Z-951                 _______________________________________________

                                         SUBSTITUTE SENATE BILL NO. 4228

                        _______________________________________________

State of Washington                              49th Legislature                              1985 Regular Session

By Senate Committee on Ways and Means (originally sponsored by Senator McDermott; by Department of Revenue request)

Read first time 3/8/85.

AN ACT Relating to revenue and excise taxation; amending RCW 82.04.440; and declaring an emergency.

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

        Sec. 1.  Section 82.04.440, chapter 15, Laws of 1961 as last amended by section 5, chapter 172, Laws of 1981 and RCW 82.04.440 are each amended to read as follows:

(1) Except as provided in subsections (2) and (3) of this section, every person engaged in activities which are within the purview of the provisions of two or more of sections RCW 82.04.230 to 82.04.290, inclusive, shall be taxable under each paragraph applicable to the activities engaged in((:  PROVIDED, That)).

(2)(a) Persons taxable under RCW 82.04.250 or 82.04.270 shall not be taxable under RCW 82.04.230, 82.04.240 or subsection (2), (3), (4), (5), or (7) of RCW 82.04.260 with respect to extracting or manufacturing of the products so sold((, and that)).

(b) If (a) of this subsection is held by a state or federal court, in a final judgment unappealed from, to result in discrimination against interstate or foreign commerce, this entire subsection shall be null and void.

(3) Persons taxable under RCW 82.04.240 or ((RCW)) 82.04.260 subsection (4) shall not be taxable under RCW 82.04.230 with respect to extracting the ingredients of the products so manufactured.

(4) Every person taxable under RCW 82.04.230, 82.04.240, or subsection (2), (3), (4), (5) or (7) of RCW 82.04.260 with respect to extracting or manufacturing products in this state shall be allowed a credit against those taxes for any gross receipts taxes paid to another state with respect to the sales of the products so extracted or manufactured in this state.  The amount of the credit shall not exceed the tax liability arising under this chapter with respect to the extraction or manufacturing of those products.  This subsection shall apply to tax reporting periods after July 1, 1985.

(a) For the purpose of this subsection, the term "gross receipts tax" means a tax:

(i) Which is imposed on or measured by the gross volume of business, in terms of gross receipts or in other terms, and in the determination of which the deductions allowed would not constitute the tax an income or value added tax; and

(ii) Which is also not, pursuant to law or custom, separately stated from the sales price.

(b) For the purpose of this subsection, the term "state" means state of the United States, any political subdivision thereof, or the District of Columbia, and any foreign country or political subdivision thereof.

NEW SECTION. Sec. 2.     This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect immediately.