FINAL BILL REPORT

                 SHB 1184

                         C 275 L 98

                     Synopsis as Enacted

Brief Description:  Repealing the sales tax on coin‑operated laundromats in apartments and mobile home communities.

Sponsors:  By House Committee on Finance (originally sponsored by Representatives Van Luven, Mason, Smith, Dunn, Carrell, Delvin, Cairnes, Sheldon, B. Thomas, Morris, Quall, Koster, Mulliken, Sherstad, Schoesler, D. Schmidt, Hatfield, Wood, Honeyford and Backlund).

House Committee on Finance

Senate Committee on Ways & Means

Background:  The sales tax is imposed on retail sales of most items of tangible personal property and some services.  The state tax rate is 6.5 percent and is applied to the selling price of the article or service.  In addition, local sales taxes apply.  The total tax rate is between 7 percent and 8.6 percent, depending on location.  Sales tax applies when items are purchased at retail in state.  Sales tax is paid by the purchaser and collected by the seller.

Use tax is imposed on the use of an item in this state when the acquisition of the item has not been subject to sales tax.  Use tax applies to items purchased from sellers who do not collect sales tax, items acquired from out-of-state, and items produced by the person using the item.  Use tax is equal to the sales tax rate multiplied by the value of the property used.  Use tax is paid directly to the Department of Revenue.

Retail sales tax applies to some services.  Services subject to sales tax include the installing, repairing, cleaning, altering, imprinting, or improving of tangible personal property.   Retail sales tax is also levied on the charges made for the use of facilities to perform services such as cleaning.  Thus, retail sales tax applies to the use of coin-operated laundry facilities.  

Before 1993, coin-operated laundry facilities provided for the exclusive use of tenants in apartment houses, hotels, motels, rooming houses, and trailer or tourist camps were exempt from retail sales tax.  In 1993, the Legislature repealed the exemption.  Since coin-operated laundries provided for tenants' exclusive use became subject to retail sales tax, the business and occupation (B&O) tax classification also changed from service to retailing.  As a result of the classification change, the B&O tax rate for these laundries was reduced from the service rate of 1.50 percent to the retailing rate of 0.471 percent.

Summary:  Charges made for tenants' exclusive use of coin-operated laundry facilities in an apartment house, rooming house, or mobile home park are removed from the definition of retail sale.  (As a result, these activities are no longer subject to the retail sales and use tax.  The B&O tax classification also changes from retailing to service which increases the B&O tax rate increases from the retailing rate of 0.471 percent to the service rate of 1.50 percent.)

Votes on Final Passage:

House980

Senate427

Effective:July 1, 1998