Purpose: This rule explains the application of business and occupation (B&O), retail sales, and use taxes to persons operating hospitals as defined in RCW 70.41.020, nursing homes as defined in RCW 18.51.010, boarding homes as defined in RCW 18.20.020, adult family homes as defined in RCW 70.128.010, and similar health care facilities. The department is revising this rule to reflect legislative changes and to provide updated and more comprehensive information.
Citation of Existing Rules Affected by this Order: Amending WAC 458-20-168 Hospitals, ((
medical care facilities))
nursing homes, boarding homes, adult family homes, and similar
health care facilities.
Statutory Authority for Adoption: RCW 82.32.300 and 82.01.060(2).
Adopted under notice filed as WSR 05-06-019 on February 22, 2005.
Changes Other than Editing from Proposed to Adopted Version: The following are the changes to the proposed rule WAC 458-20-168.
• The term "directly" is added into subsection (3)(e) of the proposed rule, so that it reads, "A B&O tax deduction is provided… for amounts received directly from the United States, any instrumentality of the United States, the state of Washington, or any municipal corporation or political subdivision of the state of Washington...."
• The term "sales of drugs for human use pursuant to a prescription" replaces the term "sales of prescription drugs as defined in RCW 82.08.0281" in subsection (3)(d) of the proposed rule.
• Subsection (3)(f) of the proposed rule is revised to incorporate SB 5857, chapter 86, Laws of 2005, which is effective August 1, 2005. This legislation provides a B&O tax deduction to nonprofit community health center or a network of nonprofit community health centers.
• The sentence "Refer to subsection (3)(h) of the rule for B&O tax deductions and exemptions available to boarding homes" is added in subsection (2)(c) of the proposed rule.
• Subsection (3)(h) is added to incorporate provisions of ESHB 2314, chapter 514, Laws of 2005. This legislation provides that effective July 1, 2005, amounts received by a nonprofit boarding home licensed for providing room and domiciliary care to residents of the boarding home are exempt from B&O tax.
• Subsection (6) is revised to incorporate provisions of ESHB 2314, chapter 514, Laws of 2005, which provide that quality maintenance fees on nursing homes not exempt from the fee under RCW 74.46.091 expire after July 1, 2011.
• Subsection (4)(c) is added to incorporate provisions of ESHB 2314, chapter 514, Laws of 2005, which provide that effective July 1, 2006, sales of medical supplies, chemicals, or materials to a comprehensive cancer center are exempt from retail sales and use tax.
• We have added an explanation in subsection (3)(d) that nursing homes operated by church organizations or by nonprofit corporations that assist alcoholics in recovery and rehabilitation qualify for the B&O tax deduction. Language has also been added to explain that nursing homes and homes for unwed mothers operated by governmental entities, including public hospital districts, do not qualify for the deduction.
• Language has been added to subsection (4)(b) to explain that the sales and use tax exemptions for prepared meals provided to senior citizens, disabled persons, or low-income persons by a not-for-profit organization organized under chapter 24.03 or 24.12 RCW apply to sales of prepared meals to such not-for-profit organizations.
• Subsection (3)(f) is revised to clarify that this B&O tax deduction applies to amounts received directly or through a third party from Medicare, Washington Basic Health plan, and programs under chapter 70.49 RCW.
• Subsection (3)(b) is revised to explain that B&O tax does not apply to donations received by a public hospital, as long as the donees do not receive any goods, services, or business benefits in return. Language has also been added to explain that a public hospital is not allowed to take a B&O tax deduction on amounts received from a state university for work-study programs or training seminars for doctors, because the university receives business benefits in return, as students receive education and training while enrolling the university's degree programs.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 1, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0.
Date Adopted: June 30, 2005.
Janis P. Bianchi, Manager
Technical Advice Unit
Reviser's note: The material contained in this filing exceeded the page-count limitations of WAC 1-21-040 for appearance in this issue of the Register. It will appear in the 05-15 issue of the Register.