ENGROSSED SUBSTITUTE HOUSE BILL 2880

ByHouse Finance (originally sponsored by Representatives Dent, Chandler, and Barkis)

AN ACT Relating to sales and use tax exemptions for aircraft fuel used for research and development purposes; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; creating a new section; providing an effective date; and providing expiration dates.

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

NEW SECTION.  Sec. 1. A new section is added to chapter 82.08 RCW to read as follows:

(1) A taxpayer who has paid the tax levied by RCW 82.08.020 on aircraft fuel used in the operation of an aircraft for research and development purposes, related to the aircraft or components thereof, and meets the criteria of this section, is eligible for an exemption in the form of a remittance.

(2) To be eligible for an exemption under the provisions of this section:

(a)(i) In cases of an initial request, a taxpayer must, in the twelve months preceding the date of the request, hire and retain at least twenty new full-time equivalent employees whose primary duties are related to the research and development for which the exemption is made; or

(ii) For requests made in subsequent years, a taxpayer must continue to retain the minimum of twenty full-time equivalent employees as required in (a)(i) of this subsection.

(b) The research and development must be conducted as part of a test flight program that uses testbed aircraft that is based in this state to test new aircraft engine designs that advance the use of new technologies or new clean fuels in the aerospace sector of the state.

(3) Any taxpayer claiming exemption from retail sales tax under the provisions of this section must pay the state and local sales tax to the seller at the time of purchase and then request a remittance from the department in accordance with this subsection and subsection (4) of this section. The request for a remittance must include any information and documentation as required by the department, which may include the sales price and amount of aircraft fuel purchased, the amount of sales tax paid on the item, the date of the purchase, the name of the seller and the physical address where the sale took place, and copies of sales receipts showing the qualified purchases.

(4) A taxpayer may file no more than one request for remittance per calendar year, except to amend a request.

(5) The exemption provided by this section is only for the state portion of the sales tax. For purposes of this section, the state portion of the sales tax is not reduced by any local sales tax that is deducted or credited against the state sales tax as provided by law.

(6) A taxpayer may not make a request for remittance under the provisions of this section prior to twelve months from the effective date of this section.

(7) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a) "Aircraft" is defined as provided in RCW 82.42.010.

(b) "Aircraft fuel" is defined as provided in RCW 82.42.010.

(c) "Research and development" means any activity performed to discover technological information, and technical and nonroutine activities concerned with translating technological information into new or improved products, processes, techniques, formulas, inventions, or software.

(d) "Retain" means to continue to employ an individual or, in cases where an employee has been terminated, resigned, or is otherwise no longer employed, "retain" means to actively seek new candidates for the vacant position.

(e) "Testbed aircraft" means an aircraft that has been specifically designed or modified to be used for research and development purposes as part of a test flight program.

(8) This section expires January 1, 2032.

NEW SECTION.  Sec. 2. A new section is added to chapter 82.12 RCW to read as follows:

(1) A taxpayer who has paid the tax levied by RCW 82.12.020 on aircraft fuel used in the operation of an aircraft for research and development purposes, related to the aircraft or components thereof, and meets the criteria in subsection (2) of this section, is eligible for an exemption in the form of a remittance.

(2) All of the eligibility requirements, conditions, limitations, and definitions in section 1 of this act apply to this section.

(3) This section expires January 1, 2032.

(2) The legislature categorizes these tax preferences as ones intended to create or retain jobs as indicated in RCW 82.32.808 (2)(c).

(3) It is the legislature's specific public policy objective to encourage new business activity in the field of aerospace to locate in the state.

(4) If a review finds that at least twenty jobs are created as a result of the preferences, then the legislature intends to extend the expiration dates of these tax preferences.

(5) In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any data collected by the state.

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