BILL REQ. #:  S-0414.1 

Read first time 01/13/11.   Referred to Committee on Ways & Means.

     AN ACT Relating to clarifying that the basis for business and occupation tax for real estate firms is the commission amount received by each real estate firm involved in a transaction; amending RCW 82.04.255; and creating new sections.

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

NEW SECTION.  Sec. 1   The legislature intends to clarify existing law that the basis for determining the business and occupation tax for real estate firms is the commission amount received by each real estate firm involved in a real estate transaction. In clarifying existing law, the legislature intends to preserve the historic method of calculating business and occupation tax for real estate firms.

Sec. 2   RCW 82.04.255 and 1997 c 7 s 1 are each amended to read as follows:
     (1) Upon every person engaging within the state ((as a real estate broker)) in the business of providing real estate brokerage services; as to such persons, the amount of the tax with respect to such business ((shall be)) is equal to the gross income of the business, multiplied by the rate of 1.5 percent.
     (2) The measure of the tax on real estate commissions earned by the real estate ((broker shall be)) firm is the gross commission earned by the particular real estate ((brokerage office)) firm including that portion of the commission paid to ((salesmen or associate)) brokers, including designated and managing brokers, in the same ((office)) firm on a particular transaction((: PROVIDED, HOWEVER, That where)). However, when a real estate commission on a particular transaction is divided ((between an originating brokerage office and a cooperating brokerage office on a particular transaction, each brokerage office shall)) among real estate firms at the closing of the transaction, including a firm located out of state, each firm must pay the tax only upon ((their)) its respective shares of said commission((: AND PROVIDED FURTHER, That where the brokerage office)). Moreover, when the real estate firm has paid the tax as provided herein, ((salesmen or associate)) brokers, including designated and managing brokers, within the same ((brokerage office shall)) real estate firm may not be required to pay a similar tax upon the same transaction. If any firm located out of state receives a share of commission on a particular transaction, that company or broker must pay the tax based on the requirements of this section and RCW 82.04.067.
     (3) For the purposes of this section, "broker," "designated broker," "managing broker," and "real estate firm" have the same meaning as provided in RCW 18.85.011.

NEW SECTION.  Sec. 3   This act applies both prospectively and retroactively.