Z-705                 _______________________________________________

                                                   HOUSE BILL NO. 1002

                        _______________________________________________

State of Washington                              49th Legislature                              1985 Regular Session

By Representatives Appelwick and Hastings; by Department of Revenue request

Read first time 2/8/85 and referred to Committee on Ways & Means.

AN ACT Relating to business and occupation taxation of the business of making sales through direct seller's representatives; and amending RCW 82.04.423.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section 5, chapter 66, Laws of 1983 1st ex. sess. and RCW 82.04.423 are each amended to read as follows:

          (1)  This chapter shall not apply to any person in respect to gross income derived from the business of making sales of consumer products at wholesale or retail if such person:

          (a)  Does not own or lease real property within this state; and

          (b)  Does not regularly maintain a stock of tangible personal property in this state for sale in the ordinary course of business; and

          (c)  Is not a corporation incorporated under the laws of this state; and

          (d)  Makes sales in this state exclusively to or through a direct seller's representative.

          (2)  For purposes of this section, the term "direct seller's representative" means a person who buys consumer products on a buy-sell basis or a deposit-commission basis for resale, by the buyer or any other person, in the home or otherwise than in a permanent retail establishment, or who sells, or solicits the sale of, consumer products in the home or otherwise than in a permanent retail establishment; and

          (a)  Substantially all of the remuneration paid to such person, whether or not paid in cash, for the performance of services described in this subsection is directly related to sales or other output, including the performance of services, rather than the number of hours worked; and

          (b)  The services performed by the person are performed pursuant to a written contract between such person and the person for whom the services are performed and such contract provides that the person will not be treated as an employee with respect to such ((purposes)) services for federal tax purposes.

          (3) For purposes of this section, the term "consumer products" means only those articles of tangible personal property, or component parts thereof, of the type sold for personal use or enjoyment.  The term does not include industrial equipment and materials, manufacturing items, industrial use products, and the like, nor component parts thereof.

(4)  Nothing in this section shall be construed to imply that a person exempt from tax under this section was engaged in a business activity taxable under this chapter prior to the enactment of this section.