BILL REQ. #:  S-0591.1 

Read first time 01/15/2007.   Referred to Committee on Labor, Commerce, Research & Development.

     AN ACT Relating to personal liability for failure to pay unemployment taxes; amending RCW 50.04.080; adding a new section to chapter 50.24 RCW; and creating a new section.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 50.24 RCW to read as follows:
     (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 payment of unemployment tax contributions under RCW 50.24.010 or 50.24.014, or who is responsible for the filing of reports or the payment of contributions or payments in lieu of contributions, is personally liable for any unpaid contributions and interest and penalties on those contributions if such officer or other person willfully fails to pay or to cause to be paid any contributions due to the department from the corporation or limited liability company business under this title. For purposes of this section, "willfully fails to pay or to cause to be paid" means that the failure is the result of an intentional, conscious, and voluntary course of action.
     (2) Persons liable under subsection (1) of this section are liable only for contributions that became due during the period he or she had the control, supervision, responsibility, or duty to act for the corporation or limited liability company, plus interest and penalties on those contributions.
     (3) Persons liable under subsection (1) of this section are exempt from liability if the nonpayment of contributions was beyond their control as determined by the employment security department by rule. In making this determination, the department shall consider, but not be limited to, such factors as the death, illness, or personal financial situation of the person liable under subsection (1) of this section.
     (4) Persons liable under subsection (1) of this section are exempt from liability if all of the assets of the corporation or limited liability company have been applied to its debts through bankruptcy or receivership.
     (5) Any person having been issued a notice of assessment under this section is entitled to the appeal procedures under chapter 50.32 RCW.
     (6) This section applies only when the employment security department determines that there is no reasonable means of collecting the contributions owed directly from the corporation or limited liability company.
     (7) This section does not relieve the corporation or limited liability company of other tax liabilities under this title or impair other tax collection remedies afforded by law.
     (8) Collection authority and procedures described in this chapter apply to collections under this section.

Sec. 2   RCW 50.04.080 and 1985 c 41 s 1 are each amended to read as follows:
     "Employer" means any individual or type of organization, including any partnership, association, trust, estate, joint stock company, insurance company, limited liability company, or corporation, whether domestic or foreign, or the receiver, trustee in bankruptcy, trustee, or the legal representative of a deceased person, having any person in employment or, having become an employer, has not ceased to be an employer as provided in this title.
     For the purposes of collection remedies available under chapter 50.24 RCW, "employer," in the case of a corporation or limited liability company, includes persons found personally liable for any unpaid contributions and interest and penalties on those contributions under section 1 of this act.

NEW SECTION.  Sec. 3   If any part of this act is found to be in conflict with federal requirements that are a prescribed condition to the allocation of federal funds to the state or the eligibility of employers in this state for federal unemployment tax credits, the conflicting part of this act is inoperative solely to the extent of the conflict, and the finding or determination does not affect the operation of the remainder of this act. Rules adopted under this act must meet federal requirements that are a necessary condition to the receipt of federal funds by the state or the granting of federal unemployment tax credits to employers in this state.

NEW SECTION.  Sec. 4   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.