HSB 541

This bill relates to the costs of litigation in administrative hearings or court proceedings involving the collection of tax penalties and interest (dispute) by the department of revenue (department). The bill changes the costs allowed to be recovered in the dispute. The costs allowed to be recovered under the bill include reasonable court costs; reasonable prevailing market rates for expert witnesses, studies, tests, analysis, or special projects; and reasonable attorney or accountant fees including fees related to the recovery of costs allowed under the bill. The bill strikes the current $25,000 cap recoverable by a taxpayer in a dispute and provides that the dollar amount of an award in a dispute be determined within the discretion of the director of revenue or court, as applicable. Under the bill, if the taxpayer substantially prevails in the dispute relating to the amount in controversy or issues involved, the burden of proof shifts to the department to prove that the position of the department was substantially justified. If the department proves the position of the department was substantially justified, the bill prohibits the taxpayer from recovering an award in the dispute. Under current law, the taxpayer must prove the position of the department was not substantially justified in addition to the amount in controversy and issues involved.