BILL REQ. #:  Z-1147.1 

Read first time 01/20/2004.   Referred to Committee on Ways & Means.

     AN ACT Relating to transferring responsibility for collecting certain telephone program excise taxes from the department of social and health services to the department of revenue; amending RCW 43.20A.725 and 80.36.430; adding a new chapter to Title 82 RCW; creating new sections; prescribing penalties; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1   RCW 43.20A.725 and 2001 c 210 s 2 are each amended to read as follows:
     (1) The department, through the sole authority of the office or its successor organization, shall maintain a program whereby an individual of school age or older who possesses a hearing or speech impairment is provided with telecommunications equipment, software, and/or peripheral devices, digital or otherwise, that is determined by the office to be necessary for such a person to access and use telecommunications transmission services effectively.
     (2) The department, through the sole authority of the office or its successor organization, shall maintain a program where telecommunications relay services of a human or electronic nature will be provided to connect hearing impaired, deaf-blind, or speech impaired persons with persons who do not have a hearing or speech impairment. Such telecommunications relay services shall provide the ability for an individual who has a hearing or speech impairment to engage in voice, tactile, or visual communication by wire or radio with a hearing individual in a manner that is functionally equivalent to the ability of an individual who does not have a hearing or speech impairment to communicate using voice or visual communication services by wire or radio subject to subsection (4)(b) of this section.
     (3) The telecommunications relay service and equipment distribution program may operate in such a manner as to provide communications transmission opportunities that are capable of incorporating new technologies that have demonstrated benefits consistent with the intent of this chapter and are in the best interests of the citizens of this state.
     (4) The office shall administer and control the award of money to all parties incurring costs in implementing and maintaining telecommunications services, programs, equipment, and technical support services according to this section. The relay service contract shall be awarded to an individual company registered as a telecommunications company by the utilities and transportation commission, to a group of registered telecommunications companies, or to any other company or organization determined by the office as qualified to provide relay services, contingent upon that company or organization being approved as a registered telecommunications company prior to final contract approval. The relay system providers and telecommunications equipment vendors shall be selected on the basis of cost-effectiveness and utility to the greatest extent possible under the program and technical specifications established by the office.
     (a) To the extent funds are available under the then-current rate and not otherwise held in reserve or required for other purposes authorized by this chapter, the office may award contracts for communications and related services and equipment for hearing impaired or speech impaired individuals accessing or receiving services provided by, or contracted for, the department to meet access obligations under Title 2 of the federal Americans with disabilities act or related federal regulations.
     (b) The office shall perform its duties under this section with the goal of achieving functional equivalency of access to and use of telecommunications services similar to the enjoyment of access to and use of such services experienced by an individual who does not have a hearing or speech impairment only to the extent that funds are available under the then-current rate and not otherwise held in reserve or required for other purposes authorized by this chapter.
     (5) The program shall be funded by a telecommunications relay service (TRS) excise tax applied to each switched access line provided by the local exchange companies. The office shall determine, in consultation with the office's program advisory committee, the budget needed to fund the program on an annual basis, including both operational costs and a reasonable amount for capital improvements such as equipment upgrade and replacement. The budget proposed by the office, together with documentation and supporting materials, shall be submitted to the office of financial management for review and approval. The approved budget shall be given by the department in an annual budget to the ((utilities and transportation commission)) department of revenue no later than March 1st prior to the beginning of the fiscal year. The ((utilities and transportation commission)) department of revenue shall then determine the amount of telecommunications relay service excise tax to be placed on each switched access line and shall inform ((each)) local exchange ((company)) companies and the utilities and transportation commission of this amount no later than May ((15)) 1st. The ((utilities and transportation commission)) department of revenue shall determine the amount of telecommunications relay service excise tax to be collected in the following fiscal year by dividing the total of the program budget, as submitted by the office, by the total number of switched access lines in the prior calendar year, as reported to the department of revenue under chapter 82.14B RCW, and shall not exercise any further oversight of the program under this subsection other than administering the collection of the telecommunications relay service excise tax as provided in sections 3 through 11 of this act. The telecommunications relay service excise tax shall not exceed nineteen cents per month per access line. ((Each local exchange company shall impose the amount of excise tax determined by the commission as of July 1, and shall remit the amount collected directly to the department on a monthly basis.)) The telecommunications relay service excise tax shall be separately identified on each ratepayer's bill with the following statement: "Funds federal ADA requirement." All proceeds from the telecommunications relay service excise tax shall be put into a fund to be administered by the office through the department. "Switched access line" has the meaning provided in RCW 82.14B.020.
     (6) The telecommunications relay service program and equipment vendors shall provide services and equipment consistent with the requirements of federal law for the operation of both interstate and intrastate telecommunications services for the hearing impaired or speech impaired. The department and the utilities and transportation commission shall be responsible for ensuring compliance with federal requirements and shall provide timely notice to the legislature of any legislation that may be required to accomplish compliance.
     (7) The department shall adopt rules establishing eligibility criteria, ownership obligations, financial contributions, and a program for distribution to individuals requesting and receiving such telecommunications devices distributed by the office, and other rules necessary to administer programs and services consistent with this chapter.

Sec. 2   RCW 80.36.430 and 2003 c 134 s 4 are each amended to read as follows:
     (1) The Washington telephone assistance program shall be funded by a telephone assistance excise tax on all switched access lines and by funds from any federal government or other programs for this purpose. Switched access lines are defined in RCW 82.14B.020. The telephone assistance excise tax shall be applied equally to all residential and business access lines not to exceed fourteen cents per month. The department shall submit an approved annual budget for the Washington telephone assistance program to the department of revenue no later than March 1st prior to the beginning of each fiscal year. The department of revenue shall then determine the amount of telephone assistance excise tax to be placed on each switched access line and shall inform local exchange companies and the utilities and transportation commission of this amount no later than May 1st. The department of revenue shall determine the amount of telephone assistance excise tax by dividing the total of the program budget funded by the telephone assistance excise tax, as submitted by the department, by the total number of switched access lines in the prior calendar year. The telephone assistance excise tax shall be separately identified on each ratepayer's bill as the "Washington telephone assistance program." All money collected from the telephone assistance excise tax shall be transferred to a telephone assistance fund administered by the department.
     (2) Local exchange companies shall bill the fund for their expenses incurred in offering the telephone assistance program, including administrative and program expenses. The department shall disburse the money to the local exchange companies. The department is exempted from having to conclude a contract with local exchange companies in order to effect this reimbursement. The department shall recover its administrative costs from the fund. The department may specify by rule the range and extent of administrative and program expenses that will be reimbursed to local exchange companies.
     (3) The department shall enter into an agreement with the department of community, trade, and economic development for an amount not to exceed eight percent of the prior fiscal year's total revenue for the administrative and program expenses of providing community service voice mail services. The community service voice mail service may include toll-free lines in community action agencies through which recipients can access their community service voice mailboxes at no charge.

NEW SECTION.  Sec. 3   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Switched access line" has the meaning provided in RCW 82.14B.020.
     (2) "Local exchange company" has the meaning provided in RCW 80.04.010.
     (3) "Subscriber" means the retail purchaser of telephone service as telephone service is defined in RCW 82.04.065(3).
     (4) "Telephone program excise taxes" means the taxes on switched access lines imposed by RCW 43.20A.725 and 80.36.430.

NEW SECTION.  Sec. 4   The department shall collect the telephone program excise taxes on behalf of the department of social and health services at no cost to the department of social and health services. The telephone program excise taxes shall be remitted to the department by local exchange companies on a tax return provided by the department. All telephone program excise taxes shall be deposited by the treasurer into the account described in RCW 43.20A.725 and the account described in RCW 80.36.430.

NEW SECTION.  Sec. 5   Telephone program excise taxes shall be collected from the subscriber by the local exchange company providing the switched access line.

NEW SECTION.  Sec. 6   (1) Telephone program excise taxes must be paid by the subscriber to the local exchange company providing the switched access line, and each local exchange company shall collect from the subscriber the full amount of the taxes payable. Telephone program excise taxes to be collected by the local exchange company are deemed to be held in trust by the local exchange company until paid to the department. Any local exchange company that appropriates or converts the tax collected to its own use or to any use other than the payment of the tax to the extent that the money collected is not available for payment on the due date as prescribed in this chapter is guilty of a gross misdemeanor.
     (2) If any local exchange company fails to collect telephone program excise taxes or, after collecting the tax, fails to pay it to the department in the manner prescribed by this chapter, whether such failure is the result of its own act or the result of acts or conditions beyond its control, the local exchange company is personally liable to the state for the amount of the tax, unless the local exchange company has taken from the buyer in good faith a properly executed resale certificate under section 9 of this act.
     (3) The amount of tax, until paid by the subscriber to the local exchange company or to the department, constitutes a debt from the subscriber to the local exchange company. Any local exchange company that fails or refuses to collect telephone program excise taxes as required with intent to violate the provisions of this chapter or to gain some advantage or benefit, either direct or indirect, and any subscriber who refuses to pay any telephone excise tax is guilty of a misdemeanor.
     (4) If a subscriber has failed to pay to the local exchange company the telephone program excise taxes and the local exchange company has not paid the amount of the tax to the department, the department may, in its discretion, proceed directly against the subscriber for collection of the tax, in which case a penalty of ten percent may be added to the amount of the tax for failure of the subscriber to pay the tax to the local exchange company, regardless of when the tax is collected by the department. Telephone program excise taxes are due as provided under section 7 of this act.

NEW SECTION.  Sec. 7   (1) The department shall administer and shall adopt rules necessary to enforce and administer the collection of telephone program excise taxes. Chapter 82.32 RCW, with the exception of RCW 82.32.045, 82.32.145, and 82.32.380, applies to the administration, collection, and enforcement of telephone program excise taxes.
     (2) Telephone program excise taxes, along with reports and returns on forms prescribed by the department, are due at the same time the taxpayer reports other taxes under RCW 82.32.045. If no other taxes are reported under RCW 82.32.045, the taxpayer shall remit telephone program excise taxes on an annual basis in accordance with RCW 82.32.045.
     (3) The department may relieve any taxpayer or class of taxpayers from the obligation of remitting monthly and may require the return to cover other longer reporting periods, but in no event may returns be filed for a period greater than one year.
     (4) Telephone program excise taxes are in addition to any taxes imposed upon the same persons under chapters 82.08, 82.12, and 82.14B RCW.

NEW SECTION.  Sec. 8   (1) A local exchange company shall file tax returns on a cash receipts or accrual basis according to which method of accounting is regularly employed in keeping the books of the company. A local exchange company filing returns on a cash receipts basis is not required to pay telephone program excise taxes on debts that are deductible as worthless for federal income tax purposes.
     (2) A local exchange company is entitled to a credit or refund for telephone program excise taxes previously paid on debts that are deductible as worthless for federal income tax purposes.

NEW SECTION.  Sec. 9   (1) Unless a local exchange company has taken from the buyer a resale certificate or equivalent document under RCW 82.04.470, the burden of proving that a sale of the use of a switched access line was not a sale to a subscriber is upon the person who made the sale.
     (2) If a local exchange company does not receive a resale certificate at the time of the sale, have a resale certificate on file at the time of the sale, or obtain a resale certificate from the buyer within a reasonable time after the sale, the local exchange company remains liable for the telephone program excise taxes as provided in section 6 of this act, unless the local exchange company can demonstrate facts and circumstances according to rules adopted by the department that show the sale was properly made without payment of telephone program excise taxes.
     (3) The penalty imposed by RCW 82.32.291 may not be assessed on telephone program excise taxes that are due but not paid as a result of the improper use of a resale certificate. This subsection does not prohibit or restrict the application of other penalties authorized by law.

NEW SECTION.  Sec. 10   (1) Upon termination, dissolution, or abandonment of a corporate or limited liability company business, any officer, member, manager, or other person having control or supervision of tax funds collected and held in trust under section 6 of this act, or who is charged with the responsibility for the filing of returns or the payment of tax funds collected and held in trust under section 6 of this act, is personally liable for any unpaid taxes and interest and penalties on those taxes, if the officer or other person willfully fails to pay or to cause to be paid any taxes due from the corporation under this section. For the purposes of this section, any taxes that have been paid, but not collected, are deductible from the taxes collected but not paid. For purposes of this subsection "willfully fails to pay or to cause to be paid" means that the failure was the result of an intentional, conscious, and voluntary course of action.
     (2) The officer, member, manager, or other person is liable only for taxes collected that became due during the period he or she had the control, supervision, responsibility, or duty to act for the corporation described in subsection (1) of this section, plus interest and penalties on those taxes.
     (3) Persons liable under subsection (1) of this section are exempt from liability if nonpayment of the tax funds held in trust is due to reasons beyond their control as determined by the department by rule.
     (4) Any person having been issued a notice of assessment under this section is entitled to the appeal procedures under RCW 82.32.160 through 82.32.200.
     (5) This section applies only if the department has determined that there is no reasonable means of collecting the tax funds held in trust directly from the corporation.
     (6) This section does not relieve the corporation or limited liability company of other tax liabilities or otherwise impair other tax collection remedies afforded by law.

NEW SECTION.  Sec. 11   Unless otherwise stated in this chapter, the collection authority and procedures prescribed in chapter 82.32 RCW apply to collections under this section.

NEW SECTION.  Sec. 12   Sections 3 through 11 of this act constitute a new chapter in Title 82 RCW.

NEW SECTION.  Sec. 13   (1) The department of revenue is responsible for the administration and collection of telephone program excise taxes as provided in this act only with regard to telephone program excise taxes that are imposed on switched access lines for any time period occurring on or after the effective date of this act.
     (2) The department of social and health services is responsible for the administration and collection of telephone program excise taxes as provided in this act only with regard to telephone program excise taxes that are imposed on switched access lines for the current year and the four preceding years which occurred prior to the effective date of this act.

NEW SECTION.  Sec. 14   This act takes effect July 1, 2004.

NEW SECTION.  Sec. 15   The secretary of the department of social and health services and the director of the department of revenue may take the necessary steps to ensure that this act is implemented on its effective date.