AN ACT Relating to
excluding utility line clearing from the definition of retail sale; amending
RCW 82.04.050; creating a new section; providing an effective date; and
declaring an emergency.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:The text of
the following section has been vetoed by the Governor. It is noted in bold
italic.
*NEW SECTION.
Sec. 1. In 1993, the legislature
extended retail sales taxes to discretionary spending on landscape maintenance
and horticultural services. The legislature did not intend to extend, nor did
it believe it was extending, retail sales taxes to pruning, trimming,
repairing, removing, and clearing of trees and brush near electric distribution
or transmission lines or equipment by, or at the direction of, an electric
utility. The latter activities generally require nondiscretionary expenditures
by electric utilities in the interests of public safety and minimizing
unplanned power interruptions.
The legislature
finds that the department of revenue misinterpreted the intent of the
legislature by adopting a rule extending retail sales taxes to pruning,
trimming, repairing, removing, and clearing of trees and brush near electric
distribution or transmission lines or equipment, performed by, or at the
direction of, an electric utility.
It is
therefore the intent of section 2 of this act to clarify that these activities
are not subject to the sales tax.
*Sec. 1
was vetoed. See message at end of chapter.
Sec. 2. RCW 82.04.050 and 1993
sp.s. c 25 s 301 are each amended to read as follows:
(1) "Sale at
retail" or "retail sale" means every sale of tangible personal
property (including articles produced, fabricated, or imprinted) to all persons
irrespective of the nature of their business and including, among others,
without limiting the scope hereof, persons who install, repair, clean, alter,
improve, construct, or decorate real or personal property of or for consumers
other than a sale to a person who presents a resale certificate under RCW
82.04.470 and who:
(a) Purchases for the
purpose of resale as tangible personal property in the regular course of
business without intervening use by such person; or
(b) Installs, repairs,
cleans, alters, imprints, improves, constructs, or decorates real or personal
property of or for consumers, if such tangible personal property becomes an
ingredient or component of such real or personal property without intervening
use by such person; or
(c) Purchases for the
purpose of consuming the property purchased in producing for sale a new article
of tangible personal property or substance, of which such property becomes an
ingredient or component or is a chemical used in processing, when the primary
purpose of such chemical is to create a chemical reaction directly through
contact with an ingredient of a new article being produced for sale; or
(d) Purchases for the
purpose of consuming the property purchased in producing ferrosilicon which is
subsequently used in producing magnesium for sale, if the primary purpose of
such property is to create a chemical reaction directly through contact with an
ingredient of ferrosilicon; or
(e) Purchases for the
purpose of providing the property to consumers as part of competitive telephone
service, as defined in RCW 82.04.065. The term shall include every sale of
tangible personal property which is used or consumed or to be used or consumed
in the performance of any activity classified as a "sale at retail"
or "retail sale" even though such property is resold or utilized as
provided in (a), (b), (c), (d), or (e) of this subsection following such use.
The term also means every sale of tangible personal property to persons engaged
in any business which is taxable under RCW 82.04.280 (2) and (7) and 82.04.290.
(2) The term "sale
at retail" or "retail sale" shall include the sale of or charge
made for tangible personal property consumed and/or for labor and services
rendered in respect to the following:
(a) The installing,
repairing, cleaning, altering, imprinting, or improving of tangible personal
property of or for consumers, including charges made for the mere use of
facilities in respect thereto, but excluding sales of laundry service to
members by nonprofit associations composed exclusively of nonprofit hospitals,
and excluding services rendered in respect to live animals, birds and insects;
(b) The constructing,
repairing, decorating, or improving of new or existing buildings or other
structures under, upon, or above real property of or for consumers, including
the installing or attaching of any article of tangible personal property
therein or thereto, whether or not such personal property becomes a part of the
realty by virtue of installation, and shall also include the sale of services or
charges made for the clearing of land and the moving of earth excepting the
mere leveling of land used in commercial farming or agriculture;
(c) The charge for
labor and services rendered in respect to constructing, repairing, or improving
any structure upon, above, or under any real property owned by an owner who
conveys the property by title, possession, or any other means to the person
performing such construction, repair, or improvement for the purpose of
performing such construction, repair, or improvement and the property is then
reconveyed by title, possession, or any other means to the original owner;
(d) The sale of or
charge made for labor and services rendered in respect to the cleaning,
fumigating, razing or moving of existing buildings or structures, but shall not
include the charge made for janitorial services; and for purposes of this
section the term "janitorial services" shall mean those cleaning and
caretaking services ordinarily performed by commercial janitor service businesses
including, but not limited to, wall and window washing, floor cleaning and
waxing, and the cleaning in place of rugs, drapes and upholstery. The term
"janitorial services" does not include painting, papering, repairing,
furnace or septic tank cleaning, snow removal or sandblasting;
(e) The sale of or
charge made for labor and services rendered in respect to automobile towing and
similar automotive transportation services, but not in respect to those
required to report and pay taxes under chapter 82.16 RCW;
(f) The sale of and
charge made for the furnishing of lodging and all other services by a hotel,
rooming house, tourist court, motel, trailer camp, and the granting of any
similar license to use real property, as distinguished from the renting or
leasing of real property, and it shall be presumed that the occupancy of real
property for a continuous period of one month or more constitutes a rental or
lease of real property and not a mere license to use or enjoy the same;
(g) The sale of or
charge made for tangible personal property, labor and services to persons
taxable under (a), (b), (c), (d), (e), and (f) of this subsection when such
sales or charges are for property, labor and services which are used or
consumed in whole or in part by such persons in the performance of any activity
defined as a "sale at retail" or "retail sale" even though
such property, labor and services may be resold after such use or consumption.
Nothing contained in this subsection shall be construed to modify subsection
(1) of this section and nothing contained in subsection (1) of this section
shall be construed to modify this subsection.
(3) The term "sale
at retail" or "retail sale" shall include the sale of or charge
made for personal, business, or professional services including amounts
designated as interest, rents, fees, admission, and other service emoluments
however designated, received by persons engaging in the following business
activities:
(a) Amusement and
recreation services including but not limited to golf, pool, billiards,
skating, bowling, ski lifts and tows, and others;
(b) Abstract, title
insurance, and escrow services;
(c) Credit bureau
services;
(d) Automobile parking
and storage garage services;
(e) Landscape
maintenance and horticultural services but excluding (i) horticultural
services provided to farmers and (ii) pruning, trimming, repairing,
removing, and clearing of trees and brush near electric transmission or
distribution lines or equipment, if performed by or at the direction of an
electric utility;
(f) Service charges
associated with tickets to professional sporting events;
(g) Guided tours and
guided charters; and
(h) The following
personal services: Physical fitness services, tanning salon services, tattoo
parlor services, massage services, steam bath services, turkish bath services,
escort services, and dating services.
(4) The term shall also
include the renting or leasing of tangible personal property to consumers and
the rental of equipment with an operator.
(5) The term shall also
include the providing of telephone service, as defined in RCW 82.04.065, to
consumers.
(6) The term shall not
include the sale of or charge made for labor and services rendered in respect
to the building, repairing, or improving of any street, place, road, highway,
easement, right of way, mass public transportation terminal or parking
facility, bridge, tunnel, or trestle which is owned by a municipal corporation
or political subdivision of the state or by the United States and which is used
or to be used primarily for foot or vehicular traffic including mass
transportation vehicles of any kind.
(7) The term shall also
not include sales of feed, seed, seedlings, fertilizer, agents for enhanced
pollination including insects such as bees, and spray materials to persons who
participate in the federal conservation reserve program or its successor
administered by the United States department of agriculture, or to farmers for
the purpose of producing for sale any agricultural product, nor shall it
include sales of chemical sprays or washes to persons for the purpose of
post-harvest treatment of fruit for the prevention of scald, fungus, mold, or
decay.
(8) The term shall not
include the sale of or charge made for labor and services rendered in respect
to the constructing, repairing, decorating, or improving of new or existing
buildings or other structures under, upon, or above real property of or for the
United States, any instrumentality thereof, or a county or city housing
authority created pursuant to chapter 35.82 RCW, including the installing, or
attaching of any article of tangible personal property therein or thereto,
whether or not such personal property becomes a part of the realty by virtue of
installation. Nor shall the term include the sale of services or charges made
for the clearing of land and the moving of earth of or for the United States,
any instrumentality thereof, or a county or city housing authority.
NEW SECTION. Sec.
3. 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.
Passed
the Senate March 9, 1995.
Passed
the House April 4, 1995.
Approved by the Governor April 17, 1995, with the
exception of certain items which were vetoed.
Filed in
Office of Secretary of State April 17, 1995.
Note: Governor's explanation
of partial veto is as follows:
"I am returning
herewith, without my approval as to section 1, Substitute Senate Bill No. 5129
entitled:
"AN ACT Relating to excluding utility line clearing from the
definition of retail sale;"
This measure removes
pruning, trimming, repairing, removing, and clearing trees and brush near
electric transmission or distribution lines or equipment from the definition of
retail sale, thereby exempting such activity from state and local retail sales
taxes. By doing so, this activity is changed from the retailing classification
to the service classification for purposes of the state's business and
occupation tax. The measure is effective on July 1, 1995.
Section 1 of Substitute
Senate Bill No. 5129 states that the 1993 Legislature did not intend to extend,
nor did it believe it was extending, the sales tax to the trimming and clearing
of trees and brush near power lines. The language further asserts that the
Department of Revenue misinterpreted legislative intent by adopting a rule
extending the sales tax to such services and that it is the intent of section 2
of the bill to clarify that these activities are not subject to the sales tax.
I believe the Department of
Revenue had no alternative authority but to include the activity in the sales
tax base through its rule. The language in the 1993 legislation pertaining to
this question (E2SSB 5967) does not indicate that tree trimming near power
lines was to be excluded from the term "landscape maintenance and
horticultural services." In addition, there was no expression at the time
by the legislature that the department could legally rely upon to exclude such
activity from the sales tax base. It should be noted that when the sales tax
was applied to these services by this previous legislature, horticultural
services "provided to farmers" were excluded from application of the
tax. No comparable explicit exclusion was provided for utility line clearing
services.
As a result, section 2 of
Substitute Senate Bill No. 5129 serves as a substantive change in law with
application from July 1, 1995 forward. The presence of section 1, however,
creates ambiguity and may encourage those who have paid sales tax on tree
trimming near utility lines since the 1993 law change to believe they are
entitled to refunds. Administering such claims and potentially litigating this
issue would lead to an unnecessary expenditure of state funds and resources.
For these reasons, I have
vetoed section 1 of Substitute Senate Bill No. 5129.
With the exception of
section 1, Substitute Senate Bill No. 5129 is approved."
