HB 1029

Bill Analysis

January 16, 1997

Brief Description:  Modifying tax exemptions for nonprofit organizations.

Staff: Linda Brooks (786-7153)

Background:  Washington's major business tax is the business and occupation (B&O) tax.  This tax is imposed on the gross receipts of business activities conducted within the state.

The state retail sales tax is imposed on retail sales of most items of tangible personal property and some services.

Nonprofit organizations pay B&O tax and collect sales taxes on their sales unless specifically exempted by statute.  Exemption from federal income tax does not automatically provide exemption from state taxes.

B&O and sales tax exemptions are provided for fund-raising auctions, bazaars and rummage sales, and sales of meals for fund-raising purposes, subject to the following limits.

Auctions:  Not more than one event per year.  Not more than two days per event.  (No dollar limit on amount raised.)

Bazaars and rummage sales:  Not more than two events per year.  Not more than two  days per event.  Exempt on first $20,000 of gross receipts per year.

Meals:  Not more than two events per week.  Not more than $1,000 per event.

Libraries:  There are no B&O and sales tax exemptions on sales of used books, used videos, used sound recordings, and similar used information products.

Summary of Bill:  The limits for B&O and sales tax exemptions for fund-raising activities are changed as follows.

Auctions:  Not more than two events per year.  Not more than five days per event.  (No dollar limit.)

Bazaars and rummage sales:  Not more than 12 events per year.  Not more than five days per event.  Exempt on first $35,000 of gross receipts per year.

Meals:  Either (a) not more than one event every two weeks or (b) not more than five days per event and no more than three events a year.  Exempt on first $50,000 of gross receipts per year.

Libraries: New B&O and sales tax exemptions are created for sales of used books, used videos, used sound recordings, and similar used information products if the proceeds support a public library.  The first $35,000 of gross receipts per year is exempt from B&O tax and sales tax collection requirements.

Effective  Date:  The bill declares an emergency and takes effect July 1, 1997.