SB 5866 — Creating a tax court for the state of Washington.

S-2265.3SECONDS-1710.1SENATE SUBSTITUTE SENATE BILL 5866State of Washington65th Legislature2017 Regular SessionBy Senate Ways & Means (originally sponsored by Senators Brown, Hobbs, Braun, Mullet, Frockt, and Warnick)READWarnickRead FIRSTfirst TIMEtime 03/31/17.AN03/10/17. ACT Relating to creating a tax court for the state of Washington;

Referred to Committee on Law & Justice.AN ACT Relating to creating a tax court for the state of Washington;

(1) The legislature finds that:(a) Taxes are a critically sensitive point of contact between citizens and their government;(b) Washington taxpayers have a right to expect that their taxes will be fairly assessed in accordance with the law;(c) Taxpayers have a right to a fair,fair impartial, and efficientimpartial resolutionhearing of their tax disputes inbefore an informed tribunaltribunal;(d) with expertise in the tax laws of this state;(d) Tax disputes that cannot be resolved by agreement of the parties should be heard and decided by an elected tax court that provides appropriate representation to the voters of the entire state, convenient access for both parties, and appellate review;(e) Tax court procedures should promote public confidence in the tax system, ensuring both the appearance and reality of due process and fundamental fairness, while promoting the consistency and predictability of tax decisions;(f)decisions;(e) Tax court procedures should recognize financial practicalities, and the procedural rules for all cases within the commissioner department should therefore provide for informal appeals and taxpayer representation by nonlawyers;

and(g)and(f) Taxpayers and their taxing authorities are encouraged to engage in settlement discussions prior to presenting their dispute to the tax court, and tax court procedures should encourage the prompt and cost-effective resolution of tax disputes through mediation and other settlement processes.(2) This act must be interpreted and construed to further the purposes of this act, and court rules adopted for implementing this act must be structured and construed to further this intent.NEW SECTION.  Sec. 102.  TAX COURT ESTABLISHED.

The tax court will consist of one judge selected from each divisiondistrict of the court of appeals and such commissioners as are appointed by the tax court.NEW SECTION.  Sec. 103.  DEFINITIONS.

or (ii) the appeal involves one or more questions of exceptional public importanceimportance; and there remain no genuine issues of material fact.

Appealsand before(iii) athere three-judgeremain panelno must,genuine soissues far as possible, be conducted in accordance with the rules of appellatematerial procedurefact. applicable in the court of appeals.

IfAppeals thebefore supreme court denies review of a singlethree-judge judgepanel decisionmust, fromso thefar mainas departmentpossible, of the tax court, the case will be transferredconducted withoutin prejudiceaccordance andwith without costs to the three-judgerules panel of theappellate mainprocedure departmentapplicable ofin the tax court forof determination.(d)appeals.(d) Appeals to the tax court from a decision of a superior court in a tax dispute will be heard on the superior court record by a three-judge panel.

All decisions by the main department must be published as opinions of the court,court.(4) whetherThe decisions of a three-judge panel and decisions by a single judge of the main department that are not reviewed by a three-judge panel are subject to review by the supreme court in printthe orsame electronicmanner form.as the decisions of the court of appeals.(5) The final decisions of the commissioner department must be rendered in writing, and must include a statement of the facts and the conclusions of law.

All decisions by the main department are precedential until reversed, modified, or overruled by the supreme court or a three-judge panel of the tax court.(4) The decisions of a three-judge panel and decisions by a single judge of the main department that are not reviewed by a three-judge panel are subject to review by the supreme court in the same manner as the decisions of the court of appeals.(5) The final decisions of the commissioner department must be rendered in writing, and must include a statement of the facts and the conclusions of law.

(1) A judge of the tax court must:(a)must:(1) Be admitted to the practice of law in the courts of this state not less than five years prior to taking office;office;(2) Be a resident for not less than one year at the time of appointment or initial election in the district of the court of appeals for which his or her position was created;(3) Have at least five years' experience as an attorney practicing in Washington state and local tax law.NEW SECTION.  Sec. 107.  JUDGE ELECTION.

and(b) Be a resident for not less than one year at the time of appointment or initial election in the division of the court of appeals for which his or her position was created.(2) The annual salary of the judges of the tax court must be equal to that established for judges of the court of appeals.

No salary warrant may be issued to any judge until the judge files with the state treasurer an affidavit that no matter referred to the judge for opinion or decision has been uncompleted for more than six months.NEW SECTION.  Sec. 107.  JUDGE ELECTION.

(1) Except whenas otherwise provided in this section, all proceedings before the tax court reviewsare anoriginal, appealindependent proceedings and will be tried without a jury and de novo.(2) In all appeals to the tax court, the decision appealed from superioris courtpresumed correct and, except as provided in subsectionRCW (4)84.40.0301, ofthe thisappellant section,has allthe proceedingsburden beforeof theproving taxotherwise courtby area original,preponderance independentof proceedings.the evidence.

AllThe tax court may exercise such procedural powers and authority as necessary to the full exercise of its jurisdiction, including the power to issue compulsory process.(3) The tax court'scourt proceedingshas willjurisdiction beto triedhear withoutthe following appeals:(a) Appeals of a jurynotice of denial of a refund or of a petition or a notice of assessment made under RCW 82.34.110, 82.32.050, 82.32.060, 82.32.160, 82.32.170, or an appraisal under RCW 82.49.050, except in cases where the taxpayer has failed to keep and depreserve novo.(2)books, Inrecords, alland appealsinvoices as required in chapters 82.32, 82.32A, and 82.24 RCW;(b) Appeals from a county board of equalization pursuant to RCW 84.08.130;(c) Appeals by an assessor or landowner from an order of the director of the department of revenue made pursuant to RCW 84.08.010 and 84.08.060, if filed with the tax court,court within thirty days after the decisionmailing appealedof the order;(d) Appeals by an assessor or owner of an intercounty public utility or private car company from isdeterminations presumedby correctthe and,director exceptof asthe provideddepartment inof RCWrevenue 84.40.0301,of equalized assessed valuation of property and the appellantapportionment hasthereof to a county made pursuant to chapters 84.12 and 84.16 RCW, if filed with the burdentax court within thirty days after mailing of provingthe otherwisedetermination;(e) Appeals by an assessor, landowner, or owner of an intercounty public utility or private car company from a preponderancedetermination of any county indicated ratio for such county compiled by the evidence.department of revenue pursuant to RCW 84.48.075, if the appeal is filed after review of the ratio under RCW 84.48.075(3) and not later than fifteen days after the mailing of the certification.

TheA taxhearing courtunder maythis exercisesubsection such(3)(e) proceduralbefore powersthe andcourt authoritymust asbe necessaryexpeditiously toheld thein fullaccordance exercisewith ofrules itsprescribed jurisdiction,by including the powercourt toand issuemust compulsorytake process.(3)precedence Theover taxall courtmatters hasof authority to hear the following:(a)same character;(f) Appeals offrom athe noticedecisions of denialsale price of asecond-class refundshorelands oron ofnavigable alakes petitionby orthe adepartment notice of assessmentnatural maderesources underpursuant to RCW 82.34.110,79.125.450;(g) 82.32.050,Appeals 82.32.060,from 82.32.160,urban 82.32.170,redevelopment orproperty antax appraisalapportionment underdistrict RCWproposals 82.49.050,established exceptby ingovernmental casesordinances wherepursuant the taxpayer has failed to keepRCW and39.88.060;(h) preserveAppeals books,from records,interest andrates invoices as requireddetermined inby chaptersthe 82.32,department 82.32A,of andrevenue 82.24for RCW;(b)use Appealsin fromvaluing afarmland countyunder boardcurrent ofuse equalizationassessment pursuant to RCW 84.08.130;(c)84.34.065;(i) Appeals byfrom anrevisions assessorto orstumpage landownervalue fromtables anused orderto ofdetermine thevalue directorby of the department of revenue made pursuant to RCW 84.08.01084.33.091;(j) and 84.08.060, if filed with the tax court within thirty days after the mailing of the order;(d) Appeals byfrom andenial assessor or owner of ana intercountytax publicexemption utilityapplication or private car company from determinations by the director of the department of revenue ofpursuant equalized assessed valuation of property and the apportionment thereof to aRCW county84.36.850;(k) madeAppeals pursuant to chaptersRCW 84.1284.40.038(3);(l) and 84.16 RCW, if filed with the tax court within thirty days after mailing of the determination;(e) Appeals by an assessor, landowner, or owner of an intercounty public utility or private car company from a determination of any county indicated ratio for such county compiled by the department of revenue pursuant to RCW 84.48.075,84.39.020;(m) ifAppeals the appeal is filed after review of therefunds ratiodenied under RCWTitle 84.48.075(3)83 andRCW notor latersuperior thancourt fifteenorders daysmade afterunder thechapter mailing83.100 ofRCW; the certification.

Aand(n) hearingAppeals underof thisfinal subsectiondecisions (3)(e)of before the superior court mustunder beRCW expeditiously82.32.180.(4) heldExcept infor accordancecases withthat rulesmay prescribedbe byappealed theor courttransferred anddirectly mustto takethe precedencesupreme overcourt allunder matterssection 105 of this act, the sametax character;(f)court Appealshas exclusive appellate jurisdiction over appeals from urbanthe redevelopmentsuperior propertycourt in tax apportionmentdisputes districtthat proposalswould establishedotherwise byfall governmentalwithin ordinancesthe pursuanttax tocourt's RCWconcurrent 39.88.060;(g)original Appealsjurisdiction, fromincluding interestsuperior ratescourt orders issued under chapter 83.100 RCW.(5)(a) Except as determinedotherwise byprovided thein departmentcases ofinvolving revenueproperty fortaxes useand as otherwise provided in valuing(b) farmlandof underthis currentsubsection, usethe assessmenttaxpayer pursuanthas the right to RCWhave 84.34.065;(h)his Appealsor fromher revisionscase toheard stumpageby valuethe tablestax usedcourt prior to determinethe valuepayment of any of the amounts asserted as due by the departmenttax administration agency and prior to the posting of revenueany pursuantbond.(b) The tax court does not have jurisdiction to RCWhear 84.33.091;(i)the Appealsfollowing fromappeals denialunless the disputed amount of ataxes, taxpenalties, exemptionand applicationinterest byhas been paid in full or the taxpayer posts a bond with the department of revenue pursuantor otherwise provides adequate security to RCWthe 84.36.850;(j)department of revenue for payment of all amounts asserted due:(i) Appeals pursuantof totaxes assessed under RCW 84.40.038(3);(k)82.32.145;(ii) Appeals pursuantof toan assessment resulting from the disregard of a tax avoidance transaction or arrangement described in RCW 84.39.020;(l)82.32.655(3);(iii) Appeals of refundsan deniedassessment underof Titletaxes 83upon RCWwhich orthe superiordepartment courtof ordersrevenue madeimposed underthe chapterpenalty 83.100in RCW;RCW 82.32.090(7);

and(m)and(iv)(A) Appeals of final decisions of the superior court under RCW 82.32.180.(4) Except for cases that may be appealed or transferred directly to the supreme court under RCW 2.06.030, the tax court has exclusive appellate jurisdiction over appeals from the superior court in tax disputes that would otherwise fall within the tax court's concurrent original jurisdiction, including superior court orders issued under chapter 83.100 RCW.(5)(a) RCW 82.32.150 applies to all parties over whom the tax court has jurisdiction until June 30, 2021.(b) As of July 1, 2021, and except as otherwise provided in cases involving property taxes and as otherwise provided in (c) of this subsection, theappeals taxpayerof hasan theassessment rightwith torespect have his or her case heard by the tax court prior to thewhich payment of any of the amountstotal assertedamount asdisputed due by the taxtaxpayer administrationexceeds agencyfive andhundred priorthousand todollars, theinclusive posting of any bond.(c) The tax court does not have authority to hear the following appeals unless the disputed amount of taxes, penalties, interest, and interestany hasamounts been paid in full or the taxpayer posts a bond with the department of revenue or otherwise provides adequate security to the department of revenue for payment of all amounts asserted due:(i) Appeals of taxes assessed under RCW(b)(i) 82.32.145;(ii)through Appeals(iii) of anthis assessmentsubsection. resulting from the disregard of a tax avoidance transaction or arrangement described in RCW 82.32.655(3);(iii) Appeals of an assessment of taxes upon which the department of revenue imposed the penalty in RCW 82.32.090(7);

and(iv)(A)The Exceptdollar threshold must be adjusted for inflation as provided in (d)(b)(iv)(B) of this subsection,subsection appeals(5).(B) ofBeginning anin assessmentDecember with2019 respectand toeach whichDecember thethereafter, total amount disputed by the taxpayeradministrative exceedsoffice one hundred thousand dollars, inclusive of taxes,the penalties,courts interest,must andreview anythe amountsdollar paidthreshold underin (c)(i) through (iii) of this subsection.subsection (5)(b)(iv).

The dollar threshold must be adjusted for inflation as provided in (c)(iv)(B) of this subsection (5).(B) Beginning in December 2019 and each December thereafter, the administrative office of the courts must review the dollar threshold in this subsection (5)(c)(iv).

For purposes of this subsection (5)(c)(iv),(5)(b)(iv), "consumer price index" has the same meaning as in RCW 83.100.020.(d)83.100.020.(c) If a taxpayer obtains a final determination through the department of revenue's administrative process pursuant to RCW 82.32.160, the tax court has authorityjurisdiction to hear an appeal of that determination, notwithstanding that the total amount in dispute exceeds the dollar threshold in (c)(iv)(b)(iv) of this subsection.(e)subsection.(d) For purposes of this subsection, "tax" has the same meaning as provided in RCW 82.32.020.(6) If, with or after the filing of a timely notice of appeal, the taxpayer pays all or part of the amount in issue before the tax court has rendered a decision, the court will treat the taxpayer's petition as a protest of a denial of a claim for refund of the amount paid.NEW SECTION.  Sec. 109.  APPEALS TO TAX COURT.

The tax court may impose costs and fees against a party as a sanction for improper conduct before the tax court.NEWcourt.PART SECTION.  Sec. 111.  TAXIIConforming COURTand LOCATIONS.Technical CorrectionsSec. 201.  RCW 2.04.110 and 1971 c 81 s 4 are each amended to read as follows:Each of the justices of the supreme court, judges of the court of appeals, judges of the tax court, and the judges of the superior courts shall in open court during the presentation of causes, before them, appear in and wear black gowns((, made of black silk,)) of the usual style of judicial gowns.Sec. 202.  RCW 34.05.030 and 2015 3rd sp.s.

The tax court must have two physical locations:

One in a city east of the Cascade mountains with a population greater than two hundred thousand persons;

and one in a city west of the Cascade mountains with a population greater than six hundred fifty thousand persons.

An additional location may be added, if required due to the volume of cases.PART IIConforming and Technical CorrectionsSec. 201.  RCW 2.04.110 and 1971 c 81 s 4 are each amended to read as follows:Each of the justices of the supreme court, judges of the court of appeals, judges of the tax court, and the judges of the superior courts shall in open court during the presentation of causes, before them, appear in and wear black gowns((, made of black silk,)) of the usual style of judicial gowns.Sec. 202.  RCW 34.05.030 and 2015 3rd sp.s.

These shorelands ((shall)) must be sold at fair market value, but not less than five percent of the fair market value of the abutting upland, less improvements, to a maximum distance of one hundred and fifty feet landward from the line of ordinary high water.(3) Review of the decision of the department regarding the sale price established for a shoreland to be sold pursuant to this section may be obtained by the upland owner by filing a petition with the board((board of ((taxtax appeals created in accordance with chapter 82.03 RCW within thirty)) naturaltax resourcescourt within thirty days after the mailing of notification by the department to the owner regarding the price.

The board((board ((ofof tax appeals shall)) tax court must review the cases in an adjudicative proceeding as described in chapter 34.05 RCW, the administrative procedure act, and the board's((board's)) court's review ((shall)) must be de novo.

Decisions of the board((board ((ofof tax appeals)) tax court regarding fair market values determined pursuant to this section ((shall be)) are final unless((unless appealed to the superior court pursuant to RCW 34.05.510 through 34.05.598.Sec. 207.  RCW34.05.598)).Sec. 207.  RCW 82.01.090 and 1967 ex.s.

No restraining order or injunction ((shall))shall may be granted or issued by any court or judge to restrain or enjoin the collection of any tax or penalty or any part thereof, except upon the ground that the assessment thereof was in violation of the Constitution of the United States or that of the state.Sec. 210.  RCW 82.32.160 and 2007 c 111 s 110 are each amended to read as follows:(1) Any person having been issued a notice of additional taxes, delinquent taxes, interest, or penalties assessed by the department((,)) may within thirty days after the issuance of the original notice of the amount thereof or within the period covered by any extension of the due date thereof granted by the department petition the department in writing for a correction of the amount of the assessment, and a conference for examination and review of the assessment.

Either party may seek appellate review in the ((samesame manner as other civil actions are appealed to the appellate courts))courts.(3) tax court in the manner provided in section 109 of this act.(3) It ((shall)) is not ((be)) necessary for the taxpayer to protest against the payment of any tax or to make any demand to have the same refunded or to petition the director for a hearing in order to appeal to the superior court, but no court action or proceeding of any kind ((shall)) may be maintained by the taxpayer to recover any tax paid, or any part thereof, except as ((herein)) provided in this section pr chapter 2.--- RCW (the new chapter created in section 301 of this act).(4) The provisions of this section ((shall)) do not apply to any tax payment which has been the subject of an appeal to the ((board of tax appeals with respect to which appeal a formal hearing has been elected)) tax court.Sec. 213.  RCW 82.49.060 and 1993 c 33 s 1 are each amended to read as follows:(1) Any vessel owner disputing an appraised value under RCW 82.49.050 or disputing whether the vessel is taxable, may petition for a conference with the department as provided under RCW 82.32.160, or for reduction of the tax due as provided under RCW 82.32.170.

Abatements and cancellations that require a refund are included within the scope of (a) of this subsection.(2) As provided in RCW 84.55.070, the provisions of chapter 84.55 RCW do not apply to a levy made by or for a taxing district under this section.NEW SECTION.  Sec. 228.  (1) The state board of tax appeals createdis transferred to the tax court.(2)(a) All reports, documents, surveys, books, records, files, papers, or written material in RCWthe 82.03.010possession isof abolished.the state board of tax appeals must be delivered to the custody of the tax court.

All powers, duties, and functions of the board are transferred to the tax court.(2)(a) All reports, documents, surveys, books, records, files, papers, or written material in the possession of the state board of tax appeals must be delivered to the custody of the tax court.

(S-1712/17) is validlyenacted submitted to and is approved and ratified by the voterslegislature atin the2017:(1) next general election:(1) This act, except for sections 228 and 229 of this act, takes effect January 1, 2018;