S-1590               _______________________________________________

                                                   SENATE BILL NO. 5683

                        _______________________________________________

State of Washington                              50th Legislature                              1987 Regular Session

By Senators Smitherman, Warnke, Cantu and Lee

Read first time 2/6/87 and referred to Committee on Commerce & Labor.

AN ACT Relating to nonprofit corporations; adding a new chapter to Title 24 RCW; and creating a new section.

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

NEW SECTION. Sec. 1.     This act shall be known and may be cited as the nonprofit corporation activities review act.

NEW SECTION. Sec. 2.     The following terms as used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:

          (1) "Corporation for profit" means a corporation for profit as defined in chapter 23A.04 RCW.

          (2) "Nonprofit corporation" means not for profit corporation as defined in chapter 24.03 RCW.

          (3) "Director" means the director of the department of revenue.

NEW SECTION. Sec. 3.     The director or the director's designee may conduct an audit of the unrelated business and retail activities of a nonprofit corporation as provided under chapter 82.32 RCW, subject to the requirements of RCW 82.32.330.  The director may request from a nonprofit corporation the following information:

          (1) Copies of its most recent federal income tax returns and related information required by the internal revenue service;

          (2)  Its affiliation with any national nonprofit corporation or association;

          (3) Its affiliation with any other nonprofit corporation doing business in this state and its status in the organizational structure;

          (4) Its affiliation with any corporation for profit doing business in this state and its status in the organizational structure;

          (5) Documentation on any transfer of funds representing retained revenues between the nonprofit corporation and any other organizations;

          (6) Notification on any modification to the nonprofit corporation's tax exempt status;

          (7) Documentation on any commingling of assets, funds, or personnel between the nonprofit corporation and any other organization; and

          (8) Any additional information the director may reasonably require in clarification or furtherance of this chapter.

NEW SECTION. Sec. 4.     Nonprofit corporations with gross revenues of less than one hundred thousand dollars per year, or whose income generating activities are conducted less than ninety continuous days per year, are exempt from this chapter.

NEW SECTION. Sec. 5.     The department of revenue shall consult with the secretary of state's office, representatives of private business, and representatives of nonprofit corporations in the administration of this chapter to promote cooperation in its administration.

NEW SECTION. Sec. 6.     The director shall submit a report to the legislature by December 30, 1987, outlining:

          (1) The competitive advantages of nonprofit corporations over for profit corporations which accrue due to their nonprofit status;

          (2) The level of commercial activity by nonprofit corporations;

          (3) The current and potential loss of tax revenue, if any, which occurs due to the commercial activity of nonprofit corporations;

          (4) The level of compliance by nonprofit corporations with the intent of Title 24 RCW in regard to commercial activities;

          (5) The level of revenue that nonprofit corporations provide for charitable or stated purposes;

          (6) The director's legislative recommendations; and

          (7) Any other findings.

NEW SECTION. Sec. 7.     Sections 1 through 5 of this act shall constitute a new chapter in Title 24 RCW.