HOUSE BILL REPORT

                 SHB 1119

                       As Passed House

                      February 24, 1993

Title:  An act relating to advertising in state publications.

Brief Description:  Prohibiting state agencies from accepting advertising from unregistered sellers.

Sponsors:  By House Committee on State Government (originally sponsored by Representatives Fuhrman, G. Fisher, King, Van Luven, Anderson, Foreman, Reams, G. Cole, Lisk, Jones, Sheldon, Wang, Sheahan, Kremen, Quall, Riley, Appelwick, Leonard, Valle, Chandler, Ballard, Schmidt, Chappell, Basich, Morton, Heavey, Rust, Silver, Carlson, Padden, Vance, Mielke, Wood, Brumsickle, Tate, Forner, Cooke, Long, Rayburn, Zellinsky, Brown, Brough, Franklin, J. Kohl, Edmondson, Springer, Holm, R. Fisher, Horn, Talcott, Shin, Romero, Karahalios, Kessler, Johanson and Miller.)

Brief History:

  Reported by House Committee on:

State Government, February 8, 1993, DPS;

  Passed House, February 24, 1993, 89-8.

HOUSE COMMITTEE ON STATE GOVERNMENT

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  Signed by 6 members:  Representatives Anderson, Chair; Veloria, Vice Chair; Reams, Ranking Minority Member; Vance, Assistant Ranking Minority Member; Conway; and King.

Staff:  Bonnie Austin (786-7135).

Background:  In 1992, the Supreme Court of the United States ruled in the Quill decision that states do not have the authority to require that out-of-state mail order companies collect use taxes on goods sold to state residents.  The court held that only Congress can impose such a requirement.  States may only compel collection of state taxes if the mail-order company has a "physical presence" in the state such as offices, warehouses, real or personal property, agents or employees. 

Certain state agency publications contain advertisements from out-of-state mail order companies.  Some parties believe that it is unfair for these companies to use state agency publications to solicit sales when these companies do not have to collect state taxes on these sales.

All persons who engage in business in the state are required to obtain a certificate of registration from the Department of Revenue.

Summary of Bill:  State agencies are prohibited from accepting advertisements for placement in state publications unless the advertiser:  (1) has obtained a certificate of registration from the Department of Revenue; and (2) if the advertiser is not required to collect state sales or use tax, agrees to either collect and remit the use tax or provide quarterly a list of Washington customers.  This prohibition only applies to advertisements that solicit orders or offer items for sale.

Fiscal Note:  Available.

Effective Date:  The bill contains an emergency clause and takes effect July 1, 1993.

Testimony For:  The Department of Wildlife uses advertisements from out-of-state mail order companies in their hunting and other pamphlets.  Under the Quill decision, these out-of-state companies are not required to collect the use tax due to the state when taking orders from Washington residents.  These companies have an unfair advantage over Washington retailers.  The retailers strongly support this bill.

Testimony Against:  None.

Witnesses:  Representative Steve Fuhrman, State Representative, Sponsor (pro); LeeRoy Wisner, Wisner's Gun Shop (pro); and Jan Gee, Washington Retail Association (pro).