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House of Representatives P.O. Box 40600 Office of Program Research Olympia WA 98504-0600 Finance Committee Phone 360-786-7100
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HB 2671
Bill Analysis
January 25, 2000
Brief Description: Establishing procedures for handling tax billing errors.
Bill Sponsors: Representatives Thomas, Dunshee and Fortunato.
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Brief Summary of Bill
CRequires certain utility businesses to identify on customers= bills the rate, origin, and amount of any tax levied on the businesses, if the tax is added to the customers= bills;
CCreates a procedure for customers to receive refunds if billed erroneously for taxes;
CMakes it a violation of the Consumer Protection Act if certain utility businesses willfully fail to respond to customers= notices about erroneous taxes.
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Staff: Linda Brooks, 786-7153.
Background:
Light & Power and Gas Businesses
A light & power or gas business must show the rate and amount of any tax levied directly on its customers (such as sales tax) on its customers= bills. A light & power or gas business that adds a component to its customers= bills for any tax levied upon the revenue of the business (such as state or city utility tax) must also show the rate, origin, and approximate amount of the tax on the customers= bills. However, these requirements to show taxes on customers= bills only apply if a light & power or gas business serves more than 20,000 customers. There are also some exceptions. State Business and Occupation (B&O) taxes, privilege taxes paid by public utility districts, and regulatory fees paid to the Washington Utility and Transportation Commission are not required to be shown on customers= bills.
Telephone and Cable TV Businesses
Telephone and cable television businesses, like all businesses in the state, must list sales tax separately from the selling price in any sales invoice or billing. However, telephone and cable television businesses are not required to show state B&O taxes, city utility taxes, or any other type of tax levied upon their gross revenues on customers= bills.
Erroneous Billing of Taxes
If a customer sees that an amount of tax has been added as a component to a bill erroneously, he or she may ask the light & power, gas, cable television, or telephone business to provide a refund or credit. For example, if a person who lives in an unincorporated area sees an amount on a bill identified as a city utility tax, the person may notify the business that he or she does not live in a city and request a refund. There are no specific statutory requirements, however, governing how quickly a utility business must respond to a customer=s notice, nor are there any specific penalties imposed for failure to respond.
Consumer Protection Act
Under the Consumer Protection Act, the attorney general or an individual may bring an action against a person who commits an unfair or deceptive act or practice in trade or commerce. An individual may recover three times the actual damages caused by the act or practice, up to $10,000, plus reasonable attorney fees. The attorney general may also sue violators to obtain injunctive relief, civil penalties of $2,000 per violation, restitution, and attorneys= fees. In order to recover, a plaintiff must show that an unfair or deceptive act in trade or commerce affecting the public interest caused the injury. A legislative declaration that a particular act or practice is unfair or deceptive in trade or commerce affecting the public interest relieves a plaintiff of having to prove these elements.
Cities and Towns
A city or town must provide a light & power, gas, cable television, or telephone business with 60 days notice whenever the city or town changes a utility tax rate.
Summary of Bill:
Light & Power and Gas Businesses
The rate, origin, and amount must be shown for any tax levied on the business, if the business is adding a component to its customers= bills for the tax. Previously, only taxes levied on the revenue of the business were required to be shown.
Telephone and Cable TV Businesses
Telephone and cable television businesses are subject to the same requirements imposed on light & power and gas businesses for showing taxes on their customers= bills. Specifically, a telephone or cable television business serving more than 20,000 customers must show on its customers= bills:
Cthe rate and amount of any tax (such as sales tax) levied directly on its customers; and
Cthe rate, origin, and amount of any tax levied on the business, if the business is adding a component to its customers= bills for the tax.
There are some exceptions. Telephone and cable television businesses are not required to show state B&O taxes nor any regulatory fees paid to the Washington Utility and Transportation Commission.
Erroneous Billing of Taxes
When a customer believes that an amount of tax has been added to his or her bill in error, the customer must notify the light & power, gas, cable television, or telephone business that issued the billing. A business has 60 days to either correct the error and make a refund with interest or to provide the customer with a written explanation as to why a refund is not due.
If a business fails to make a refund or to provide a written explanation within 60 days, then a $5 penalty must be credited to a customer=s bill for each monthly billing period that begins more than 60 days after notice was received from a customer. A customer may deduct this $5 penalty from his or her bill if a business fails to include the credit on the customer=s bill. A business cannot interrupt gas, electrical, cable television, or telephone service for nonpayment of any amount in dispute, as long as amounts not in dispute are paid when due.
On the other hand, if a business has investigated a complaint and determined that no error has been made, then the business must mail a written explanation to the customer. A business may then recover all tax amounts, interest and penalties withheld by a customer. However, at least 30 days must follow the mailing of the written explanation before any recovery occurs.
Consumer Protection Act
It is a Consumer Protection Act violation if a light & power, gas, cable television, or telephone business engages in a willful pattern of failing to respond to customers= notices about tax billing errors.
Cities and Towns
Cities and towns must notify gas, light & power, cable television, and telephone businesses of any annexations at least 60 days before the annexations take effect.
If a light & power, gas, cable television, or telephone business requests assistance, a city or town must provide the business with copies of any maps, street addresses, geographical information system data bases, or other information that would assist the business in identifying its customers whose addresses are located within the city or town. The light & power, gas, cable television, or telephone business cannot use the information provided by a city or town for commercial purposes.
Appropriation: None.
Fiscal Note: Requested.
Effective Date: Ninety days after adjournment of session in which bill is passed.