HOUSE BILL REPORT

SB 6822

BYSenators Bluechel, Gaspard, Amondson and Barr

Exempting small timber harvesters from business and occupation tax.

House Committe on Revenue

Majority Report:  Do pass as amended.  (13)

      Signed by Representatives Wang, Chair; Pruitt, Vice Chair; Horn, Assistant Ranking Republican; Basich, Brumsickle, Fraser, Fuhrman, Grant, Haugen, Morris, Phillips,H. Sommers and Van Luven.

House Staff:Rick Wickman (786-7150)

AS PASSED HOUSE FEBRUARY 26, 1990

BACKGROUND:

Persons who harvest timber for sale or for commercial or industrial use from their own land or from land of another under contract or for hire are subject to the business and occupation tax upon "extractors" at a rate of 0.484 percent of gross proceeds.  Persons who harvest 500,000 board feet or less in a calendar quarter or 1 million board feet or less in a year may be small woodlot owners or small for-hire loggers.  However, this same category may often include persons clearing land for commercial, industrial, or residential development purposes.  These persons are not primarily engaged in the business of growing or harvesting timber.

In order for persons in this latter group to satisfy their business and occupation tax obligation, they are frequently required to open an account with the Department of Revenue, obtain necessary Washington State business licenses, and apply for state and federal taxpayer identification numbers.  Often in these cases the expense of registering with the department is greater than the amount of tax.  The costs of processing the return by the department can also be greater than the amount of tax collected.

SUMMARY:

Persons who fell, cut, or take timber for sale or for commercial or industrial use in amounts not exceeding 500,000 board feet in a calendar quarter and not exceeding 1 million board feet in a calendar year are exempt from the business and occupation tax.

Revenue:    The bill has a revenue impact.

Fiscal Note:      Available.

House Committee ‑ Testified For:    Senator Bluechel, prime sponsor and Nels Hanson, Washington Farm Forestry Association.

House Committee - Testified Against:      No one.

House Committee - Testimony For:    Small timber harvesters need an exemption from business and occupation taxes because many are small one-time or infrequent harvesters of timber.  Small harvesters already pay a timber excise tax on the stumpage value of timber less amounts for harvesting and marketing.

House Committee - Testimony Against:      None.