HOUSE BILL REPORT

HB 207

BYRepresentatives Appelwick, Madsen and Sayan; by request of Department of Revenue

Providing for the taxation of tangible personal property which is provided with an operator for a charge.

House Committe on Ways & Means/Revenue

Majority Report:     Do Pass.  (9)

     Signed by Representatives Appelwick, Chair; Basich, Bristow, Grimm, Holland, Madsen, Rust, Taylor and Valle.

House Staff:Susan Kavanaugh (786-7145)

AS REPORTED BY COMMITTEE ON WAYS & MEANS/REVENUE FEBRUARY 13, 1987

BACKGROUND:

A 1986 court decision invalidated Department of Revenue regulations providing that the purchase of tangible personal property for rental or lease to another with an operator, such as a crane, backhoe, bulldozer, etc., constituted an intervening use and that such purchases were therefore subject to the retail sales tax.

SUMMARY:

Operation of tangible personal property for business purposes by the purchaser, including rental or leasing of the property with an operator represents an intervening use which subjects the purchase of the property to sales tax.  Purchase of property for rental or leasing to consumers without an operator is not subject to sales tax.

Fiscal Note:    Attached.

House Committee ‑ Testified For:     Barney McClure, Department of Revenue.

House Committee - Testified Against: None Presented.

House Committee - Testimony For:     This bill puts what had been held as a rule in statute.  Without this measure, the state could lose $5 - $10 million per year in revenue.

House Committee - Testimony Against: None Presented.