SENATE BILL REPORT

ESB 5402

As Amended by House, March 6, 2020

Title: An act relating to improving tax and licensing laws administered by the department of revenue, but not including changes to tax laws that are estimated to affect state or local tax collections as reflected in any fiscal note prepared and approved under the process established in chapter 43.88A RCW.

Brief Description: Improving tax and licensing laws administered by the department of revenue, but not including changes to tax laws that are estimated to affect state or local tax collections as reflected in any fiscal note prepared and approved under the process established in chapter 43.88A RCW.

Sponsors: Senators Schoesler and Rolfes.

Brief History:

Committee Activity: Ways & Means: 1/30/19, 2/04/19 [DP].

Floor Activity:

Passed Senate: 2/18/20, 47-0.Passed House: 3/06/20, 97-0.

Majority Report: Do pass.

Signed by Senators Rolfes, Chair; Frockt, Vice Chair, Operating, Capital Lead; Mullet, Capital Budget Cabinet; Braun, Ranking Member; Brown, Assistant Ranking Member, Operating; Honeyford, Assistant Ranking Member, Capital; Bailey, Becker, Billig, Conway, Darneille, Hasegawa, Hunt, Keiser, Liias, Palumbo, Pedersen, Rivers, Schoesler, Van De Wege, Wagoner, Warnick and Wilson, L..

Staff: Alia Kennedy (786-7405)

Background: Technical revisions to the Revised Code of Washington (RCW) may be required for multiple reasons. Sections of the RCW may be repealed, recodified, or amended in a way changing their internal or statutory numbering or terminology. The language in these sections, as well as references to these sections in other provisions of the RCW, then become incorrect. Statutes may become obsolete with the passage of time, evolution of technology, improvement of administrative processes, or adoption of state or federal legislation. Administrative agencies occasionally suggest statutory revisions for the purpose of increasing clarity or improving administration.

Summary of Engrossed Bill: Updating Tax Preference Performance Statements. Updates the tax preference performance statements for a number of tax preferences by clarifying tax preference standards and replacing references to the annual tax surveys and reports with consolidated annual tax performance reports.

Clarifying and Consolidating Provisions. The following updates are made:

• authorize the Department of Revenue to waive penalties for delinquent business license renewals if the delinquency is due to indisputable department error;

• deletes references to a repealed statute and corrects cross-references to radio and TV broadcaster subscription programming sales tax exemption;

• consolidates current artistic and cultural organization business and occupation tax deductions for amounts received and value of articles manufactured for public displays or performances;

• clarifies county assessor duties regarding property tax deferral program declarations;

• clarifies county treasurer duties regarding personal property subject to unpaid tax moved from one county to another;

• repeals obsolete sales and use tax sourcing statutes and thoroughbred racetrack tax deferral statutes; and

• repeals consolidated statutes throughout.

Technical Corrections. The following corrections are made:

• changes "Liquor Control Board" to "Liquor and Cannabis Board" and "Department of Community, Trade, and Economic Development" to "Department of Commerce" throughout to reflect agency name changes;

• deletes definition of “biofuel” and adds definitions of “biofuel” and “biogas;”

• revises United States Code citation in use tax exemption for government property and services used in watershed protection and flood prevention;

• provides only leasehold excise tax credit for leaseholds in real property owned by certain major universities, created in 2017, expiring Jan. 1, 2032;

• allows offset for use tax mistakenly paid on personal property purchased for leasing, in addition to a currently authorized offset for sales tax; and

• makes corrections to cross-references throughout.

Restoring Statutory Definitions. The following are defined:

• items currently exempt from sales tax if sold to organ procurement organizations—“chemical,” “materials,” “medical supplies”;

• items currently exempt from use tax if used by organ procurement organizations—“chemicals,” “materials,” “medical supplies”;

• public utility tax deductions for energy conservation or renewable energy, to clarify that “cogeneration” is qualified by “as existing on June 30, 2006”; and

• definitions for underground storage tank funding program.

Reduces Administrative Burden on Claimants. The following amendments are made:

• deletes requirement that educational institutions claiming property tax exemption provide detailed information regarding property, purpose for which it is used, revenue derived for preceding year, use to which revenue was applied, number of students who attended institution, and total revenues, with sources and purposes to which revenues were applied; and

• statutes relating to property tax deferral and grant programs to clarify that claimants need not file duplicate declarations to defer property taxes under the low-income deferral program, senior citizen or disabled person deferral program, and the widows and widowers of qualifying veterans' property tax grant program.

Appropriation: None.

Fiscal Note: Available.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: This is an annual technical cleanup bill. The Department of Revenue worked with the Code Revisers Office to identify areas of code that were obsolete, redundant, or unclear. The intent is to reduce administrative burden and provide technical clarity in the tax and licensing laws.

Persons Testifying: PRO: David Duvall, Department of Revenue.

Persons Signed In To Testify But Not Testifying: No one.

EFFECT OF HOUSE AMENDMENT(S):

• Removes a change to the definition of biofuel.

• Extends the deadline to decline partnership with the Department of Revenue and Business Licensing Service by participation in FileLocal to July 1, 2021 for certain cities.

• Updates the interest calculation provisions to reflect the changed filing due date for annual filers of business and occupation tax returns.