AN ACT Relating to leasehold excise taxation; amending RCW 82.29A.030, 82.29A.050, 82.29A.120, 82.29A.130, 82.29A.140, and 82.02.030; and repealing RCW 82.29A.040, 82.29A.080, 82.29A.090, 82.29A.100, and 82.29A.110.

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

Sec. 1. Section 3, chapter 61, Laws of 1975-'76 2nd ex. sess. as last amended by section 18, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.29A.030 are each amended to read as follows:

((~~(1)~~)) There is hereby levied and shall be collected a leasehold excise tax on the act or privilege of occupying or using publicly owned real or personal property through a leasehold interest on and after January 1, 1976, at a rate of ((~~twelve~~)) one percent of taxable rent((~~: PROVIDED, That after the computation of the tax there shall be allowed credit for any tax collected pursuant to RCW 82.29A.040.~~

~~(2) An additional tax is imposed equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section~~)).

Sec. 2. Section 5, chapter 61, Laws of 1975-'76 2nd ex. sess. and RCW 82.29A.050 are each amended to read as follows:

(1) The leasehold excise taxes provided for in RCW 82.29A.030 ((~~and 82.29A.040~~)) shall be paid by the lessee to the lessor and the lessor shall collect such tax and remit the same to the department of revenue. The tax shall be payable at the same time as payments are due to the lessor for use of the property from which the leasehold interest arises, and in the case of payment of contract rent to a person other than the lessor, at the time of payment. The tax payment shall be accompanied by such information as the department of revenue may require. In the case of prepaid contract rent the payment may be prorated in accordance with instructions of the department of revenue and the prorated portion of the tax shall be due, one-half not later than May 31 and the other half not later than November 30 each year.

(2) The lessor receiving taxes payable under the provisions of this chapter shall remit the same together with a return provided by the department, to the department of revenue on or before the fifteenth day of the month following the month in which the tax is collected. The department may relieve any taxpayer or class of taxpayers from the obligation of filing monthly returns and may require the return to cover other reporting periods, but in no event shall returns be filed for a period greater than one year. The lessor shall be fully liable for collection and remittance of the tax. The amount of tax until paid by the lessee to the lessor shall constitute a debt from the lessee to the lessor. The tax required by this chapter shall be stated separately from contract rent, and if not so separately stated for purposes of determining the tax due from the lessee to the lessor and from the lessor to the department, the contract rent does not include the tax imposed by this chapter. Where a lessee has failed to pay to the lessor the tax imposed by this chapter and the lessor has not paid the amount of the tax to the department, the department may, in its discretion, proceed directly against the lessee for collection of the tax: PROVIDED, That taxes due where contract rent has not been paid shall be reported by the lessor to the department and the lessee alone shall be liable for payment of the tax to the department.

(3) Each person having a leasehold interest subject to the tax provided for in this chapter arising out of a lease of federally owned or federal trust lands shall report and remit the tax due directly to the department of revenue in the same manner and at the same time as the lessor would be required to report and remit the tax if such lessor were a state public entity.

Sec. 3. Section 12, chapter 61, Laws of 1975-'76 2nd ex. sess. and RCW 82.29A.120 are each amended to read as follows:

After computation of the taxes imposed pursuant to RCW 82.29A.030 ((~~and 82.29A.040~~)) there shall be allowed the following credits in determining the tax payable:

(1) With respect to a leasehold interest arising out of any lease or agreement, the terms of which were binding on the lessee prior to July 1, 1970, where such lease or agreement has not been renegotiated since that date, and excluding from such credit (a) any leasehold interest arising out of any lease of property covered by the provisions of RCW 28B.20.394 and (b) any lease or agreement including options to renew which extends beyond January 1, 1985, as follows:

With respect to taxes due in calendar year 1976, a credit equal to eighty percent of the tax otherwise due.

With respect to taxes due in calendar year 1977, a credit equal to sixty percent of the tax otherwise due.

With respect to taxes due in calendar year 1978, a credit equal to forty percent of the tax otherwise due.

With respect to taxes due in calendar year 1979, a credit equal to twenty percent of the tax otherwise due.

(2) With respect to a product lease, a credit of thirty-three percent of the tax otherwise due.

Sec. 4. Section 13, chapter 61, Laws of 1975-'76 2nd ex. sess. and RCW 82.29A.130 are each amended to read as follows:

The following leasehold interests shall be exempt from taxes imposed pursuant to RCW 82.29A.030 ((~~and 82.29A.040~~)):

(1) All leasehold interests constituting a part of the operating properties of any public utility which is assessed and taxed as a public utility pursuant to chapter 84.12 RCW.

(2) All leasehold interests in facilities owned or used by a school, college or university which leasehold provides housing for students and which is otherwise exempt from taxation under provisions of RCW 84.36.010 and 84.36.050.

(3) All leasehold interests of subsidized housing where the fee ownership of such property is vested in the government of the United States, or the state of Washington or any political subdivision thereof but only if income qualification exists for such housing.

(4) All leasehold interests used for fair purposes of a nonprofit fair association that sponsors or conducts a fair or fairs which receive support from revenues collected pursuant to RCW 67.16.100 and allocated by the director of the department of agriculture where the fee ownership of such property is vested in the government of the United States, the state of Washington or any of its political subdivisions: PROVIDED, That this exemption shall not apply to the leasehold interest of any sublessee of such nonprofit fair association if such leasehold interest would be taxable if it were the primary lease.

(5) All leasehold interests in any property of any public entity used as a residence by an employee of that public entity who is required as a condition of employment to live in the publicly owned property.

(6) All leasehold interests held by enrolled Indians of lands owned or held by any Indian or Indian tribe where the fee ownership of such property is vested in or held in trust by the United States and which are not subleased to other than to a lessee which would qualify pursuant to this chapter, RCW 84.36.451 and 84.40.175.

(7) All leasehold interests in any real property of any Indian or Indian tribe, band, or community that is held in trust by the United States or is subject to a restriction against alienation imposed by the United States: PROVIDED, That this exemption shall apply only where it is determined that contract rent paid is greater than or equal to ninety percent of fair market rental, to be determined by the department of revenue using the same criteria used to establish taxable rent in RCW 82.29A.020(2)(b).

(8) All leasehold interests for which annual taxable rent is less than two hundred fifty dollars per year. For purposes of this subsection leasehold interests held by the same lessee in contiguous properties owned by the same lessor shall be deemed a single leasehold interest.

(9) All leasehold interests which give use or possession of the leased property for a continuous period of less than thirty days: PROVIDED, That for purposes of this subsection, successive leases or lease renewals giving substantially continuous use of possession of the same property to the same lessee shall be deemed a single leasehold interest: PROVIDED FURTHER, That no leasehold interest shall be deemed to give use or possession for a period of less than thirty days solely by virtue of the reservation by the public lessor of the right to use the property or to allow third parties to use the property on an occasional, temporary basis.

(10) All leasehold interests under month-to-month leases in residential units rented for residential purposes of the lessee pending destruction or removal for the purpose of constructing a public highway or building.

(11) All leasehold interests in any publicly owned real or personal property to the extent such leasehold interests arises solely by virtue of a contract for public improvements or work executed under the public works statutes of this state or of the United States between the public owner of the property and a contractor.

Sec. 5. Section 16, chapter 61, Laws of 1975-'76 2nd ex. sess. and RCW 82.29A.140 are each amended to read as follows:

The department of revenue of the state of Washington shall make such rules and regulations consistent with chapter 34.04 RCW and the provisions of this chapter, RCW 84.36.451 and 84.40.175 as shall be necessary to permit its effective administration including procedures for collection and remittance of taxes imposed by this chapter((~~, and for intervention by the cities and counties levying under RCW 82.29A.040, in proceedings involving such levies and taxes collected pursuant thereto~~)).

Sec. 6. Section 31, chapter 35, Laws of 1982 1st ex. sess. as last amended by section 6, chapter 3, Laws of 1983 2nd ex. sess. and RCW 82.02.030 are each amended to read as follows:

(1) The rate of the additional taxes under RCW 54.28.020(2), 54.28.025(2), 66.24.210(2), 66.24.290(2), 82.04.2901, 82.16.020(2), 82.20.010(2), 82.26.020(2), 82.27.020(5), ((~~82.29A.030(2),~~)) 82.44.020(5), and 82.45.060(2) shall be seven percent;

(2) The rate of the additional taxes under RCW 82.08.150(4) shall be fourteen percent;

(3) The rate of the additional taxes under RCW 82.24.020(2) shall be fifteen percent; and

(4) The rate of the additional taxes under RCW 48.14.020(3) shall be four percent.

NEW SECTION. Sec. 7. The following acts or parts of acts are each repealed:

(1) Section 4, chapter 61, Laws of 1975-'76 2nd ex. sess. and RCW 82.29A.040;

(2) Section 8, chapter 61, Laws of 1975-'76 2nd ex. sess., section 8, chapter 4, Laws of 1981 2nd ex. sess. and RCW 82.29A.080;

(3) Section 9, chapter 61, Laws of 1975-'76 2nd ex. sess., section 9, chapter 4, Laws of 1981 2nd ex. sess. and RCW 82.29A.090;

(4) Section 10, chapter 61, Laws of 1975-'76 2nd ex. sess. and RCW 82.29A.100; and

(5) Section 11, chapter 61, Laws of 1975-'76 2nd ex. sess. and RCW 82.29A.110.

These repeals shall not be construed as affecting any existing right acquired or liability or obligation incurred under the statutes repealed or under any rule, regulation, or order adopted pursuant thereto; nor as affecting any proceeding instituted thereunder.