H-3605.1          _______________________________________________

                                  HOUSE BILL 2253

                  _______________________________________________

State of Washington              54th Legislature             1996 Regular Session

By Representatives Schoesler, Sheldon, Dickerson, Pennington, Boldt, Carrell, Mulliken, Foreman, Reams, Hatfield, Chandler, Quall, Carlson, Thompson, McMorris and Cooke

Read first time 01/08/96.  Referred to Committee on Finance.

Modifying tax exemptions for nonprofit organizations.

     AN ACT Relating to tax exemptions for nonprofit organizations; amending RCW 82.04.365, 82.04.366, and 82.08.02571; adding a new section to chapter 82.08 RCW; creating a new section; and providing an effective date.

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

     Sec. 1.  RCW 82.04.365 and 1995 2nd sp.s. c 11 s 1 are each amended to read as follows:

     BAZAARS, RUMMAGE SALES, MEALS, AND LIBRARY SALES‑-BUSINESS AND OCCUPATION TAX EXEMPTION.  (1) This chapter does not apply to the first ((twenty)) thirty‑five thousand dollars received in a calendar year by a nonprofit organization as a result of conducting or participating in a bazaar or rummage sale if:

     (a) The organization does not conduct or participate in more than ((two)) twelve bazaars or rummage sales per year; and

     (b) Each bazaar or rummage sale does not extend over a period of more than ((two)) five days.

     (2) This chapter does not apply to the first fifty thousand dollars received in a calendar year by a nonprofit organization as a result of meal‑serving events for fund‑raising purposes, if:

(a) Each meal‑serving event occurs no more than one day every two weeks; or

(b) Each meal‑serving event does not extend over a period of more than five days and is held no more frequently than three times per year.

(3) This chapter does not apply to the first thirty‑five thousand dollars received in a calendar year by a nonprofit organization from sales of used books, used videos, used sound recordings, or similar used information products, if substantially all of the net proceeds from the sales are used to support a library as defined in RCW 27.12.010.

(4) For purposes of this section, "nonprofit organization" means an organization that meets all of the following criteria:

     (a) The members, stockholders, officers, directors, or trustees of the organization do not receive any part of the organization's gross income, except as payment for services rendered;

     (b) The compensation received by any person for services rendered to the organization does not exceed an amount reasonable under the circumstances; and

     (c) The activities of the organization do not include a substantial amount of political activity, including but not limited to influencing legislation and participation in any campaign on behalf of any candidate for political office.

NEW SECTION. Sec. 2.  A new section is added to chapter 82.08 RCW to read as follows:

     BAZAARS, RUMMAGE SALES, MEALS, AND LIBRARY SALES‑-SALES TAX EXEMPTION.  The tax levied by RCW 82.08.020 does not apply to a sale made by a nonprofit organization if the gross income from the sale is exempt under RCW 82.04.365.

     Sec. 3.  RCW 82.04.366 and 1991 c 51 s 1 are each amended to read as follows:

     AUCTIONS‑-BUSINESS AND OCCUPATION TAX EXEMPTION.  (1) This chapter does not apply to amounts received by a public benefit nonprofit organization from sales at an auction that the organization conducts or participates in, if:

     (a) The organization does not conduct or participate in more than ((one)) two auctions per year; and

     (b) The auction does not extend over a period of more than ((two)) five days.

     (2) As used in this section, "public benefit nonprofit organization" means an organization exempt from tax under section 501(c)(3) of the federal internal revenue code, as in effect on January 1, 1991, or a subsequent date provided by the director by rule consistent with the purpose of this section.

     Sec. 4.  RCW 82.08.02571 and 1991 c 51 s 2 are each amended to read as follows:

     AUCTIONS‑-SALES TAX EXEMPTION.  (1) The tax levied by RCW 82.08.020 does not apply to sales made by a public benefit nonprofit organization at an auction that the organization conducts or participates in, if:

     (a) The organization does not conduct or participate in more than ((one)) two auctions per year; and

     (b) The auction does not extend over a period of more than ((two)) five days.

     (2) As used in this section, "public benefit nonprofit organization" means an organization exempt from tax under section 501(c)(3) of the federal internal revenue code, as in effect on January 1, 1991, or a subsequent date provided by the director by rule consistent with the purpose of this section.

NEW SECTION. Sec. 5.  CAPTIONS.  Captions used in this act do not constitute part of the law.

NEW SECTION. Sec. 6.  EFFECTIVE DATE.  This act shall take effect July 1, 1996.

                                    --- END ---