SENATE BILL REPORT

                   SB 6348

              As Passed Senate, February 10, 1998

Title:  An act relating to eliminating requirements for filing certificates or annual summaries for sales and use tax exemptions on manufacturing machinery and equipment.

Brief Description:  Eliminating requirements for filing certificates or annual summaries for sales and use tax exemptions on manufacturing machinery and equipment.

Sponsors:  Senators Hale and Haugen; by request of Department of Revenue.

Brief History:

Committee Activity:  Government Operations:  1/27/98 [DP].

Passed Senate, 2/10/98, 48-0.

SENATE COMMITTEE ON GOVERNMENT OPERATIONS

Majority Report:  Do pass.

  Signed by Senators McCaslin, Chair; Hale, Vice Chair; Haugen, Horn, Patterson and T. Sheldon.

Staff:  Eugene Green (786-7405)

Background:  Machinery and equipment used directly in a manufacturing operation or research and development operation are exempt from sales and use taxation.  Taxpayers must provide the Department of Revenue with either a duplicate copy of the exemption certificate or an annual summary report as a requirement for the exemption.  This was to ensure that taxpayers would report exempt manufacturing machinery and equipment so that the department could complete a legislatively mandated study to measure the economic effect of the exemption.  The department found that it is an excessive burden on taxpayers to properly submit a report and that the department will still be able to obtain the information needed to complete the study.

Summary of Bill:  The reporting requirement for sales and use tax exemptions for machinery and equipment used directly in a manufacturing operation or research and development operation is eliminated.

Appropriation:  None.

Fiscal Note:  Not requested.

Effective Date:  July 1, 1998.

Testimony For:  The reporting requirement is a burden.  Purchasing activity doesn=t help.  The department already has three years of data.

Testimony Against:  None.

Testified:  PRO:  Terry Byington, American Electronics Association; Jim Hedrick, Department of Revenue; Carolyn Logue, NFIB.

House Amendment(s):  Elimination of duplicate certificate and summary filing requirements is delayed until January 1, 1999.  It is clarified that an exemption cannot be denied simply because the duplicates were not filed.