INITIATIVE 1107
To the People
Chapter 2, Laws of 2011
REVERSING CERTAIN 2010 AMENDMENTS TO STATE TAX LAWS
EFFECTIVE DATE: 12/02/10
Approved by the
People of the State of Washington
in the General Election on
November 2, 2010
ORIGINALLY FILED
May 19, 2010
Secretary of State
1AN ACT Relating to repealing tax increases on certain processed
2foods, bottled water, candy, and carbonated beverages enacted by the
32010 legislature; amending RCW 82.04.4266, 82.04.260, 82.04.298,
482.04.440, 82.08.0293, 82.08.0293, 82.12.0293, and 82.12.0293; creating
5new sections; repealing RCW 82.04.---, 82.08.---, 82.12.---, 82.08.---,
682.12.---, 82.04.---, and 82.--.--- through 82.--.---; and providing a
7contingent effective date.
8BE IT ENACTED BY THE PEOPLE OF THE STATE OF WASHINGTON:
9PART I
10Intent
11NEW SECTION. Sec. 101. The people of the state of Washington in
12enacting this initiative measure find:
13(1) The 2010 legislature adopted legislation that imposed new or
14higher taxes on many common food and beverage products, increasing the
15tax burden on Washington consumers and businesses by hundreds of
16millions of dollars;
17(2) Taxes on food and beverages hurt all Washington consumers, and
1especially hurt lower and middle income taxpayers who can least afford
2it;
3(3) The legislature's tax increases on food and beverages come at
4a time when Washington residents and businesses already face an
5economic crisis;
6(4) The process the legislature used to increase taxes on food and
7beverages did not provide adequate public input on or scrutiny of the
8proposed tax increases;
9(5) Washington residents already pay among the highest sales taxes
10in the country;
11(6) The legislature's tax increases on food and beverages hurt
12Washington food and beverage producers and retail businesses by making
13their products more costly and less competitive;
14(7) The legislature's tax increases on food and beverages will hurt
15Washington's economy and cause the loss of many local jobs; and
16(8) The legislature's tax increases on food and beverages
17arbitrarily and unfairly impose higher taxes on some food and beverage
18products but not on others that are similar or essentially the same.
19For these reasons, the people repeal the food and beverage taxes
20imposed by the 2010 legislature.
21PART II
22Repeal of Tax Increases on Foods Made from Certain Agricultural
23Products
24NEW SECTION. Sec. 201. RCW 82.04.--- and 2010 1st sp.s. c 23 s
25502 are each repealed.
26Sec. 202. RCW 82.04.4266 and 2010 1st sp.s. c 23 s 504 are each
27amended to read as follows:
28(1) This chapter does not apply to the value of products or the
29gross proceeds of sales derived from:
30(a) Manufacturing fruits or vegetables ((products)) by canning,
31preserving, freezing, processing, or dehydrating fresh fruits or
32vegetables; or
33(b) Selling at wholesale fruits or vegetables ((products))
34manufactured by the seller by canning, preserving, freezing,
35processing, or dehydrating fresh fruits or vegetables and sold to
1purchasers who transport in the ordinary course of business the goods
2out of this state. A person taking an exemption under this subsection
3(1)(b) must keep and preserve records for the period required by RCW
482.32.070 establishing that the goods were transported by the purchaser
5in the ordinary course of business out of this state.
6(2)(((a) "Fruit or vegetable products" means:
7(i) Products comprised exclusively of fruits, vegetables, or both;
8and
9(ii) Products comprised of fruits, vegetables, or both, and which
10may also contain water, sugar, salt, seasonings, preservatives,
11binders, stabilizers, flavorings, yeast, and similar substances.
12However, the amount of all ingredients contained in the product, other
13than fruits, vegetables, and water, may not exceed the amount of fruits
14and vegetables contained in the product measured by weight or volume.
15(b) "Fruit or vegetable products" includes only products that are
16intended for human consumption as food or animal consumption as feed.
17(3))) A person claiming the exemption provided in this section must
18file a complete annual survey with the department under RCW 82.32.---
19(section 102, chapter 114 (SHB 3066), Laws of 2010).
20(((4))) (3) This section expires July 1, 2012.
21Sec. 203. RCW 82.04.260 and 2010 1st sp.s. c 23 s 506 are each
22amended to read as follows:
23(1) Upon every person engaging within this state in the business of
24manufacturing:
25(a) Wheat into flour, barley into pearl barley, soybeans into
26soybean oil, canola into canola oil, canola meal, or canola by-
27products, or sunflower seeds into sunflower oil; as to such persons the
28amount of tax with respect to such business is equal to the value of
29the flour, pearl barley, oil, canola meal, or canola by-product
30manufactured, multiplied by the rate of 0.138 percent;
31(b) Beginning July 1, 2012, seafood products that remain in a raw,
32raw frozen, or raw salted state at the completion of the manufacturing
33by that person; or selling manufactured seafood products that remain in
34a raw, raw frozen, or raw salted state at the completion of the
35manufacturing, to purchasers who transport in the ordinary course of
36business the goods out of this state; as to such persons the amount of
37tax with respect to such business is equal to the value of the products
1manufactured or the gross proceeds derived from such sales, multiplied
2by the rate of 0.138 percent. Sellers must keep and preserve records
3for the period required by RCW 82.32.070 establishing that the goods
4were transported by the purchaser in the ordinary course of business
5out of this state;
6(c) Beginning July 1, 2012, dairy products that as of September 20,
72001, are identified in 21 C.F.R., chapter 1, parts 131, 133, and 135,
8including by-products from the manufacturing of the dairy products such
9as whey and casein; or selling the same to purchasers who transport in
10the ordinary course of business the goods out of state; as to such
11persons the tax imposed is equal to the value of the products
12manufactured or the gross proceeds derived from such sales multiplied
13by the rate of 0.138 percent. Sellers must keep and preserve records
14for the period required by RCW 82.32.070 establishing that the goods
15were transported by the purchaser in the ordinary course of business
16out of this state;
17(d)(((i))) Beginning July 1, 2012, fruits or vegetables
18((products)) by canning, preserving, freezing, processing, or
19dehydrating fresh fruits or vegetables, or selling at wholesale fruits
20or vegetables ((products)) manufactured by the seller by canning,
21preserving, freezing, processing, or dehydrating fresh fruits or
22vegetables and sold to purchasers who transport in the ordinary course
23of business the goods out of this state; as to such persons the amount
24of tax with respect to such business is equal to the value of the
25products manufactured or the gross proceeds derived from such sales
26multiplied by the rate of 0.138 percent. Sellers must keep and
27preserve records for the period required by RCW 82.32.070 establishing
28that the goods were transported by the purchaser in the ordinary course
29of business out of this state;
30(((ii) For purposes of this subsection, "fruit or vegetable
31products" means:
32(A) Products comprised exclusively of fruits, vegetables, or both;
33or
34(B) Products comprised of fruits, vegetables, or both, and which
35may also contain water, sugar, salt, seasonings, preservatives,
36binders, stabilizers, flavorings, yeast, and similar substances.
37However, the amount of all ingredients contained in the product, other
1than fruits, vegetables, and water, may not exceed the amount of fruits
2and vegetables contained in the product measured by weight or volume;
3(iii) "Fruit and vegetable products" includes only products that
4are intended for human consumption as food or animal consumption as
5feed;))
6(e) Until July 1, 2009, alcohol fuel, biodiesel fuel, or biodiesel
7feedstock, as those terms are defined in RCW 82.29A.135; as to such
8persons the amount of tax with respect to the business is equal to the
9value of alcohol fuel, biodiesel fuel, or biodiesel feedstock
10manufactured, multiplied by the rate of 0.138 percent; and
11(f) Wood biomass fuel as defined in RCW 82.29A.135; as to such
12persons the amount of tax with respect to the business is equal to the
13value of wood biomass fuel manufactured, multiplied by the rate of
140.138 percent.
15(2) Upon every person engaging within this state in the business of
16splitting or processing dried peas; as to such persons the amount of
17tax with respect to such business is equal to the value of the peas
18split or processed, multiplied by the rate of 0.138 percent.
19(3) Upon every nonprofit corporation and nonprofit association
20engaging within this state in research and development, as to such
21corporations and associations, the amount of tax with respect to such
22activities is equal to the gross income derived from such activities
23multiplied by the rate of 0.484 percent.
24(4) Upon every person engaging within this state in the business of
25slaughtering, breaking and/or processing perishable meat products
26and/or selling the same at wholesale only and not at retail; as to such
27persons the tax imposed is equal to the gross proceeds derived from
28such sales multiplied by the rate of 0.138 percent.
29(5) Upon every person engaging within this state in the business of
30acting as a travel agent or tour operator; as to such persons the
31amount of the tax with respect to such activities is equal to the gross
32income derived from such activities multiplied by the rate of 0.275
33percent.
34(((5))) (6) Upon every person engaging within this state in
35business as an international steamship agent, international customs
36house broker, international freight forwarder, vessel and/or cargo
37charter broker in foreign commerce, and/or international air cargo
1agent; as to such persons the amount of the tax with respect to only
2international activities is equal to the gross income derived from such
3activities multiplied by the rate of 0.275 percent.
4(((6))) (7) Upon every person engaging within this state in the
5business of stevedoring and associated activities pertinent to the
6movement of goods and commodities in waterborne interstate or foreign
7commerce; as to such persons the amount of tax with respect to such
8business is equal to the gross proceeds derived from such activities
9multiplied by the rate of 0.275 percent. Persons subject to taxation
10under this subsection are exempt from payment of taxes imposed by
11chapter 82.16 RCW for that portion of their business subject to
12taxation under this subsection. Stevedoring and associated activities
13pertinent to the conduct of goods and commodities in waterborne
14interstate or foreign commerce are defined as all activities of a
15labor, service or transportation nature whereby cargo may be loaded or
16unloaded to or from vessels or barges, passing over, onto or under a
17wharf, pier, or similar structure; cargo may be moved to a warehouse or
18similar holding or storage yard or area to await further movement in
19import or export or may move to a consolidation freight station and be
20stuffed, unstuffed, containerized, separated or otherwise segregated or
21aggregated for delivery or loaded on any mode of transportation for
22delivery to its consignee. Specific activities included in this
23definition are: Wharfage, handling, loading, unloading, moving of
24cargo to a convenient place of delivery to the consignee or a
25convenient place for further movement to export mode; documentation
26services in connection with the receipt, delivery, checking, care,
27custody and control of cargo required in the transfer of cargo;
28imported automobile handling prior to delivery to consignee; terminal
29stevedoring and incidental vessel services, including but not limited
30to plugging and unplugging refrigerator service to containers,
31trailers, and other refrigerated cargo receptacles, and securing ship
32hatch covers.
33(((7)(a))) (8) Upon every person engaging within this state in the
34business of disposing of low-level waste, as defined in RCW 43.145.010;
35as to such persons the amount of the tax with respect to such business
36is equal to the gross income of the business, excluding any fees
37imposed under chapter 43.200 RCW, multiplied by the rate of 3.3
38percent.
1(((b))) If the gross income of the taxpayer is attributable to
2activities both within and without this state, the gross income
3attributable to this state must be determined in accordance with the
4methods of apportionment required under RCW 82.04.460.
5(((8))) (9) Upon every person engaging within this state as an
6insurance producer or title insurance agent licensed under chapter
748.17 RCW or a surplus line broker licensed under chapter 48.15 RCW; as
8to such persons, the amount of the tax with respect to such licensed
9activities is equal to the gross income of such business multiplied by
10the rate of 0.484 percent.
11(((9))) (10) Upon every person engaging within this state in
12business as a hospital, as defined in chapter 70.41 RCW, that is
13operated as a nonprofit corporation or by the state or any of its
14political subdivisions, as to such persons, the amount of tax with
15respect to such activities is equal to the gross income of the business
16multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5
17percent thereafter.
18(((10))) (11)(a) Beginning October 1, 2005, upon every person
19engaging within this state in the business of manufacturing commercial
20airplanes, or components of such airplanes, or making sales, at retail
21or wholesale, of commercial airplanes or components of such airplanes,
22manufactured by the seller, as to such persons the amount of tax with
23respect to such business is, in the case of manufacturers, equal to the
24value of the product manufactured and the gross proceeds of sales of
25the product manufactured, or in the case of processors for hire, equal
26to the gross income of the business, multiplied by the rate of:
27(i) 0.4235 percent from October 1, 2005, through June 30, 2007; and
28(ii) 0.2904 percent beginning July 1, 2007.
29(b) Beginning July 1, 2008, upon every person who is not eligible
30to report under the provisions of (a) of this subsection (((10))) (11)
31and is engaging within this state in the business of manufacturing
32tooling specifically designed for use in manufacturing commercial
33airplanes or components of such airplanes, or making sales, at retail
34or wholesale, of such tooling manufactured by the seller, as to such
35persons the amount of tax with respect to such business is, in the case
36of manufacturers, equal to the value of the product manufactured and
37the gross proceeds of sales of the product manufactured, or in the case
1of processors for hire, be equal to the gross income of the business,
2multiplied by the rate of 0.2904 percent.
3(c) For the purposes of this subsection (((10))) (11), "commercial
4airplane" and "component" have the same meanings as provided in RCW
582.32.550.
6(d) In addition to all other requirements under this title, a
7person reporting under the tax rate provided in this subsection
8(((10))) (11) must file a complete annual report with the department
9under RCW 82.32.--- (section 103, chapter 114 (SHB 3066), Laws of
102010).
11(e) This subsection (((10))) (11) does not apply on and after July
121, 2024.
13(((11))) (12)(a) Until July 1, 2024, upon every person engaging
14within this state in the business of extracting timber or extracting
15for hire timber; as to such persons the amount of tax with respect to
16the business is, in the case of extractors, equal to the value of
17products, including by-products, extracted, or in the case of
18extractors for hire, equal to the gross income of the business,
19multiplied by the rate of 0.4235 percent from July 1, 2006, through
20June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30,
212024.
22(b) Until July 1, 2024, upon every person engaging within this
23state in the business of manufacturing or processing for hire: (i)
24Timber into timber products or wood products; or (ii) timber products
25into other timber products or wood products; as to such persons the
26amount of the tax with respect to the business is, in the case of
27manufacturers, equal to the value of products, including by-products,
28manufactured, or in the case of processors for hire, equal to the gross
29income of the business, multiplied by the rate of 0.4235 percent from
30July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1,
312007, through June 30, 2024.
32(c) Until July 1, 2024, upon every person engaging within this
33state in the business of selling at wholesale: (i) Timber extracted by
34that person; (ii) timber products manufactured by that person from
35timber or other timber products; or (iii) wood products manufactured by
36that person from timber or timber products; as to such persons the
37amount of the tax with respect to the business is equal to the gross
38proceeds of sales of the timber, timber products, or wood products
1multiplied by the rate of 0.4235 percent from July 1, 2006, through
2June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30,
32024.
4(d) Until July 1, 2024, upon every person engaging within this
5state in the business of selling standing timber; as to such persons
6the amount of the tax with respect to the business is equal to the
7gross income of the business multiplied by the rate of 0.2904 percent.
8For purposes of this subsection (((11))) (12)(d), "selling standing
9timber" means the sale of timber apart from the land, where the buyer
10is required to sever the timber within thirty months from the date of
11the original contract, regardless of the method of payment for the
12timber and whether title to the timber transfers before, upon, or after
13severance.
14(e) For purposes of this subsection, the following definitions
15apply:
16(i) "Biocomposite surface products" means surface material products
17containing, by weight or volume, more than fifty percent recycled paper
18and that also use nonpetroleum-based phenolic resin as a bonding agent.
19(ii) "Paper and paper products" means products made of interwoven
20cellulosic fibers held together largely by hydrogen bonding. "Paper
21and paper products" includes newsprint; office, printing, fine, and
22pressure-sensitive papers; paper napkins, towels, and toilet tissue;
23kraft bag, construction, and other kraft industrial papers; paperboard,
24liquid packaging containers, containerboard, corrugated, and solid-
25fiber containers including linerboard and corrugated medium; and
26related types of cellulosic products containing primarily, by weight or
27volume, cellulosic materials. "Paper and paper products" does not
28include books, newspapers, magazines, periodicals, and other printed
29publications, advertising materials, calendars, and similar types of
30printed materials.
31(iii) "Recycled paper" means paper and paper products having fifty
32percent or more of their fiber content that comes from postconsumer
33waste. For purposes of this subsection (((11))) (12)(e)(iii),
34"postconsumer waste" means a finished material that would normally be
35disposed of as solid waste, having completed its life cycle as a
36consumer item.
37(iv) "Timber" means forest trees, standing or down, on privately or
1publicly owned land. "Timber" does not include Christmas trees that
2are cultivated by agricultural methods or short-rotation hardwoods as
3defined in RCW 84.33.035.
4(v) "Timber products" means:
5(A) Logs, wood chips, sawdust, wood waste, and similar products
6obtained wholly from the processing of timber, short-rotation hardwoods
7as defined in RCW 84.33.035, or both;
8(B) Pulp, including market pulp and pulp derived from recovered
9paper or paper products; and
10(C) Recycled paper, but only when used in the manufacture of
11biocomposite surface products.
12(vi) "Wood products" means paper and paper products; dimensional
13lumber; engineered wood products such as particleboard, oriented strand
14board, medium density fiberboard, and plywood; wood doors; wood
15windows; and biocomposite surface products.
16(f) Except for small harvesters as defined in RCW 84.33.035, a
17person reporting under the tax rate provided in this subsection
18(((11))) (12) must file a complete annual survey with the department
19under RCW 82.32.--- (section 102, chapter 114 (SHB 3066), Laws of
202010).
21(((12))) (13) Upon every person engaging within this state in
22inspecting, testing, labeling, and storing canned salmon owned by
23another person, as to such persons, the amount of tax with respect to
24such activities is equal to the gross income derived from such
25activities multiplied by the rate of 0.484 percent.
26(((13))) (14)(a) Upon every person engaging within this state in
27the business of printing a newspaper, publishing a newspaper, or both,
28the amount of tax on such business is equal to the gross income of the
29business multiplied by the rate of 0.2904 percent.
30(b) A person reporting under the tax rate provided in this
31subsection (((13))) (14) must file a complete annual report with the
32department under RCW 82.32.--- (section 103, chapter 114 (SHB 3066),
33Laws of 2010).
34Sec. 204. RCW 82.04.298 and 2010 1st sp.s. c 23 s 511 are each
35amended to read as follows:
36(1) The amount of tax with respect to a qualified grocery
37distribution cooperative's sales of groceries or related goods for
1resale, excluding items subject to tax under RCW ((82.04.--- (section
2502 of this act))) 82.04.260(4), to customer-owners of the grocery
3distribution cooperative is equal to the gross proceeds of sales of the
4grocery distribution cooperative multiplied by the rate of one and
5one-half percent.
6(2) A qualified grocery distribution cooperative is allowed a
7deduction from the gross proceeds of sales of groceries or related
8goods for resale, excluding items subject to tax under RCW ((82.04.---
9(section 502 of this act))) 82.04.260(4), to customer-owners of the
10grocery distribution cooperative that is equal to the portion of the
11gross proceeds of sales for resale that represents the actual cost of
12the merchandise sold by the grocery distribution cooperative to
13customer-owners.
14(3) The definitions in this subsection apply throughout this
15section unless the context clearly requires otherwise.
16(a) "Grocery distribution cooperative" means an entity that sells
17groceries and related items to customer-owners of the grocery
18distribution cooperative and has customer-owners, in the aggregate, who
19own a majority of the outstanding ownership interests of the grocery
20distribution cooperative or of the entity controlling the grocery
21distribution cooperative. "Grocery distribution cooperative" includes
22an entity that controls a grocery distribution cooperative.
23(b) "Qualified grocery distribution cooperative" means:
24(i) A grocery distribution cooperative that has been determined by
25a court of record of the state of Washington to be not engaged in
26wholesaling or making sales at wholesale, within the meaning of RCW
2782.04.270 or any similar provision of a municipal ordinance that
28imposes a tax on gross receipts, gross proceeds of sales, or gross
29income, with respect to purchases made by customer-owners, and
30subsequently changes its form of doing business to make sales at
31wholesale of groceries or related items to its customer-owners; or
32(ii) A grocery distribution cooperative that has acquired
33substantially all of the assets of a grocery distribution cooperative
34described in (b)(i) of this subsection.
35(c) "Customer-owner" means a person who has an ownership interest
36in a grocery distribution cooperative and purchases groceries and
37related items at wholesale from that grocery distribution cooperative.
1(d) "Controlling" means holding fifty percent or more of the voting
2interests of an entity and having at least equal power to direct or
3cause the direction of the management and policies of the entity,
4whether through the ownership of voting securities, by contract, or
5otherwise.
6Sec. 205. RCW 82.04.440 and 2010 1st sp.s. c 23 s 513 are each
7amended to read as follows:
8(1) Every person engaged in activities that are subject to tax
9under two or more provisions of RCW 82.04.230 through 82.04.298,
10inclusive, is taxable under each provision applicable to those
11activities.
12(2) Persons taxable under RCW 82.04.2909(2), 82.04.250, 82.04.270,
1382.04.294(2), or 82.04.260 (1)(b), (c), or (d), (((10), or)) (4), (11),
14or ((section 502(2) of this act)) (12) with respect to selling products
15in this state, including those persons who are also taxable under RCW
1682.04.261, are allowed a credit against those taxes for any (a)
17manufacturing taxes paid with respect to the manufacturing of products
18so sold in this state, and/or (b) extracting taxes paid with respect to
19the extracting of products so sold in this state or ingredients of
20products so sold in this state. Extracting taxes taken as credit under
21subsection (3) of this section may also be taken under this subsection,
22if otherwise allowable under this subsection. The amount of the credit
23may not exceed the tax liability arising under this chapter with
24respect to the sale of those products.
25(3) Persons taxable as manufacturers under RCW 82.04.240 or
2682.04.260 (1)(b) or (((11))) (12), including those persons who are also
27taxable under RCW 82.04.261, are allowed a credit against those taxes
28for any extracting taxes paid with respect to extracting the
29ingredients of the products so manufactured in this state. The amount
30of the credit may not exceed the tax liability arising under this
31chapter with respect to the manufacturing of those products.
32(4) Persons taxable under RCW 82.04.230, 82.04.240, 82.04.2909(1),
3382.04.294(1), 82.04.2404, or 82.04.260 (1), (2), (((10), or)) (4),
34(11), or ((section 502(1) of this act)) (12), including those persons
35who are also taxable under RCW 82.04.261, with respect to extracting or
36manufacturing products in this state are allowed a credit against those
37taxes for any (i) gross receipts taxes paid to another state with
1respect to the sales of the products so extracted or manufactured in
2this state, (ii) manufacturing taxes paid with respect to the
3manufacturing of products using ingredients so extracted in this state,
4or (iii) manufacturing taxes paid with respect to manufacturing
5activities completed in another state for products so manufactured in
6this state. The amount of the credit may not exceed the tax liability
7arising under this chapter with respect to the extraction or
8manufacturing of those products.
9(5) For the purpose of this section:
10(a) "Gross receipts tax" means a tax:
11(i) Which is imposed on or measured by the gross volume of
12business, in terms of gross receipts or in other terms, and in the
13determination of which the deductions allowed would not constitute the
14tax an income tax or value added tax; and
15(ii) Which is also not, pursuant to law or custom, separately
16stated from the sales price.
17(b) "State" means (i) the state of Washington, (ii) a state of the
18United States other than Washington, or any political subdivision of
19such other state, (iii) the District of Columbia, and (iv) any foreign
20country or political subdivision thereof.
21(c) "Manufacturing tax" means a gross receipts tax imposed on the
22act or privilege of engaging in business as a manufacturer, and
23includes (i) the taxes imposed in RCW 82.04.240, 82.04.2404,
2482.04.2909(1), 82.04.260 (1), (2),(((10), and)) (4), (11), ((section
25502(1) of this act)) and (12), and 82.04.294(1); (ii) the tax imposed
26under RCW 82.04.261 on persons who are engaged in business as a
27manufacturer; and (iii) similar gross receipts taxes paid to other
28states.
29(d) "Extracting tax" means a gross receipts tax imposed on the act
30or privilege of engaging in business as an extractor, and includes (i)
31the tax imposed on extractors in RCW 82.04.230 and 82.04.260(((11)))
32(12); (ii) the tax imposed under RCW 82.04.261 on persons who are
33engaged in business as an extractor; and (iii) similar gross receipts
34taxes paid to other states.
35(e) "Business", "manufacturer", "extractor", and other terms used
36in this section have the meanings given in RCW 82.04.020 through
3782.04.212, notwithstanding the use of those terms in the context of
38describing taxes imposed by other states.
1PART III
2Repeal of Tax Increases on Bottled Water and Candy
3Sec. 301. RCW 82.08.0293 and 2010 1st sp.s. c 23 s 902 are each
4amended to read as follows:
5(1) The tax levied by RCW 82.08.020 does not apply to sales of food
6and food ingredients. "Food and food ingredients" means substances,
7whether in liquid, concentrated, solid, frozen, dried, or dehydrated
8form, that are sold for ingestion or chewing by humans and are consumed
9for their taste or nutritional value. "Food and food ingredients" does
10not include:
11(a) "Alcoholic beverages," which means beverages that are suitable
12for human consumption and contain one-half of one percent or more of
13alcohol by volume; and
14(b) "Tobacco," which means cigarettes, cigars, chewing or pipe
15tobacco, or any other item that contains tobacco.
16(2) ((Until July 1, 2013,)) The exemption of "food and food
17ingredients" provided for in subsection (1) of this section does not
18apply to prepared food, soft drinks, ((bottled water, candy,)) or
19dietary supplements. ((Beginning July 1, 2013, the exemption of "food
20and food ingredients" provided for in subsection (1) of this section
21does not apply to prepared food, soft drinks, candy, or dietary
22supplements.)) For purposes of this subsection, the following
23definitions apply:
24(a) "Dietary supplement" means any product, other than tobacco,
25intended to supplement the diet that:
26(i) Contains one or more of the following dietary ingredients:
27(A) A vitamin;
28(B) A mineral;
29(C) An herb or other botanical;
30(D) An amino acid;
31(E) A dietary substance for use by humans to supplement the diet by
32increasing the total dietary intake; or
33(F) A concentrate, metabolite, constituent, extract, or combination
34of any ingredient described in this subsection;
35(ii) Is intended for ingestion in tablet, capsule, powder, softgel,
36gelcap, or liquid form, or if not intended for ingestion in such form,
37is not represented as conventional food and is not represented for use
38as a sole item of a meal or of the diet; and
1(iii) Is required to be labeled as a dietary supplement,
2identifiable by the "supplement facts" box found on the label as
3required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered as
4of January 1, 2003.
5(b)(i) "Prepared food" means:
6(A) Food sold in a heated state or heated by the seller;
7(B) Food sold with eating utensils provided by the seller,
8including plates, knives, forks, spoons, glasses, cups, napkins, or
9straws. A plate does not include a container or packaging used to
10transport the food; or
11(C) Two or more food ingredients mixed or combined by the seller
12for sale as a single item, except:
13(I) Food that is only cut, repackaged, or pasteurized by the
14seller; or
15(II) Raw eggs, fish, meat, poultry, and foods containing these raw
16animal foods requiring cooking by the consumer as recommended by the
17federal food and drug administration in chapter 3, part 401.11 of The
18Food Code, published by the food and drug administration, as amended or
19renumbered as of January 1, 2003, so as to prevent foodborne illness.
20(ii) "Prepared food" does not include the following food or food
21ingredients, if the food or food ingredients are sold without eating
22utensils provided by the seller:
23(A) Food sold by a seller whose proper primary North American
24industry classification system (NAICS) classification is manufacturing
25in sector 311, except subsector 3118 (bakeries), as provided in the
26"North American industry classification system--United States, 2002";
27(B) Food sold in an unheated state by weight or volume as a single
28item; or
29(C) Bakery items. The term "bakery items" includes bread, rolls,
30buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes,
31tortes, pies, tarts, muffins, bars, cookies, or tortillas.
32(c) "Soft drinks" means nonalcoholic beverages that contain natural
33or artificial sweeteners. Soft drinks do not include beverages that
34contain: Milk or milk products; soy, rice, or similar milk
35substitutes; or greater than fifty percent of vegetable or fruit juice
36by volume.
37(((d) "Candy" means a preparation of sugar, honey, or other natural
38or artificial sweeteners in combination with chocolate, fruits, nuts,
1or other ingredients or flavorings in the form of bars, drops, or
2pieces. "Candy" does not include any preparation containing flour and
3does not require refrigeration.
4(e) "Bottled water" means water that is placed in a sealed
5container or package for human consumption. Bottled water is calorie
6free and does not contain sweeteners or other additives except that it
7may contain: (i) Antimicrobial agents; (ii) fluoride; (iii)
8carbonation; (iv) vitamins, minerals, and electrolytes; (v) oxygen;
9(vi) preservatives; and (vii) only those flavors, extracts, or essences
10derived from a spice or fruit. "Bottled water" includes water that is
11delivered to the buyer in a reusable container that is not sold with
12the water.))
13(3) Notwithstanding anything in this section to the contrary, the
14exemption of "food and food ingredients" provided in this section
15applies to food and food ingredients that are furnished, prepared, or
16served as meals:
17(a) Under a state administered nutrition program for the aged as
18provided for in the older Americans act (P.L. 95-478 Title III) and RCW
1974.38.040(6);
20(b) That are provided to senior citizens, individuals with
21disabilities, or low-income persons by a not-for-profit organization
22organized under chapter 24.03 or 24.12 RCW; or
23(c) That are provided to residents, sixty-two years of age or
24older, of a qualified low-income senior housing facility by the lessor
25or operator of the facility. The sale of a meal that is billed to both
26spouses of a marital community or both domestic partners of a domestic
27partnership meets the age requirement in this subsection (3)(c) if at
28least one of the spouses or domestic partners is at least sixty-two
29years of age. For purposes of this subsection, "qualified low-income
30senior housing facility" means a facility:
31(i) That meets the definition of a qualified low-income housing
32project under 26 U.S.C. Sec. 42 of the federal internal revenue code,
33as existing on August 1, 2009;
34(ii) That has been partially funded under 42 U.S.C. Sec. 1485; and
35(iii) For which the lessor or operator has at any time been
36entitled to claim a federal income tax credit under 26 U.S.C. Sec. 42
37of the federal internal revenue code.
1(4)(a) Subsection (1) of this section notwithstanding, the retail
2sale of food and food ingredients is subject to sales tax under RCW
382.08.020 if the food and food ingredients are sold through a vending
4machine. Except as provided in (b) of this subsection, the selling
5price of food and food ingredients sold through a vending machine for
6purposes of RCW 82.08.020 is fifty-seven percent of the gross receipts.
7(b) For soft drinks and hot prepared food and food ingredients,
8other than food and food ingredients which are heated after they have
9been dispensed from the vending machine, the selling price is the total
10gross receipts of such sales divided by the sum of one plus the sales
11tax rate expressed as a decimal.
12(c) For tax collected under this subsection (4), the requirements
13that the tax be collected from the buyer and that the amount of tax be
14stated as a separate item are waived.
15Sec. 302. RCW 82.08.0293 and 2010 1st sp.s. c 35 s 305 are each
16amended to read as follows:
17(1) The tax levied by RCW 82.08.020 does not apply to sales of food
18and food ingredients. "Food and food ingredients" means substances,
19whether in liquid, concentrated, solid, frozen, dried, or dehydrated
20form, that are sold for ingestion or chewing by humans and are consumed
21for their taste or nutritional value. "Food and food ingredients" does
22not include:
23(a) "Alcoholic beverages," which means beverages that are suitable
24for human consumption and contain one-half of one percent or more of
25alcohol by volume; and
26(b) "Tobacco," which means cigarettes, cigars, chewing or pipe
27tobacco, or any other item that contains tobacco.
28(2) The exemption of "food and food ingredients" provided for in
29subsection (1) of this section does not apply to prepared food, soft
30drinks, ((bottled water, candy,)) or dietary supplements. For purposes
31of this subsection, the following definitions apply:
32(a) "Dietary supplement" means any product, other than tobacco,
33intended to supplement the diet that:
34(i) Contains one or more of the following dietary ingredients:
35(A) A vitamin;
36(B) A mineral;
37 (C) An herb or other botanical;
1(D) An amino acid;
2(E) A dietary substance for use by humans to supplement the diet by
3increasing the total dietary intake; or
4(F) A concentrate, metabolite, constituent, extract, or combination
5of any ingredient described in this subsection;
6(ii) Is intended for ingestion in tablet, capsule, powder, softgel,
7gelcap, or liquid form, or if not intended for ingestion in such form,
8is not represented as conventional food and is not represented for use
9as a sole item of a meal or of the diet; and
10(iii) Is required to be labeled as a dietary supplement,
11identifiable by the "supplement facts" box found on the label as
12required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered as
13of January 1, 2003.
14(b)(i) "Prepared food" means:
15(A) Food sold in a heated state or heated by the seller;
16(B) Food sold with eating utensils provided by the seller,
17including plates, knives, forks, spoons, glasses, cups, napkins, or
18straws. A plate does not include a container or packaging used to
19transport the food; or
20(C) Two or more food ingredients mixed or combined by the seller
21for sale as a single item, except:
22(I) Food that is only cut, repackaged, or pasteurized by the
23seller; or
24(II) Raw eggs, fish, meat, poultry, and foods containing these raw
25animal foods requiring cooking by the consumer as recommended by the
26federal food and drug administration in chapter 3, part 401.11 of The
27Food Code, published by the food and drug administration, as amended or
28renumbered as of January 1, 2003, so as to prevent foodborne illness.
29(ii) "Prepared food" does not include the following food or food
30ingredients, if the food or food ingredients are sold without eating
31utensils provided by the seller:
32(A) Food sold by a seller whose proper primary North American
33industry classification system (NAICS) classification is manufacturing
34in sector 311, except subsector 3118 (bakeries), as provided in the
35"North American industry classification system--United States, 2002";
36(B) Food sold in an unheated state by weight or volume as a single
37item; or
1(C) Bakery items. The term "bakery items" includes bread, rolls,
2buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes,
3tortes, pies, tarts, muffins, bars, cookies, or tortillas.
4(c) "Soft drinks" means nonalcoholic beverages that contain natural
5or artificial sweeteners. Soft drinks do not include beverages that
6contain: Milk or milk products; soy, rice, or similar milk
7substitutes; or greater than fifty percent of vegetable or fruit juice
8by volume.
9(((d) "Candy" means a preparation of sugar, honey, or other natural
10or artificial sweeteners in combination with chocolate, fruits, nuts,
11or other ingredients or flavorings in the form of bars, drops, or
12pieces. "Candy" does not include any preparation containing flour and
13does not require refrigeration.
14(e) "Bottled water" means water that is placed in a sealed
15container or package for human consumption. Bottled water is calorie
16free and does not contain sweeteners or other additives except that it
17may contain: (i) Antimicrobial agents; (ii) fluoride; (iii)
18carbonation; (iv) vitamins, minerals, and electrolytes; (v) oxygen;
19(vi) preservatives; and (vii) only those flavors, extracts, or essences
20derived from a spice or fruit. "Bottled water" includes water that is
21delivered to the buyer in a reusable container that is not sold with
22the water.))
23(3) Notwithstanding anything in this section to the contrary, the
24exemption of "food and food ingredients" provided in this section
25applies to food and food ingredients that are furnished, prepared, or
26served as meals:
27(a) Under a state administered nutrition program for the aged as
28provided for in the older Americans act (P.L. 95-478 Title III) and RCW
2974.38.040(6);
30(b) That are provided to senior citizens, individuals with
31disabilities, or low-income persons by a not-for-profit organization
32organized under chapter 24.03 or 24.12 RCW; or
33(c) That are provided to residents, sixty-two years of age or
34older, of a qualified low-income senior housing facility by the lessor
35or operator of the facility. The sale of a meal that is billed to both
36spouses of a marital community or both domestic partners of a domestic
37partnership meets the age requirement in this subsection (3)(c) if at
1least one of the spouses or domestic partners is at least sixty-two
2years of age. For purposes of this subsection, "qualified low-income
3senior housing facility" means a facility:
4(i) That meets the definition of a qualified low-income housing
5project under 26 U.S.C. Sec. 42 of the federal internal revenue code,
6as existing on August 1, 2009;
7(ii) That has been partially funded under 42 U.S.C. Sec. 1485; and
8(iii) For which the lessor or operator has at any time been
9entitled to claim a federal income tax credit under 26 U.S.C. Sec. 42
10of the federal internal revenue code.
11(4)(a) Subsection (1) of this section notwithstanding, the retail
12sale of food and food ingredients is subject to sales tax under RCW
1382.08.020 if the food and food ingredients are sold through a vending
14machine. Except as provided in (b) of this subsection, the selling
15price of food and food ingredients sold through a vending machine for
16purposes of RCW 82.08.020 is fifty-seven percent of the gross receipts.
17(b) For soft drinks and hot prepared food and food ingredients,
18other than food and food ingredients which are heated after they have
19been dispensed from the vending machine, the selling price is the total
20gross receipts of such sales divided by the sum of one plus the sales
21tax rate expressed as a decimal.
22(c) For tax collected under this subsection (4), the requirements
23that the tax be collected from the buyer and that the amount of tax be
24stated as a separate item are waived.
25Sec. 303. RCW 82.12.0293 and 2010 1st sp.s. c 23 s 903 are each
26amended to read as follows:
27(1) The provisions of this chapter do not apply in respect to the
28use of food and food ingredients for human consumption. "Food and food
29ingredients" has the same meaning as in RCW 82.08.0293.
30(2) ((Until July 1, 2013,)) The exemption of "food and food
31ingredients" provided for in subsection (1) of this section does not
32apply to prepared food, soft drinks, ((bottled water, candy,)) or
33dietary supplements. ((Beginning July 1, 2013, the exemption of "food
34and food ingredients" provided for in subsection (1) of this section
35does not apply to prepared food, soft drinks, candy, or dietary
36supplements.)) "Prepared food," "soft drinks," and "dietary
1supplements((,))" (("candy," and "bottled water")) have the same
2meanings as in RCW 82.08.0293.
3(3) Notwithstanding anything in this section to the contrary, the
4exemption of "food and food ingredients" provided in this section
5((apply)) applies to food and food ingredients which are furnished,
6prepared, or served as meals:
7(a) Under a state administered nutrition program for the aged as
8provided for in the older Americans act (P.L. 95-478 Title III) and RCW
974.38.040(6);
10(b) Which are provided to senior citizens, individuals with
11disabilities, or low-income persons by a not-for-profit organization
12organized under chapter 24.03 or 24.12 RCW; or
13(c) That are provided to residents, sixty-two years of age or
14older, of a qualified low-income senior housing facility by the lessor
15or operator of the facility. The sale of a meal that is billed to both
16spouses of a marital community or both domestic partners of a domestic
17partnership meets the age requirement in this subsection (3)(c) if at
18least one of the spouses or domestic partners is at least sixty-two
19years of age. For purposes of this subsection, "qualified low-income
20senior housing facility" has the same meaning as in RCW 82.08.0293.
21Sec. 304. RCW 82.12.0293 and 2010 1st sp.s. c 35 s 306 are each
22amended to read as follows:
23(1) The provisions of this chapter do not apply in respect to the
24use of food and food ingredients for human consumption. "Food and food
25ingredients" has the same meaning as in RCW 82.08.0293.
26(2) The exemption of "food and food ingredients" provided for in
27subsection (1) of this section does not apply to prepared food, soft
28drinks, ((bottled water, candy,)) or dietary supplements. "Prepared
29food," "soft drinks," and "dietary supplements((,))" (("candy," and
30"bottled water")) have the same meanings as in RCW 82.08.0293.
31 (3) Notwithstanding anything in this section to the contrary, the
32exemption of "food and food ingredients" provided in this section
33applies to food and food ingredients which are furnished, prepared, or
34served as meals:
35(a) Under a state administered nutrition program for the aged as
36provided for in the older Americans act (P.L. 95-478 Title III) and RCW
3774.38.040(6);
1(b) Which are provided to senior citizens, individuals with
2disabilities, or low-income persons by a not-for-profit organization
3organized under chapter 24.03 or 24.12 RCW; or
4(c) That are provided to residents, sixty-two years of age or
5older, of a qualified low-income senior housing facility by the lessor
6or operator of the facility. The sale of a meal that is billed to both
7spouses of a marital community or both domestic partners of a domestic
8partnership meets the age requirement in this subsection (3)(c) if at
9least one of the spouses or domestic partners is at least sixty-two
10years of age. For purposes of this subsection, "qualified low-income
11senior housing facility" has the same meaning as in RCW 82.08.0293.
12NEW SECTION. Sec. 305. The following acts or parts of acts are
13each repealed:
14(1) RCW 82.08.--- and 2010 1st sp.s c 23 s 904;
15(2) RCW 82.12.--- and 2010 1st sp.s c 23 s 905;
16(3) RCW 82.08.--- and 2010 1st sp.s c 23 s 906;
17(4) RCW 82.12.--- and 2010 1st sp.s c 23 s 907; and
18(5) RCW 82.04.--- and 2010 1st sp.s c 23 s 908.
19PART IV
20Repeal of Tax Increase on Carbonated Beverages
21NEW SECTION. Sec. 401. RCW 82.--.--- through 82.--.--- and 2010
221st sp.s c 23 ss 1401 through 1406 are each repealed.
23PART V
24Miscellaneous Provisions
25NEW SECTION. Sec. 501. The provisions of this act are to be
26construed liberally so as to effectuate its intent.
27NEW SECTION. Sec. 502. If any provision of this act or its
28application to any person or circumstance is held invalid, the
29remainder of the act or the application of the provision to other
30persons or circumstances is not affected.
1NEW SECTION. Sec. 503. Sections 302 and 304 of this act take
2effect on the date that chapter 35, sections 305 and 306, Laws of 2010
3(Engrossed House Bill No. 2561) take effect.Originally filed in Office of Secretary of State May 19, 2010.
Approved by the People of the State of Washington in the General Election on November 2, 2010.