BILL REQ. #:  S-0672.5 

Read first time 02/13/13.   Referred to Committee on Ways & Means.

     AN ACT Relating to providing a funding source to improve education; amending RCW 82.45.090, 82.45.150, 83.100.230, 66.24.290, and 82.04.29002; adding a new section to chapter 28A.300 RCW; adding a new chapter to Title 82 RCW; creating new sections; prescribing penalties; making appropriations; and providing for submission of certain sections of this act to a vote of the people.

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

NEW SECTION.  Sec. 101   (1) Washington's economy is dependent on a thriving middle class, and the prosperity of the middle class depends on our children's access to, and ability to benefit from, high quality education at all levels. The state must provide funding for education and it must also ensure that students receive the best possible education to ensure their personal and economic success.
     (2) Therefore, this act implements a capital gains tax to provide a stable, ongoing source of funding to support educational programs and the services that make those programs work. This revenue will have a direct and positive impact on the social and economic success of the state by supporting a more effective educational system, one that engages students in the advanced fields and industries critical to the modern economy.

NEW SECTION.  Sec. 201   A new section is added to chapter 28A.300 RCW to read as follows:
     (1) The indicators of educational progress in this subsection must be used to assist in evaluating the success of providing the targeted funding from revenue obtained pursuant to chapter 82.-- RCW (the new chapter created in section 601 of this act) from the education legacy trust account created in RCW 83.100.230:
     (a) Whether, by the 2018-19 school year, at least ninety percent of the third graders are meeting the standard on the third grade reading assessment administered in accordance with RCW 28A.655.070; and
     (b) Whether, by the 2018-19 school year the rate for high school completion has increased to ninety percent of the four-year cohort.
     (2) By December 1st of each year, the office of the superintendent of public instruction and the state board of education shall jointly submit a report to the legislature on the progress towards meeting these goals.

NEW SECTION.  Sec. 202   The appropriations contained in section 203 of this act are intended as the first stage of a linear implementation of lower class size for kindergarten through third grade and all-day kindergarten as required for full implementation by the 2017-18 school year.

NEW SECTION.  Sec. 203   This section establishes appropriations for the biennium ending June 30, 2015, from the additional funds deposited in the education legacy trust account as a result of Parts III and IV of this act.
     (1) The sum of fifty-five million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2015, from the education legacy trust account to the department of early learning to provide additional early childhood education and assistance program slots to all eligible three and four-year olds.
     (2)(a) The sum of two hundred twenty million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2015, from the education legacy trust account to the office of the superintendent of public instruction to phase in, in a linear fashion reduced class sizes in kindergarten through third grade to achieve seventeen full-time equivalent students per teacher by the 2017-18 school year as required in RCW 28A.150.260(4)(b).
     (b) The sum of six million dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2015, from the education legacy trust account to the office of the superintendent of public instruction to enhance the readiness to learn program.
     (c) The sum of eighty-nine million three hundred thousand dollars, or as much thereof as may be necessary, is appropriated for the biennium ending June 30, 2015, from the education legacy trust account to the office of the superintendent of public instruction to phase in all-day kindergarten in a linear fashion to achieve full statewide implementation of all-day kindergarten by the 2017-18 school year.

NEW SECTION.  Sec. 204   The sum of one hundred seventy-five million dollars, or as much thereof as may be necessary, must be appropriated for the biennium ending June 30, 2015, from the additional funds deposited in the education legacy trust account as a result of Parts III and IV of this act to institutions of higher education on a per enrolled student basis to provide support to the institutions.

NEW SECTION.  Sec. 301   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise. Any term used in this chapter has the same meaning as when used in a comparable context in the internal revenue code unless provided otherwise.
     (1) "Capital assets" has the same meaning as provided by section 1221 of the internal revenue code.
     (2) "Capital gains" means the excess of the gains from sales or exchanges of capital assets over the losses from such sales or exchanges received by a person.
     (3) "Department" means the state department of revenue.
     (4) "Internal revenue code" means the United States internal revenue code of 1986 and amendments thereto, as existing and in effect as of the effective date of this section.
     (5) "Nonresident" means a person whose domicile is not in this state and who does not reside in this state for more than one hundred eighty-three days during the tax year.
     (6) "Person" means a natural person.
     (7)(a) "Resident" means a person whose domicile is in this state or whose domicile is not in this state but who resides in this state for more than one hundred eighty-three days during the tax year.
     (b) For purposes of this subsection, once a person is a resident, residency continues for three years, notwithstanding changes in domicile.
     (8) "Taxable year" means the taxpayer's taxable year as defined under the internal revenue code.
     (9) "Taxpayer" means a person receiving capital gains subject to tax under this chapter.

NEW SECTION.  Sec. 302   (1) Beginning January 1, 2014, a tax is imposed on every person for the privilege of selling or exchanging capital assets. The tax equals five percent multiplied by a person's capital gains for each taxable year.
     (2) For resident persons, all capital gains must be allocated to this state.
     (3) For nonresident persons, capital gains must be derived from sources within this state and allocated to this state.
     (4) The following threshold exemptions are allowed in determining the tax under subsection (1) of this section:
     (a) Ten thousand dollars; or
     (b) Twenty thousand dollars for persons filing joint returns under section 314 of this act.
     (5) Capital gains must be reported in the taxable year they are received. Losses from the sale or exchange of capital assets may only be used to offset gains from other sales or exchanges of capital assets in the same taxable year.
     (6) Receipts from this tax must be deposited into the education legacy trust account created in RCW 83.100.230.

NEW SECTION.  Sec. 303   (1) This chapter does not apply to gain from the sale of a principal residence if it is excluded from tax under section 121 of the internal revenue code.
     (2) This chapter does not apply to gain from the sale of a principal residence that would be otherwise excluded from tax under section 121(2) of the internal revenue code for registered domestic partners or those married under chapter 26.04 RCW.
     (3) This chapter does not apply to gain from the sale of a long-term principal residence if the gain exceeds the exemption allowed in subsection (1) or (2) of this section and it has been used by a person as the person's principal residence for periods aggregating at least ten years and owned by the person for at least the twenty-year period ending on the date of the sale or exchange of the property.

NEW SECTION.  Sec. 304   This chapter does not apply to capital gains received by any person from age-qualified distributions from a retirement savings account under section 401(k) of the internal revenue code, a tax-sheltered annuity or a custodial account described in section 403(b) of the internal revenue code, an individual retirement account or an individual retirement annuity described in section 408 of the internal revenue code, a Roth individual retirement account described in section 408A of the internal revenue code, an employee defined contribution program, an employee benefit plan, or similar retirement savings vehicle.

NEW SECTION.  Sec. 305   This chapter does not apply to amounts received by any person for the sale or exchange of property as authorized under the condemnation proceedings as provided by law for the exercise of the power of eminent domain under Title 8 RCW, regardless of whether the parties have settled the matter prior to filing an action.

NEW SECTION.  Sec. 306   This chapter does not apply to amounts received by any person for the sale or exchange of cattle, horses, or breeding livestock held for more than twelve months by a taxpayer who received in excess of fifty percent of his or her gross income from farming or ranching.

NEW SECTION.  Sec. 307   This chapter does not apply to amounts received by any person from the sale of agricultural land who has regular, continuous, and substantial involvement in the operation of the agricultural land that meets the criteria for material participation in an activity under section 469(h) of the internal revenue code for the ten years prior to the date of the sale or exchange of the agricultural land.

NEW SECTION.  Sec. 308   This chapter does not apply to amounts received by any person from the sale of tangible personal property used in a business and that would qualify for an income tax deduction under section 167 or 179 of the internal revenue code.

NEW SECTION.  Sec. 309   (1) The intent of this section is to prevent the multiple taxation of capital gains in both Washington and another taxing jurisdiction.
     (2) As used in this section, "taxing jurisdiction" means any of the states, the District of Columbia, or any territory or possession of the United States; any municipality, city, county, township, parish, transportation district, or assessment jurisdiction; or other political subdivision within the territorial limits of the United States with the authority to impose a tax, charge, or fee.
     (3) A resident person is allowed a credit against the tax imposed in section 302 of this act equal to the amount of tax paid to another taxing jurisdiction on capital gains derived from sources within the other taxing jurisdiction.
     (4) The amount of tax credits received by any resident person under this section may not exceed the total amount of tax due under this chapter, and there may be no carryback or carryforward of any unused credits.

NEW SECTION.  Sec. 310   This chapter does not apply to the amounts received for a sale of timber under section 631 (a) and (b) of the internal revenue code.

NEW SECTION.  Sec. 311   (1) Any person who knowingly attempts to evade the tax imposed under this title or payment thereof is guilty of a class C felony as provided in chapter 9A.20 RCW.
     (2) Any person who knowingly fails to pay tax, make returns, keep records, or supply information, as required under this title, is guilty of a gross misdemeanor as provided in chapter 9A.20 RCW.

NEW SECTION.  Sec. 312   (1) All taxpayers must file with the department, on forms prescribed by the department, a capital gains tax return for each taxable year. A person owing no tax for a taxable year is not required to file a return for that year. Each person required to file a return under this title must, without assessment, notice, or demand, pay any tax due thereon to the department on or before the date fixed for the filing of the return.
     (2) The department may by rule require that certain taxpayers file, on forms prescribed by the department, informational returns for any period.

NEW SECTION.  Sec. 313   The due date of a return required to be filed with the department must be the due date of the federal income tax return or informational return for federal income tax purposes, except as otherwise required by the department. The department may grant extensions of times by which returns required to be filed by this title may be submitted. The department may grant extensions of time to pay tax with regard to taxes imposed by this title. Interest at the rate as specified in RCW 82.32.050 must accrue during any extension period and the interest and penalty provisions of chapter 82.32 RCW apply to late payments and deficiencies.

NEW SECTION.  Sec. 314   (1) If the federal income tax liabilities of both spouses are determined on a joint federal return for the taxable year, they must file a joint return under this title.
     (2) If neither spouse is required to file a federal income tax return for the taxable year, a joint return is required to be filed under this title under the same conditions under which a joint return may be filed for purposes of the federal income tax.
     (3) Except as provided in subsection (5) of this section, if the federal income tax liability of either spouse is determined on a separate federal return for the taxable year, they must file separate returns under this title.
     (4) In any case in which a joint return is filed under this section, the liability of the husband and wife or partners is joint and several, unless the spouse or partner is relieved of liability under 26 U.S.C. Sec. 6013 of the federal internal revenue code.
     (5) Partners in a state registered domestic partnership or who have a marriage licensed under chapter 26.04 RCW may file a joint return under this title.

NEW SECTION.  Sec. 315   (1) Every person required to pay the tax imposed under this title must keep records, render statements, make returns, file reports, and perform other acts as the department requires by rule. Each return must be made under penalty of perjury and on forms prescribed by the department. The department may require other statements and reports be made under penalty of perjury and on forms prescribed by the department. The department may require any taxpayer to furnish to the department a correct copy of any return or document that the taxpayer has filed with the internal revenue service or received from the internal revenue service.
     (2) All books and records and other papers and documents required to be kept under this title are subject to inspection by the department at all times during business hours of the day.

NEW SECTION.  Sec. 316   (1) To the extent possible without being inconsistent with this chapter, all of the provisions of the internal revenue code relating to the time and manner of making returns, extensions of time for filing returns, verification of returns, and the time when a return is deemed filed apply to this chapter.
     (2) The department by rule may provide modifications and exceptions to requirements of subsection (1) of this section, if reasonably necessary to facilitate the prompt, efficient, and equitable collection of tax under this chapter.

NEW SECTION.  Sec. 317   (1) The department must refund all taxes improperly paid or collected.
     (2) The following sections apply to the administration of taxes imposed under this title: RCW 82.32.050, 82.32.055, 82.32.060, 82.32.070, 82.32.080, 82.32.085, 82.32.090, 82.32.100, 82.32.105, 82.32.110, 82.32.117, 82.32.120, 82.32.130, 82.32.135, 82.32.145, 82.32.150, 82.32.160, 82.32.170, 82.32.180, 82.32.190, 82.32.200, 82.32.210, 82.32.212, 82.32.220, 82.32.230, 82.32.235, 82.32.237, 82.32.240, 82.32.245, 82.32.265, 82.32.300, 82.32.310, 82.32.320, 82.32.330, 82.32.340, 82.32.350, 82.32.360, 82.32.380, and 82.32.410.

NEW SECTION.  Sec. 318   The department may adopt rules under chapter 34.05 RCW for the administration and enforcement of this chapter. The rules, to the extent possible without being inconsistent with this chapter, must follow the internal revenue code and the regulations and rulings of the United States treasury department with respect to the federal income tax. The department may adopt as a part of these rules any portions of the internal revenue code and treasury department regulations and rulings, in whole or in part.

NEW SECTION.  Sec. 319   (1) An authorized agent providing closing and settlement services in a conveyance is required to withhold from consideration payable to a transferor an amount equal to the tax due imposed under section 302 of this act.
     (2) An authorized agent is not required to withhold amounts under this section if:
     (a) The conveyance is in lieu of foreclosure of a mortgage, trust deed, or other security instrument or a land sale contract with no additional monetary consideration;
     (b) The transferor is a personal representative, executor, conservator, bankruptcy trustee, or other person acting under judicial review;
     (c) The transferor delivers to the authorized agent a written assurance that the sale or exchange qualifies for exclusion of gain under section 303, 305, or 307 of this act.
     (3)(a) An authorized agent must electronically report the tax withheld on forms prescribed by the department and remit electronic payment of the tax to the department under the methods provided in RCW 82.32.080. An authorized agent must electronically file and make payment under this subsection within twenty-five days after the end of the month in which the conveyance occurred.
     (b) The amount of tax due is a specific lien upon each parcel of real property located in this state that is sold by a transferor. The lien attached from the time of sale until the tax is withheld and paid as provided by this section. The lien may be enforced in the manner prescribed for the foreclosure of mortgages.
     (c) Amounts withheld pursuant to this section are held in trust for Washington. If an authorized agent fails to remit an amount withheld by the agent under this section by the time remittance is required, the department may recover from the authorized agent the amount withheld, plus interest and penalties as provided in chapter 82.32 RCW. The tax collection provisions of chapter 82.32 RCW apply to the collection of amounts withheld pursuant to this section but not remitted to the department as required under this section.
     (4) A transferor may claim the amount withheld by an authorized agent on the transferor's tax return.
     (5) An authorized agent may withhold funds under this section without written instructions to withhold from the transferor.
     (6) A written affidavit must be executed by the transferor or the transferor's tax advisor under penalty of perjury and must contain the transferor's taxpayer identification number. The authorized agent must retain for six years from the date of the closing of the conveyance any written affirmation obtained by the agent in connection with the conveyance. The department must prescribe by rule the form and content of the written affidavit.
     (7) It is a defense to any claim by the department or by a transferor against an agent that the agent has acted in reasonable reliance upon representations made by the transferor or the transferor's tax advisor.
     (8) For the purposes of this section, the following definitions apply unless the context clearly requires otherwise:
     (a) "Authorized agent" means an agent who is responsible for closing and settlement services in a conveyance;
     (b) "Closing and settlement services" means services that are provided by:
     (i) A licensed escrow agent in a real estate closing escrow; or
     (ii) An attorney for the benefit of a transferor or a transferee in a conveyance, if, simultaneously with the conveyance, the attorney deposits the unpaid purchase price into the attorney's client trust account for disbursal pursuant to the written instructions of, or the agreement between, the transferor and transferee;
     (c) "Consideration" includes the amount of cash paid for a conveyance and the amount of any lien, mortgage, contract, indebtedness or other encumbrance existing against the property conveyed to which the property remains subject or which the purchaser agrees to pay or assume;
     (d) "Conveyance" means a sale or exchange of any real estate located in Washington;
     (e) "Net proceeds" means the net amount to be disbursed to the transferor, prior to reduction for withholding, as shown on the transferor's settlement statement for the conveyance; and
     (f) "Transferor" means a person, as defined in section 301 of this act, on the closing date of the conveyance.

Sec. 320   RCW 82.45.090 and 2009 c 350 s 8 are each amended to read as follows:
     (1) Except for a sale of a beneficial interest in real property ((where)) when no instrument evidencing the sale is recorded in the official real property records of the county in which the property is located, the tax imposed by this chapter ((shall)) and the tax withheld under section 319 of this act must be paid to and collected by the treasurer of the county within which is located the real property which was sold.
     (2) In collecting the tax under this section the treasurer ((shall)) must act as agent for the state.
     (a) The county treasurer ((shall)) must cause a verification of payment evidencing satisfaction of the lien to be affixed to the instrument of sale or conveyance prior to its recording or to the real estate excise tax affidavit in the case of used mobile home sales and used floating home sales.
     (i) A receipt issued by the county treasurer for the payment of the tax imposed under this chapter ((shall be)) is evidence of the satisfaction of the lien imposed hereunder and may be recorded in the manner prescribed for recording satisfactions of mortgages.
     (ii) No instrument of sale or conveyance evidencing a sale subject to the tax ((shall)) may be accepted by the county auditor for filing or recording until the tax ((shall have)) has been paid and the verification of payment affixed thereto; in case the tax is not due on the transfer, the instrument ((shall)) may not be so accepted until suitable notation of such fact has been made on the instrument by the treasurer.
     (iii) Any time there is a sale of a used mobile home, used manufactured home, used park model, or used floating home that has not been title eliminated, property taxes must be current in order to complete the processing of the real estate excise tax affidavit or other documents transferring title.
     (iv) Verification that the property taxes are current must be noted on the mobile home real estate excise tax affidavit or on a form approved by the county treasurer.
     (b) For the purposes of this subsection (2), "mobile home," "manufactured home," and "park model" have the same meaning as provided in RCW 59.20.030.
     (((2))) (3) For a sale of a beneficial interest in real property ((where)) when a tax is due under this chapter and ((where)) when no instrument is recorded in the official real property records of the county in which the property is located, the sale ((shall)) must be reported to the department of revenue within five days from the date of the sale on such returns or forms and according to such procedures as the department may prescribe. Such forms or returns ((shall)) must be signed by both the transferor and the transferee and shall be accompanied by payment of the tax due.
     (((3))) (4) Any person who intentionally makes a false statement on any return or form required to be filed with the department under this chapter is guilty of perjury under chapter 9A.72 RCW.

Sec. 321   RCW 82.45.150 and 1996 c 149 s 6 are each amended to read as follows:
     (1) All of chapter 82.32 RCW, except RCW 82.32.030, 82.32.050, 82.32.140, 82.32.270, and 82.32.090 (1) and (((8))) (10), applies to the tax imposed by this chapter, in addition to any other provisions of law for the payment and enforcement of the tax imposed by this chapter. The department of revenue ((shall)) must provide by rule ((provide)) for the effective administration of this chapter. The rules ((shall)) must prescribe and furnish a real estate excise tax affidavit form verified by both the seller and the buyer, or agents of each, to be used by each county, or the department, as the case may be, in the collection of the tax imposed by this chapter, except that an affidavit given in connection with grant of an easement or right-of-way to a gas, electrical, or telecommunications company, as defined in RCW 80.04.010, or to a public utility district or cooperative that distributes electricity, need be verified only on behalf of the company, district, or cooperative. The department of revenue ((shall)) must annually conduct audits of transactions and affidavits filed under this chapter.
     (2) The department may combine the form required in section 312 of this act with the real estate excise tax affidavit form required in this section.

Sec. 322   RCW 83.100.230 and 2012 1st sp.s. c 10 s 7 are each amended to read as follows:
     The education legacy trust account is created in the state treasury. Money in the account may be spent only after appropriation. Except as otherwise provided in this section, expenditures from the account may be used only for support of the common schools, and for expanding access to higher education through funding for new enrollments and financial aid, and other educational improvement efforts. Moneys deposited into this account as required under Parts III and IV of this act cannot supplant existing state funding and must be used for expanded funding for kindergarten through third grade class size reduction, early childhood education and assistance program slots, all-day kindergarten, the readiness to learn program, enrollment support for higher education, enhancements to basic education, and other programs to enhance student preparedness and learning.

Sec. 401   RCW 66.24.290 and 2010 1st sp.s. c 23 s 1301 are each amended to read as follows:
     (1) Any microbrewer or domestic brewery or beer distributor licensed under this title may sell and deliver beer and strong beer to holders of authorized licenses direct, but to no other person, other than the board. Any certificate of approval holder authorized to act as a distributor under RCW 66.24.270 ((shall)) must pay the taxes imposed by this section.
     (a) Every such brewery or beer distributor ((shall)) must report all sales to the board monthly, pursuant to the regulations, and ((shall)) must pay to the board as an added tax for the privilege of manufacturing and selling the beer and strong beer within the state a tax of one dollar and thirty cents per barrel of thirty-one gallons on sales to licensees within the state and on sales to licensees within the state of bottled and canned beer, including strong beer, ((shall)) must pay a tax computed in gallons at the rate of one dollar and thirty cents per barrel of thirty-one gallons.
     (b) Any brewery or beer distributor whose applicable tax payment is not postmarked by the twentieth day following the month of sale will be assessed a penalty at the rate of two percent per month or fraction thereof. Beer and strong beer ((shall)) must be sold by breweries and distributors in sealed barrels or packages.
     (c) The moneys collected under this subsection ((shall)) must be distributed as follows: (i) Three-tenths of a percent ((shall)) must be distributed to border areas under RCW 66.08.195; and (ii) of the remaining moneys: (A) Twenty percent ((shall)) must be distributed to counties in the same manner as under RCW 66.08.200; and (B) eighty percent ((shall)) must be distributed to incorporated cities and towns in the same manner as under RCW 66.08.210.
     (d) Any licensed retailer authorized to purchase beer from a certificate of approval holder with a direct shipment endorsement or a brewery or microbrewery ((shall)) must make monthly reports to the liquor control board on beer purchased during the preceding calendar month in the manner and upon such forms as may be prescribed by the board.
     (2) An additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section. The additional tax is equal to two dollars per barrel of thirty-one gallons. All revenues collected during any month from this additional tax ((shall)) must be deposited in the state general fund by the twenty-fifth day of the following month.
     (3)(a) An additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section. The additional tax is equal to ninety-six cents per barrel of thirty-one gallons through June 30, 1995, two dollars and thirty-nine cents per barrel of thirty-one gallons for the period July 1, 1995, through June 30, 1997, and four dollars and seventy-eight cents per barrel of thirty-one gallons thereafter.
     (b) The additional tax imposed under this subsection does not apply to the sale of the first sixty thousand barrels of beer each year by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051 of the federal internal revenue code, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of this exemption.
     (c) All revenues collected from the additional tax imposed under this subsection (3) ((shall)) must be deposited in the state general fund.
     (4) An additional tax is imposed on all beer and strong beer that is subject to tax under subsection (1) of this section that is in the first sixty thousand barrels of beer and strong beer by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051 of the federal internal revenue code, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of the exemption under subsection (3)(b) of this section. The additional tax is equal to one dollar and forty-eight and two-tenths cents per barrel of thirty-one gallons. By the twenty-fifth day of the following month, three percent of the revenues collected from this additional tax ((shall)) must be distributed to border areas under RCW 66.08.195 and the remaining moneys ((shall)) must be transferred to the state general fund.
     (5)(a) From June 1, 2010, through ((June 30, 2013)) December 31, 2015, an additional tax is imposed on all beer and strong beer subject to tax under subsection (1) of this section. The additional tax is equal to fifteen dollars and fifty cents per barrel of thirty-one gallons.
     (b) The additional tax imposed under this subsection does not apply to the sale of the first sixty thousand barrels of beer each year by breweries that are entitled to a reduced rate of tax under 26 U.S.C. Sec. 5051 of the federal internal revenue code, as existing on July 1, 1993, or such subsequent date as may be provided by the board by rule consistent with the purposes of this exemption.
     (c) All revenues collected from the additional tax imposed under this subsection ((shall)) must be deposited in the ((state general fund)) education legacy trust account created in RCW 83.100.230.
     (6) The board may make refunds for all taxes paid on beer and strong beer exported from the state for use outside the state.
     (7) The board may require filing with the board of a bond to be approved by it, in such amount as the board may fix, securing the payment of the tax. If any licensee fails to pay the tax when due, the board may forthwith suspend or cancel his or her license until all taxes are paid.

Sec. 402   RCW 82.04.29002 and 2010 1st sp.s. c 23 s 1101 are each amended to read as follows:
     (1) Beginning May 1, 2010, through ((June 30, 2013)) December 31, 2015, an additional rate of tax of 0.30 percent is added to the rate provided for in RCW 82.04.255, 82.04.285, and 82.04.290(2)(a). All revenues collected from the additional tax under this section must be deposited into the education legacy trust account created in RCW 83.100.230.
     (2)(a) The additional rate in subsection (1) of this section does not apply to persons engaging within this state in business as a hospital. "Hospital" has the meaning provided in chapter 70.41 RCW but also includes any hospital that comes within the scope of chapter 71.12 RCW if the hospital is also licensed under chapter 70.41 RCW.
     (b) The additional rate in subsection (1) of this section does not apply to amounts received from performing scientific research and development services including but not limited to research and development in the physical, engineering, and life sciences (such as agriculture, bacteriological, biotechnology, chemical, life sciences, and physical science research and development laboratories or services).

NEW SECTION.  Sec. 501   (1) The secretary of state must submit Part III of this act to the people for their adoption and ratification, or rejection, at the next general election to be held in this state, in accordance with Article II, section 1 of the state Constitution and the laws adopted to facilitate its operation.
     (2) Pursuant to RCW 29A.72.050(6), the statement of subject and concise description for the ballot title must read: "The legislature has passed . . . Bill No. . . . (this act), concerning creating a capital gains tax to fund results in education. This measure would impose a 5.0 percent state excise tax on capital gains above ten thousand dollars per person, exempt gains on most residences, and provide that all capital gains tax revenues must be deposited into the education legacy trust account to fund education."

NEW SECTION.  Sec. 601   Part I of this act and sections 301 through 319 of this act constitute a new chapter in Title 82 RCW.

NEW SECTION.  Sec. 602   This act, being necessary for the welfare of the state and its inhabitants, must be liberally construed.

NEW SECTION.  Sec. 603   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.