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SF 524

A bill for an act relating to awarding the costs in administrative hearings or court proceedings involving the collection of tax, penalties, and interest by the department of revenue.

2025-2026 Regular Session

The bill allows taxpayers to recover broader and uncapped costs (attorney, expert, etc.) if they substantially prevail, shifting burden to the Department to prove substantial justi

Referred to Judiciary.
#administrativeprocedure #courts #hearings #incometaxes #publicfunds #revenuedepartment #taxation #witnesses
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Bill Summary · SF 524

Summary of SF 524 (2025)

Purpose and scope

SF 524 would change how costs are awarded in administrative hearings or court proceedings involving the Department of Revenue’s collection of tax, penalties, and interest. The bill updates which costs can be recovered, eliminates the current cap, and modifies the burden of proof when a taxpayer substantially prevails in a dispute.

Key provisions

  • Costs recoverable: The bill allows recovery of
    • reasonable court costs;
    • reasonable prevailing market rates for expert witnesses, studies, tests, analyses, or special projects;
    • reasonable attorney or accountant fees, including fees related to recovering the allowed costs.
  • Cap elimination: The current taxpayer cost recovery cap of $25,000 is struck from law.
  • Burden of proof and outcome if taxpayer substantially prevails:
    • If the taxpayer substantially prevails on the dispute (amount in controversy or issues involved), the burden shifts to the Department of Revenue to prove that its position was substantially justified.
    • If the department proves substantial justification, the taxpayer cannot recover an award.
    • If the taxpayer prevails, the department must pay the reasonable costs described above.
  • Current law comparison: Under existing law, the taxpayer must prove that the department’s position was not substantially justified, in addition to the amount at issue and the issues involved.

Who is affected

  • Primary: Taxpayers active in disputes with the Department of Revenue over taxes, penalties, and interest.
  • Secondary: The Department of Revenue (potentially higher cost exposure if taxpayers prevail), and professionals (attorneys, accountants, experts) who bill in these disputes.

Procedural and timeline aspects

  • Introduced: March 5, 2025.
  • Status: Referred to Judiciary; committee report approved on introduction date.
  • Legislative actions:
    • 2025-03-05: Introduced and placed on calendar; committee report approving.
    • 2025-06-16: Referred again to Judiciary.

Potential impact and considerations

  • The bill shifts incentives in disputes: taxpayers may have greater potential to recover costs if they substantially prevail, while the state could incur higher costs if the department’s position is not substantially justified.
  • Removal of the $25,000 cap broadens the scope of recoverable costs, potentially affecting budgeting for both taxpayers and the state in large disputes.
  • The burden-shifting mechanism places a new onus on the department to defend its position when a taxpayer prevails, potentially influencing litigation strategy.

Note: This summary reflects the introduced text and stated provisions. If enacted, the bill would apply to future disputes related to tax collection by the department.

Compiled from official sources — confirm details with the bill’s official record.

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