WSR 98-09-036

PREPROPOSAL STATEMENT OF INQUIRY

DEPARTMENT OF REVENUE

[Filed April 13, 1998, 1:36 p.m.]



Subject of Possible Rule Making: WAC 458-20-192 Indians--Indian reservations.

WAC 458-20-192 has not been revised since 1980. The Department of Revenue is developing revisions to WAC 458-20-192. The following outline describes the major areas that have been identified for revision.

I. Introduction. The rule will describe the excise tax liability of Indians and non-Indians doing business and making transactions on and off of Indian reservations and trust land.

II. Definitions. Definitions will be provided for the following terms:

(1) Indian reservation.

(2) Indian tribe.

(3) Indian.

(4) Treaty fishery.

(5) Value generated on the reservation.

III. Indian reservations. Direction will be given on how to obtain current information on federally recognized Indian tribes in the state of Washington. Persons will be directed to contact the Governor's Office of Indian Affairs for an up-to-date list of federally recognized Indian tribes in the state of Washington.

IV. Tax liability. The following broad areas of tax administration and tax policy will be addressed:

(1) Exclusion from tax imposition.

(2) Business registration requirements of Indian-owned businesses - what events trigger.

(3) Tax collection duties of Indian persons doing business with non-Indian persons.

(4) Federal preemption or infringement of tribal self-government and the resultant tax status of non-Indians doing business with Indian tribes.

(5) Value generated on the reservation.

(6) Resale certificates and exemption certificates.

(7) Doing business through corporations, partnerships, joint ventures, or other forms of business.

V. Rules of construction. The rules of construction used in analyzing the application of tax laws to Indians and non-Indians doing business with Indians will be explained.

VI. Business transactions with Indians and by Indians. The application of the business and occupation (B&O) tax and retail sales tax and use tax as they apply to business activities conducted by or with Indians or Indian tribes, both on and off the reservation, will be described.

VII. Treaty fishery. The tax status of activities surrounding the treaty fishery will be described.

VIII. Tangible personal property or services, delivered on or off a reservation. The retail sales and use tax and its application to persons on and off of the reservation will be explained.

IX. Sales to business located in the reservation and owned by an Indian and a non-Indian. The tax status on the reservation of businesses owned by a joint venture or other type of entity in which one of the members is an Indian will be explained.

X. Miscellaneous taxes and issues. The following may be addressed:

(1) Timber excise tax.

(2) Real estate excise tax.

(3) Motor vehicles or trailers.

(4) Fish tax.

(5) Gaming activities.

(6) Cigarette tax.

(7) Leasehold excise tax.

Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 82.32.300.

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: This rule is being revised to reflect changes in the state of the law. The rule was last revised in 1980.

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: The administration of state excise taxes is primarily administered by the Department of Revenue. The Department of Licensing administers the motor vehicle excise tax and fuel taxes. The Liquor Control Board enforces the cigarette excise tax and the tobacco products tax, but the Liquor Control Board does not administer these taxes. These agencies will be included in this rule-making process.

Process for Developing New Rule: Modified negotiated rule making.

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication. Written comments should be submitted by the public meeting date to ensure full consideration, but will be accepted if they are received two weeks before the date of adoption. Written comments may be submitted by mail, FAX, or at the public meeting. Oral comments will be accepted at the public meeting or later public hearing. This hearing is intended to solicit input before going forward with rule making. The outline above is a listing of the major areas identified as out of date and needing to be updated. The public meeting is an opportunity to comment on these areas as well as provide comment on other areas. The department is soliciting input before going forward with a draft rule. The previously scheduled meeting on May 13th has been canceled and rescheduled to June 1.

Written comments on and/or requests for copies of the rule outline may be directed to Leslie Cushman, Legislation and Policy, P.O. Box 47467, Olympia, WA 98504-7467, phone (360) 664-0057, FAX (360) 664-0693.

Location and Date of Public Meeting: General Administration Building, 1st Floor Auditorium, 11th and Columbia, Olympia, Washington, on June 1, 1998, at 10 a.m.

April 13, 1998

Russell W. Brubaker

Assistant Director

Legislature Code Reviser

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