H-4256.1          _______________________________________________

                            SUBSTITUTE HOUSE BILL 2214

                  _______________________________________________

State of Washington              54th Legislature             1996 Regular Session

By House Committee on Finance (originally sponsored by Representatives Van Luven, B. Thomas, Schoesler, Pennington, Mastin, Sheldon, Radcliff, Koster, Smith, Huff, Sheahan, Morris, Thompson, Cooke, Goldsmith, Backlund, Benton and Dyer)

Read first time 01/16/96. 

Exempting research and development machinery and equipment from sales and use taxes.

     AN ACT Relating to sales and use tax exemptions for research and development; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; and providing an effective date.

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) The tax levied by RCW 82.08.020 shall not apply to sales of machinery and equipment used for research and development, or to sales of or charges made for labor and services rendered in respect to installing the machinery and equipment, but only when the purchaser provides the seller with an exemption certificate in a form and manner prescribed by the department by rule, and the purchaser provides the department with a duplicate of the certificate or a summary of exempt sales as the department may require.  The seller shall retain a copy of the certificate for the seller's files.

     (2) For purposes of this section and section 2 of this act:

     (a) "Machinery and equipment" is defined as provided in RCW 82.08.02565.

     (b) "Used for research and development" means expenditures for the machinery and equipment may be treated as expenses under section 174 of the federal internal revenue code, as in effect on January 1, 1996, or such subsequent date as the director may provide by rule consistent with the purposes of this section.

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

     (1) The provisions of this chapter shall not apply in respect to the use of machinery and equipment for research and development, but only when the user provides the department with:

     (a) An exemption certificate in a form and manner prescribed by the department within sixty days of the first use of the machinery and equipment in this state; or

     (b) An annual summary listing the machinery and equipment by January 31st of the year following the calendar year in which the machinery and equipment is first used in this state.

     (2) The definitions in section 1 of this act apply to this section.

NEW SECTION. Sec. 3.  This act shall take effect July 1, 1996.

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