Payroll expense tax

AN ACT Relating to enacting an excise tax on large employers on 1
the amount of payroll expenses above the social security wage 2
threshold to fund public schools, health care, social services, and 3
other programs and services to benefit Washingtonians; adding a new 4
Title to the Revised Code of Washington to be codified as Title 50C 5
RCW; creating a new section; and prescribing penalties.6
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:7
NEW SECTION. Sec. 1. INTENT. (1) The legislature finds that, 8
through the state's general fund, the state funds public schools, 9
health care, and social services that help Washingtonians to succeed 10
and thrive.11
(2) These general fund dollars help the state meet its paramount 12
duty to amply provide every child in the state with an education, 13
including children who qualify for special education services, 14
creating the opportunity for each child to succeed in school and 15
achieve success in life. 16
(3) The general fund supports health care and other programs that 17
protect the safety and well-being of the public including behavioral 18
health services for those living with mental illness or substance use 19
disorder, as well as supervision of individuals who have committed 20
crimes. 21
S-2307.4
SENATE BILL 5796
State of Washington 69th Legislature 2025 Regular Session
By Senators Saldaña, Robinson, Alvarado, Bateman, Frame, Hasegawa,
Lovelett, Nobles, Pedersen, Ramos, and Trudeau
Read first time 03/21/25. Referred to Committee on Ways & Means.
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(4) The general fund also funds social services that provide 1
critical, basic needs assistance for our state's most vulnerable 2
residents including support for those with developmental disabilities 3
and long-term care for the elderly. 4
(5) Therefore, the intent of this act is to maintain and preserve 5
essential services for Washingtonians, particularly within public 6
schools, health care, and social services, by depositing revenues 7
from this act to the general fund. 8
(6) Furthermore, the legislature finds that more progress is 9
needed for the state to have a fair and balanced tax system that can 10
provide sustainable, ample funding for public schools and other 11
essential public programs and services. Washington's tax system 12
remains the second most regressive in the nation as it asks those 13
with the least to pay the most as a percentage of their income. Low-14
income Washingtonians pay at least three times more in state and 15
local taxes as a percentage of their income than the state's highest 16
income households. The legislature further acknowledges that the 17
state's reliance on the business and occupation tax as its primary 18
tax on business entities in Washington is challenging for small and 19
low-margin businesses, as it applies to the gross receipts of a 20
business without consideration of profitability. In response, the 21
legislature intends to limit this act to employer payroll expenses 22
above the social security wage threshold and exempt businesses with 23
less than $7,000,000 in annual payroll expenses. As a result, the 24
payroll expense tax is estimated to impact just 17 percent of 25
businesses in this state, taking a significant step toward reducing 26
the disproportionate reliance on small and low-margin businesses to 27
fund public schools, health care, social services, and other programs 28
and services to benefit Washingtonians. 29
(7) Thus, to help meet the state's paramount duty of amply 30
providing every child in the state with an education and supporting 31
the health and well-being of Washingtonians, the legislature intends 32
to impose a tax on large employers on the amount of payroll expenses 33
not otherwise subject to social security withholdings.34
NEW SECTION. Sec. 2. DEFINITIONS. The definitions in this 35
section apply throughout this chapter unless the context clearly 36
requires otherwise.37
(1) "Commissioner" means the commissioner of the employment 38
security department. 39
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(2) "Department" means the employment security department.1
(3) "Employee" has the same meaning as in RCW 50A.05.010.2
(4) "Employer" has the same meaning as in RCW 50A.05.010.3
(5) "Employment" means personal service, of whatever nature, as 4
known to the common law or any other legal relationship performed for 5
wages or under any contract calling for the performance of personal 6
services, written or oral, express or implied. "Employment" includes 7
an individual's entire service performed within or without or both 8
within and without this state, if: 9
(a) The service is localized in this state; or10
(b) The service is not localized in any state, but some of the 11
service is performed in this state; and 12
(i) The base of operations of the employee is in this state, or 13
if there is no base of operations, then the place from which such 14
service is directed or controlled is in this state; or15
(ii) The base of operations or place from which such service is 16
directed or controlled is not in any state in which some part of the 17
service is performed, but the individual's residence is in this 18
state. 19
(6) "Remuneration" has the same meaning as provided in RCW 20
50A.05.010. 21
(7) "Service is localized in this state" has the same meaning as 22
in RCW 50A.05.010. 23
(8) "Wages" means the remuneration paid by an employer to an 24
employee. 25
NEW SECTION. Sec. 3. PAYROLL EXPENSE TAX. (1) Beginning July 1, 26
2026, a payroll expense tax is levied on employers engaged in 27
business within the state of Washington as provided in this section. 28
The payroll expense tax is the total amount of calendar year wages 29
for each employee in employment of the employer that exceeds the 30
maximum wages subject to taxation for social security, as determined 31
by the social security administration, multiplied by a rate of five 32
percent.33
(2)(a) Each employer must remit the tax imposed under this 34
section to the department in a manner specified by the department.35
(b) In the payment of any taxes, a fractional part of a cent is 36
disregarded unless it amounts to one-half cent or more, in which case 37
it is increased to one cent. 38
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(3) The commissioner must annually set the employee wage amount 1
excluded from tax under this section in an amount equal to the 2
maximum wages subject to taxation for social security as determined 3
by the social security administration. 4
(4) The tax under this section is imposed on the employer. An 5
employer may not make any deductions from employee wages to pay for 6
this tax. 7
NEW SECTION. Sec. 4. EXEMPTION. The payroll expense tax under 8
section 3 of this act does not apply to any employer with total 9
employee wages equal to or less than $7,000,000 for the prior 10
calendar year.11
NEW SECTION. Sec. 5. CREDIT. (1) In computing the tax due under 12
this chapter, a credit is allowed against the tax imposed in this 13
chapter and in accordance with this section, for any eligible city 14
payroll expense tax paid by the employer.15
(2)(a) The amount of credit is equal to the total amount of 16
eligible city payroll expense tax remitted to the city during the 17
immediately prior state tax reporting period. The amount of the 18
credit may not exceed the tax that would be owed for the city payroll 19
expense tax in effect on January 1, 2024. 20
(b) No employer may claim a credit under this section for 21
reporting periods for which no tax was due to the city.22
(3) The credit under this section may not exceed the tax 23
otherwise due under this chapter for the tax reporting period. No 24
refunds may be granted for credits under this section.25
(4) The department may contract, under chapter 39.34 RCW, with 26
any city imposing an eligible city payroll expense tax to facilitate 27
the administration of the credit authorized in this section.28
(5) For the purpose of this section, "eligible city payroll 29
expense tax" means a tax that is measured by annual employee 30
compensation and imposed by a city, as of January 1, 2024.31
NEW SECTION. Sec. 6. EMPLOYER REQUIREMENTS. (1) In the form and 32
at the times specified in this chapter and by the commissioner, an 33
employer shall make reports, furnish information, and collect and 34
remit taxes as required by this chapter to the department. If the 35
employer is a temporary help company that provides employees on a 36
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temporary basis to its customers, the temporary help company is the 1
employer for purposes of this section. 2
(2)(a) An employer must keep at the employer's place of business 3
a record of employment, for a period of six years, from which the 4
information needed by the department for purposes of this chapter may 5
be obtained. This record must at all times be open to the inspection 6
of the commissioner. 7
(b) Information obtained under this chapter from employer records 8
is confidential and not open to public inspection, other than to 9
public employees in the performance of their official duties. 10
However, an interested party must be supplied with information from 11
employer records to the extent necessary for the proper presentation 12
of the case in question. An employer may authorize inspection of the 13
employer's records by written consent. 14
(3) Before issuing a warning letter for failure to comply with 15
requirements relating to the collection of payroll expense taxes is 16
as provided in this chapter, the department shall enforce the 17
collection of taxes through conference and conciliation. This 18
requirement applies to: 19
(a) An employer that fails under this chapter to make the 20
required reports, or fails to remit the full amount of taxes when 21
due; 22
(b) An employer that willfully makes a false statement or 23
misrepresentation regarding a material fact, or willfully fails to 24
report a material fact, to avoid making the required reports or 25
remitting the full amount of the tax when due under this chapter;26
(c) A successor in the manner specified in section 9 of this act; 27
and 28
(d) An officer, member, or owner having either control or 29
supervision of payment or reporting of excess compensation taxes, or 30
both, or who is charged with the responsibility for the filing of 31
returns, in the manner specified in section 7 of this act.32
(4) Appeals are governed by section 22 of this act.33
NEW SECTION. Sec. 7. EMPLOYER PENALTIES. (1) An employer who 34
willfully fails to make the required reports is subject to penalties 35
as follows: (a) For the second occurrence, the penalty is $75; (b) 36
for the third occurrence, the penalty is $150; and (c) for the fourth 37
occurrence and for each occurrence thereafter, the penalty is $250.38
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(2) An employer who willfully fails to remit the full amount of 1
taxes when due is liable, in addition to the full amount of taxes due 2
and amounts assessed as interest under section 8 of this act, to a 3
penalty equal to the tax and interest. 4
(3) Any moneys under this section must be deposited into the 5
general fund of the state. 6
(4) For the purposes of this section, "willful" means a knowing 7
and intentional action that is neither accidental nor the result of a 8
bona fide dispute. 9
(5)(a) Beginning January 1, 2027, the department shall enforce 10
the collection of penalties and interest pursuant to this section and 11
section 8 of this act for any penalties and interest accruing after 12
the effective date of this section. 13
(b) The department shall enforce the collection of penalties 14
through conference and conciliation. 15
(6) These penalties may be appealed as provided in this chapter.16
NEW SECTION. Sec. 8. DELINQUENCY— ACCRUAL OF INTEREST. If taxes 17
are not paid on the date on which they are due and payable as 18
prescribed by the commissioner, the whole or part thereof remaining 19
unpaid must bear interest at the rate of one percent per month or 20
fraction thereof from and after such date until payment plus accrued 21
interest is received by the commissioner. The date as of which 22
payment of taxes, if mailed, is deemed to have been received may be 23
determined by such rules as the commissioner may prescribe. Interest 24
collected pursuant to this section must be paid into the general fund 25
of the state. Interest may not accrue on taxes from any estate in the 26
hands of a receiver, executor, administrator, trustee in bankruptcy, 27
common law assignee, or other liquidating officer subsequent to the 28
date when such receiver, executor, administrator, trustee in 29
bankruptcy, common law assignee, or other liquidating officer 30
qualifies as such, but taxes accruing with respect to employment of 31
persons by any receiver, executor, administrator, trustee in 32
bankruptcy, common law assignee, or other liquidating officer become 33
due and draw interest in the same manner as taxes due from other 34
employers. Where adequate information has been furnished to the 35
department and the department has failed to act or has advised the 36
employer of no liability or inability to decide the issue, interest 37
may be waived.38
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NEW SECTION. Sec. 9. TERMINATION OR DISPOSAL OF BUSINESS — TAX 1
PAYMENT— SUCCESSOR LIABILITY. Whenever any employer quits business, or 2
sells out, exchanges, or otherwise disposes of the employer's 3
business or stock of goods, any taxes payable under this chapter 4
shall become immediately due and payable, and the employer shall, 5
within 10 days, make a return and pay the taxes due; and any person 6
who becomes a successor to such business shall become liable for the 7
full amount of taxes and withhold from the purchase price a sum 8
sufficient to pay any taxes due from the employer until such time as 9
the employer produces a receipt from the employment security 10
department showing payment in full of any taxes due or a certificate 11
that no tax is due and, if such taxes are not paid by the employer 12
within 10 days from the date of such sale, exchange, or disposal, the 13
successor shall become liable for the payment of the full amount of 14
taxes, and the payment thereof by such successor shall, to the extent 15
thereof, be deemed a payment upon the purchase price, and if such 16
payment is greater in amount than the purchase price the amount of 17
the difference shall become a debt due such successor from the 18
employer. A successor may not be liable for any tax due from the 19
person from whom that person has acquired a business or stock of 20
goods if that person gives written notice to the employment security 21
department of such acquisition and no assessment is issued by the 22
department within 180 days of receipt of such notice against the 23
former operator of the business and a copy thereof mailed to such 24
successor.25
NEW SECTION. Sec. 10. DELINQUENCY— ORDER AND NOTICE OF 26
ASSESSMENT. At any time after the commissioner shall find that any 27
tax, interest, or penalties have become delinquent, the commissioner 28
may issue an order and notice of assessment specifying the amount 29
due, which order and notice of assessment shall be served upon the 30
delinquent employer in the manner prescribed for the service of a 31
summons in a civil action, or using a method by which the mailing can 32
be tracked or the delivery can be confirmed. Failure of the employer 33
to receive such notice or order whether served or mailed shall not 34
release the employer from any tax, or any interest or penalties 35
thereon.36
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NEW SECTION. Sec. 11. JEOPARDIZED COLLECTION — IMMEDIATE 1
ASSESSMENT. If the commissioner has reason to believe that an 2
employer is insolvent or if any reason exists why the collection of 3
any taxes accrued will be jeopardized by delaying collection, the 4
commissioner may make an immediate assessment thereof and may proceed 5
to enforce collection immediately, but interest and penalties shall 6
not begin to accrue upon any taxes until the date when such taxes 7
would normally have become delinquent.8
NEW SECTION. Sec. 12. COLLECTION BY DISTRAINT, SEIZURE, AND 9
SALE. If the amount of tax, interest, or penalties assessed by the 10
commissioner by order and notice of assessment provided in this 11
chapter is not paid within 10 days after the service or mailing of 12
the order and notice of assessment, the commissioner or the 13
commissioner's duly authorized representative may collect the amount 14
stated in said assessment by the distraint, seizure, and sale of the 15
property, goods, chattels, and effects of said delinquent employer. 16
There shall be exempt from distraint and sale under this section such 17
goods and property as are exempt from execution under the laws of 18
this state.19
NEW SECTION. Sec. 13. COLLECTION BY DISTRAINT, SEIZURE, AND 20
SALE— PROCEDURE. The commissioner, upon making a distraint, must seize 21
the property and must make an inventory of the property distrained, a 22
copy of which must be mailed to the owner of such property or 23
personally delivered to the owner, and must specify the time and 24
place when such property must be sold. A notice specifying the 25
property to be sold and the time and place of sale must be posted in 26
at least two public places in the county wherein the seizure has been 27
made. The time of sale may be not less than 10 nor more than 20 days 28
from the date of posting of such notices. The sale may be adjourned 29
from time to time at the discretion of the commissioner, but not for 30
a time to exceed in all 60 days. The sale must be conducted by the 31
commissioner or the commissioner's authorized representative who 32
proceeds to sell such property by parcel or by lot at a public 33
auction, and who may set a minimum price to include the expenses of 34
making a levy and of advertising the sale, and if the amount bid for 35
such property at the sale is not equal to the minimum price so fixed, 36
the commissioner or the commissioner's representative may declare 37
such property to be purchased by the department for such minimum 38
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price. In such event the delinquent account must be credited with the 1
amount for which the property has been sold. Property acquired by the 2
department as prescribed in this section may be sold by the 3
commissioner or the commissioner's representative at public or 4
private sale, and the amount realized must be placed in the general 5
fund of the state. In all cases of sale, as provided in this section, 6
the commissioner must issue a bill of sale or a deed to the purchaser 7
and such bill of sale or deed is prima facie evidence of the right of 8
the commissioner to make such sale and conclusive evidence of the 9
regularity of the commissioner's proceeding in making the sale, and 10
must transfer to the purchaser all right, title, and interest of the 11
delinquent employer in said property. The proceeds of any such sale, 12
except in those cases wherein the property has been acquired by the 13
department, must be first applied by the commissioner in satisfaction 14
of the delinquent account, and out of any sum received in excess of 15
the amount of delinquent tax, interest, and penalties the 16
administration fund must be reimbursed for the costs of distraint and 17
sale. Any excess that thereafter remains in the hands of the 18
commissioner must be refunded to the delinquent employer. Sums so 19
refundable to a delinquent employer may be subject to seizure or 20
distraint in the hands of the commissioner by any other taxing 21
authority of the state or its political subdivisions.22
NEW SECTION. Sec. 14. NOTICE AND ORDER TO WITHHOLD AND DELIVER. 23
The commissioner may issue to any person, firm, corporation, 24
political subdivision, or department of the state, a notice and order 25
to withhold and deliver property of any kind whatsoever when the 26
commissioner has reason to believe that there is in the possession of 27
such person, firm, corporation, political subdivision, or department, 28
property which is due, owing, or belonging to any person, firm, or 29
corporation upon whom the department has served a notice and order of 30
assessment for tax, interest, or penalties. The effect of a notice to 31
withhold and deliver shall be continuous from the date such notice 32
and order to withhold and deliver is first made until the liability 33
is satisfied or becomes unenforceable because of a lapse of time. The 34
notice and order to withhold and deliver shall be served by the 35
sheriff or the sheriff's deputy of the county wherein the service is 36
made, using a method by which the mailing can be tracked or the 37
delivery can be confirmed, or by any duly authorized representative 38
of the commissioner. Any person, firm, corporation, political 39
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subdivision, or department upon whom service has been made must 1
answer the notice within 20 days exclusive of the day of service, 2
under oath and in writing, and shall make true answers to the matters 3
inquired of in the notice. In the event there is in the possession of 4
any such person, firm, corporation, political subdivision, or 5
department, any property which may be subject to the claim of the 6
employment security department of the state, such property shall be 7
delivered forthwith to the commissioner or the commissioner's duly 8
authorized representative upon demand to be held in trust by the 9
commissioner for application on the indebtedness involved or for 10
return, without interest, in accordance with final determination of 11
liability or nonliability, or in the alternative, there shall be 12
furnished a good and sufficient bond satisfactory to the commissioner 13
conditioned upon final determination of liability. Should any person, 14
firm, or corporation fail to make answer to an order to withhold and 15
deliver within the time prescribed herein, it shall be lawful for the 16
court, after the time to answer such order has expired, to render 17
judgment by default against such person, firm, or corporation for the 18
full amount claimed by the commissioner in the notice to withhold and 19
deliver, together with costs. 20
NEW SECTION. Sec. 15. WARRANT FOR ASSESSMENT. Whenever any 21
order and notice of assessment or jeopardy assessment has become 22
final in accordance with the provisions of this chapter the 23
commissioner may file with the clerk of any county within the state a 24
warrant in the amount of the notice of assessment plus interest, 25
penalties, and a filing fee under RCW 36.18.012(10). The clerk of the 26
county wherein the warrant is filed shall immediately designate a 27
superior court cause number for such warrant, and the clerk shall 28
cause to be entered in the judgment docket under the superior court 29
cause number assigned to the warrant, the name of the employer 30
mentioned in the warrant, the amount of the tax, interest, penalties, 31
and filing fee, and the date when such warrant was filed. The 32
aggregate amount of such warrant as docketed shall become a lien upon 33
the title to, and interest in all real and personal property of the 34
employer against whom the warrant is issued, the same as a judgment 35
in a civil case duly docketed in the office of such clerk. Such 36
warrant so docketed shall be sufficient to support the issuance of 37
writs of execution and writs of garnishment in favor of the state in 38
the manner provided by law in the case of civil judgment, wholly or 39
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partially unsatisfied. The clerk of the court shall be entitled to a 1
filing fee under RCW 36.18.012(10), which shall be added to the 2
amount of the warrant, and charged by the commissioner to the 3
employer. A copy of the warrant shall be mailed to the employer using 4
a method by which the mailing can be tracked or the delivery can be 5
confirmed within five days of filing with the clerk.6
NEW SECTION. Sec. 16. LIENS. The claim of the employment 7
security department for any tax, interest, or penalties not paid when 8
due, shall be a lien prior to all other liens or claims and on a 9
parity with prior tax liens against all property and rights to 10
property, whether real or personal, belonging to the employer. In 11
order to avail itself of the lien hereby created, the department 12
shall file with any county auditor where property of the employer is 13
located a statement and claim of lien specifying the amount of 14
delinquent taxes, interest, and penalties claimed by the department. 15
From the time of filing for record, the amount required to be paid 16
shall constitute a lien upon all property and rights to property, 17
whether real or personal, in the county, owned by the employer or 18
acquired by him or her. The lien shall not be valid against any 19
purchaser, holder of a security interest, mechanic's lien, or 20
judgment lien creditor until notice thereof has been filed with the 21
county auditor. This lien shall be separate and apart from, and in 22
addition to, any other lien or claim created by, or provided for in, 23
this chapter. When any such notice of lien has been so filed, the 24
commissioner may release the same by filing a certificate of release 25
when it shall appear that the amount of delinquent tax, interest, and 26
penalties have been paid, or when such assurance of payment shall be 27
made as the commissioner may deem to be adequate. Fees for filing and 28
releasing the lien provided herein may be charged to the employer and 29
may be collected from the employer utilizing the remedies provided in 30
this chapter for the collection of taxes.31
NEW SECTION. Sec. 17. LIENS— INSOLVENCY, DISSOLUTION, OR 32
DISTRIBUTION OF ASSETS. In the event of any distribution of an 33
employer's assets pursuant to an order of any court, including any 34
receivership, probate, legal dissolution, or similar proceeding, or 35
in case of any assignment for the benefit of creditors, composition, 36
or similar proceeding, tax, interest, or penalties then or thereafter 37
due shall be a lien upon all the assets of such employer. Said lien 38
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is prior to all other liens or claims except prior tax liens, other 1
liens provided by this chapter, and claims for remuneration for 2
services of not more than $250 to each claimant earned within six 3
months of the commencement of the proceeding. The mere existence of a 4
condition of insolvency or the institution of any judicial proceeding 5
for legal dissolution or of any proceeding for distribution of assets 6
shall cause such a lien to attach without action on behalf of the 7
commissioner or the state. In the event of an employer's adjudication 8
in bankruptcy, judicially confirmed extension proposal, or 9
composition, under the federal bankruptcy act of 1898, as amended, 10
tax, interest, or penalties then or thereafter due shall be entitled 11
to such priority as provided in that act, as amended.12
NEW SECTION. Sec. 18. CIVIL ACTIONS— SERVICE OF PROCESS. (1) If 13
after due notice, any employer defaults in any payment of tax, 14
interest, or penalties, the amount due may be collected by civil 15
action in the name of the state, and the employer adjudged in default 16
shall pay the cost of such action. Any lien created by this chapter 17
may be foreclosed by decree of the court in any such action. Civil 18
actions brought under this chapter to collect tax, interest, or 19
penalties from an employer shall be heard by the court at the 20
earliest possible date and shall be entitled to preference upon the 21
calendar of the court over all other civil actions except petitions 22
for judicial review under this chapter, cases arising under the 23
unemployment compensation laws of this state, and cases arising under 24
the industrial insurance laws of this state.25
(2) Any employer that is not a resident of this state and that 26
exercises the privilege of having one or more individuals perform 27
service for it within this state, and any resident employer that 28
exercises that privilege and thereafter removes from this state, 29
shall be deemed thereby to appoint the secretary of state as its 30
agent and attorney for the acceptance of process in any action under 31
this chapter. In instituting such an action against any such employer 32
the commissioner shall cause such process or notice to be filed with 33
the secretary of state and such service shall be sufficient service 34
upon such employer, and shall be of the same force and validity as if 35
served upon it personally within this state if the commissioner shall 36
forthwith send notice of the service of such process or notice, 37
together with a copy thereof, by registered mail, return receipt 38
requested, to such employer at its last known address and such return 39
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receipt, the commissioner's affidavit of compliance with the 1
provisions of this section, and a copy of the notice of service shall 2
be appended to the original of the process filed in the court in 3
which such action is pending. 4
NEW SECTION. Sec. 19. INJUNCTION FROM CONTINUING IN BUSINESS. 5
Any employer who is delinquent in the payment of tax, interest, or 6
penalties may be enjoined upon the suit of the state of Washington 7
from continuing in business in this state or employing persons herein 8
until the delinquent tax, interest, and penalties have been paid, or 9
until the employer has furnished a good and sufficient bond in a sum 10
equal to double the amount of tax, interest, and penalties already 11
delinquent, plus such further sum as the court deems adequate to 12
protect the department in the collection of tax, interest, and 13
penalties which will become due from such employer during the next 14
ensuing calendar year, said bond to be conditioned upon payment of 15
all tax, interest, and penalties due and owing within 30 days after 16
the expiration of the next ensuing calendar year or at such earlier 17
date as the court may fix. Action under this section may be 18
instituted in the superior court of any county of the state wherein 19
the employer resides, has its principal place of business, or where 20
it has anyone performing services for it, whether or not such 21
services constitute employment.22
NEW SECTION. Sec. 20. COMPROMISE OF CLAIMS. The commissioner 23
may compromise any claim for tax, interest, or penalties due and 24
owing from an employer where collection of the full amount due and 25
owing, whether reduced to judgment or otherwise, would be against 26
equity and good conscience. Whenever a compromise is made by the 27
commissioner in the case of a claim for tax, interest, or penalties, 28
whether reduced to judgment or otherwise, there shall be placed on 29
file in the department a statement of the amount of tax, interest, 30
and penalties imposed by law and claimed due, attorneys' fees and 31
costs, if any, a complete record of the compromise agreement, and the 32
amount actually paid in accordance with the terms of the compromise 33
agreement. If any such compromise is accepted by the commissioner, 34
within such time as may be stated in the compromise or agreed to, 35
such compromise shall be final and conclusive and except upon showing 36
of fraud or malfeasance or misrepresentation of a material fact the 37
case shall not be reopened as to the matters agreed upon. In any 38
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suit, action, or proceeding, such agreement or any determination, 1
collection, payment, adjustment, refund, or credit made in accordance 2
therewith shall not be annulled, modified, set aside, or disregarded.3
NEW SECTION. Sec. 21. UNCOLLECTIBLE ACCOUNTS. The commissioner 4
may charge off as uncollectible and no longer an asset of the general 5
fund of the state, any delinquent tax, interest, penalties, or 6
credits if the commissioner is satisfied that there are no cost-7
effective means of collecting the tax, interest, or penalties.8
NEW SECTION. Sec. 22. GENERALLY. (1) Any aggrieved party may 9
file an appeal from any determination or redetermination with the 10
commissioner within 30 days after the date of notification or 11
mailing, whichever is earlier, of such determination or 12
redetermination to the party's last known address. If an appeal with 13
respect to any determination is pending as of the date when a 14
redetermination is issued, such appeal, unless withdrawn, shall be 15
treated as an appeal from such redetermination.16
(2) Upon receipt of a notice of appeal, the commissioner shall 17
request the assignment of an administrative law judge under chapter 18
34.12 RCW to conduct a hearing in accordance with chapter 34.05 RCW 19
and issue a proposed order. 20
NEW SECTION. Sec. 23. ASSESSMENTS. (1) When an order and notice 21
of assessment has been served upon or mailed to a delinquent 22
employer, the employer may within 30 days file an appeal with the 23
department, stating that the assessment is unjust or incorrect and 24
requesting a hearing. The appeal must set forth the reasons why the 25
assessment is objected to and the amount of tax, if any, which the 26
employer admits to be due. If no appeal is filed, the assessment 27
shall be conclusively deemed to be just and correct except that in 28
such case, and in cases where payment of tax, interest, or penalties 29
has been made pursuant to a jeopardy assessment, the commissioner may 30
properly entertain a subsequent application for refund. The filing of 31
an appeal on a disputed assessment with the administrative law judge 32
stays the distraint and sale proceeding provided for in this chapter 33
until a final decision has been made, but the filing of an appeal 34
shall not affect the right of the commissioner to perfect a lien, as 35
provided by this chapter, upon the property of the employer. The 36
filing of a petition on a disputed assessment stays the accrual of 37
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interest and penalties on the disputed taxes until a final decision 1
is made. 2
(2) Within 30 days after notice of denial of refund or adjustment 3
has been mailed or delivered, whichever is the earlier, to an 4
employer, the employer may file an appeal with the department for a 5
hearing unless assessments have been appealed from and have become 6
final. The employer shall set forth the reasons why such hearing 7
should be granted and the amount which the employer believes should 8
be adjusted or refunded. If no appeal is filed within said 30 days, 9
the determination of the commissioner as stated in the notice shall 10
be final. 11
NEW SECTION. Sec. 24. WHEN DEEMED FILED AND RECEIVED. The 12
appeal or petition from a determination, redetermination, order and 13
notice of assessment, appeals decision, or commissioner's decision is 14
deemed filed and received if properly addressed and with sufficient 15
postage:16
(1) If transmitted through the United States mail, on the date 17
shown by the United States postal service cancellation mark;18
(2) If mailed but not received by the addressee, or where 19
received and the United States postal service cancellation mark is 20
illegible, erroneous, or omitted, on the date it was mailed, if the 21
sender establishes by competent evidence that the appeal or petition 22
was deposited in the United States mail on or before the date due for 23
filing; or 24
(3) In the case of a metered cancellation mark by the sender and 25
a United States postal service cancellation mark on the same envelope 26
or other wrapper, the latter shall control. 27
NEW SECTION. Sec. 25. ASSESSMENTS— PROCEDURE. In any proceeding 28
before an administrative law judge involving an appeal from a 29
disputed order and notice of assessment or a disputed denial of 30
refund or adjustment, the administrative law judge, after affording 31
the parties a reasonable opportunity for hearing, shall affirm, 32
modify, or set aside the notice of assessment or denial of refund. 33
The parties shall be duly notified of such decision together with the 34
reasons, which shall be deemed to be the final decision unless within 35
30 days after the date of notification or mailing, whichever is the 36
earlier, of such decision, further appeal is perfected pursuant to 37
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the provisions of this chapter relating to review by the 1
commissioner. 2
NEW SECTION. Sec. 26. HEARING PROCEDURES. The manner in which 3
any dispute is presented to the administrative law judge, and the 4
conduct of hearings and appeals, shall be in accordance with rules 5
adopted by the commissioner. A full and complete record shall be kept 6
of all administrative law judge proceedings. All testimony at any 7
appeal hearing shall be recorded, but need not be transcribed unless 8
further appeal is taken.9
NEW SECTION. Sec. 27. COMMISSIONER REVIEW— INITIATION. Within 30 10
days from the date of notification or mailing, whichever is the 11
earlier, of any decision of an administrative law judge, the 12
commissioner on the commissioner's own order may, or upon petition of 13
any interested party shall, take jurisdiction of the proceedings for 14
the purpose of review. Appeal from any decision of an administrative 15
law judge may be perfected so as to prevent finality of such decision 16
if, within 30 days from the date of notification or mailing of the 17
decision, whichever is the earlier, a petition in writing for review 18
by the commissioner is received by the commissioner or by such 19
representative of the commissioner as the commissioner by rule shall 20
prescribe. The commissioner may also prevent finality of any decision 21
of an administrative law judge and take jurisdiction of the 22
proceedings for the commissioner's review by entering an order so 23
providing on the commissioner's own motion and mailing a copy thereof 24
to the interested parties within the same period allowed for receipt 25
of a petition for review. The time limit provided for the 26
commissioner's assumption of jurisdiction on the commissioner's own 27
motion for review shall be deemed to be jurisdictional.28
NEW SECTION. Sec. 28. COMMISSIONER REVIEW — PROCEDURE. After 29
having acquired jurisdiction for review, the commissioner shall 30
review the proceedings in question. Prior to rendering a decision, 31
the commissioner may order the taking of additional evidence by an 32
administrative law judge to be made a part of the record in the case. 33
Upon the basis of evidence submitted to the administrative law judge 34
and such additional evidence as the commissioner may order to be 35
taken, the commissioner shall render a decision in writing affirming, 36
modifying, or setting aside the decision of the administrative law 37
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judge. Alternatively, the commissioner may order further proceedings 1
to be held before the administrative law judge, upon completion of 2
which the administrative law judge shall issue a new decision in 3
writing affirming, modifying, or setting aside the previous decision 4
of the administrative law judge. The new decision of the 5
administrative law judge may be appealed as provided under section 27 6
of this act. The commissioner shall mail the decision of the 7
commissioner to the interested parties at their last known addresses.8
NEW SECTION. Sec. 29. COMMISSIONER REVIEW — WHEN FINAL — 9
COMMISSIONER AS PARTY. Any decision of the commissioner involving a 10
review of an administrative law judge decision, in the absence of a 11
petition as provided in chapter 34.05 RCW, becomes final 30 days 12
after notification or mailing, whichever is earlier. The commissioner 13
shall be deemed to be a party to any judicial action involving any 14
such decision and shall be represented in any such judicial action by 15
the attorney general.16
NEW SECTION. Sec. 30. APPLICABILITY OF FINDINGS, 17
DETERMINATIONS, ETC., TO OTHER ACTIONS. Any finding, determination, 18
conclusion, declaration, or final order made by the commissioner, or 19
the commissioner's representative or delegate, or by an appeal 20
tribunal, administrative law judge, reviewing officer, or other agent 21
of the department for the purposes of this chapter, shall not be 22
conclusive, nor binding, nor admissible as evidence in any separate 23
action outside the scope of this chapter between an employee and the 24
employee's present or prior employer before an arbitrator, court, or 25
judge of this state or the United States, regardless of whether the 26
prior action was between the same or related parties or involved the 27
same facts or was reviewed pursuant to section 33 of this act.28
NEW SECTION. Sec. 31. WAIVER OF TIME LIMITATIONS. For good 29
cause shown the administrative law judge or the commissioner may 30
waive the time limitations for administrative appeals or petitions 31
set forth in this chapter.32
NEW SECTION. Sec. 32. JUDICIAL REVIEW. (1) In all court 33
proceedings under or pursuant to this chapter the decision of the 34
commissioner shall be prima facie correct, and the burden of proof 35
shall be upon the party challenging the decision.36
p. 17 SB 5796
(2) If the court determines that the commissioner has acted 1
within the commissioner's power and has correctly construed the law, 2
the decision of the commissioner shall be confirmed; otherwise, the 3
decision shall be reversed or modified. In case of a modification or 4
reversal the superior court shall refer the decision to the 5
commissioner with an order directing the commissioner to proceed in 6
accordance with the findings of the court. 7
(3) Whenever any order and notice of assessment shall have become 8
final in accordance with the provisions of this chapter, the court 9
shall upon application of the commissioner enter a judgment in the 10
amount provided for in the order and notice of assessment, and the 11
judgment shall have and be given the same effect as if entered 12
pursuant to a civil action instituted in the court.13
NEW SECTION. Sec. 33. JUDICIAL REVIEW — PROCEDURE. Judicial 14
review of a decision of the commissioner involving the review of a 15
decision of an administrative law judge under this chapter may be had 16
only in accordance with the procedural requirements of RCW 34.05.452.17
NEW SECTION. Sec. 34. REMEDIES EXCLUSIVE. The remedies provided 18
in this chapter for determining the justness or correctness of 19
assessments, refunds, adjustments, or claims shall be exclusive and 20
no court shall entertain any action to enjoin an assessment or 21
require a refund or adjustment except in accordance with the 22
provisions of this chapter. Matters which may be determined by the 23
procedures set out in this chapter shall not be the subject of any 24
declaratory judgment.25
NEW SECTION. Sec. 35. DEPOSITING FUNDS. All tax, interest, and 26
penalties collected under this chapter must be deposited in the 27
general fund of the state.28
NEW SECTION. Sec. 36. PROCUREMENT EXEMPTION. The department is 29
exempt from the requirements of chapter 39.26 RCW until October 1, 30
2026, for purposes of implementing Title 50C RCW (the new title 31
created in section 40 of this act).32
NEW SECTION. Sec. 37. RULE MAKING. The department may adopt 33
rules as necessary to implement this title. 34
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NEW SECTION. Sec. 38. SHORT TITLE. This act may be known and 1
cited as the payroll expense tax act.2
NEW SECTION. Sec. 39. SEVERABILITY. If any provision of this 3
act or its application to any person or circumstance is held invalid, 4
the remainder of the act or the application of the provision to other 5
persons or circumstances is not affected.6
NEW SECTION. Sec. 40. CODIFICATION. Sections 1 through 38 of 7
this act constitute a new chapter in a new title to be codified as 8
Title 50C RCW.9
NEW SECTION. Sec. 41. NECESSITY OF ACT. This act is necessary 10
for the support of the state government and its existing public 11
institutions.12
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