BILL REQ. #: H-3313.4
| State of Washington | 62nd Legislature | 2012 Regular Session |
Read first time 01/16/12. Referred to Committee on Ways & Means.
AN ACT Relating to tax reform; amending RCW 82.32.010, 82.03.130, 82.03.140, 2.10.180, 2.12.090, 6.15.020, 41.24.240, 41.35.100, 41.40.052, 41.44.240, 43.43.310, 82.08.020, 82.04.261, 82.04.285, and 82.04.050; reenacting and amending RCW 41.32.052 and 41.26.053; adding a new title to the Revised Code of Washington to be codified as Title 82A RCW; creating a new section; repealing RCW 6.15.025, 82.04.230, 82.04.240, 82.04.2403, 82.04.2404, 82.04.250, 82.04.255, 82.04.257, 82.04.260, 82.04.263, 82.04.270, 82.04.272, 82.04.280, 82.04.290, 82.04.2905, 82.04.2906, 82.04.2907, 82.04.2908, 82.04.2909, 82.04.293, 82.04.294, and 82.04.298; prescribing penalties; providing contingent effective dates; providing an expiration date; and providing for submission of this act to a vote of the people.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 101
NEW SECTION. Sec. 102
NEW SECTION. Sec. 103
NEW SECTION. Sec. 104
NEW SECTION. Sec. 105
(1) For individuals, adjusted gross income.
(2) For all other persons, except corporations and individuals,
taxable income as determined under the internal revenue code.
(3) For corporations, gross profits.
NEW SECTION. Sec. 106
NEW SECTION. Sec. 107
NEW SECTION. Sec. 108
NEW SECTION. Sec. 109
NEW SECTION. Sec. 110
(1) An individual who:
(a) Has resided in this state for the entire taxable year; or
(b) Is domiciled in this state unless the individual:
(i) Maintains no permanent place of abode in this state; and
(ii) Does maintain a permanent place of abode elsewhere; and
(iii) Spends in the aggregate not more than thirty days in the
taxable year in this state; or
(c) Is not domiciled in this state, but maintains a permanent place
of abode in this state and spends in the aggregate more than one
hundred eighty-three days of the taxable year in this state unless the
individual establishes to the satisfaction of the department that the
individual is in the state only for temporary or transitory purposes;
or
(d) Claims the state of Washington as the individual's tax home for
federal income tax purposes.
(2) "Resident estate" means an estate of which a personal
representative was appointed by a Washington court or an estate
administered in this state.
(3) "Resident trust" means a trust whose situs, as determined by
RCW 11.96A.030, is within the state of Washington.
NEW SECTION. Sec. 111
NEW SECTION. Sec. 112
NEW SECTION. Sec. 113
NEW SECTION. Sec. 114
NEW SECTION. Sec. 115
NEW SECTION. Sec. 201
NEW SECTION. Sec. 202
(2) Add any expenses incurred in the production of amounts
subtracted under subsection (1) of this section, to the extent the
expenses have been deducted in computing federal base income.
NEW SECTION. Sec. 203
NEW SECTION. Sec. 204
NEW SECTION. Sec. 205
NEW SECTION. Sec. 206
NEW SECTION. Sec. 207
NEW SECTION. Sec. 208
(2) Subtract any expenses incurred in the production of amounts
added under subsection (1) of this section, to the extent the expenses
have not been deducted in computing federal base income.
NEW SECTION. Sec. 209
(2) Add any expenses incurred in the production of amounts
subtracted under subsection (1) of this section, to the extent the
expenses have been deducted in computing federal base income.
NEW SECTION. Sec. 210
(1) The taxable income must be multiplied by a fraction. The
numerator of the fraction is the number of days in the fractional
taxable year. The denominator of the fraction is the number of days in
the entire taxable year.
(2) The taxable income must be adjusted, in accordance with rules
of the department, so as to include only such income and be reduced
only by such deductions as can be clearly determined from the permanent
records of the taxpayer to be attributable to the fractional taxable
year.
NEW SECTION. Sec. 301
(2) For nonresident individuals, estates, and trusts, income
derived from sources within this state must be apportioned and
allocated to this state. For purposes of this title:
(a) The adjusted gross income of a nonresident derived from sources
within this state is the net amount of items of income, gain, loss, and
deduction of the nonresident's federal adjusted gross income that are
derived from or connected with sources in this state including any
distributive share of partnership income and deductions, and any share
of estate or trust income and deductions, including any unrelated
business income of an otherwise exempt trust or organization.
(b) Items of income, gain, loss, and deduction derived from or
connected with sources within this state are those items attributable
to the ownership or disposition of any interest in real or tangible
personal property in this state, and a business, trade, profession, or
occupation carried on within this state. The department must issue
rules to provide consistency of this section with the excise tax
provisions.
(c) Deduction with respect to expenses, capital losses, and net
operating losses must be based solely on income, gains, losses, and
deductions derived from or connected with sources in this state but
must otherwise be determined in the same manner as the corresponding
federal deduction except as provided in this title.
(d) Income from intangible personal property, including annuities,
dividends, interest, and gains from the disposition of intangible
personal property, constitutes income derived from sources within the
state of Washington only to the extent that such income is from
property employed in a business, trade, profession, or occupation
carried on within this state. However, distributed and undistributed
income of an electing S corporation for federal tax purposes derived
from or connected with sources within this state is income derived from
sources within this state for a nonresident shareholder. A net
operating loss of such corporation does constitute a loss or deduction
connected with sources within this state for a nonresident shareholder.
(e) Compensation paid by the United States for service in the armed
forces of the United States performed in this state by a nonresident
does not constitute income derived from sources within this state.
(f) If a business, trade, profession, or occupation is carried on
partly within and partly without this state, the determination of net
income derived or connected with sources within this state, as provided
in this section, must be made by apportionment and allocation under
chapter 82.56 RCW.
NEW SECTION. Sec. 302
(2) For financial organizations, as defined in Article IV, section
1(d) and (f) of RCW 82.56.010, that are taxable both within this state
and in another state within the meaning of Article IV, section 3 of RCW
82.56.010, the amount of net income to be apportioned or allocated, or
both, to this state must be determined in accordance with rules adopted
by the department. The rules must, as far as the department deems
practical, be consistent with the provisions of Article IV of RCW
82.56.010. In developing the rules, the department must also give
appropriate consideration to any uniform regulations adopted by the
multistate tax commission pursuant to Article VII of RCW 82.56.010, and
to the rules of other states in which the financial organizations and
public utilities are also taxable.
NEW SECTION. Sec. 303
(2) A corporation is a part of a water's edge combined group if it
is engaged in business activities that are integrated with, dependent
upon, or that contribute to the business activities of the group as a
whole. Only corporations meeting one or more of the following
descriptions may be included in a water's edge combined group:
(a) Corporations included or includable in a consolidated return
for federal income tax purposes;
(b) United States possessions corporations;
(c) Corporations incorporated in any United States possession or
territory;
(d) Domestic international sales corporations or foreign sales
corporations;
(e) Corporations incorporated in a country that either does not
impose an income tax or imposes an income tax at a rate lower than
ninety percent of the federal tax rate on the federally defined income
tax base, if:
(i) Fifty percent or more of either the sales or purchases or of
payments of income or expenses, exclusive of payments for intangible
property, or payments of eighty percent or more of all expenses are
made directly or indirectly to one or more members of a water's edge
combined group; or
(ii) The corporation conducts no significant economic activity;
(f) Foreign corporations having at least a threshold level of
business activity in the United States, as determined under rules of
the department;
(g) United States corporations that are members of a group of two
or more corporations with a common owner or owners, either corporate or
noncorporate, where more than fifty percent of the voting stock of each
member corporation is directly or indirectly owned by the common owner
or owners or by one or more of the member corporations.
(3) The income attributable to the Washington activities of a
corporation that is a part of a water's edge combined group must be
determined by the apportionment of the entire business gross profits of
the group and the allocation of nonbusiness income of the corporation,
using the factors and methods in section 302 of this act and the rules
of the department adopted under section 302 of this act. Business net
income may include income of corporations that do not have federal
taxable income because they are not subject to federal taxation.
NEW SECTION. Sec. 304
(2) The taxable incomes of shareholders of S corporations must be
computed by including a share of the modifications under Part II and
sections 301 through 303 of this act and the credits allowed under
section 402 of this act, if the modification or credit relates to the
income of the S corporation. Each shareholder's share of a
modification or credit is the amount of modification or credit
multiplied by a fraction. The numerator of the fraction is the
shareholder's pro rata share of S corporation income. The denominator
of the fraction is the total S corporation income. The fraction may
never be greater than one.
(3) As used in this section:
(a) "S corporation income" includes both distributed and
undistributed federal taxable income of the S corporation less any
amount subject to tax under section 402 of this act.
(b) "Pro rata share" means pro rata share as determined under
section 1366(a) of the internal revenue code.
NEW SECTION. Sec. 305
Each taxpayer's share of a modification or credit is the amount of
modification or credit multiplied by a fraction. The numerator of the
fraction is the taxpayer's share of the distributable net income of the
estate or trust. The denominator of the fraction is the total
distributable net income of the estate or trust. The fraction may
never be greater than one.
(2) As used in this section, "distributable net income" means
distributable net income as defined in the internal revenue code. If
an estate or trust has no federal distributable net income, the term
means the income of the estate or trust which is distributed or is
required to be distributed during the taxable year under local law or
the terms of the estate or trust instrument.
(3) Any portion of a modification that is not included in
calculating the taxable incomes of the beneficiaries must be included
in calculating the taxable income of the trust or estate.
NEW SECTION. Sec. 401
(2) The taxes imposed in this section may never be less than zero.
NEW SECTION. Sec. 402
(2) As used in this section, "another jurisdiction" means another
state or foreign country or a political subdivision of another state or
foreign country.
(3) A resident individual, estate, or trust is allowed a credit
against the tax imposed under this title equal to the lesser of:
(a) The amount of tax paid to another jurisdiction on net income
derived from sources within the other jurisdiction; or
(b) The amount of tax due under this title, before application of
credits allowable by this title, multiplied by a fraction. The
numerator of the fraction is the amount of the taxpayer's adjusted
gross income subject to tax in the other jurisdiction. The denominator
of the fraction is the taxpayer's total adjusted gross income as
modified under Part II of this title. The fraction may never be
greater than one.
(4) If the laws of another jurisdiction contain a provision
exempting a resident of Washington from net income taxes on income
derived from sources in that jurisdiction, the director of revenue is
authorized to enter into a reciprocal agreement with that jurisdiction
providing a similar tax exemption for residents of that jurisdiction
for income derived from sources within Washington.
(5) The amount of tax credits received by any taxpayer under this
section may not exceed the total amount of tax due, and there may be no
carryback or carryforward of any unused credits.
NEW SECTION. Sec. 403
NEW SECTION. Sec. 404
NEW SECTION. Sec. 405
NEW SECTION. Sec. 406 Taxes collected under sections 401 and 404
of this act must be used as follows:
(1) Seven and two-tenths percent must be deposited into the state
educational trust fund created in RCW 28B.92.140 and used exclusively
for the purposes of the state need grant program under chapter 28B.92
RCW.
(2) Seven and two-tenths percent must be deposited into the
education legacy trust account created in RCW 83.100.230. Revenues
deposited into the education legacy trust account under this subsection
must be used to provide universal access for students to colleges and
universities, which includes a waiver of: An academic year of tuition
and fees at community and technical colleges including tuition and fees
for apprentice students; two quarters of tuition and fees at regional
universities and The Evergreen State College; one-quarter of tuition
and fees at the University of Washington; and one-third of tuition and
fees for one year at Washington State University.
NEW SECTION. Sec. 501
(2) If the employee is a resident of this state and earns income
from personal services entirely performed in another state that imposes
an income tax on the income, and the employer withholds income taxes
under the laws of the state in which the income is earned, the employer
is not required to withhold any tax imposed by this title on the income
if the laws of the state in which the income is earned allow a similar
exemption for its residents who earn income in this state.
NEW SECTION. Sec. 502
NEW SECTION. Sec. 503
NEW SECTION. Sec. 504
(2) In case any employer, or a responsible person within the
meaning of internal revenue code section 6672, fails to collect the tax
imposed by this title or having collected the tax fails to pay it to
the department, the employer or responsible person must, nevertheless,
be personally liable to the state for the amount of the tax. The
interest and penalty provisions of chapter 82.32 RCW apply to this
section.
NEW SECTION. Sec. 505
(2) The provisions of the internal revenue code relating to the
determination of reporting periods and due dates of payments of
estimated tax apply to the estimated tax payments due under this
section.
(3) The amount of the estimated tax must be the annualized tax
divided by the number of months in the reporting period. No estimated
tax is due if the annualized tax is less than five hundred dollars.
The provisions of RCW 82.32.050 and 82.32.090 must apply to
underpayments of estimated tax but may not apply to underpayments if
the tax remitted to the department under this Part is either ninety
percent of the tax shown on the return or one hundred percent of the
tax shown on the previous year's tax return.
(4) For purposes of this section, the annualized tax is the
taxpayer's projected tax liability for the taxable year as computed
under internal revenue code section 6654 and the regulations
thereunder.
NEW SECTION. Sec. 601
(2) Any person required to collect tax imposed under this title who
knowingly fails to collect, truthfully account for, or pay over the tax
is guilty of a class C felony as provided in chapter 9A.20 RCW.
(3) Any person who knowingly fails to pay tax, pay estimated tax,
make returns, keep records, or supply information, as required under
this title, is guilty of a gross misdemeanor as provided in chapter
9A.20 RCW.
NEW SECTION. Sec. 701
(2) If a person's method of accounting is changed for federal
income tax purposes, it must be similarly changed for purposes of this
title.
NEW SECTION. Sec. 702
(2) The department may by rule require that certain taxpayers file,
on forms prescribed by the department, informational returns for any
period.
(3) If an adjustment to a taxpayer's federal return is made by the
taxpayer or the internal revenue service, the taxpayer must, within
ninety days of the final determination of the adjustment by the
internal revenue service or within thirty days of the filing of a
federal return adjusted by the taxpayer, file with the department on
forms prescribed by the department, a corrected return reflecting the
adjustments as finally determined. The taxpayer must pay any
additional tax due resulting from the finally determined internal
revenue service adjustment or a taxpayer adjustment without notice and
assessment. Notwithstanding any provision of this title or any other
title to the contrary, the period of limitation for the collection of
the additional tax, interest, and penalty due as a result of an
adjustment by the taxpayer or a finally determined internal revenue
service adjustment must begin at the later of thirty days following the
final determination of the adjustment or the date of the filing of the
corrected return.
NEW SECTION. Sec. 703
NEW SECTION. Sec. 704
(2) If neither spouse is required to file a federal income tax
return for the taxable year, a joint return is required to be filed
under this title under the same conditions under which a joint return
may be filed for purposes of the federal income tax.
(3) Except as provided in subsection (5) of this section, if the
federal income tax liability of either spouse is determined on a
separate federal return for the taxable year, they must file separate
returns under this title.
(4) In any case in which a joint return is filed under this
section, the liability of the husband and wife or partners is joint and
several, unless the spouse or partner is relieved of liability under
section 6013 of the internal revenue code.
(5) Partners in a state registered domestic partnership may file a
joint return under this title.
NEW SECTION. Sec. 705
(2) All books and records and other papers and documents required
to be kept under this title are subject to inspection by the department
at all times during business hours of the day.
NEW SECTION. Sec. 706
NEW SECTION. Sec. 707
(a) Time of payment of tax deducted and withheld under section 501
of this act;
(b) Liability of transferees;
(c) Time and manner of making returns, extensions of time for
filing returns, verification of returns, and the time when a return is
deemed filed.
(2) The department by rule may provide modifications and exceptions
to the provisions listed in subsection (1) of this section, if
reasonably necessary to facilitate the prompt, efficient, and equitable
collection of tax under this title.
NEW SECTION. Sec. 708
(2) The following sections apply to the administration of taxes
imposed under this title: RCW 82.32.050, 82.32.055, 82.32.060,
82.32.070, 82.32.080, 82.32.090, 82.32.100, 82.32.105, 82.32.110,
82.32.117, 82.32.120, 82.32.130, 82.32.135, 82.32.140, 82.32.150,
82.32.160, 82.32.170, 82.32.180, 82.32.190, 82.32.200, 82.32.210,
82.32.212, 82.32.220, 82.32.230, 82.32.235, 82.32.237, 82.32.240,
82.32.245, 82.32.260, 82.32.265, 82.32.310, 82.32.320, 82.32.330,
82.32.340, 82.32.350, 82.32.360, 82.32.380, and 82.32.410.
NEW SECTION. Sec. 709
Sec. 710 RCW 82.32.010 and 2010 1st sp.s. c 19 s 13 are each
amended to read as follows:
The provisions of this chapter apply with respect to the taxes
imposed under chapters 82.04 through 82.14 RCW, under chapter 82.14B
RCW, under chapters 82.16 through 82.29A RCW of this title, under
chapter 84.33 RCW, under Title 82A RCW (the new title created in
section 1302 of this act), and under other titles, chapters, and
sections in such manner and to such extent as indicated in each such
title, chapter, or section.
Sec. 801 RCW 82.03.130 and 2005 c 253 s 7 are each amended to
read as follows:
(1) The board ((shall have)) has jurisdiction to decide the
following types of appeals:
(a) Appeals taken pursuant to RCW 82.03.190.
(b) Appeals from a county board of equalization pursuant to RCW
84.08.130.
(c) Appeals by an assessor or landowner from an order of the
director of revenue made pursuant to RCW 84.08.010 and 84.08.060, if
filed with the board of tax appeals within thirty days after the
mailing of the order, the right to such an appeal being hereby
established.
(d) Appeals by an assessor or owner of an intercounty public
utility or private car company from determinations by the director of
revenue of equalized assessed valuation of property and the
apportionment thereof to a county made pursuant to chapter 84.12 and
84.16 RCW, if filed with the board of tax appeals within thirty days
after mailing of the determination, the right to such appeal being
hereby established.
(e) Appeals by an assessor, landowner, or owner of an intercounty
public utility or private car company from a determination of any
county indicated ratio for such county compiled by the department of
revenue pursuant to RCW 84.48.075((: PROVIDED, That)).
(i) ((Said)) The appeal be filed after review of the ratio under
RCW 84.48.075(3) and not later than fifteen days after the mailing of
the certification; and
(ii) The hearing before the board ((shall)) must be expeditiously
held in accordance with rules prescribed by the board and ((shall))
takes precedence over all matters of the same character.
(f) Appeals from the decisions of sale price of second class
shorelands on navigable lakes by the department of natural resources
pursuant to RCW ((79.94.210)) 79.125.450.
(g) Appeals from urban redevelopment property tax apportionment
district proposals established by governmental ordinances pursuant to
RCW 39.88.060.
(h) Appeals from interest rates as determined by the department of
revenue for use in valuing farmland under current use assessment
pursuant to RCW 84.34.065.
(i) Appeals from revisions to stumpage value tables used to
determine value by the department of revenue pursuant to RCW 84.33.091.
(j) Appeals from denial of tax exemption application by the
department of revenue pursuant to RCW 84.36.850.
(k) Appeals pursuant to RCW 84.40.038(3).
(l) Appeals pursuant to RCW 84.39.020.
(m) Appeals relating to income tax deficiencies and refunds,
including penalties and interest, under Title 82A RCW (the new title
created in section 1302 of this act).
(2) Except as otherwise specifically provided by law hereafter, the
provisions of RCW 1.12.070 ((shall apply)) applies to all notices of
appeal filed with the board of tax appeals.
Sec. 802 RCW 82.03.140 and 2000 c 103 s 1 are each amended to
read as follows:
In all appeals over which the board has jurisdiction under RCW
82.03.130, a party taking an appeal may elect either a formal or an
informal hearing, such election to be made according to rules of
practice and procedure to be promulgated by the board((: PROVIDED,
That)). However, nothing ((shall)) prevents the assessor or taxpayer,
as a party to an appeal pursuant to RCW 84.08.130, within twenty days
from the date of the receipt of the notice of appeal, from filing with
the clerk of the board notice of intention that the hearing be a formal
one((: PROVIDED, HOWEVER, That)). Moreover, nothing ((herein shall))
in this section may be construed to modify the provisions of RCW
82.03.190((: AND PROVIDED FURTHER, That)) and upon an appeal under RCW
82.03.130(1) (e) or (m), the director of revenue may, within ten days
from the date of its receipt of the notice of appeal, file with the
clerk of the board notice of its ((intention that the hearing be held
pursuant to chapter 34.05 RCW)) election of a formal hearing. In the
event that appeals are taken from the same decision, order, or
determination, as the case may be, by different parties and only one of
such parties elects a formal hearing, a formal hearing ((shall)) must
be granted.
Sec. 901 RCW 2.10.180 and 1991 c 365 s 18 are each amended to
read as follows:
(1) Except as provided in subsections (2), (3), ((and)) (4), and
(5) of this section, the right of a person to a retirement allowance,
disability allowance, or death benefit, the retirement, disability or
death allowance itself, any optional benefit, any other right accrued
or accruing to any person under the provisions of this chapter, and the
moneys in the fund created under this chapter, are hereby exempt from
any state, county, municipal, or other local tax and ((shall)) are not
((be)) subject to execution, garnishment, or any other process of law
whatsoever.
(2) Subsection (1) of this section ((shall)) may not be deemed to
prohibit a beneficiary of a retirement allowance from authorizing
deductions therefrom for payment of premiums due on any group insurance
policy or plan issued for the benefit of a group comprised of public
employees of the state of Washington.
(3) Deductions made in the past from retirement benefits are hereby
expressly recognized, ratified, and affirmed. Future deductions may
only be made in accordance with this section.
(4) Subsection (1) of this section ((shall)) does not prohibit the
department of retirement systems from complying with (a) a wage
assignment order for child support issued pursuant to chapter 26.18
RCW, (b) a notice of payroll deduction issued under chapter 26.23 RCW,
(c) an order to withhold and deliver issued pursuant to chapter 74.20A
RCW, (d) a mandatory benefits assignment order issued pursuant to
chapter 41.50 RCW, (e) a court order directing the department of
retirement systems to pay benefits directly to an obligee under a
dissolution order as defined in RCW 41.50.500(3) which fully complies
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court
order expressly authorized by federal law.
(5) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
Sec. 902 RCW 2.12.090 and 1991 c 365 s 19 are each amended to
read as follows:
(1) Except as provided in subsections (2), (3), ((and)) (4), and
(5) of this section, the right of any person to a retirement allowance
or optional retirement allowance under the provisions of this chapter
and all moneys and investments and income thereof are exempt from any
state, county, municipal, or other local tax and ((shall not be)) is
not subject to execution, garnishment, attachment, the operation of
bankruptcy or the insolvency laws, or other processes of law whatsoever
and ((shall be)) is unassignable except as herein specifically
provided.
(2) Subsection (1) of this section ((shall)) does not prohibit the
department of retirement systems from complying with (a) a wage
assignment order for child support issued pursuant to chapter 26.18
RCW, (b) a notice of payroll deduction issued under chapter 26.23 RCW,
(c) an order to withhold and deliver issued pursuant to chapter 74.20A
RCW, (d) a mandatory benefits assignment order issued pursuant to
chapter 41.50 RCW, (e) a court order directing the department of
retirement systems to pay benefits directly to an obligee under a
dissolution order as defined in RCW 41.50.500(3) which fully complies
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court
order expressly authorized by federal law.
(3) Subsection (1) of this section ((shall)) may not be deemed to
prohibit a beneficiary of a retirement allowance from authorizing
deductions therefrom for payment of premiums due on any group insurance
policy or plan issued for the benefit of a group comprised of public
employees of the state of Washington.
(4) Deductions made in the past from retirement benefits are hereby
expressly recognized, ratified, and affirmed. Future deductions may
only be made in accordance with this section.
(5) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
Sec. 903 RCW 6.15.020 and 2011 c 162 s 3 are each amended to read
as follows:
(1) It is the policy of the state of Washington to ensure the well-being of its citizens by protecting retirement income to which they are
or may become entitled. For that purpose generally and pursuant to the
authority granted to the state of Washington under 11 U.S.C. Sec.
522(b)(2), the exemptions in this section relating to retirement
benefits are provided.
(2) Unless otherwise provided by federal law, any money received by
any citizen of the state of Washington as a pension from the government
of the United States, whether the same be in the actual possession of
such person or be deposited or loaned, ((shall be)) is exempt from
execution, attachment, garnishment, or seizure by or under any legal
process whatever, and when a debtor dies, or absconds, and leaves his
or her family any money exempted by this subsection, the same ((shall
be)) is exempt to the family as provided in this subsection. This
subsection ((shall)) does not apply to child support collection actions
issued under chapter 26.18, 26.23, or 74.20A RCW, if otherwise
permitted by federal law, or to collection actions for taxes imposed
under Title 82A RCW (the new title created in section 1302 of this
act).
(3) The right of a person to a pension, annuity, or retirement
allowance or disability allowance, or death benefits, or any optional
benefit, or any other right accrued or accruing to any citizen of the
state of Washington under any employee benefit plan, and any fund
created by such a plan or arrangement, ((shall be)) is exempt from
execution, attachment, garnishment, or seizure by or under any legal
process whatever. This subsection ((shall)) does not apply to child
support collection actions issued under chapter 26.18, 26.23, or 74.20A
RCW if otherwise permitted by federal law, or to collection actions for
taxes imposed under Title 82A RCW (the new title created in section
1302 of this act). This subsection ((shall)) permits benefits under
any such plan or arrangement to be payable to a spouse, former spouse,
child, or other dependent of a participant in such plan to the extent
expressly provided for in a qualified domestic relations order that
meets the requirements for such orders under the plan, or, in the case
of benefits payable under a plan described in 26 U.S.C. Sec. 403(b) or
408 of the internal revenue code of 1986, as amended, or section 409 of
such code as in effect before January 1, 1984, to the extent provided
in any order issued by a court of competent jurisdiction that provides
for maintenance or support. This subsection does not prohibit actions
against an employee benefit plan, or fund for valid obligations
incurred by the plan or fund for the benefit of the plan or fund.
(4) For the purposes of this section, the term "employee benefit
plan" means any plan or arrangement that is described in RCW 49.64.020,
including any Keogh plan, whether funded by a trust or by an annuity
contract, and in 26 U.S.C. Sec. 401(a) or 403(a) of the internal
revenue code of 1986, as amended; or that is a tax-sheltered annuity or
a custodial account described in section 403(b) of such code or an
individual retirement account or an individual retirement annuity
described in section 408 of such code; or a Roth individual retirement
account described in section 408A of such code; or a medical savings
account or a health savings account described in sections 220 and 223,
respectively, of such code; or a retirement bond described in section
409 of such code as in effect before January 1, 1984. The term
"employee benefit plan" ((shall)) does not include any employee benefit
plan that is established or maintained for its employees by the
government of the United States, by the state of Washington under
chapter 2.10, 2.12, 41.26, 41.32, 41.34, 41.35, 41.37, 41.40, or 43.43
RCW or RCW 41.50.770, or by any agency or instrumentality of the
government of the United States.
(5) An employee benefit plan ((shall be)) is deemed to be a
spendthrift trust, regardless of the source of funds, the relationship
between the trustee or custodian of the plan and the beneficiary, or
the ability of the debtor to withdraw or borrow or otherwise become
entitled to benefits from the plan before retirement. This subsection
((shall)) does not apply to child support collection actions issued
under chapter 26.18, 26.23, or 74.20A RCW, if otherwise permitted by
federal law, or to collection actions for taxes imposed under Title 82A
RCW (the new title created in section 1302 of this act). This
subsection ((shall)) permits benefits under any such plan or
arrangement to be payable to a spouse, former spouse, child, or other
dependent of a participant in such plan to the extent expressly
provided for in a qualified domestic relations order that meets the
requirements for such orders under the plan, or, in the case of
benefits payable under a plan described in 26 U.S.C. Sec. 403(b) or 408
of the internal revenue code of 1986, as amended, or section 409 of
such code as in effect before January 1, 1984, to the extent provided
in any order issued by a court of competent jurisdiction that provides
for maintenance or support.
(6) Unless prohibited by federal law, nothing contained in
subsection (3), (4), or (5) of this section ((shall)) may be construed
as a termination or limitation of a spouse's community property
interest in an employee benefit plan held in the name of or on account
of the other spouse, who is the participant or the account holder
spouse. Unless prohibited by applicable federal law, at the death of
the nonparticipant, nonaccount holder spouse, the nonparticipant,
nonaccount holder spouse may transfer or distribute the community
property interest of the nonparticipant, nonaccount holder spouse in
the participant or account holder spouse's employee benefit plan to the
nonparticipant, nonaccount holder spouse's estate, testamentary trust,
inter vivos trust, or other successor or successors pursuant to the
last will of the nonparticipant, nonaccount holder spouse or the law of
intestate succession, and that distributee may, but ((shall)) is not
((be)) required to, obtain an order of a court of competent
jurisdiction, including a nonjudicial binding agreement or order
entered under chapter 11.96A RCW, to confirm the distribution. For
purposes of subsection (3) of this section, the distributee of the
nonparticipant, nonaccount holder spouse's community property interest
in an employee benefit plan ((shall be)) is considered a person
entitled to the full protection of subsection (3) of this section. The
nonparticipant, nonaccount holder spouse's consent to a beneficiary
designation by the participant or account holder spouse with respect to
an employee benefit plan ((shall)) is not, absent clear and convincing
evidence to the contrary, be deemed a release, gift, relinquishment,
termination, limitation, or transfer of the nonparticipant, nonaccount
holder spouse's community property interest in an employee benefit
plan. For purposes of this subsection, the term "nonparticipant,
nonaccount holder spouse" means the spouse of the person who is a
participant in an employee benefit plan or in whose name an individual
retirement account is maintained. As used in this subsection, an order
of a court of competent jurisdiction entered under chapter 11.96A RCW
includes an agreement, as that term is used under RCW 11.96A.220.
Sec. 904 RCW 41.24.240 and 1995 c 11 s 13 are each amended to
read as follows:
(1) The right of any person to any future payment under the
provisions of this chapter ((shall)) is not ((be)) transferable or
assignable at law or in equity, and none of the moneys paid or payable
or the rights existing under this chapter, ((shall be)) is subject to
execution, levy, attachment, garnishment, or other legal process, or to
the operation of any bankruptcy or insolvency law. This section
((shall)) is not ((be)) applicable to any child support collection
action taken under chapter 26.18, 26.23, or 74.20A RCW. Benefits under
this chapter ((shall be)) are payable to a spouse or ex-spouse to the
extent expressly provided for in any court decree of dissolution or
legal separation or in any court order or court-approved property
settlement agreement incident to any court decree of dissolution or
legal separation.
(2) Nothing in this chapter ((shall)) may be construed to deprive
any participant, eligible to receive a pension hereunder, from
receiving a pension under any other act to which that participant may
become eligible by reason of services other than or in addition to his
or her services under this chapter.
(3) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
Sec. 905 RCW 41.32.052 and 1991 c 365 s 21 and 1991 c 35 s 63 are
each reenacted and amended to read as follows:
(1) Subject to subsections (2) ((and)), (3), and (4) of this
section, the right of a person to a pension, an annuity, a retirement
allowance, or disability allowance, to the return of contributions, any
optional benefit or death benefit, any other right accrued or accruing
to any person under the provisions of this chapter and the moneys in
the various funds created by this chapter ((shall be)) is unassignable,
and are hereby exempt from any state, county, municipal or other local
tax, and ((shall)) are not ((be)) subject to execution, garnishment,
attachment, the operation of bankruptcy or insolvency laws, or other
process of law whatsoever.
(2)(a) This section ((shall)) may not be deemed to prohibit a
beneficiary of a retirement allowance who is eligible:
(((a))) (i) Under RCW 41.05.080 from authorizing monthly deductions
therefrom for payment of premiums due on any group insurance policy or
plan issued for the benefit of a group comprised of public employees of
the state of Washington or its political subdivisions;
(((b))) (ii) Under a group health care benefit plan approved
pursuant to RCW 28A.400.350 or 41.05.065 from authorizing monthly
deductions therefrom, of the amount or amounts of subscription
payments, premiums, or contributions to any person, firm, or
corporation furnishing or providing medical, surgical, and hospital
care or other health care insurance; or
(((c))) (iii) Under this system from authorizing monthly deductions
therefrom for payment of dues and other membership fees to any
retirement association composed of retired teachers and/or public
employees pursuant to a written agreement between the director and the
retirement association.
(b) Deductions under (a) ((and (b))) (i) and (ii) of this
subsection ((shall)) must be made in accordance with rules that may be
adopted by the director.
(3) Subsection (1) of this section ((shall)) does not prohibit the
department from complying with (a) a wage assignment order for child
support issued pursuant to chapter 26.18 RCW, (b) an order to withhold
and deliver issued pursuant to chapter 74.20A RCW, (c) a notice of
payroll deduction issued pursuant to RCW 26.23.060, (d) a mandatory
benefits assignment order issued by the department, (e) a court order
directing the department of retirement systems to pay benefits directly
to an obligee under a dissolution order as defined in RCW 41.50.500(3)
which fully complies with RCW 41.50.670 and 41.50.700, or (f) any
administrative or court order expressly authorized by federal law.
(4) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
Sec. 906 RCW 41.35.100 and 1998 c 341 s 11 are each amended to
read as follows:
(1) Subject to subsections (2) ((and)), (3), and (4) of this
section, the right of a person to a pension, an annuity, or retirement
allowance, any optional benefit, any other right accrued or accruing to
any person under the provisions of this chapter, the various funds
created by this chapter, and all moneys and investments and income
thereof, are hereby exempt from any state, county, municipal, or other
local tax, and ((shall)) are not ((be)) subject to execution,
garnishment, attachment, the operation of bankruptcy or insolvency
laws, or other process of law whatsoever, and ((shall be)) is
unassignable.
(2) This section does not prohibit a beneficiary of a retirement
allowance from authorizing deductions therefrom for payment of premiums
due on any group insurance policy or plan issued for the benefit of a
group comprised of public employees of the state of Washington or its
political subdivisions and which has been approved for deduction in
accordance with rules that may be adopted by the state health care
authority and/or the department. This section also does not prohibit
a beneficiary of a retirement allowance from authorizing deductions
therefrom for payment of dues and other membership fees to any
retirement association or organization the membership of which is
composed of retired public employees, if a total of three hundred or
more of such retired employees have authorized such deduction for
payment to the same retirement association or organization.
(3) Subsection (1) of this section does not prohibit the department
from complying with (a) a wage assignment order for child support
issued pursuant to chapter 26.18 RCW, (b) an order to withhold and
deliver issued pursuant to chapter 74.20A RCW, (c) a notice of payroll
deduction issued pursuant to RCW 26.23.060, (d) a mandatory benefits
assignment order issued by the department, (e) a court order directing
the department of retirement systems to pay benefits directly to an
obligee under a dissolution order as defined in RCW 41.50.500(3) which
fully complies with RCW 41.50.670 and 41.50.700, or (f) any
administrative or court order expressly authorized by federal law.
(4) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
Sec. 907 RCW 41.40.052 and 1999 c 83 s 1 are each amended to read
as follows:
(1) Subject to subsections (2) ((and)), (3), and (4) of this
section, the right of a person to a pension, an annuity, or retirement
allowance, any optional benefit, any other right accrued or accruing to
any person under the provisions of this chapter, the various funds
created by this chapter, and all moneys and investments and income
thereof, are ((hereby)) exempt from any state, county, municipal, or
other local tax, and ((shall)) are not ((be)) subject to execution,
garnishment, attachment, the operation of bankruptcy or insolvency
laws, or other process of law whatsoever, and ((shall be)) is
unassignable.
(2)(a) This section ((shall)) is not ((be)) deemed to prohibit a
beneficiary of a retirement allowance from authorizing deductions
therefrom for payment of premiums due on any group insurance policy or
plan issued for the benefit of a group comprised of public employees of
the state of Washington or its political subdivisions and which has
been approved for deduction in accordance with rules that may be
adopted by the state health care authority and/or the department, and
this section ((shall)) may not be deemed to prohibit a beneficiary of
a retirement allowance from authorizing deductions therefrom for
payment of dues and other membership fees to any retirement association
or organization the membership of which is composed of retired public
employees, if a total of three hundred or more of such retired
employees have authorized such deduction for payment to the same
retirement association or organization.
(b) This section does not prohibit a beneficiary of a retirement
allowance from authorizing deductions from that allowance for
charitable purposes on the same terms as employees and public officers
under RCW 41.04.035 and 41.04.036.
(3) Subsection (1) of this section ((shall)) does not prohibit the
department from complying with (a) a wage assignment order for child
support issued pursuant to chapter 26.18 RCW, (b) an order to withhold
and deliver issued pursuant to chapter 74.20A RCW, (c) a notice of
payroll deduction issued pursuant to RCW 26.23.060, (d) a mandatory
benefits assignment order issued by the department, (e) a court order
directing the department of retirement systems to pay benefits directly
to an obligee under a dissolution order as defined in RCW 41.50.500(3)
which fully complies with RCW 41.50.670 and 41.50.700, or (f) any
administrative or court order expressly authorized by federal law.
(4) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
Sec. 908 RCW 41.44.240 and 1989 c 360 s 28 are each amended to
read as follows:
(1) The right of a person to a pension, annuity or a retirement
allowance, to the return of contribution, the pension, annuity or
retirement allowance itself, any optional benefit, any other right
accrued or accruing to any person under the provisions of this chapter,
and the moneys in the fund created under this chapter ((shall)) are not
((be)) subject to execution, garnishment, or any other process
whatsoever.
(2) This section ((shall)) does not apply to child support
collection actions taken under chapter 26.18, 26.23, or 74.20A RCW
against benefits payable under any such plan or arrangement. Benefits
under this chapter ((shall be)) are payable to a spouse or ex-spouse to
the extent expressly provided for in any court decree of dissolution or
legal separation or in any court order or court-approved property
settlement agreement incident to any court decree of dissolution or
legal separation.
(3) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
Sec. 909 RCW 41.26.053 and 1991 c 365 s 20 and 1991 c 35 s 25 are
each reenacted and amended to read as follows:
(1) Subject to subsections (2) ((and)), (3), and (4) of this
section, the right of a person to a retirement allowance, disability
allowance, or death benefit, to the return of accumulated
contributions, the retirement, disability or death allowance itself,
any optional benefit, any other right accrued or accruing to any person
under the provisions of this chapter, and the moneys in the fund
created under this chapter, are ((hereby)) exempt from any state,
county, municipal, or other local tax and ((shall)) are not ((be))
subject to execution, garnishment, attachment, the operation of
bankruptcy or insolvency laws, or any other process of law whatsoever,
and ((shall be)) are unassignable.
(2) On the written request of any person eligible to receive
benefits under this section, the department may deduct from such
payments the premiums for life, health, or other insurance. The
request on behalf of any child or children ((shall)) must be made by
the legal guardian of such child or children. The department may
provide for such persons one or more plans of group insurance, through
contracts with regularly constituted insurance carriers or health care
service contractors.
(3) Subsection (1) of this section ((shall)) does not prohibit the
department from complying with (a) a wage assignment order for child
support issued pursuant to chapter 26.18 RCW, (b) an order to withhold
and deliver issued pursuant to chapter 74.20A RCW, (c) a notice of
payroll deduction issued pursuant to RCW 26.23.060, (d) a mandatory
benefits assignment order issued by the department, (e) a court order
directing the department of retirement systems to pay benefits directly
to an obligee under a dissolution order as defined in RCW 41.50.500(3)
which fully complies with RCW 41.50.670 and 41.50.700, or (f) any
administrative or court order expressly authorized by federal law.
(4) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
Sec. 910 RCW 43.43.310 and 1991 c 365 s 23 are each amended to
read as follows:
(1) Except as provided in subsections (2) ((and)), (3), and (4) of
this section, the right of any person to a retirement allowance or
optional retirement allowance under the provisions hereof and all
moneys and investments and income thereof are exempt from any state,
county, municipal, or other local tax and ((shall)) are not ((be))
subject to execution, garnishment, attachment, the operation of
bankruptcy or the insolvency laws, or other processes of law whatsoever
and ((shall be)) are unassignable except as herein specifically
provided.
(2) Subsection (1) of this section ((shall)) does not prohibit the
department of retirement systems from complying with (a) a wage
assignment order for child support issued pursuant to chapter 26.18
RCW, (b) an order to withhold and deliver issued pursuant to chapter
74.20A RCW, (c) a notice of payroll deduction issued pursuant to RCW
26.23.060, (d) a mandatory benefits assignment order issued pursuant to
chapter 41.50 RCW, (e) a court order directing the department of
retirement systems to pay benefits directly to an obligee under a
dissolution order as defined in RCW 41.50.500(3) which fully complies
with RCW 41.50.670 and 41.50.700, or (f) any administrative or court
order expressly authorized by federal law.
(3) Subsection (1) of this section ((shall)) may not be deemed to
prohibit a beneficiary of a retirement allowance from authorizing
deductions therefrom for payment of premiums due on any group insurance
policy or plan issued for the benefit of a group comprised of members
of the Washington state patrol or other public employees of the state
of Washington, or for contributions to the Washington state patrol
memorial foundation.
(4) Subsection (1) of this section does not exempt any pension or
other benefit received under this chapter from tax under Title 82A RCW
(the new title created in section 1302 of this act), nor does it
prohibit the department of retirement systems from complying with the
tax withholding requirements of that title.
NEW SECTION. Sec. 911 RCW 6.15.025 (Exemption of pension or
retirement plan benefits from execution for judgment for out-of-state
income tax) and 1991 c 123 s 3 are each repealed.
Sec. 1001 RCW 82.08.020 and 2011 c 171 s 120 are each amended to
read as follows:
(1) There is levied and collected a tax equal to ((six and five-tenths)) five percent of the selling price on each retail sale in this
state of:
(a) Tangible personal property, unless the sale is specifically
excluded from the RCW 82.04.050 definition of retail sale;
(b) Digital goods, digital codes, and digital automated services,
if the sale is included within the RCW 82.04.050 definition of retail
sale;
(c) Services, other than digital automated services, included
within the RCW 82.04.050 definition of retail sale;
(d) Extended warranties to consumers; and
(e) Anything else, the sale of which is included within the RCW
82.04.050 definition of retail sale.
(2) There is levied and collected an additional tax on each retail
car rental, regardless of whether the vehicle is licensed in this
state, equal to five and nine-tenths percent of the selling price. The
revenue collected under this subsection must be deposited in the
multimodal transportation account created in RCW 47.66.070.
(3) Beginning July 1, 2003, there is levied and collected an
additional tax of three-tenths of one percent of the selling price on
each retail sale of a motor vehicle in this state, other than retail
car rentals taxed under subsection (2) of this section. The revenue
collected under this subsection must be deposited in the multimodal
transportation account created in RCW 47.66.070.
(4) For purposes of subsection (3) of this section, "motor vehicle"
has the meaning provided in RCW 46.04.320, but does not include farm
tractors or farm vehicles as defined in RCW 46.04.180 and 46.04.181,
off-road vehicles as defined in RCW 46.04.365, nonhighway vehicles as
defined in RCW 46.09.310, and snowmobiles as defined in RCW 46.04.546.
(5) Beginning on December 8, 2005, 0.16 percent of the taxes
collected under subsection (1) of this section must be dedicated to
funding comprehensive performance audits required under RCW 43.09.470.
The revenue identified in this subsection must be deposited in the
performance audits of government account created in RCW 43.09.475.
(6) The taxes imposed under this chapter apply to successive retail
sales of the same property.
(7) The rates provided in this section apply to taxes imposed under
chapter 82.12 RCW as provided in RCW 82.12.020.
NEW SECTION. Sec. 1101 The following acts or parts of acts are
each repealed:
(1) RCW 82.04.230 (Tax upon extractors) and 2006 c 300 s 5, 1993
sp.s. c 25 s 101, 1971 ex.s. c 281 s 2, 1969 ex.s. c 262 s 33, 1967
ex.s. c 149 s 7, & 1961 c 15 s 82.04.230;
(2) RCW 82.04.240 (Tax on manufacturers) and 2010 c 114 s 104, 2004
c 24 s 4, 2003 c 149 s 3, 1998 c 312 s 3, 1993 sp.s. c 25 s 102, 1981
c 172 s 1, 1979 ex.s. c 196 s 1, 1971 ex.s. c 281 s 3, 1969 ex.s. c 262
s 34, 1967 ex.s. c 149 s 8, 1965 ex.s. c 173 s 5, & 1961 c 15 s
82.04.240;
(3) RCW 82.04.2403 (Manufacturer tax not applicable to cleaning
fish) and 1994 c 167 s 1;
(4) RCW 82.04.2404 (Manufacturers -- Processors for hire--Semiconductor materials) and 2010 c 114 s 105 & 2006 c 84 s 2;
(5) RCW 82.04.250 (Tax on retailers) and 2010 1st sp.s. c 23 s 509,
(2010 1st sp.s. c 23 s 508 expired July 1, 2011), (2010 1st sp.s. c 23
s 507 expired July 13, 2010), 2010 1st sp.s. c 11 s 1, (2010 c 114 s
106 expired July 1, 2011), 2008 c 81 s 5, (2007 c 54 s 5 repealed by
2010 1st sp.s. c 11 s 7), 2006 c 177 s 5, 2003 2nd sp.s. c 1 s 2, &
(2003 1st sp.s. c 2 s 1 expired July 1, 2006);
(6) RCW 82.04.255 (Tax on real estate brokers) and 2011 c 322 s 2,
1997 c 7 s 1, 1996 c 1 s 1, 1993 sp.s. c 25 s 202, 1985 c 32 s 2, 1983
2nd ex.s. c 3 s 1, 1983 c 9 s 1, & 1970 ex.s. c 65 s 3;
(7) RCW 82.04.257 (Tax on digital products and services) and 2010
c 111 s 301 & 2009 c 535 s 401;
(8) RCW 82.04.260 (Tax on manufacturers and processors of various
foods and by-products -- Research and development organizations -- Travel
agents -- Certain international activities -- Stevedoring and associated
activities -- Low-level waste disposers -- Insurance producers, surplus
line brokers, and title insurance agents--Hospitals -- Commercial
airplane activities -- Timber product activities -- Canned salmon
processors) and 2011 c 2 s 203 (Initiative Measure No. 1107), 2010 1st
sp.s. c 23 s 506, (2010 1st sp.s. c 23 s 505 expired June 10, 2010), &
2010 c 114 s 107;
(9) RCW 82.04.263 (Tax on cleaning up radioactive waste and other
by-products of weapons production and nuclear research and development)
and 2009 c 469 s 202 & 1996 c 112 s 3;
(10) RCW 82.04.270 (Tax on wholesalers) and 2004 c 24 s 5, 2003 2nd
sp.s. c 1 s 5, 2001 1st sp.s. c 9 s 3, & 1999 c 358 s 2;
(11) RCW 82.04.272 (Tax on warehousing and reselling prescription
drugs) and 2003 c 168 s 401 & 1998 c 343 s 1;
(12) RCW 82.04.280 (Tax on printers, publishers, highway
contractors, extracting or processing for hire, cold storage warehouse
or storage warehouse operation, insurance general agents, radio and
television broadcasting, government contractors -- Cold storage warehouse
defined -- Storage warehouse defined -- Periodical or magazine defined) and
2010 c 106 s 206, 2010 c 106 s 205, 2009 c 461 s 3, 2009 c 461 s 2,
2006 c 300 s 7, 2006 c 300 s 6, 2004 c 24 s 6, 2003 c 149 s 4, 1998 c
343 s 3, 1994 c 112 s 1, 1993 sp.s. c 25 s 303, 1993 sp.s. c 25 s 106,
1986 c 226 s 2, 1983 c 132 s 1, 1975 1st ex.s. c 90 s 3, 1971 ex.s. c
299 s 5, 1971 ex.s. c 281 s 7, & 1970 ex.s. c 8 s 2;
(13) RCW 82.04.290 (Tax on international investment management
services or other business or service activities) and 2011 c 174 s 101,
2008 c 81 s 6, 2005 c 369 s 8, 2004 c 174 s 2, 2003 c 343 s 2, 2001 1st
sp.s. c 9 s 6, & (2001 1st sp.s. c 9 s 4 expired July 1, 2001);
(14) RCW 82.04.2905 (Tax on providing day care) and 1998 c 312 s 7;
(15) RCW 82.04.2906 (Tax on certain chemical dependency services)
and 2003 c 343 s 1;
(16) RCW 82.04.2907 (Tax on royalties) and 2010 1st sp.s. c 23 s
107, (2010 1st sp.s. c 23 s 106 expired July 1, 2010), 2010 c 111 s
302, 2009 c 535 s 407, 2001 c 320 s 3, & 1998 c 331 s 1;
(17) RCW 82.04.2908 (Tax on provision of room and domiciliary care
to boarding home residents) and 2005 c 514 s 302 & 2004 c 174 s 1;
(18) RCW 82.04.2909 (Tax on aluminum smelters) and 2011 c 174 s
301;
(19) RCW 82.04.293 (International investment management services--Definitions) and 1997 c 7 s 3 & 1995 c 229 s 1;
(20) RCW 82.04.294 (Tax on manufacturers or wholesalers of solar
energy systems) and 2011 c 179 s 1, 2010 c 114 s 109, 2009 c 469 s 501,
2007 c 54 s 8, & 2005 c 301 s 2; and
(21) RCW 82.04.298 (Tax on qualified grocery distribution
cooperatives) and 2011 c 2 s 204 (Initiative Measure No. 1107), 2010
1st sp.s. c 23 s 511, 2008 c 49 s 1, & 2001 1st sp.s. c 9 s 1.
Sec. 1102 RCW 82.04.261 and 2010 1st sp.s. c 23 s 510 are each
amended to read as follows:
(1) ((In addition to the taxes imposed under RCW 82.04.260(11),))
A surcharge is imposed on those persons who ((are)) would be subject to
any of the taxes imposed under RCW 82.04.260(((11))) (12) if not for
its repeal under section 1101 of this act. Except as otherwise
provided in this section, the surcharge is equal to 0.052 percent.
((The surcharge is added to the rates provided in RCW 82.04.260(11)
(a), (b), (c), and (d). The surcharge and this section expire July 1,
2024.))
(2) All receipts from the surcharge imposed under this section must
be deposited into the forest and fish support account created in RCW
76.09.405.
(3)(a) The surcharge imposed under this section is suspended if:
(i) Receipts from the surcharge total at least eight million
dollars during any fiscal biennium; or
(ii) The office of financial management certifies to the department
that the federal government has appropriated at least two million
dollars for participation in forest and fish report-related activities
by federally recognized Indian tribes located within the geographical
boundaries of the state of Washington for any federal fiscal year.
(b)(i) The suspension of the surcharge under (a)(i) of this
subsection (3) takes effect on the first day of the calendar month that
is at least thirty days after the end of the month during which the
department determines that receipts from the surcharge total at least
eight million dollars during the fiscal biennium. The surcharge is
imposed again at the beginning of the following fiscal biennium.
(ii) The suspension of the surcharge under (a)(ii) of this
subsection (3) takes effect on the later of the first day of October of
any federal fiscal year for which the federal government appropriates
at least two million dollars for participation in forest and fish
report-related activities by federally recognized Indian tribes located
within the geographical boundaries of the state of Washington, or the
first day of a calendar month that is at least thirty days following
the date that the office of financial management makes a certification
to the department under subsection (5) of this section. The surcharge
is imposed again on the first day of the following July.
(4)(a) If, by October 1st of any federal fiscal year, the office of
financial management certifies to the department that the federal
government has appropriated funds for participation in forest and fish
report-related activities by federally recognized Indian tribes located
within the geographical boundaries of the state of Washington but the
amount of the appropriation is less than two million dollars, the
department must adjust the surcharge in accordance with this
subsection.
(b) The department must adjust the surcharge by an amount that the
department estimates will cause the amount of funds deposited into the
forest and fish support account for the state fiscal year that begins
July 1st and that includes the beginning of the federal fiscal year for
which the federal appropriation is made, to be reduced by twice the
amount of the federal appropriation for participation in forest and
fish report-related activities by federally recognized Indian tribes
located within the geographical boundaries of the state of Washington.
(c) Any adjustment in the surcharge takes effect at the beginning
of a calendar month that is at least thirty days after the date that
the office of financial management makes the certification under
subsection (5) of this section.
(d) The surcharge is imposed again at the rate provided in
subsection (1) of this section on the first day of the following state
fiscal year unless the surcharge is suspended under subsection (3) of
this section or adjusted for that fiscal year under this subsection.
(e) Adjustments of the amount of the surcharge by the department
are final and may not be used to challenge the validity of the
surcharge imposed under this section.
(f) The department must provide timely notice to affected taxpayers
of the suspension of the surcharge or an adjustment of the surcharge.
(5) The office of financial management must make the certification
to the department as to the status of federal appropriations for tribal
participation in forest and fish report-related activities.
(6) This section expires July 1, 2024.
Sec. 1103 RCW 82.04.285 and 2005 c 369 s 5 are each amended to
read as follows:
(1) Until July 1, 2015, upon every person engaging within this
state in the business of operating contests of chance; as to such
persons, the amount of tax with respect to the business of operating
contests of chance is equal to the gross income of the business derived
from contests of chance multiplied by the rate of 1.5 percent.
(2) An additional tax is imposed on those persons subject to tax in
subsection (1) of this section or who would otherwise be subject to the
tax if not for its expiration on July 1, 2015. The amount of the
additional tax with respect to the business of operating contests of
chance is equal to the gross income of the business derived from
contests of chance multiplied by the rate of 0.1 percent through June
30, 2006, and 0.13 percent thereafter. The money collected under this
subsection (2) ((shall)) must be deposited in the problem gambling
account created in RCW 43.20A.892. This subsection does not apply to
businesses operating contests of chance when the gross income from the
operation of contests of chance is less than fifty thousand dollars per
year.
(3) For the purpose of this section, "contests of chance" means any
contests, games, gaming schemes, or gaming devices, other than the
state lottery as defined in RCW 67.70.010, in which the outcome depends
in a material degree upon an element of chance, notwithstanding that
skill of the contestants may also be a factor in the outcome. The term
includes social card games, bingo, raffle, and punchboard games, and
pull-tabs as defined in chapter 9.46 RCW. The term does not include
race meets for the conduct of which a license must be secured from the
Washington horse racing commission, or "amusement game" as defined in
RCW 9.46.0201.
(4) "Gross income of the business" does not include the monetary
value or actual cost of any prizes that are awarded, amounts paid to
players for winning wagers, accrual of prizes for progressive jackpot
contests, or repayment of amounts used to seed guaranteed progressive
jackpot prizes.
Sec. 1201 RCW 82.04.050 and 2011 c 174 s 202 are each amended to
read as follows:
(1)(a) "Sale at retail" or "retail sale" means every sale of
tangible personal property (including articles produced, fabricated, or
imprinted) to all persons irrespective of the nature of their business
and including, among others, without limiting the scope hereof, persons
who install, repair, clean, alter, improve, construct, or decorate real
or personal property of or for consumers other than a sale to a person
who:
(i) Purchases for the purpose of resale as tangible personal
property in the regular course of business without intervening use by
such person, but a purchase for the purpose of resale by a regional
transit authority under RCW 81.112.300 is not a sale for resale; or
(ii) Installs, repairs, cleans, alters, imprints, improves,
constructs, or decorates real or personal property of or for consumers,
if such tangible personal property becomes an ingredient or component
of such real or personal property without intervening use by such
person; or
(iii) Purchases for the purpose of consuming the property purchased
in producing for sale as a new article of tangible personal property or
substance, of which such property becomes an ingredient or component or
is a chemical used in processing, when the primary purpose of such
chemical is to create a chemical reaction directly through contact with
an ingredient of a new article being produced for sale; or
(iv) Purchases for the purpose of consuming the property purchased
in producing ferrosilicon which is subsequently used in producing
magnesium for sale, if the primary purpose of such property is to
create a chemical reaction directly through contact with an ingredient
of ferrosilicon; or
(v) Purchases for the purpose of providing the property to
consumers as part of competitive telephone service, as defined in RCW
82.04.065; or
(vi) Purchases for the purpose of satisfying the person's
obligations under an extended warranty as defined in subsection (7) of
this section, if such tangible personal property replaces or becomes an
ingredient or component of property covered by the extended warranty
without intervening use by such person.
(b) The term includes every sale of tangible personal property that
is used or consumed or to be used or consumed in the performance of any
activity defined as a "sale at retail" or "retail sale" even though
such property is resold or used as provided in (a)(i) through (vi) of
this subsection following such use.
(c) The term also means every sale of tangible personal property to
persons engaged in any business that is taxable under RCW
((82.04.280(1) (a), (b), and (g),)) 82.04.290((,)) and 82.04.2908.
(2) The term "sale at retail" or "retail sale" includes the sale of
or charge made for tangible personal property consumed and/or for labor
and services rendered in respect to the following:
(a) The installing, repairing, cleaning, altering, imprinting, or
improving of tangible personal property of or for consumers, including
charges made for the mere use of facilities in respect thereto, but
excluding charges made for the use of self-service laundry facilities,
and also excluding sales of laundry service to nonprofit health care
facilities, and excluding services rendered in respect to live animals,
birds and insects;
(b) The constructing, repairing, decorating, or improving of new or
existing buildings or other structures under, upon, or above real
property of or for consumers, including the installing or attaching of
any article of tangible personal property therein or thereto, whether
or not such personal property becomes a part of the realty by virtue of
installation, and also includes the sale of services or charges made
for the clearing of land and the moving of earth excepting the mere
leveling of land used in commercial farming or agriculture;
(c) The constructing, repairing, or improving of any structure
upon, above, or under any real property owned by an owner who conveys
the property by title, possession, or any other means to the person
performing such construction, repair, or improvement for the purpose of
performing such construction, repair, or improvement and the property
is then reconveyed by title, possession, or any other means to the
original owner;
(d) The cleaning, fumigating, razing, or moving of existing
buildings or structures, but does not include the charge made for
janitorial services; and for purposes of this section the term
"janitorial services" means those cleaning and caretaking services
ordinarily performed by commercial janitor service businesses
including, but not limited to, wall and window washing, floor cleaning
and waxing, and the cleaning in place of rugs, drapes and upholstery.
The term "janitorial services" does not include painting, papering,
repairing, furnace or septic tank cleaning, snow removal or
sandblasting;
(e) Automobile towing and similar automotive transportation
services, but not in respect to those required to report and pay taxes
under chapter 82.16 RCW;
(f) The furnishing of lodging and all other services by a hotel,
rooming house, tourist court, motel, trailer camp, and the granting of
any similar license to use real property, as distinguished from the
renting or leasing of real property, and it is presumed that the
occupancy of real property for a continuous period of one month or more
constitutes a rental or lease of real property and not a mere license
to use or enjoy the same. For the purposes of this subsection, it is
presumed that the sale of and charge made for the furnishing of lodging
for a continuous period of one month or more to a person is a rental or
lease of real property and not a mere license to enjoy the same;
(g) The installing, repairing, altering, or improving of digital
goods for consumers;
(h) Persons taxable under (a), (b), (c), (d), (e), (f), and (g) of
this subsection when such sales or charges are for property, labor and
services which are used or consumed in whole or in part by such persons
in the performance of any activity defined as a "sale at retail" or
"retail sale" even though such property, labor and services may be
resold after such use or consumption. Nothing contained in this
subsection may be construed to modify subsection (1) of this section
and nothing contained in subsection (1) of this section may be
construed to modify this subsection.
(3) The term "sale at retail" or "retail sale" includes the sale of
or charge made for all other personal, business, or professional
services not otherwise specified under this section, including amounts
designated as interest, rents, fees, admission, and other service
emoluments however designated((, received by persons engaging in the
following business activities:)).
Services provided by an employee to an employer are not included within
the definition of retail sale under this subsection (3).
(a) Amusement and recreation services including but not limited to
golf, pool, billiards, skating, bowling, ski lifts and tows, day trips
for sightseeing purposes, and others, when provided to consumers;
(b) Abstract, title insurance, and escrow services;
(c) Credit bureau services;
(d) Automobile parking and storage garage services;
(e) Landscape maintenance and horticultural services but excluding
(i) horticultural services provided to farmers and (ii) pruning,
trimming, repairing, removing, and clearing of trees and brush near
electric transmission or distribution lines or equipment, if performed
by or at the direction of an electric utility;
(f) Service charges associated with tickets to professional
sporting events; and
(g) The following personal services: Physical fitness services,
tanning salon services, tattoo parlor services, steam bath services,
turkish bath services, escort services, and dating services
(4)(a) The term also includes the renting or leasing of tangible
personal property to consumers.
(b) The term does not include the renting or leasing of tangible
personal property where the lease or rental is for the purpose of
sublease or subrent.
(5) The term also includes the providing of "competitive telephone
service," "telecommunications service," or "ancillary services," as
those terms are defined in RCW 82.04.065, to consumers.
(6)(a) The term also includes the sale of prewritten computer
software to a consumer, regardless of the method of delivery to the end
user. For purposes of this subsection (6)(a), the sale of prewritten
computer software includes the sale of or charge made for a key or an
enabling or activation code, where the key or code is required to
activate prewritten computer software and put the software into use.
There is no separate sale of the key or code from the prewritten
computer software, regardless of how the sale may be characterized by
the vendor or by the purchaser.
The term "retail sale" does not include the sale of or charge made
for:
(i) Custom software; or
(ii) The customization of prewritten computer software.
(b)(i) The term also includes the charge made to consumers for the
right to access and use prewritten computer software, where possession
of the software is maintained by the seller or a third party,
regardless of whether the charge for the service is on a per use, per
user, per license, subscription, or some other basis.
(ii)(A) The service described in (b)(i) of this subsection (6)
includes the right to access and use prewritten computer software to
perform data processing.
(B) For purposes of this subsection (6)(b)(ii), "data processing"
means the systematic performance of operations on data to extract the
required information in an appropriate form or to convert the data to
usable information. Data processing includes check processing, image
processing, form processing, survey processing, payroll processing,
claim processing, and similar activities.
(7) The term also includes the sale of or charge made for an
extended warranty to a consumer. For purposes of this subsection,
"extended warranty" means an agreement for a specified duration to
perform the replacement or repair of tangible personal property at no
additional charge or a reduced charge for tangible personal property,
labor, or both, or to provide indemnification for the replacement or
repair of tangible personal property, based on the occurrence of
specified events. The term "extended warranty" does not include an
agreement, otherwise meeting the definition of extended warranty in
this subsection, if no separate charge is made for the agreement and
the value of the agreement is included in the sales price of the
tangible personal property covered by the agreement. For purposes of
this subsection, "sales price" has the same meaning as in RCW
82.08.010.
(8)(a) The term also includes the following sales to consumers of
digital goods, digital codes, and digital automated services:
(i) Sales in which the seller has granted the purchaser the right
of permanent use;
(ii) Sales in which the seller has granted the purchaser a right of
use that is less than permanent;
(iii) Sales in which the purchaser is not obligated to make
continued payment as a condition of the sale; and
(iv) Sales in which the purchaser is obligated to make continued
payment as a condition of the sale.
(b) A retail sale of digital goods, digital codes, or digital
automated services under this subsection (8) includes any services
provided by the seller exclusively in connection with the digital
goods, digital codes, or digital automated services, whether or not a
separate charge is made for such services.
(c) For purposes of this subsection, "permanent" means perpetual or
for an indefinite or unspecified length of time. A right of permanent
use is presumed to have been granted unless the agreement between the
seller and the purchaser specifies or the circumstances surrounding the
transaction suggest or indicate that the right to use terminates on the
occurrence of a condition subsequent.
(9) The term also includes the charge made for providing tangible
personal property along with an operator for a fixed or indeterminate
period of time. A consideration of this is that the operator is
necessary for the tangible personal property to perform as designed.
For the purpose of this subsection (9), an operator must do more than
maintain, inspect, or set up the tangible personal property.
(10) The term does not include the sale of or charge made for labor
and services rendered in respect to the building, repairing, or
improving of any street, place, road, highway, easement, right-of-way,
mass public transportation terminal or parking facility, bridge,
tunnel, or trestle which is owned by a municipal corporation or
political subdivision of the state or by the United States and which is
used or to be used primarily for foot or vehicular traffic including
mass transportation vehicles of any kind.
(11) The term also does not include sales of chemical sprays or
washes to persons for the purpose of postharvest treatment of fruit for
the prevention of scald, fungus, mold, or decay, nor does it include
sales of feed, seed, seedlings, fertilizer, agents for enhanced
pollination including insects such as bees, and spray materials to:
(a) Persons who participate in the federal conservation reserve
program, the environmental quality incentives program, the wetlands
reserve program, and the wildlife habitat incentives program, or their
successors administered by the United States department of agriculture;
(b) farmers for the purpose of producing for sale any agricultural
product; and (c) farmers acting under cooperative habitat development
or access contracts with an organization exempt from federal income tax
under 26 U.S.C. Sec. 501(c)(3) of the federal internal revenue code or
the Washington state department of fish and wildlife to produce or
improve wildlife habitat on land that the farmer owns or leases.
(12) The term does not include the sale of or charge made for labor
and services rendered in respect to the constructing, repairing,
decorating, or improving of new or existing buildings or other
structures under, upon, or above real property of or for the United
States, any instrumentality thereof, or a county or city housing
authority created pursuant to chapter 35.82 RCW, including the
installing, or attaching of any article of tangible personal property
therein or thereto, whether or not such personal property becomes a
part of the realty by virtue of installation. Nor does the term
include the sale of services or charges made for the clearing of land
and the moving of earth of or for the United States, any
instrumentality thereof, or a county or city housing authority. Nor
does the term include the sale of services or charges made for cleaning
up for the United States, or its instrumentalities, radioactive waste
and other by-products of weapons production and nuclear research and
development.
(13) The term does not include the sale of or charge made for
labor, services, or tangible personal property pursuant to agreements
providing maintenance services for bus, rail, or rail fixed guideway
equipment when a regional transit authority is the recipient of the
labor, services, or tangible personal property, and a transit agency,
as defined in RCW 81.104.015, performs the labor or services.
(14) The term does not include the sale for resale of any service
described in this section if the sale would otherwise constitute a
"sale at retail" and "retail sale" under this section.
NEW SECTION. Sec. 1301 If any provision of this act or its
application to any person or circumstance is held invalid, the
remainder of the act or the application of the provision to other
persons or circumstances is not affected.
NEW SECTION. Sec. 1302 Sections 101 through 709 of this act
constitute a new title in the Revised Code of Washington, to be
codified as Title 82A RCW.
NEW SECTION. Sec. 1303 (1) If this act is approved by the voters
as provided in section 1306 of this act, except as otherwise provided
in this section, this act takes effect January 1, 2015.
(2) If this act is approved by the voters as provided in section
1306 of this act, parts XI and XII of this act take effect July 1,
2015.
NEW SECTION. Sec. 1304 If any amendments in this act, or any
sections enacted or affected by chapter . . ., Laws of 2012 (this act),
are enacted in a 2012 legislative session that do not take cognizance
of chapter . . ., Laws of 2012 (this act), the code reviser must
prepare a bill for introduction in the 2013 or 2014 legislative session
that incorporates any such amendments into the reorganization adopted
by chapter . . ., Laws of 2012 (this act) and corrects any incorrect
cross-references.
NEW SECTION. Sec. 1305 This act may be known and cited as the
higher opportunity promise for education act.
NEW SECTION. Sec. 1306 The secretary of state shall submit this
act to the people for their adoption and ratification, or rejection, at
the next general election to be held in this state, in accordance with
Article II, section 1 of the state Constitution and the laws adopted to
facilitate its operation.