996 c 149 s 13 are each amended to read as follows:
(1)
Any tax due under this chapter which is not paid by the due date under RCW
83.100.060(1) shall bear interest at the rate of twelve percent per annum from the
date the tax is due until the date of payment.
(2)
Interest imposed under this section for periods after January 1, 1997, shall be
computed at the rate as computed under RCW 82.32.050(2). The rate so computed
shall be adjusted on the first day of January of each year.
(3)
If the Washington return is not filed when due under RCW 83.100.050, then the
person required to file the federal return shall pay, in addition to interest,
a penalty equal to five percent of the tax due for each month after the date
the return is due until filed. No penalty may exceed twenty-five percent of
the tax.
(4)
If the department finds that a return due under this chapter has not been filed
by the due date, and the delinquency was the result of circumstances beyond the
control of the person required to file the federal return, the department shall
waive or cancel any penalties imposed under this chapter with respect to the
filing of such a tax return.
*Sec. 5 was vetoed. See message at end of chapter.
Sec.
6. RCW
83.100.130 and 1996 c 149 s 14 are each amended to read as follows:
(1)
Whenever the department determines that a person required to file the federal
return has overpaid the tax due under this chapter, the department shall refund
the amount of the overpayment, together with interest at the then existing rate
under RCW 83.100.070(1). If the application for refund, with supporting
documents, is filed within four months after an adjustment or final
determination of federal tax liability, the department shall pay interest until
the date the refund is mailed. If the application for refund, with supporting
documents, is filed after four months after the adjustment or final
determination, the department shall pay interest only until the end of the
four-month period.
(2)
Interest refunded under this section for periods after January 1, 1997, through
December 31, 1998, shall be computed on a daily basis at the rate as
computed under RCW 82.32.050(2) less one percentage point((, and)).
Interest allowed after December 31, 1998, shall be computed at the rate as
computed under RCW 82.32.050(2). Interest shall be refunded from the date
of overpayment until the date the refund is mailed. The rate so computed shall
be adjusted on the first day of January of each year.
