AN ACT Relating to oil company taxation; and adding a new chapter to Title 82 RCW.

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

NEW SECTION. Sec. 1. As used in this chapter, the following terms have the meanings indicated unless the context clearly requires otherwise.

(1) "Consideration" means all proceeds received, whether in cash, credits, or property, of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or services, or other costs, interest, or discount allowed, or any other expense whatsoever, except that deductions are allowed for returned merchandise.

(2) "Department" means the department of revenue.

(3) "Motor vehicle" means all vehicles, engines, machines, or mechanical contrivances which are propelled by internal combustion engines or motors.

(4) "Oil company" means every corporation, association, joint-stock association, partnership, limited partnership, copartnership, natural individual or individuals, and any business conducted by a trustee or trustees wherein evidence of ownership is evidenced by certificate or written instrument, formed for or engaged in the sale or the importation of petroleum products within this state.

(5) "Person" means any oil company subject to tax under this chapter.

(6) "Petroleum products" means any product of the industrial processing of crude oil and its fractionation products manufactured or refined or used for the generation of power used in an internal combustion engine for the generation of power to propel motor vehicles of any kind or character on the public highways. Petroleum products include but are not limited to gasoline, diesel fuel, kerosene, propane, and any other product of crude oil used for such purpose. Petroleum products do not include any product used for residential heating purposes or in the generation of electricity by a public utility or municipality.

(7) "Petroleum revenue" means all consideration derived from the first sale of petroleum products otherwise subject to liquid fuel taxes to wholesale or retail dealers in this state for marketing and distribution or to a direct user. If the consideration derived from the sale to a wholesale dealer includes federal gasoline taxes, the taxes shall not be considered a part of the petroleum revenue. If no consideration is received or if the transaction involves a person owned or controlled by the selling entity or a division within the selling entity and the consideration does not reflect the consideration which would have been received in an arm's length transaction with an unrelated person, then the selling entity shall be deemed to have received from such sale revenue equal to the consideration it would have received in an arm's length transaction with an unrelated person. Receipts from the sale of petroleum products are allocable to this state if the property is delivered or shipped to a purchaser located within this state regardless of the F.O.B. point or other conditions of the sale. The importation of petroleum products into this state upon which this tax has not been imposed or collected shall constitute a sale within this state and the importing purchaser shall be deemed an oil company for the purposes of this chapter. Subsequent exportation of these imported products from the state shall constitute a deduction from taxable revenue.

NEW SECTION. Sec. 2. (1) Every oil company incorporated or organized now or hereafter by or under any law of this state or of any other state or territory or by the United States or any foreign government or dependency, and doing business in this state, shall pay an excise tax of ........ cents upon each dollar of its petroleum revenues for the privilege of exercising its corporate franchise or of doing business, or of employing capital, or of owning or leasing property in this state in a corporate or organized capacity, or of maintaining an office in this state, or of having employees in this state, for all or any part of any calendar year.

(2) The tax imposed by this chapter is in addition to all other taxes imposed by this chapter or any other statute and shall not be permitted as a deduction in calculating any other tax imposed by the state.

(3) The tax imposed by this chapter automatically preempts any like tax or any tax on the privilege of processing or refining any petroleum product taxable under this chapter or any other refined product of crude oil imposed by any political subdivision of this state. This preemption does not extend to any local or personal or real property tax of general application or to any tax imposed by the state.

(4) The department may require purchasers of petroleum products to provide the selling oil company with documentation in such form and under such terms and conditions as the department may prescribe to substantiate any portion of its purchases which are or will be used for a nontaxable purpose.

(5) If at the time of a sale or importation of petroleum products by an oil company it cannot be reasonably determined whether the products will be used for a taxable purpose, it is presumed that the products are being used for a taxable purpose. The department may provide, in such form and under such terms as it may prescribe, a credit against any tax due and payable for any subsequent month upon submission to the department of such proof as it may require that any products presumed taxable were ultimately used for a nontaxable purpose.

(6) Any purchaser of petroleum products for a nontaxable purpose who provides documentation to an oil company pursuant to subsections (4) and (5) of this section and who subsequently sells or uses those products for a taxable purpose shall be deemed an oil company for the purposes of this chapter.

(7) The department may provide, in any case in which the purchaser is unable to provide documentation that petroleum products are used for a nontaxable purpose, for the payment of a credit based on the average wholesale price of petroleum products determined pursuant to rules adopted by the department.

(8) Any purchaser from an oil company subject to tax under this chapter who intentionally provides an oil company with false or fraudulent proof of the ultimate use of petroleum products, which enables that oil company to obtain a credit or exemption to which it is not entitled, or who directly receives a credit for taxes paid, is liable to pay to the department two hundred percent of the credit so obtained, plus interest at the rate of eighteen percent per annum.

(9) Any purchaser or user of petroleum products may, upon application to and approval by the department, elect to be deemed an oil company for the purposes of this chapter and to pay the taxes imposed by this chapter. Any purchaser or user electing to be taxed as an oil company may acquire petroleum products without the imposition of tax upon the supplier of the petroleum products.

(10) The tax imposed by this chapter shall be collected once on any petroleum products sold or used in this state.

NEW SECTION. Sec. 3. Chapter 82.32 RCW applies to the taxes imposed in this chapter, including RCW 82.32.045 on reports and returns.

NEW SECTION. Sec. 4. (1) The governor, or the governor's authorized representative, is hereby vested with authority to confer with the governor and the authorized representatives of other states with respect to reciprocal collection between this state and such other states of the tax imposed by this chapter.

(2) The governor, or the governor's representative, is authorized to join with such authorities of other states to conduct joint investigations, exchange information, hold joint hearings, and enter into compacts or interstate agreements with such other states to accomplish uniform reciprocal collection between those states who are parties to any compact or interstate agreement and this state of the tax imposed by this chapter.

NEW SECTION. Sec. 5. The department shall administer this chapter and is authorized to make the inquiries, determinations, and assessments of taxes imposed by this chapter.

NEW SECTION. Sec. 6. All taxes, interest, and penalties imposed by this chapter shall be deposited in the motor vehicle fund under RCW 46.68.070.

NEW SECTION. Sec. 7. 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. 8. Sections 1 through 6 of this act shall constitute a new chapter in Title 82 RCW.