5300-S

5300-S.E AMH LG H2517.2

ESSB 5300 - H COMM AMD

By Committee on Local Government

On page 13, after line 26, insert the following:

"NEW SECTION. Sec. 17. A new section is added to chapter 35.21 RCW to read as follows:

(1) The legislature finds that companies who engage in business activities in multiple local jurisdictions are unduly burdened by double, triple, and sometimes even quadruple taxation of the same business income. The legislature further finds that this multiple taxation of the same business income by local jurisdictions is significantly impairing the ability of the state to solidify and enhance its competitive position to attract new businesses and retain existing businesses. The legislature further finds that this multiple taxation is the result of a lack of a method to fairly and equitably apportion business income to various local jurisdictions for the purpose of taxation. It is, therefore, the intent of the legislature to establish a consistent, fair, and equitable method of allocating and apportioning business income among various local jurisdictions for the purpose of taxation. This method is intended to produce an apportionment and allocation system that avoids multiple taxation of the same business income, provides taxpayers with certainty in the determination of their tax liability, and allows for fair division of gross income of businesses between and among local jurisdictions.

(2) The definitions in this subsection apply throughout this section unless the content clearly requires otherwise:

(a) "Gross receipts tax" means a tax which is imposed on or measured by the gross volume of business, in terms of gross receipts or in other terms, and in the determination of which the deductions allowed would not constitute an income tax or value added tax and which is also not, pursuant to law or custom, separately stated from the sales price.

(b) "Local jurisdiction" means any city, town, county, municipal district or corporation, political subdivision, Indian reservation, or federal area located in the state of Washington.

(3)(a) All state and federal constitutional provisions and laws pertaining to interstate commerce shall be duly applicable to intrastate commerce, including, but not limited to, apportioning or allocating gross income when a person is engaged in business both within and without a local jurisdiction, establishing nexus for purposes of exerting a local jurisdiction tax, and providing a multiple activities tax credit similar to that provided in RCW 82.04.440.

(b) Under no circumstances shall the total tax measure apportioned or allocated to the applicable local jurisdictions exceed the total tax measure computed for the purpose of state taxation.

(4) The following specific guidelines shall be applied by any local jurisdiction with respect to any locally imposed gross receipts tax:

(a) For the purposes of imposing a gross receipts tax on extracting, manufacturing, or processing for hire activities, the activities shall be subject to tax in the local jurisdiction where the activities occur. If the activities occur in more than one local jurisdiction, the activities shall be consistently, equitably, and reasonably apportioned between or among those local jurisdictions.

(b) For the purposes of imposing a gross receipts tax on retail or wholesale sales, all sales shall be subject to tax in the local jurisdiction where the sales take place. The following provisions are to be followed in determining where a sale takes place:

(i) A retail or wholesale sale consisting solely of the sale of tangible personal property shall be deemed to have occurred at the retail or wholesale outlet at or from which delivery is made to the purchaser. The term retail or wholesale outlet shall not include a sales office unless purchasers regularly visit the sales office to place orders. Dock sales or other sales of tangible personal property where the purchaser takes possession of the tangible personal property shall be deemed to have occurred where the purchaser takes possession of the tangible personal property regardless of where the purchaser may ultimately transport the tangible personal property. Where a common carrier, a private carrier, or a seller's own transport is used to deliver tangible personal property, other than from a retail or wholesale outlet, the sale of tangible personal property shall be deemed to have occurred at the location where the common carrier delivers the tangible personal property to the purchaser regardless of who pays the carrier and notwithstanding any other terms of sale.

(ii) A retail or wholesale sale consisting essentially of the performance of professional business or professional services shall be deemed to have occurred at the place at which such services were primarily performed, except that for the performance of a tow truck service, as defined in RCW 46.55.010 the retail or wholesale sale shall be deemed to have occurred at the place of the business of the tow truck service.

(iii) A retail or wholesale sale consisting of the rental of tangible personal property shall be deemed to have occurred, in the case of rental involving periodic rental payments, in the primary place of use by the lessee during the period covered by each payment and, in all other cases, at the place of first use by the lessee.

(iv) A retail sale within the scope of RCW 82.04.050(2), and a retail sale of tangible personal property to be installed by the seller shall be deemed to have occurred at the place where the labor and services involved were primarily performed.

(c) For the purposes of imposing a gross receipts tax on any person rendering services as defined under RCW 82.04.290, the services shall be subject to tax in the local jurisdiction where the services were primarily performed. If the person rendering services performs substantial service activities in more than one local jurisdiction, the person shall apportion to each local jurisdiction that portion of the total gross income which is derived from services rendered in each local jurisdiction. Where apportionment cannot be accurately made by separate accounting methods, the person shall apportion to each local jurisdiction that proportion of the total gross income which is derived from services which the cost of performing the services within a local jurisdiction bears to the total cost of performing the services in all local jurisdictions.

(5) The following credits shall be allowed for persons performing multiple activities in multiple local jurisdictions:

(a) Every person engaged in manufacturing activities shall be allowed a credit against the measure of tax of any manufacturing gross receipts tax imposed by a local jurisdiction for any portion of the measure of tax which has been previously subjected to a local jurisdiction gross receipts tax on either extracting or manufacturing activities.

(b) Every person engaged in making retail or wholesale sales shall be allowed a credit against the measure of tax of any retailing or wholesaling gross receipts tax imposed by a local jurisdiction for any portion of the measure of tax which has been previously subjected to a local jurisdiction gross receipts tax on either extracting or previously performed manufacturing activities."

Correct the title.