Senate panel considers Brown measure to bring fairness to taxpayer appeals

Today the Senate Law and Justice Committee held a public hearing on a bill sponsored by Sen. Sharon Brown that would reform the state tax-appeals system to bring greater fairness and efficiencies. Senate Bill 5866 would accomplish this by creating a statewide elected Tax Appeals Division of the appeals court and eliminating the executive agency composed of political appointees that currently hears tax appeals.

“I am a lawyer, but even for me this is a very complicated area of law,” explained Brown, R-Kennewick. “Taxpayers going through this process are already at a severe disadvantage. Washington has an intricate tax-appeals system that requires filing with different agencies depending on the type of tax. It also is a pay-to-play system where taxpayers are forced to pay all taxes, fines, penalties and interest before seeking relief from a court. This financial burden can be a barrier to justice. And after all of that, the taxpayer ultimately has to go before a board of political appointees, who may have no experience in tax law at all.

“My bill is about bringing fairness to the system and streamlining the process to save time and money for both the state and the taxpayer.”

Under SB 5866:

  • The Tax Court would consist of one judge selected from each district of the Court of Appeals, three judges total, and commissioners appointed by the Tax Court.
  • It would provide fair and impartial judges, independent of an agency, with expertise is the area of tax law. Judges would be elected for six-year terms and must be admitted to practice law in Washington with at least five years’ experience as an attorney practicing in Washington state and local tax law.
  • It would streamline the process and reduce superior-court caseloads, saving the state and taxpayers money. In many cases, it would eliminate the need to go through the administrative bureaucracy, allowing appellants to go straight to court. It would also eliminate duplicative and time-consuming appeal levels.
  • No pay-to-play in most circumstances for taxpayers defending their filing in good faith. Taxpayers who owe less than $500,000 would not have to pay the disputed amount as a prerequisite to having their appeal heard by the Tax Court. Taxpayers who owe $500,000 or more but who choose to first receive a final determination through the Department of Revenue’s administrative process would also not be required to make the payment in advance.

Several groups representing small businesses and property owners testified on the bill before the committee.

“Senator Brown referred to it as pay-to-play; a lot of our members call it settle-or-starve,” said Patrick Connor, representing the National Federation of Independent Business. “It is a costly, unfair process currently, and we would encourage this panel to support this important bill for small business.”

Brown pointed to property owners and small businesses as the driving concern that led her to introduce the bill.

“The current system is stacked against the taxpayers,” she said. “The result of my bill would be a more transparent, simple and fair process that helps property owners and small businesses – some of whom have seen their lives or businesses destroyed simply for defending their rights in the current system.”