H-2569.1  _______________________________________________

                    SUBSTITUTE HOUSE BILL 1302

          _______________________________________________

State of Washington      55th Legislature     1997 Regular Session

By House Committee on Finance (originally sponsored by Representatives Pennington, Kessler, Carrell, Boldt, Thompson, Sheldon, Cairnes, Lambert, B. Thomas, Mitchell, Chandler, Talcott, Cooke, Schoesler, Robertson, Huff, Mielke, Lisk, Delvin, Wensman, Mulliken, Backlund and L. Thomas)

Read first time 03/10/97.

Clarifying the taxation of intangible personal property. 

    AN ACT Relating to intangible personal property; amending RCW 84.36.070; adding a new section to chapter 84.48 RCW; and creating new sections.

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

    Sec. 1.  RCW 84.36.070 and 1974 ex.s. c 118 s 1 are each amended to read as follows:

    ((The following)) (1) Intangible personal property ((shall be)) is exempt from ((ad valorem)) property taxation((:)).

(2) "Intangible personal property" means:

(a) All moneys and credits including mortgages, notes, accounts, certificates of deposit, tax certificates, judgments, state, county and municipal bonds and warrants and bonds and warrants of other taxing districts, bonds of the United States and of foreign countries or political subdivisions thereof and the bonds, stocks, or shares of private corporations((,));

(b) Private nongovernmental personal service contracts ((or)), private nongovernmental athletic or sports franchises, or private nongovernmental athletic or sports agreements provided that ((such)) the contracts, franchises, or agreements do not pertain to the use or possession of tangible personal or real property or to any interest in tangible personal or real property; and

(c) Other intangible property such as trademarks, trade names, brand names, patents, copyrights, trade secrets, franchise agreements, licenses, permits, core deposits of financial institutions, noncompete agreements, customer lists, patient lists, favorable contracts, favorable financing agreements, reputation, exceptional management, prestige, good name, or integrity of a business.

(3) "Intangible personal property" does not include zoning, location, view, geographic features, easements, covenants, proximity to raw materials, condition of surrounding property, proximity to markets, the availability of a skilled work force, and other characteristics or attributes of property.

(4) This section does not preclude the use of, or permit a departure from, generally accepted appraisal practices and the appropriate application thereof in the valuation of real and tangible personal property.

NEW SECTION. Sec. 2.  A new section is added to chapter 84.48 RCW to read as follows:

    (1) In equalizing personal property as of January 1, 1998, the department shall treat intangible personal property in the same manner as intangible personal property is to be treated after the effective date of this act.

    (2) This section expires December 31, 1998.

NEW SECTION. Sec. 3.  This act shall not be construed to amend or modify any existing statute or rule relating to the treatment of computer software, retained rights in computer software, and golden and master copies of computer software for property tax purposes.

NEW SECTION. Sec. 4.  Nothing in this act is intended to incorporate and nothing in this act is based on any other state's statutory or case law.

NEW SECTION. Sec. 5.  If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 6.  This act is effective for taxes levied for collection in 1999 and thereafter.

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