BILL REQ. #:  Z-0827.1 

Read first time 12/08/11.   Referred to Committee on Ways & Means.

     AN ACT Relating to generating revenues without raising taxes to provide funding for critical state services to preserve the health, safety, and welfare of the public; amending RCW 82.32.050, 82.32.060, 82.32.062, 82.45.100, 82.12.045, 83.100.130, 84.56.440, 74.60.050, 18.27.110, 18.27.200, 82.32.780, 82.32.783, 66.24.010, 63.29.220, and 63.29.240; reenacting and amending RCW 82.32.080; adding new sections to chapter 82.32 RCW; creating new sections; providing effective dates; providing an expiration date; and declaring an emergency.

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

Sec. 101   RCW 82.32.050 and 2008 c 181 s 501 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)) must assess against the taxpayer such additional amount found to be due and ((shall)) must add thereto interest on the tax only. The department ((shall)) must notify the taxpayer by mail, or electronically as provided in RCW 82.32.135, of the additional amount and the additional amount ((shall)) becomes due and ((shall)) must 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)) is 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. After December 31, 1998, the rate of interest ((shall be)) is variable and computed as provided in subsection (2) of this section. The rate so computed ((shall)) must 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, the rate of interest ((shall be)) is 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)) must be adjusted on the first day of January of each year for use in computing interest for that calendar year.
     (c) Interest imposed after December 31, 1998, ((shall be)) is 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)) is computed until the date of payment. The rate of interest ((shall be)) is variable and computed as provided in subsection (2) of this section. The rate so computed ((shall)) must be adjusted on the first day of January of each year for use in computing interest for that calendar year.
     (2)(a) For the purposes of this section, the rate of interest to be charged to the taxpayer ((shall be)):
     (i) For tax liabilities arising before January 1, 2013, is an average of the federal short-term rate as defined in 26 U.S.C. Sec. 1274(d) plus two percentage points; and
     (ii) For tax liabilities arising after December 31, 2012, is an average of the federal short-term rate as defined in 26 U.S.C. Sec. 1274(d) plus four percentage points. This subsection (2)(a)(ii) also applies to interest imposed beginning January 1, 2013, for tax liabilities arising before that date and included in any notice that is not paid in full by the due date of the notice.
     (b) The rate set for each new year ((shall be)) is computed by taking an arithmetical average to the nearest percentage point of the federal short-term rate, compounded annually. ((That)) The average ((shall be)) is calculated using the rates from four months: January, April, and July of the calendar year immediately preceding the new year, and October of the previous preceding year.
     (3) During a state of emergency declared under RCW 43.06.010(12), the department, on its own motion or at the request of any taxpayer affected by the emergency, may extend the due date of any assessment or correction of an assessment for additional taxes, penalties, or interest as the department deems proper.
     (4) 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).))
     (5) 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. 102   RCW 82.32.060 and 2009 c 176 s 4 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)) in subsection (2) of this section 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 must be credited to the taxpayer's account or must be refunded to the taxpayer, at the taxpayer's option.
     (2)(a) Except as otherwise provided in this subsection (2) ((of this section)), no refund or credit may be made for taxes, penalties, or interest paid more than ((four)) three years prior to the beginning of the calendar year in which the refund application is made or examination of records is completed.
     (((2)(a) The execution of a written waiver under RCW 82.32.050 or 82.32.100 will 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.))
     (b) A refund or credit must be allowed for an excess payment resulting from the failure to claim a bad debt deduction, credit, or refund under RCW 82.04.4284, 82.08.037, 82.12.037, 82.14B.150, or 82.16.050(5) for debts that became bad debts under 26 U.S.C. Sec. 166, as amended or renumbered as of January 1, 2003, less than ((four)) three years prior to the beginning of the calendar year in which the refund application is made or examination of records is completed.
     (c) Notwithstanding the limitation on the time for making a refund or credit provided in this subsection, when the department conducts an audit or examination of the taxpayer's records or returns and identifies an overpayment of tax, penalty, or interest for a particular tax year within the scope of the audit or examination and for which a refund or credit may not be made because of the lapse of the three-year period in this subsection, the amount of any deficiency determined by the department for that same tax year must be reduced by the amount of the overpayment. However, if the overpayment exceeds the amount of the deficiency, the amount of the overpayment that exceeds the deficiency may not be refunded or credited against any deficiency for any other tax year.
     (3) Any such refunds must 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 must have any refunds paid by electronic funds transfer if the department has the necessary account information to facilitate a refund by electronic funds transfer.
     (4) 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 must be paid in the same manner, as provided in subsection (3) of this section, upon the filing with the department of a certified copy of the order or judgment of the court.
     (5)(a) Interest at the rate of three percent per annum must 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 applies for all interest allowed through December 31, 1998. Interest allowed after December 31, 1998, must be computed at the rate as computed under RCW 82.32.050(2)(a)(i), disregarding for this purpose the language in RCW 82.32.050(2)(a)(i) limiting its applicability to periods before January 1, 2013. The rate so computed must 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 must be the rate as computed for assessments under RCW 82.32.050(2)(a)(i) less one percent. This rate of interest applies for all interest allowed through December 31, 1998. Interest allowed after December 31, 1998, must be computed at the rate as computed under RCW 82.32.050(2)(a)(i), disregarding for this purpose the language in RCW 82.32.050(2)(a)(i) limiting its applicability to periods before January 1, 2013. The rate so computed must be adjusted on the first day of January of each year for use in computing interest for that calendar year.
     (((5))) (6) Interest allowed on a credit notice or refund issued after December 31, 2003, must be computed as follows:
     (a) If all overpayments for each calendar year and all reporting periods ending with the final month included in a notice or refund were made on or before the due date of the final return for each calendar year or the final reporting period included in the notice or refund:
     (i) Interest must be computed from January 31st following each calendar year included in a notice or refund; or
     (ii) Interest must be computed from the last day of the month following the final month included in a notice or refund.
     (b) If the taxpayer has not made all overpayments for each calendar year and all reporting periods ending with the final month included in a notice or refund on or before the dates specified by RCW 82.32.045 for the final return for each calendar year or the final month included in the notice or refund, interest must be computed from the last day of the month following the date on which payment in full of the liabilities was made for each calendar year included in a notice or refund, and the last day of the month following the date on which payment in full of the liabilities was made if the final month included in a notice or refund is not the end of a calendar year.
     (c) Interest included in a credit notice must accrue up to the date the taxpayer could reasonably be expected to use the credit notice, as defined by the department's rules. If a credit notice is converted to a refund, interest must be recomputed to the date the refund is issued, but not to exceed the amount of interest that would have been allowed with the credit notice.
     (7) This section does not limit the time in which a credit notice issued by the department to a taxpayer may be used or converted into a refund.

Sec. 103   RCW 82.32.062 and 2002 c 57 s 1 are each amended to read as follows:
     In addition to the procedure set forth in RCW 82.32.060 and as an exception to the ((four-year)) three-year period explicitly set forth in RCW 82.32.060, an offset for a tax that has been paid in excess of that properly due may be taken under the following conditions: (1) The tax paid in excess of that properly due was sales tax paid on the purchase of property acquired for leasing; (2) the taxpayer was at the time of purchase entitled to purchase the property at wholesale under RCW 82.04.060; and (3) the taxpayer substantiates that sales tax was paid at the time of purchase and that there was no intervening use of the equipment by the taxpayer. The offset is applied to and reduced by the amount of retail sales tax otherwise due from the beginning of lease of the property until the offset is extinguished.

Sec. 104   RCW 82.45.100 and 2010 1st sp.s. c 23 s 211 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 will bear interest from the time of sale until the date of payment.
     (a) Interest imposed before January 1, 1999, is computed at the rate of one percent per month.
     (b) Interest imposed after December 31, 1998, is computed on a monthly basis at the rate as computed under RCW 82.32.050(2). The rate so computed must be adjusted on the first day of January of each year for use in computing interest for that calendar year. The department must provide written notification to the county treasurers of the variable rate on or before December 1st 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 is 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 will 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 will be assessed a total penalty of twenty percent of the amount of the tax. The payment of the penalty described in this subsection is 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 is personally liable for the tax, along with any interest as provided in subsection (1) of this section, unless an instrument evidencing the sale is recorded in the official real property records of the county in which the property conveyed is located.
     (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 must 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 must notify the taxpayer by mail, or electronically as provided in RCW 82.32.135, of the additional amount and the same becomes due and must be paid within thirty days from the date of the notice, or within such further time as the department may provide.
     (5)(a) If, upon receipt of an application by a taxpayer for a refund, or upon examination of any affidavits or from other information obtained by the department or its agents, the department determines that the taxpayer has overpaid the tax due under this chapter, the department must refund the amount of the overpayment, together with interest as provided in (b) of this subsection (5).
     (b) Interest on refunds must be allowed as provided in RCW 82.32.060. The rate so computed must be adjusted on the first day of January of each year for use in computing interest for that calendar year. Interest must be refunded from the date of overpayment until the date the refund is mailed. No refund may be made by the department more than three years after the date of sale.
     (6) 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))) (7) Penalties collected on taxes due under this chapter under subsection (2) of this section and RCW 82.32.090 (2) through (8) must be deposited in the housing trust fund as described in chapter 43.185 RCW.

Sec. 105   RCW 82.12.045 and 2010 c 161 s 904 are each amended to read as follows:
     (1) In the collection of the use tax on vehicles, the department of revenue may designate the county auditors of the several counties of the state as its collecting agents. Upon such designation, it ((shall be)) is the duty of each county auditor to collect the tax at the time an applicant applies for transfer of certificate of title to the vehicle, except when the applicant:
     (a) Exhibits a dealer's report of sale showing that the retail sales tax has been collected by the dealer;
     (b) Presents a written statement signed by the department of revenue, or its duly authorized agent showing that no use tax is legally due; or
     (c) Presents satisfactory evidence showing that the retail sales tax or the use tax has been paid by the applicant on the vehicle in question.
     (2) As used in this section, "vehicle" has the same meaning as in RCW 46.04.670.
     (3) It ((shall be)) is the duty of every applicant for registration and transfer of certificate of title who is subject to payment of tax under this section to declare upon the application the value of the vehicle for which application is made, which ((shall)) must consist of the consideration paid or contracted to be paid therefor.
     (4) Each county auditor who acts as agent of the department of revenue ((shall)) must at the time of remitting vehicle license fee receipts on vehicles subject to the provisions of this section pay over and account to the state treasurer for all use tax revenue collected under this section, after first deducting as a collection fee the sum of two dollars for each motor vehicle upon which the tax has been collected. All revenue received by the state treasurer under this section ((shall)) must be credited to the general fund. The auditor's collection fee ((shall)) must be deposited in the county current expense fund. A duplicate of the county auditor's transmittal report to the state treasurer ((shall)) must be forwarded ((forthwith)) immediately to the department of revenue.
     (5) Any applicant who has paid use tax to a county auditor under this section may apply to the department of revenue for refund thereof if he or she has reason to believe that such tax was not legally due and owing. No refund ((shall be)) is allowed unless application therefor is received by the department of revenue within the statutory period ((for assessment of taxes, penalties, or interest prescribed by RCW 82.32.050(4))) for refunds provided in RCW 82.32.060. Upon receipt of an application for refund the department of revenue ((shall)) must consider the same and issue its order either granting or denying it and if refund is denied the taxpayer ((shall have)) has the right of appeal as provided in RCW 82.32.170, 82.32.180, and 82.32.190.
     (6) The provisions of this section ((shall)) must be construed as cumulative of other methods prescribed in chapters 82.04 through 82.32 RCW, inclusive, for the collection of the tax imposed by this chapter. The department of revenue ((shall have)) has power to promulgate such rules as may be necessary to administer the provisions of this section. Any duties required by this section to be performed by the county auditor may be performed by the director of licensing but no collection fee ((shall)) may be deductible by said director in remitting use tax revenue to the state treasurer.
     (7) The use tax revenue collected on the rate provided in RCW 82.08.020(3) ((shall)) must be deposited in the multimodal transportation account under RCW 47.66.070.

Sec. 106   RCW 83.100.130 and 2005 c 516 s 10 are each amended to read as follows:
     (1) If, upon receipt of an application by a taxpayer for a refund, or upon examination of the returns or records of any taxpayer, the department determines that ((within the statutory period for assessment of taxes, penalties, or interest prescribed by RCW 83.100.095)) a person required to file the Washington return under RCW 83.100.050 has overpaid the tax due under this chapter, the department ((shall)) must refund the amount of the overpayment, together with interest as provided in subsection (2) of this section. If the application for refund, with supporting documents, is filed within one hundred twenty days after an adjustment or final determination of federal tax liability, the department ((shall)) must pay interest until the date the refund is mailed. If the application for refund, with supporting documents, is filed after one hundred twenty days after the adjustment or final determination, the department ((shall)) must pay interest only until the end of the one hundred twenty-day period.
     (2) Interest refunded under this section for periods before January 2, 1997, shall be computed at the rate provided in RCW 83.100.070(1). Interest refunded under this section for periods after January 1, 1997, through December 31, 1998, ((shall be)) is computed on a daily basis at the rate as computed under RCW 82.32.050(2) less one percentage point. Interest allowed for periods after December 31, 1998, ((shall be)) is computed at the rate as computed under RCW 82.32.050(2)(a)(i), disregarding for this purpose the language in RCW 82.32.050(2)(a)(i) limiting its applicability to periods before January 1, 2013. Except as provided in subsection (1) of this section, interest ((shall)) must be refunded from the date of overpayment until the date the refund is mailed. The rate so computed ((shall)) must be adjusted on the first day of January of each year.
     (3) Except as otherwise provided in subsection (4) of this section and RCW 83.100.090, no refund ((shall)) may be made for taxes, penalties, or interest paid more than ((four)) three years prior to the beginning of the calendar year in which the refund application is made or an examination of records is complete.
     (4) The execution of a written waiver under RCW 83.100.095 ((shall)) at the request of the department extends the time for making a refund if, prior to the expiration of the waiver period, an application for refund is made by the taxpayer or the department discovers a refund is due.
     (5) An application for refund ((shall)) must be on a form prescribed by the department and ((shall)) must contain any information and supporting documents the department requires.

Sec. 107   RCW 84.56.440 and 2008 c 181 s 511 are each amended to read as follows:
     (1)(a) The department of revenue ((shall)) must collect all ad valorem taxes upon ships and vessels listed with the department in accordance with RCW 84.40.065 and all applicable interest and penalties.
     (b) The taxes ((shall be)) are due and payable to the department on or before the thirtieth day of April and ((shall be)) are delinquent after that date.
     (2) If payment of the tax is not received by the department by the due date, there ((shall be)) is imposed a penalty of five percent of the amount of the tax; and if the tax is not received within thirty days after the due date, there ((shall be)) is imposed a total penalty of ten percent of the amount of the tax; and if the tax is not received within sixty days after the due date, there ((shall be)) is imposed a total penalty of twenty percent of the amount of the tax. No penalty so added ((shall)) may be less than five dollars.
     (3) Delinquent taxes under this section are subject to interest at the rate set forth in RCW 82.32.050 from the date of delinquency until paid. Interest or penalties collected on delinquent taxes under this section ((shall)) must be paid by the department into the general fund of the state treasury.
     (4) If upon information obtained by the department it appears that any ship or vessel required to be listed according to the provisions of RCW 84.40.065 is not so listed, the department ((shall)) must value the ship or vessel and assess against the owner of the vessel the taxes found to be due and ((shall)) must add thereto interest at the rate set forth in RCW 82.32.050 from the original due date of the tax until the date of payment. The department ((shall)) must notify the vessel owner by mail of the amount and the same ((shall)) becomes due and ((shall)) must be paid by the vessel owner within thirty days of the date of the notice. If payment is not received by the department by the due date specified in the notice, the department ((shall)) must add a penalty of ten percent of the tax found due. A person who willfully gives a false listing or willfully fails to list a ship or vessel as required by RCW 84.40.065 ((shall be)) is subject to the penalty imposed by RCW 84.40.130(2), which ((shall)) must be assessed and collected by the department.
     (5) Delinquent taxes under this section, along with all penalties and interest thereon, ((shall)) must be collected by the department according to the procedures set forth in chapter 82.32 RCW for the filing and execution of tax warrants, including the imposition of warrant interest. In the event a warrant is issued by the department for the collection of taxes under this section, the department ((shall)) must add a penalty of five percent of the amount of the delinquent tax, but not less than ten dollars.
     (6) The department ((shall)) must also collect all delinquent taxes pertaining to ships and vessels appearing on the records of the county treasurers for each of the counties of this state as of December 31, 1993, including any applicable interest or penalties. The provisions of subsection (5) of this section ((shall)) apply to the collection of such delinquent taxes.
     (7) During a state of emergency declared under RCW 43.06.010(12), the department, on its own motion or at the request of any taxpayer affected by the emergency, may grant extensions of the due date of any taxes payable under this section as the department deems proper.
     (8)(a) If, upon receipt of an application by a vessel owner for a refund, or upon examination of any information obtained by the department, the department determines that the vessel owner has overpaid the tax due under this section, the department must refund the amount of the overpayment, together with interest as provided in (b) of this subsection (8).
     (b) Interest on refunds must be allowed as provided in RCW 82.32.060. The rate so computed must be adjusted on the first day of January of each year for use in computing interest for that calendar year. Interest must be refunded from the date of overpayment until the date the refund is mailed. No refund may be made by the department more than three years prior to the beginning of the calendar year in which the refund application is made or the department's examination of information is complete.

Sec. 108   RCW 74.60.050 and 2010 1st sp.s. c 30 s 6 are each amended to read as follows:
     (1) The department, in cooperation with the office of financial management, ((shall)) must develop rules for determining the amount to be assessed to individual hospitals, notifying individual hospitals of the assessed amount, and collecting the amounts due. Such rule making ((shall)) must specifically include provision for:
     (a) Transmittal of quarterly notices of assessment by the department to each hospital informing the hospital of its nonmedicare hospital inpatient days and the assessment amount due and payable. Such quarterly notices ((shall)) must be sent to each hospital at least thirty calendar days prior to the due date for the quarterly assessment payment.
     (b) Interest on delinquent assessments at the rate specified in RCW 82.32.050, as that statute existed on January 1, 2011.
     (c) Adjustment of the assessment amounts as follows:
     (i) For each fiscal year beginning July 1, 2010, the assessment amounts under RCW 74.60.030 (1) and (3) may be adjusted as follows:
     (A) If sufficient other funds for hospitals, excluding any extension of section 5001 of P.L. No. 111-5, are available to support the reimbursement rates and other payments under RCW 74.60.080, 74.60.090, 74.60.100, 74.60.110, or 74.60.120 without utilizing the full assessment authorized under RCW 74.60.030 (1) or (3), the department ((shall)) must reduce the amount of the assessment for prospective payment system, psychiatric, and rehabilitation hospitals proportionately to the minimum level necessary to support those reimbursement rates and other payments.
     (B) Provided that none of the conditions set forth in RCW 74.60.150(2) have occurred, if the department's forecasts indicate that the assessment amounts under RCW 74.60.030 (1) and (3), together with all other available funds, are not sufficient to support the reimbursement rates and other payments under RCW 74.60.080, 74.60.090, 74.60.100, 74.60.110, or 74.60.120, the department ((shall)) must increase the assessment rates for prospective payment system, psychiatric, and rehabilitation hospitals proportionately to the amount necessary to support those reimbursement rates and other payments, plus a contingency factor up to ten percent of the total assessment amount.
     (C) Any positive balance remaining in the fund at the end of the fiscal year ((shall)) must be applied to reduce the assessment amount for the subsequent fiscal year.
     (ii) Any adjustment to the assessment amounts pursuant to this subsection, and the data supporting such adjustment, including but not limited to relevant data listed in subsection (2) of this section, must be submitted to the Washington state hospital association for review and comment at least sixty calendar days prior to implementation of such adjusted assessment amounts. Any review and comment provided by the Washington state hospital association ((shall)) may not limit the ability of the Washington state hospital association or its members to challenge an adjustment or other action by the department that is not made in accordance with this chapter.
     (2) By November 30th of each year, the department ((shall)) must provide the following data to the Washington state hospital association:
     (a) The fund balance;
     (b) The amount of assessment paid by each hospital;
     (c) The annual medicaid fee-for-service payments for inpatient hospital services and outpatient hospital services; and
     (d) The medicaid healthy options inpatient and outpatient payments as reported by all hospitals to the department on disproportionate share hospital applications. The department ((shall)) must amend the disproportionate share hospital application and reporting instructions as needed to ensure that the foregoing data is reported by all hospitals as needed in order to comply with this subsection (2)(d).
     (3) The department ((shall)) must determine the number of nonmedicare hospital inpatient days for each hospital for each assessment period.
     (4) To the extent necessary, the department ((shall)) must amend the contracts between the managed care organizations and the department and between regional support networks and the department to incorporate the provisions of RCW 74.60.120. The department ((shall)) must pursue amendments to the contracts as soon as possible after April 27, 2010. The amendments to the contracts ((shall)) must, among other provisions, provide for increased payment rates to managed care organizations in accordance with RCW 74.60.120.

Sec. 201   RCW 18.27.110 and 1997 c 314 s 11 are each amended to read as follows:
     (1)(a) No city, town, or county ((shall)) may issue a construction building permit for work which is to be done by any contractor required to be registered under this chapter without verification of the contractor's unified business identifier number and that such contractor is currently registered as required by law. Information regarding the contractor must be obtained at the time the building permit is applied for. The requirement in this subsection (1)(a) to verify a contractor's registration and unified business identifier number does not apply with respect to subcontractors.
     (b)(i) When a general contractor, including a property owner acting as a general contractor, requests a final inspection, the city, town, or county that issued the building permit must request from the general contractor the name, unified business identifier number, and contractor registration number of any subcontractors that performed any portion of the work under the building permit. The department of revenue must develop a form for this purpose and make it available, at no cost, to the cities, towns, and counties.
     (ii) Cities, towns, and counties may charge a fee of five dollars to defray the cost of collecting the information required in this subsection (1)(b) and providing the information to the department of revenue as required in (f) of this subsection (1).
     (iii) This subsection (1)(b) only applies with respect to construction on single-family dwellings and multifamily residential buildings as defined in RCW 19.27.015.
     (c) A general contractor or building permit applicant must provide a city, town, or county with complete and accurate information about the contractor and any subcontractors as requested by the city, town, or county pursuant to (a) and (b) of this subsection (1).
     (d) When ((such)) the verification is made and the information requested, as required in (a) and (b) of this subsection (1), nothing contained in this section is intended to be, nor ((shall)) may be construed to create, or form the basis for any liability under this chapter on the part of any city, town, or county, or its officers, employees, or agents.
     (e) However, failure to ((verify the contractor registration number)) comply with the provisions of (a) and (b) of this subsection (1) results in liability to the city, town, or county to a penalty to be imposed according to RCW 18.27.100(((7))) (8)(a).
     (f) Cities, towns, and counties must furnish the information collected pursuant to (a) and (b) of this subsection (1) to the department of revenue monthly at no charge to the department. The information must be provided in a format requested by the department. The department of revenue must, upon request, share such information with the department of labor and industries and the employment security department.
     (2) At the time of issuing the building permit, all cities, towns, or counties are responsible for:
     (a) Printing the contractor registration number on the building permit; and
     (b) Providing a written notice to the building permit applicant informing them of contractor registration laws and the potential risk and monetary liability to the homeowner for using an unregistered contractor.
     (3) If a building permit is obtained by an applicant or contractor who falsifies information to obtain an exemption provided under RCW 18.27.090 or who violates subsection (1)(c) of this section by providing materially incomplete or inaccurate information to a city, town, or county, the building permit ((shall)) must be forfeited.

Sec. 202   RCW 18.27.200 and 2007 c 436 s 9 are each amended to read as follows:
     (1) It is a violation of this chapter and an infraction for any contractor to:
     (a) Advertise, offer to do work, submit a bid, or perform any work as a contractor without being registered as required by this chapter;
     (b) Advertise, offer to do work, submit a bid, or perform any work as a contractor when the contractor's registration is suspended or revoked;
     (c) Transfer a valid registration to an unregistered contractor or allow an unregistered contractor to work under a registration issued to another contractor;
     (d) If the contractor is a contractor as defined in RCW 18.106.010, violate RCW 18.106.320; ((or))
     (e) Subcontract to, or use, an unregistered contractor; or
     (f) Provide materially incomplete or inaccurate information to a city, town, or county pursuant to a request for information as required by RCW 18.27.110.
     (2) Each day that a contractor works without being registered as required by this chapter, works while the contractor's registration is suspended or revoked, or works under a registration issued to another contractor is a separate infraction. Each worksite at which a contractor works without being registered as required by this chapter, works while the contractor's registration is suspended or revoked, or works under a registration issued to another contractor is a separate infraction.

Sec. 301   RCW 82.32.780 and 2010 c 112 s 2 are each amended to read as follows:
     (1)(a) Taxpayers seeking to obtain a new reseller permit or to renew or reinstate a reseller permit, other than taxpayers subject to the provisions of RCW 82.32.783, must apply to the department in a form and manner prescribed by the department and pay to the department a fee in the amount of twenty-five dollars. The department must use its best efforts to rule on applications within sixty days of receiving a complete application. If the department fails to rule on an application within sixty days of receiving a complete application, the taxpayer may either request a review as provided in subsection (6) of this section or resubmit the application. Nothing in this subsection may be construed as preventing the department from ruling on an application more than sixty days after the department received the application.
     (b) An application must be denied if:
     (i) The department determines that, based on the nature of the applicant's business, the applicant is not entitled to make purchases at wholesale or is otherwise prohibited from using a reseller permit;
     (ii) The application contains any material misstatement; ((or))
     (iii) The application is incomplete; or
     (iv) The application is not accompanied by the twenty-five dollar fee required by this subsection.
     (c) The department may also deny an application if it determines that denial would be in the best interest of collecting taxes due under this title.
     (d) The department's decision to approve or deny an application may be based on tax returns previously filed with the department by the applicant, a current or previous examination of the applicant's books and records by the department, information provided by the applicant in the master application and the reseller permit application, and other information available to the department.
     (e) The department must refuse to accept an application to renew a reseller permit that is received more than ninety days before the expiration of the reseller permit.
     (f) The fee required by this subsection is nonrefundable and applies regardless of whether an application is approved or denied.
     (2) Notwithstanding subsection (1) of this section, the department may issue or renew a reseller permit for a taxpayer that has not applied for the permit or renewal of the permit if:
     (a) It appears to the department's satisfaction, based on the nature of the taxpayer's business activities and any other information available to the department, that the taxpayer is entitled to make purchases at wholesale; and
     (b) The taxpayer has remitted the twenty-five dollar fee required by subsection (1) of this section. However, the department, in its sole discretion, may issue or renew reseller permits under this subsection and bill the taxpayer for the twenty-five dollar fee required by subsection (1) of this section. In such cases, if the department does not receive payment of the twenty-five dollar fee within thirty days of the date the department issued or renewed the reseller permit, the department may revoke the reseller permit as provided by rule of the department. The department may provide by rule for an alternative process for administering the twenty-five dollar fee for reseller permits issued or renewed under this subsection (2).
     (3)(a) Except as otherwise provided in this section, reseller permits issued, renewed, or reinstated under this section will be valid for a period of forty-eight months from the date of issuance, renewal, or reinstatement.
     (b)(i) A reseller permit is valid for a period of twenty-four months and may be renewed for the period prescribed in (a) of this subsection (3) if the permit is issued to a taxpayer who:
     (A) Is not registered with the department under RCW 82.32.030;
     (B) Has been registered with the department under RCW 82.32.030 for a continuous period of less than one year as of the date that the department received the taxpayer's application for a reseller permit;
     (C) Was on nonreporting status as authorized under RCW 82.32.045(4) at the time that the department received the taxpayer's application for a reseller permit or to renew or reinstate a reseller permit;
     (D) Has filed tax returns reporting no business activity for purposes of sales and business and occupation taxes for the twelve-month period immediately preceding the date that the department received the taxpayer's application for a reseller permit or to renew or reinstate a reseller permit; or
     (E) Has failed to file tax returns covering any part of the twelve-month period immediately preceding the department's receipt of the taxpayer's application for a reseller permit or to renew or reinstate a reseller permit.
     (ii) The provisions of this subsection (3)(b) do not apply to reseller permits issued to any business owned by a federally recognized Indian tribe or by an enrolled member of a federally recognized Indian tribe, if the business does not engage in any business activity that subjects the business to any tax imposed by the state under chapter 82.04 RCW. Permits issued to such businesses are valid for the period provided in (a) of this subsection (3).
     (iii) Nothing in this subsection (3)(b) may be construed as affecting the department's right to deny a taxpayer's application for a reseller permit or to renew or reinstate a reseller permit as provided in subsection (1)(b) and (c) of this section.
     (c) A reseller permit is no longer valid if the permit holder's certificate of registration is revoked, the permit holder's tax reporting account is closed by the department, or the permit holder otherwise ceases to engage in business.
     (d) The department may provide by rule for a uniform expiration date for reseller permits issued, renewed, or reinstated under this section, if the department determines that a uniform expiration date for reseller permits will improve administrative efficiency for the department. If the department adopts a uniform expiration date by rule, the department may extend or shorten the twenty-four or forty-eight month period provided in (a) and (b) of this subsection for a period not to exceed six months as necessary to conform the reseller permit to the uniform expiration date.
     (4)(a) The department may revoke a taxpayer's reseller permit for any of the following reasons:
     (i) The taxpayer used or allowed or caused its reseller permit to be used to purchase any item or service without payment of sales tax, but the taxpayer or other purchaser was not entitled to use the reseller permit for the purchase;
     (ii) The department issued the reseller permit to the taxpayer in error;
     (iii) The department determines that the taxpayer is no longer entitled to make purchases at wholesale; or
     (iv) The department determines that revocation of the reseller permit would be in the best interest of collecting taxes due under this title.
     (b) The notice of revocation must be in writing and is effective on the date specified in the revocation notice. The notice must also advise the taxpayer of its right to a review by the department.
     (c) The department may refuse to reinstate a reseller permit revoked under (a)(i) of this subsection until all taxes, penalties, and interest due on any improperly purchased item or service have been paid in full. In the event a taxpayer whose reseller permit has been revoked under this subsection reorganizes, the new business resulting from the reorganization is not entitled to a reseller permit until all taxes, penalties, and interest due on any improperly purchased item or service have been paid in full.
     (d) For purposes of this subsection, "reorganize" or "reorganization" means: (i) The transfer, however effected, of a majority of the assets of one business to another business where any of the persons having an interest in the ownership or management in the former business maintain an ownership or management interest in the new business, either directly or indirectly; (ii) a mere change in identity or form of ownership, however effected; or (iii) the new business is a mere continuation of the former business based on significant shared features such as owners, personnel, assets, or general business activity.
     (5) The department may provide the public with access to reseller permit numbers on its web site, including the name of the permit holder, the status of the reseller permit, the expiration date of the permit, and any other information that is disclosable under RCW 82.32.330(3)(((l))) (k).
     (6) The department must provide by rule for the review of the department's decision to deny, revoke, or refuse to reinstate a reseller permit or the department's failure to rule on an application within the time prescribed in subsection (1)(a) of this section. Such review must be consistent with the requirements of chapter 34.05 RCW.
     (7) As part of its continuing efforts to educate taxpayers on their sales and use tax responsibilities, the department will educate taxpayers on the appropriate use of a reseller permit or other documentation authorized under RCW 82.04.470 and the consequences of misusing such permits or other documentation.

Sec. 302   RCW 82.32.783 and 2010 c 112 s 3 are each amended to read as follows:
     (1)(a) Contractors seeking a new reseller permit or to renew or reinstate a reseller permit must apply to the department in a form and manner prescribed by the department and pay to the department a fee in the amount of twenty-five dollars.
     (b) As part of the application, the contractor must report the total combined dollar amount of all purchases of materials and labor during the preceding twenty-four months for retail construction activity, wholesale construction activity, speculative building, public road construction, and government contracting. If the contractor was not engaged in business as a contractor during the preceding twenty-four months, the contractor may provide an estimate of the dollar amount of purchases of materials and labor for retail construction activity, wholesale construction activity, speculative building, public road construction, and government contracting during the twelve-month or twenty-four month period for which the reseller permit will be valid. The contractor must also report the percentage of its total dollar amount of actual or, if applicable, estimated material and labor purchases that was for retail and wholesale construction activity performed by the applicant.
     (c) The department must use its best efforts to rule on applications within sixty days of receiving a complete application. If the department fails to rule on an application within sixty days of receiving a complete application, the taxpayer may either request a review as provided in subsection (6) of this section or resubmit the application. Nothing in this subsection may be construed as preventing the department from ruling on an application more than sixty days after the department received the application.
     (d)(i) An application must be denied if:
     (A) The department determines that the applicant is not entitled to make purchases at wholesale or is otherwise prohibited from using a reseller permit;
     (B) The application contains any material misstatement;
     (C) The application is incomplete; ((or))
     (D) The application is not accompanied by the twenty-five dollar fee required by this subsection; or
     (E) Less than twenty-five percent of the taxpayer's total dollar amount of actual or, if applicable, estimated material and labor purchases as reported on the application is for retail and wholesale construction activity performed by the applicant. However, the department may approve an application not meeting the criteria in this subsection (1)(d)(i)(((D))) (E) if the department is satisfied that approval is unlikely to jeopardize collection of the taxes due under this title.
     (ii) The department may also deny an application if the department determines that denial would be in the best interest of collecting taxes due under this title.
     (iii) The department's decision to approve or deny an application may be based on tax returns previously filed with the department by the applicant, a current or previous examination of the applicant's books and records by the department, information provided by the applicant in the master application and the reseller permit application, and other information available to the department.
     (e) The department must refuse to accept an application to renew a reseller permit that is received more than ninety days before the expiration of the reseller permit.
     (f) The fee required by this subsection is nonrefundable and applies regardless of whether an application is approved or denied.
     (2) Notwithstanding subsection (1) of this section, the department may issue or renew a reseller permit for a contractor that has not applied for the permit or renewal of the permit if:
     (a) The department is satisfied that the contractor is entitled to make purchases at wholesale and that issuing or renewing the reseller permit is unlikely to jeopardize collection of sales taxes due under this title based on criteria established by the department by rule. Such criteria may include but is not limited to whether the taxpayer has a previous history of misusing resale certificates or reseller permits or there is any other indication that issuing or renewing the reseller permit would jeopardize collection of sales taxes due from the contractor; and
     (b) The taxpayer has remitted the twenty-five dollar fee required by subsection (1) of this section. However, the department, in its sole discretion, may issue or renew reseller permits under this subsection and bill the taxpayer for the twenty-five dollar fee required by subsection (1) of this section. In such cases, if the department does not receive payment of the twenty-five dollar fee within thirty days of the date the department issued or renewed the reseller permit, the department may revoke the reseller permit as provided by rule of the department. The department may provide by rule for an alternative process for administering the twenty-five dollar fee for reseller permits issued or renewed under this subsection (2).
     (3)(a) Except as otherwise provided in (b) of this subsection:
     (i) Except as provided in (a)(ii) of this subsection, until June 30, 2013, reseller permits issued, renewed, or reinstated under this section will be valid for a period of twelve months from the date of issuance, renewal, or reinstatement; and
     (ii) Beginning July 1, 2013, reseller permits issued, renewed, or reinstated under this section will be valid for a period of twenty-four months from the date of issuance, renewal, or reinstatement. However, the department may issue, renew, or reinstate permits for a period of twenty-four months beginning July 1, 2011, if the department is satisfied in the same manner as set forth in subsection (2) of this section.
     (b)(i) A reseller permit is no longer valid if the permit holder's certificate of registration is revoked, the permit holder's tax reporting account is closed by the department, or the permit holder otherwise ceases to engage in business.
     (ii) The department may provide by rule for a uniform expiration date for reseller permits issued, renewed, or reinstated under this section, if the department determines that a uniform expiration date for reseller permits will improve administrative efficiency for the department. If the department adopts a uniform expiration date by rule, the department may extend or shorten the twelve or twenty-four month period provided in (a)(i) and (ii) of this subsection for a period not to exceed six months as necessary to conform the reseller permit to the uniform expiration date.
     (4)(a) The department may revoke a contractor's reseller permit for any of the following reasons:
     (i) The contractor used or allowed or caused its reseller permit to be used to purchase any item or service without payment of sales tax, but the contractor or other purchaser was not entitled to use the reseller permit for the purchase;
     (ii) The department issued the reseller permit to the contractor in error;
     (iii) The department determines that the contractor is no longer entitled to make purchases at wholesale; or
     (iv) The department determines that revocation of the reseller permit would be in the best interest of collecting taxes due under this title.
     (b) The notice of revocation must be in writing and is effective on the date specified in the revocation notice. The notice must also advise the contractor of its right to a review by the department.
     (c) The department may refuse to reinstate a reseller permit revoked under (a)(i) of this subsection until all taxes, penalties, and interest due on any improperly purchased item or service have been paid in full. In the event a contractor whose reseller permit has been revoked under this subsection reorganizes, the new business resulting from the reorganization is not entitled to a reseller permit until all taxes, penalties, and interest due on any improperly purchased item or service have been paid in full.
     (d) For purposes of this subsection, "reorganize" or "reorganization" means: (i) The transfer, however effected, of a majority of the assets of one business to another business where any of the persons having an interest in the ownership or management in the former business maintain an ownership or management interest in the new business, either directly or indirectly; (ii) a mere change in identity or form of ownership, however effected; or (iii) the new business is a mere continuation of the former business based on significant shared features such as owners, personnel, assets, or general business activity.
     (5) The department may provide the public with access to reseller permit numbers on its web site, including the name of the permit holder, the status of the reseller permit, the expiration date of the permit, and any other information that is disclosable under RCW 82.32.330(3)(((l))) (k).
     (6) The department must provide by rule for the review of the department's decision to deny, revoke, or refuse to reinstate a reseller permit or the department's failure to rule on an application within the time prescribed in subsection (1)(a) of this section. Such review must be consistent with the requirements of chapter 34.05 RCW.
     (7) As part of its continuing efforts to educate taxpayers on their sales and use tax responsibilities, the department will educate taxpayers on the appropriate use of a reseller permit or other documentation authorized under RCW 82.04.470 and the consequences of misusing such permits or other documentation.
     (8) As used in this section, the following definitions apply:
     (a) "Contractor" means a person whose primary business activity is as a contractor as defined in RCW 18.27.010 or an electrical contractor as defined in RCW 19.28.006.
     (b) "Government contracting" means the activity described in RCW 82.04.190(6).
     (c) "Public road construction" means the activity described in RCW 82.04.190(3).
     (d) "Retail construction activity" means any activity defined as a retail sale in RCW 82.04.050(2) (b) or (c).
     (e) "Speculative building" means the activities of a speculative builder as the term "speculative builder" is defined by rule of the department.
     (f) "Wholesale construction activity" means labor and services rendered for persons who are not consumers in respect to real property, if such labor and services are expressly defined as a retail sale by RCW 82.04.050 when rendered to or for consumers. For purposes of this subsection (8)(f), "consumer" has the same meaning as in RCW 82.04.190.

NEW SECTION.  Sec. 401   A new section is added to chapter 82.32 RCW to read as follows:
     (1) Whenever the department sends any assessment, invoice, warrant, or other notice of tax, interest, penalty, late payment, or other deficiency, the department must add a fee in the amount of ten dollars to the amount due. The fee imposed in this section does not apply to billings for reseller permit fees imposed by RCW 82.32.780 or 82.32.783 or notices of denial for failing to pay the reseller permit fee under RCW 82.32.780 or 82.32.783.
     (2) The fee in this section may be imposed more than once relative to the same deficiency should the department have to issue multiple invoices for the deficiency such as when the department issues a warrant for an unpaid assessment.
     (3) The fee imposed under this section must be canceled or refunded:
     (a) Should it later be determined that the taxpayer did not owe any amount of the tax, interest, penalty, or other deficiency included in an assessment, invoice, warrant, or other notice; or
     (b) If the department cancels the assessment, invoice, warrant, or other notice of deficiency for any reason.
     (4) The department may waive or cancel the fee imposed in this section if, in the judgment of the department, waiving or canceling the fee is in the best fiscal interests of the state or is clearly required to avoid an inequitable result.

Sec. 402   RCW 82.32.080 and 2011 c 24 s 1 and 2010 2nd sp.s. c 2 s 2 are each reenacted and amended to read as follows:
     (1) When authorized by the department, payment of the tax may be made by uncertified check under such rules as the department prescribes, but, if a check so received is not paid by the bank on which it is drawn, the taxpayer, by whom such check is tendered, will remain liable for payment of the tax and for all legal penalties and interest, the same as if such check had not been tendered.
     (2)(a) Except as otherwise provided in this subsection, payment of the tax must be made by electronic funds transfer, as defined in RCW 82.32.085. As an alternative to electronic funds transfer, the department may authorize other forms of electronic payment, such as payment by credit card. All taxes administered by this chapter are subject to this requirement, except that the department may exclude any taxes not reported on the combined excise tax return or any successor return from the electronic payment requirement in this subsection.
     (b) The department may waive the electronic payment requirement in this subsection for any taxpayer or class of taxpayers, for good cause or for whom the department has assigned a reporting frequency that is less than quarterly. In the discretion of the department, a waiver under this subsection may be made temporary or permanent, and may be made on the department's own motion.
     (c) The department is authorized to accept payment of taxes by electronic funds transfer or other acceptable forms of electronic payment from taxpayers that are not subject to the mandatory electronic payment requirements in this subsection.
     (3)(a) Except as otherwise provided in this subsection, returns must be filed electronically using the department's online tax filing service or other method of electronic reporting as the department may authorize.
     (b) The department may waive the electronic filing requirement in this subsection for any taxpayer or class of taxpayers, for good cause or for whom the department has assigned a reporting frequency that is less than quarterly. In the discretion of the department, a waiver under this subsection may be made temporary or permanent, and may be made on the department's own motion.
     (c) The department is authorized to allow electronic filing of returns from taxpayers that are not subject to the mandatory electronic filing requirements in this subsection.
     (4)(a)(i) The department, for good cause shown, may extend the time for making and filing any return, and may grant such reasonable additional time within which to make and file returns as it may deem proper, but any permanent extension granting the taxpayer a reporting date without penalty more than ten days beyond the due date, and any extension in excess of thirty days must be conditional on deposit with the department of an amount to be determined by the department which is approximately equal to the estimated tax liability for the reporting period or periods for which the extension is granted. In the case of a permanent extension or a temporary extension of more than thirty days the deposit must be deposited within the state treasury with other tax funds and a credit recorded to the taxpayer's account which may be applied to taxpayer's liability upon cancellation of the permanent extension or upon reporting of the tax liability where an extension of more than thirty days has been granted.
     (ii) The department must review the requirement for deposit at least annually and may require a change in the amount of the deposit required when it believes that such amount does not approximate the tax liability for the reporting period or periods for which the extension is granted.
     (b) During a state of emergency declared under RCW 43.06.010(12), the department, on its own motion or at the request of any taxpayer affected by the emergency, may extend the time for making or filing any return as the department deems proper. The department may not require any deposit as a condition for granting an extension under this subsection (4)(b).
     (5) The department must keep full and accurate records of all funds received and disbursed by it. Subject to the provisions of RCW 82.32.105, 82.32.052, section 401 of this act, and 82.32.350, the department must apply the payment of the taxpayer first against ((penalties and)) interest, penalties, fees, and other nontax amounts, and then upon the tax, without regard to any direction of the taxpayer.
     (6) The department may refuse to accept any return that is not accompanied by a remittance of the tax shown to be due thereon or that is not filed electronically as required in this section. When such return is not accepted, the taxpayer is deemed to have failed or refused to file a return and is subject to the procedures provided in RCW 82.32.100 and to the penalties provided in RCW 82.32.090. The above authority to refuse to accept a return may not apply when a return is timely filed electronically and a timely payment has been made by electronic funds transfer or other form of electronic payment as authorized by the department.
     (7) Except for returns and remittances required to be transmitted to the department electronically under this section and except as otherwise provided in this chapter, a return or remittance that is transmitted to the department by United States mail is deemed filed or received on the date shown by the post office cancellation mark stamped upon the envelope containing it. A return or remittance that is transmitted to the department electronically is deemed filed or received according to procedures set forth by the department.
     (8)(a) For purposes of subsections (2) and (3) of this section, "good cause" means the inability of a taxpayer to comply with the requirements of subsection (2) or (3) of this section because:
     (i) The taxpayer does not have the equipment or software necessary to enable the taxpayer to comply with subsection (2) or (3) of this section;
     (ii) The equipment or software necessary to enable the taxpayer to comply with subsection (2) or (3) of this section is not functioning properly;
     (iii) The taxpayer does not have access to the internet using the taxpayer's own equipment;
     (iv) The taxpayer does not have a bank account or a credit card;
     (v) The taxpayer's bank is unable to send or receive electronic funds transfer transactions; or
     (vi) Some other circumstance or condition exists that, in the department's judgment, prevents the taxpayer from complying with the requirements of subsection (2) or (3) of this section.
     (b) "Good cause" also includes any circumstance that, in the department's judgment, supports the efficient or effective administration of the tax laws of this state, including providing relief from the requirements of subsection (2) or (3) of this section to any taxpayer that is voluntarily collecting and remitting this state's sales or use taxes on sales to Washington customers but has no legal requirement to be registered with the department.

NEW SECTION.  Sec. 501   A new section is added to chapter 82.32 RCW to read as follows:
     (1) When a taxpayer holds a license from the liquor control board and is in arrears for the payment of a tax warrant, the department may request that the liquor control board not renew any such license the next time the license is up for renewal.
     (2)(a) For purposes of this section, a taxpayer is in arrears for the payment of a tax warrant if:
     (i) The department has issued a tax warrant against the taxpayer under RCW 82.32.210 for any unpaid tax, fee, penalty, or other liability;
     (ii) The tax warrant was filed with the superior court;
     (iii) The tax warrant remains unpaid; and
     (iv) The taxpayer either has not entered into an agreement satisfactory to the department to pay the tax warrant in full or is in default of such an agreement.
     (b) A taxpayer is also in arrears for the payment of a tax warrant if the taxpayer is liable as a successor under RCW 82.32.140 to a person against whom the department has filed a tax warrant, if that tax warrant remains unpaid and the successor has either not entered into an agreement satisfactory to the department to pay the tax warrant in full or is in default of such an agreement. However, the department may not request that the liquor control board not renew the taxpayer's license during the pendency of any administrative or judicial proceeding to contest the taxpayer's liability as a successor.
     (3)(a) The department must notify the taxpayer in writing of the department's intent to request that the liquor control board not renew the taxpayer's license.
     (b)(i) A taxpayer may request a brief adjudicative proceeding as provided in chapter 34.05 RCW to contest the department's intent to request that the liquor control board not renew the taxpayer's license. The only issue that may be considered at the brief adjudicative proceeding is whether the taxpayer is noncompliant in the payment of a tax warrant.
     (ii) The department must receive the taxpayer's request for a brief adjudicative proceeding in writing within twenty days of the date of the department's written notification under (a) of this subsection.
     (iii) Upon receipt of a written request for a brief adjudicative proceeding, the department will stay the request that the liquor control board not renew the taxpayer's license pending the outcome of the brief adjudicative proceeding, including any departmental review of the order resulting from the proceeding. If the brief adjudicative proceeding is resolved against the taxpayer and the taxpayer remains in arrears for the payment of a tax warrant, the department may immediately request that the liquor control board not renew the taxpayer's license as provided in subsection (1) of this section.
     (iv) If the taxpayer does not request a brief adjudicative proceeding within the time provided in (b)(ii) of this subsection (3) and the taxpayer remains in arrears for the payment of a tax warrant, the department may immediately request that the liquor control board not renew the taxpayer's license the next time the license is up for renewal.
     (c) The procedures in this subsection constitute the exclusive administrative remedy for contesting that a taxpayer is in arrears for the payment of a tax warrant and the denial of a license renewal pursuant to a request made by the department under this section.
     (4) If, after the department has requested that the liquor control board not renew a taxpayer's license, the circumstances that caused the department to request the liquor control board not renew the taxpayer's license no longer exist, the department will notify the liquor control board that it has withdrawn its request that the board not renew the taxpayer's license.
     (5) For the purposes of this section "license" means all licenses issued to the taxpayer under chapter 66.24 RCW.

Sec. 502   RCW 66.24.010 and 2011 c 195 s 1 are each amended to read as follows:
     (1) Every license ((shall)) must be issued in the name of the applicant, and the holder thereof ((shall)) may not allow any other person to use the license.
     (2) For the purpose of considering any application for a license, or the renewal of a license, the board may cause an inspection of the premises to be made, and may inquire into all matters in connection with the construction and operation of the premises. For the purpose of reviewing any application for a license and for considering the denial, suspension, revocation, or renewal or denial thereof, of any license, the liquor control board may consider any prior criminal conduct of the applicant including an administrative violation history record with the board and a criminal history record information check. The board may submit the criminal history record information check to the Washington state patrol and to the identification division of the federal bureau of investigation in order that these agencies may search their records for prior arrests and convictions of the individual or individuals who filled out the forms. The board ((shall)) must require fingerprinting of any applicant whose criminal history record information check is submitted to the federal bureau of investigation. The provisions of RCW 9.95.240 and ((of)) chapter 9.96A RCW ((shall)) do not apply to such cases. Subject to the provisions of this section, the board may, in its discretion, grant or deny the renewal or license applied for. Denial may be based on, without limitation, the existence of chronic illegal activity documented in objections submitted pursuant to subsections (8)(d) and (12) of this section. Authority to approve an uncontested or unopposed license may be granted by the board to any staff member the board designates in writing. Conditions for granting such authority ((shall)) must be adopted by rule. No retail license of any kind may be issued to:
     (a) A person doing business as a sole proprietor who has not resided in the state for at least one month prior to receiving a license, except in cases of licenses issued to dining places on railroads, boats, or aircraft;
     (b) A copartnership, unless all of the members thereof are qualified to obtain a license, as provided in this section;
     (c) A person whose place of business is conducted by a manager or agent, unless such manager or agent possesses the same qualifications required of the licensee;
     (d) A corporation or a limited liability company, unless it was created under the laws of the state of Washington or holds a certificate of authority to transact business in the state of Washington.
     (3)(a) The board may, in its discretion, subject to the provisions of RCW 66.08.150, suspend or cancel any license; and all rights of the licensee to keep or sell liquor thereunder ((shall)) must be suspended or terminated, as the case may be.
     (b) The board ((shall)) must immediately suspend the license or certificate of a person who has been certified pursuant to RCW 74.20A.320 by the department of social and health services as a person who is not in compliance with a support order. If the person has continued to meet all other requirements for reinstatement during the suspension, reissuance of the license or certificate ((shall be)) is automatic upon the board's receipt of a release issued by the department of social and health services stating that the licensee is in compliance with the order.
     (c) The board may request the appointment of administrative law judges under chapter 34.12 RCW who ((shall)) must have power to administer oaths, issue subpoenas for the attendance of witnesses and the production of papers, books, accounts, documents, and testimony, examine witnesses, and to receive testimony in any inquiry, investigation, hearing, or proceeding in any part of the state, under such rules and regulations as the board may adopt.
     (d) Witnesses ((shall)) must be allowed fees and mileage each way to and from any such inquiry, investigation, hearing, or proceeding at the rate authorized by RCW 34.05.446. Fees need not be paid in advance of appearance of witnesses to testify or to produce books, records, or other legal evidence.
     (e) In case of disobedience of any person to comply with the order of the board or a subpoena issued by the board, or any of its members, or administrative law judges, or on the refusal of a witness to testify to any matter regarding which he or she may be lawfully interrogated, the judge of the superior court of the county in which the person resides, on application of any member of the board or administrative law judge, ((shall)) must compel obedience by contempt proceedings, as in the case of disobedience of the requirements of a subpoena issued from said court or a refusal to testify therein.
     (4) Upon receipt of notice of the suspension or cancellation of a license, the licensee ((shall forthwith)) must immediately deliver up the license to the board. Where the license has been suspended only, the board ((shall)) must return the license to the licensee at the expiration or termination of the period of suspension. The board ((shall)) must notify all vendors in the city or place where the licensee has its premises of the suspension or cancellation of the license; and no employee may allow or cause any liquor to be delivered to or for any person at the premises of that licensee.
     (5)(a) At the time of the original issuance of a spirits, beer, and wine restaurant license, the board ((shall)) must prorate the license fee charged to the new licensee according to the number of calendar quarters, or portion thereof, remaining until the first renewal of that license is required.
     (b) Unless sooner canceled, every license issued by the board ((shall)) expires at midnight of the thirtieth day of June of the fiscal year for which it was issued. However, if the board deems it feasible and desirable to do so, it may establish, by rule pursuant to chapter 34.05 RCW, a system for staggering the annual renewal dates for any and all licenses authorized by this chapter. If such a system of staggered annual renewal dates is established by the board, the license fees provided by this chapter ((shall)) must be appropriately prorated during the first year that the system is in effect.
     (6) Every license issued under this section ((shall be)) is subject to all conditions and restrictions imposed by this title or by rules adopted by the board. All conditions and restrictions imposed by the board in the issuance of an individual license may be listed on the face of the individual license along with the trade name, address, and expiration date. Conditions and restrictions imposed by the board may also be included in official correspondence separate from the license.
     (7) Every licensee ((shall)) must post and keep posted its license, or licenses, and any additional correspondence containing conditions and restrictions imposed by the board in a conspicuous place on the premises.
     (8)(a) Unless (b) of this subsection applies, before the board issues a new or renewal license to an applicant it ((shall)) must give notice of such application to the chief executive officer of the incorporated city or town, if the application is for a license within an incorporated city or town, or to the county legislative authority, if the application is for a license outside the boundaries of incorporated cities or towns.
     (b) If the application for a special occasion license is for an event held during a county, district, or area fair as defined by RCW 15.76.120, and the county, district, or area fair is located on property owned by the county but located within an incorporated city or town, the county legislative authority ((shall)) must be the entity notified by the board under (a) of this subsection. The board ((shall)) must send a duplicate notice to the incorporated city or town within which the fair is located.
     (c) The incorporated city or town through the official or employee selected by it, or the county legislative authority or the official or employee selected by it, ((shall have)) has the right to file with the board within twenty days after the date of transmittal of such notice for applications, or at least thirty days prior to the expiration date for renewals, written objections against the applicant or against the premises for which the new or renewal license is asked. The board may extend the time period for submitting written objections.
     (d) The written objections ((shall)) must include a statement of all facts upon which such objections are based, and in case written objections are filed, the city or town or county legislative authority may request and the liquor control board may in its discretion hold a hearing subject to the applicable provisions of Title 34 RCW. If the board makes an initial decision to deny a license or renewal based on the written objections of an incorporated city or town or county legislative authority, the applicant may request a hearing subject to the applicable provisions of Title 34 RCW. If such a hearing is held at the request of the applicant, liquor control board representatives ((shall)) must present and defend the board's initial decision to deny a license or renewal.
     (e) Upon the granting of a license under this title the board ((shall)) must send written notification to the chief executive officer of the incorporated city or town in which the license is granted, or to the county legislative authority if the license is granted outside the boundaries of incorporated cities or towns. When the license is for a special occasion license for an event held during a county, district, or area fair as defined by RCW 15.76.120, and the county, district, or area fair is located on county-owned property but located within an incorporated city or town, the written notification ((shall)) must be sent to both the incorporated city or town and the county legislative authority.
     (9)(a) Before the board issues any license to any applicant, it ((shall)) must give (i) due consideration to the location of the business to be conducted under such license with respect to the proximity of churches, schools, and public institutions and (ii) written notice, with receipt verification, of the application to public institutions identified by the board as appropriate to receive such notice, churches, and schools within five hundred feet of the premises to be licensed. The board ((shall)) may not issue a liquor license for either on-premises or off-premises consumption covering any premises not now licensed, if such premises are within five hundred feet of the premises of any tax-supported public elementary or secondary school measured along the most direct route over or across established public walks, streets, or other public passageway from the main entrance of the school to the nearest public entrance of the premises proposed for license, and if, after receipt by the school of the notice as provided in this subsection, the board receives written objection, within twenty days after receiving such notice, from an official representative or representatives of the school within five hundred feet of said proposed licensed premises, indicating to the board that there is an objection to the issuance of such license because of proximity to a school. The board may extend the time period for submitting objections. For the purpose of this section, "church" means a building erected for and used exclusively for religious worship and schooling or other activity in connection therewith. For the purpose of this section, "public institution" means institutions of higher education, parks, community centers, libraries, and transit centers.
     (b) No liquor license may be issued or reissued by the board to any motor sports facility or licensee operating within the motor sports facility unless the motor sports facility enforces a program reasonably calculated to prevent alcohol or alcoholic beverages not purchased within the facility from entering the facility and such program is approved by local law enforcement agencies.
     (c) It is the intent under this subsection (9) that a retail license ((shall)) may not be issued by the board where doing so would, in the judgment of the board, adversely affect a private school meeting the requirements for private schools under Title 28A RCW, which school is within five hundred feet of the proposed licensee. The board ((shall)) must fully consider and give substantial weight to objections filed by private schools. If a license is issued despite the proximity of a private school, the board ((shall)) must state in a letter addressed to the private school the board's reasons for issuing the license.
     (10) The restrictions set forth in subsection (9) of this section ((shall)) do not prohibit the board from authorizing the assumption of existing licenses now located within the restricted area by other persons or licenses or relocations of existing licensed premises within the restricted area. In no case may the licensed premises be moved closer to a church or school than it was before the assumption or relocation.
     (11)(a) Nothing in this section prohibits the board, in its discretion, from issuing a temporary retail or distributor license to an applicant to operate the retail or distributor premises during the period the application for the license is pending. The board may establish a fee for a temporary license by rule.
     (b) A temporary license issued by the board under this section ((shall be for a period)) may not ((to)) exceed sixty days. A temporary license may be extended at the discretion of the board for additional periods of sixty days upon payment of an additional fee and upon compliance with all conditions required in this section.
     (c) Refusal by the board to issue or extend a temporary license ((shall)) does not entitle the applicant to request a hearing. A temporary license may be canceled or suspended summarily at any time if the board determines that good cause for cancellation or suspension exists. RCW 66.08.130 applies to temporary licenses.
     (d) Application for a temporary license ((shall)) must be on such form as prescribed by the board ((shall prescribe)). If an application for a temporary license is withdrawn before issuance or is refused by the board, the fee which accompanied such application ((shall)) must be refunded in full.
     (12) In determining whether to grant or deny a license or renewal of any license, the board ((shall)) must give substantial weight to objections from an incorporated city or town or county legislative authority based upon chronic illegal activity associated with the applicant's operations of the premises proposed to be licensed or the applicant's operation of any other licensed premises, or the conduct of the applicant's patrons inside or outside the licensed premises. "Chronic illegal activity" means (a) a pervasive pattern of activity that threatens the public health, safety, and welfare of the city, town, or county including, but not limited to, open container violations, assaults, disturbances, disorderly conduct, or other criminal law violations, or as documented in crime statistics, police reports, emergency medical response data, calls for service, field data, or similar records of a law enforcement agency for the city, town, county, or any other municipal corporation or any state agency; or (b) an unreasonably high number of citations for violations of RCW 46.61.502 associated with the applicant's or licensee's operation of any licensed premises as indicated by the reported statements given to law enforcement upon arrest.
     (13) Upon request of the department of revenue as provided in section 501 of this act, the board must not renew the license of a person that is in arrears for the payment of a tax warrant or issue a new license to such person. Upon the board's receipt of notification from the department of revenue that the department has withdrawn its request to the board not to renew the person's license, the board may renew the person's license, or issue a new license to such person, in accordance with this chapter.

Sec. 601   RCW 63.29.220 and 2005 c 367 s 4 are each amended to read as follows:
     (1) Except as otherwise provided in ((subsections (2) and (3) of)) this section, the department, within five years after the receipt of abandoned property, ((shall)) must sell it to the highest bidder at public sale in whatever city in the state affords in the judgment of the department the most favorable market for the property involved. The department may decline the highest bid and reoffer the property for sale if, in the judgment of the department, the bid is insufficient. If, in the judgment of the department, the probable cost of sale exceeds the value of the property, it need not be offered for sale. Any sale held under this ((section)) subsection must be preceded by a single publication of notice, at least three weeks in advance of sale, in a newspaper of general circulation in the county in which the property is to be sold.
     (2)(a) Except as otherwise provided in this subsection (2)(a), the department must sell all securities delivered to the department as required by this chapter as soon as practicable, in the judgment of the department, after receipt by the department. However, this subsection does not apply with respect to any securities that, in the judgment of the department, cannot be sold, are worthless, or are not cost-effective to sell.
     (b) Securities listed on an established stock exchange must be sold at prices prevailing at the time of sale on the exchange. Other securities may be sold over the counter at prices prevailing at the time of sale or by any other method the department considers advisable. All securities may be sold over the counter at prices prevailing at the time of the sale, or by any other method the department deems advisable.
     (((3) Unless the department considers it to be in the best interest of the state to do otherwise, all securities, other than those presumed abandoned under RCW 63.29.100, delivered to the department must be held for at least one year before being sold.
     (4) Unless the department considers it to be in the best interest of the state to do otherwise, all securities presumed abandoned under RCW 63.29.100 and delivered to the department must be held for at least three years before being sold. If the department sells any securities delivered pursuant to RCW 63.29.100 before the expiration of the three-year period, any person making a claim pursuant to this chapter before the end of the three-year period is entitled to either the proceeds of the sale of the securities or the market value of the securities at the time the claim is made, whichever amount is greater, less any deduction for fees pursuant to RCW 63.29.230(2).))
     (c)(i) Except as otherwise provided in this subsection (2)(c), a person making a claim under this chapter ((after the expiration of this period is)) with respect to securities is only entitled to receive ((either the securities delivered to the department by the holder, if they still remain in the hands of the department, or)) the proceeds received from sale, less any amounts deducted pursuant to RCW 63.29.230(2)((, but)), even if the sale of the securities has not been completed at the time the department receives the claim. However, if the department receives a claim for securities and the department has not ordered those securities to be sold as of the time the claim is received by the department, the claimant is entitled to receive either the securities delivered to the department by the holder, or the proceeds received from the sale, less any amounts deducted pursuant to RCW 63.29.230(2).
     (ii) With respect to securities that, in the judgment of the department, cannot be sold or are not cost-effective to sell and that remain in the possession of the department, a person making a claim under this chapter is only entitled to receive the securities delivered to the department by the holder.
     (d) No person has any claim under this chapter against the state, the holder, any transfer agent, registrar, or other person acting for or on behalf of a holder for or on account of any appreciation or depreciation in the value of the property occurring after delivery by the holder to the department.
     (((5))) (3) The purchaser of property at any sale conducted by the department pursuant to this chapter takes the property free of all claims of the owner or previous holder thereof and of all persons claiming through or under them. The department ((shall)) must execute all documents necessary to complete the transfer of ownership.

Sec. 602   RCW 63.29.240 and 1983 c 179 s 24 are each amended to read as follows:
     (1) A person, excluding another state, claiming an interest in any property paid or delivered to the department may file with it a claim on a form prescribed by it and verified by the claimant.
     (2) The department ((shall)) must consider each claim within ninety days after it is filed and give written notice to the claimant if the claim is denied in whole or in part. The notice may be given by mailing it to the last address, if any, stated in the claim as the address to which notices are to be sent. If no address for notices is stated in the claim, the notice may be mailed to the last address, if any, of the claimant as stated in the claim. No notice of denial need be given if the claim fails to state either the last address to which notices are to be sent or the address of the claimant.
     (3)(a) If a claim is allowed, the department ((shall)) must pay over or deliver to the claimant the property or the amount the department actually received or the net proceeds if it has been sold by the department, together with any additional amount required by RCW 63.29.210. ((If the claim is for property presumed abandoned under RCW 63.29.100 which was sold by the department within three years after the date of delivery, the amount payable for that claim is the value of the property at the time the claim was made or the net proceeds of sale, whichever is greater.)) Nothing in this subsection (3)(a) may be construed to modify RCW 63.29.220(2)(c).
     (b) If the property claimed was interest-bearing to the owner on the date of surrender by the holder, the department also ((shall)) must pay interest at the legal rate or any lesser rate the property earned while in the possession of the holder. Interest begins to accrue when the property is delivered to the department and ceases on the earlier of the expiration of ten years after delivery or the date on which payment is made to the owner. No interest on interest-bearing property is payable for any period before June 30, 1983.
     (4) Any holder who pays the owner for property that has been delivered to the state and which, if claimed from the department, would be subject to subsection (3) of this section ((shall)) must add interest as provided in subsection (3) of this section. The added interest must be repaid to the holder by the department in the same manner as the principal.

NEW SECTION.  Sec. 701   (1) The interest rate provisions of sections 101 through 108 of this act apply only to interest imposed or allowed after December 31, 2012, regardless of whether the interest relates to tax liabilities incurred or overpayments made on or before December 31, 2012.
     (2) The provisions in sections 101 through 108 of this act that reduce the time period for granting credits and refunds of state taxes apply only to:
     (a) Overpayments discovered by the department of revenue after December 31, 2012, regardless of whether the overpayment was made after, on, or before that date;
     (b) Applications for credit or refund, including amended tax returns, submitted to the department of revenue after December 31, 2012, regardless of whether the overpayments or purported overpayments were made on or before that date; and
     (c) Applications for credit or refund submitted to the department of revenue before January 1, 2013, but only if sufficient documentation is not provided to the department of revenue by December 31, 2012, to substantiate the claim for credit or refund.

NEW SECTION.  Sec. 702   The fees imposed in sections 301 and 302 of this act apply only with respect to applications received under RCW 82.32.780 or 82.32.783 on or after July 1, 2012, as well as to reseller permits issued by the department under RCW 82.32.780(2) or 82.32.783(2) on or after July 1, 2012.

NEW SECTION.  Sec. 703   The fee imposed in section 401 of this act applies to assessments, invoices, warrants, or other notices of deficiency issued by the department of revenue on or after July 1, 2012, regardless of when the underlying liability accrued.

NEW SECTION.  Sec. 704   (1) Section 601(2)(a) of this act applies with respect to securities the department of revenue holds as of the effective date of this section as well as securities delivered to the department of revenue after the effective date of this section.
     (2) Section 601(2)(c)(i) of this act applies with respect to claims received by the department of revenue on or after the effective date of this section.

NEW SECTION.  Sec. 705   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.

NEW SECTION.  Sec. 706   (1) Except as otherwise provided in this section, this act takes effect July 1, 2012.
     (2) Sections 601 and 602 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and take effect immediately.
     (3) Sections 101 through 108 of this act take effect January 1, 2013.

NEW SECTION.  Sec. 707   Section 108 of this act expires July 1, 2013.