H-0950.1 _______________________________________________
HOUSE BILL 1258
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State of Washington 54th Legislature 1995 Regular Session
By Representatives B. Thomas, Horn, Ebersole, Thompson, Fuhrman, Mielke, Johnson, Van Luven, Pelesky, Hickel, Huff, Dyer, Robertson, Mitchell, L. Thomas, Beeksma, Schoesler, Carrell, McMahan, Boldt, Talcott, Smith and Sehlin
Read first time 01/18/95. Referred to Committee on Finance.
AN ACT Relating to apportionment of taxable income of investment management companies; amending RCW 82.04.460; providing an effective date; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1. RCW 82.04.460 and 1985 c 7 s 154 are each amended to read as follows:
(1) Any person rendering services taxable under RCW 82.04.290 and maintaining places of business both within and without this state which contribute to the rendition of such services shall, for the purpose of computing tax liability under RCW 82.04.290, apportion to this state that portion of his gross income which is derived from services rendered within this state. Where such apportionment cannot be accurately made by separate accounting methods, the taxpayer shall apportion to this state that proportion of his total income which the cost of doing business within the state bears to the total cost of doing business both within and without the state.
(2) Notwithstanding the provision of subsection (1) of this section, persons doing business both within and without the state who receive gross income from service charges, as defined in RCW 63.14.010 (relating to amounts charged for granting the right or privilege to make deferred or installment payments) or who receive gross income from engaging in business as financial institutions within the scope of chapter 82.14A RCW (relating to city taxes on financial institutions) shall apportion or allocate gross income taxable under RCW 82.04.290 to this state pursuant to rules promulgated by the department consistent with uniform rules for apportionment or allocation developed by the states.
(3) Notwithstanding the provisions of subsections (1) and (2) of this section, persons engaging in the business of providing investment management, investment consulting, fund administration, or fund distribution services to a collective investment fund shall apportion or allocate gross income taxable under RCW 82.04.290 to this state by multiplying the total gross income from engaging in such business by a fraction, the numerator of which is the average of the beginning-of-the-year and end-of-the-year number of units owned by collective investment fund unit holders domiciled in this state and the denominator of which is the average of the beginning-of-the-year and end-of-the-year number of units owned by collective investment fund unit holders everywhere. In the case of an employee benefit plan, the plan shall constitute the unit holder for purposes of this subsection.
For purposes of this subsection, the term collective investment fund shall include: (a) A mutual fund or other regulated investment company, as defined in section 851(a) of the internal revenue code of 1986, as amended; (b) an "investment company," as that term is used in section 3(a) of the investment company act of 1940, as well as any entity that would be an investment company for this purpose but for the exemptions contained in sections 3(c)(1) or 3(c)(11), or but for the fact that it is organized under the laws of a foreign country; (c) an "employee benefit plan," which includes any plan, trust, commingled employee benefit trust, or custodial arrangement that is subject to the employee retirement income security act of 1974, as amended, 29 U.S.C. Sec. 1001 et seq., or that is described in sections 125, 401, 403, 408, 457, and 501(c)(9) and (c) (17) through (c)(23) of the internal revenue code of 1986, as amended, or a similar plan maintained by a state or local government, or a plan, trust, or custodial arrangement established to self-insure benefits required by federal, state, or local law; (d) a fund maintained by a tax exempt organization, as defined in section 501(c)(3) of the internal revenue code of 1986, as amended, for operating, quasi-endowment, or endowment purposes; or (e) funds that are established for the benefit of such tax exempt organizations, such as charitable remainder trusts, charitable lead trusts, charitable annuity trusts, or other similar trusts.
(4) The department shall by rule provide a method or methods of apportioning or allocating gross income derived from sales of telephone services taxed under this chapter, if the gross proceeds of sales subject to tax under this chapter do not fairly represent the extent of the taxpayer's income attributable to this state. The rules shall be, so far as feasible, consistent with the methods of apportionment contained in this section and shall require the consideration of those facts, circumstances, and apportionment factors as will result in an equitable and constitutionally permissible division of the services.
NEW SECTION. Sec. 2. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect July 1, 1995.
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