OLYMPIA… Under a bill proposed Wednesday, just 11 days until the anticipated end of the 2009 legislative session, corporate officers could be held personally responsible for the financial debt of their corporations. 

Senate Bill 6169 was introduced by Sen. Margarita Prentice, the Renton Democrat who chairs the Senate Ways and Means Committee. It is likely intended to tap what some see as a funding source that the state has apparently overlooked. 

“The whole idea of a corporation is to protect the personal assets of the corporation’s creators,” said Sen. Mike Carrell, R-Lakewood. “This destroys the fundamental concept of a corporation. If I was part of a group thinking of forming a corporation, I wouldn’t do it in the state of Washington if this becomes law. In fact, it would likely drive current corporations out of state where the risk of losing personal assets doesn’t exist.” 

Carrell says that under current law corporate officers are on the hook for no more than the amount that they’ve invested in the corporation. If SB 6169 becomes law, current and former corporate officers would be joint and severally liable for any unpaid business and occupation or use taxes still owed by the corporation. 

Carrell went on to say that because the state is facing a multi-billion dollar budget deficit, majority budget writers are desperately searching for any money they can find to make up for years of state overspending. 

“I don’t claim to be a wizard in corporate law, but I understand how bad this is for keeping corporations in our state,” Carrell said. “This bill would disembowel corporations in the state of Washington if it becomes law. Who would want to be a corporate officer when your house, your savings, your retirement fund and your property is on the line? This is an absolutely horrible idea.” 

SB 6169 had a public hearing in the ways and means committee Wednesday. Carrell said multiple business organizations testified against the bill.