BP BHEAD INT H [Atlas:Generic]

AN ACT Relating to sales and use tax exemptions for call centers in distressed areas; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. The legislature finds that there are still areas of the state that have very high levels of unemployment despite strong state-wide economic growth.

The legislature also finds that additional incentives are needed to promote economic stimulation and new employment opportunities in these distressed areas, and that these incentives are essential to increase economic growth in distressed areas.

The legislature intends to accomplish this by providing a sales and use tax exemption on machinery and equipment and buildings used by businesses that establish call centers in distressed areas of the state.

NEW SECTION. Sec. 2. A new section is added to chapter 82.08 RCW to read as follows:

(1) The tax levied by RCW 82.08.020 does not apply to sales to a business, located in an eligible area, of machinery and equipment used directly in a back office operation, or to sales of or charges made for labor and services rendered in respect to installing, repairing, cleaning, altering, or improving the machinery and equipment, but only if the purchaser provides the seller with an exemption certificate in a form and manner prescribed by the department by rule, and the purchaser provides the department with a duplicate of the certificate or a summary of exempt as the department may require. The seller shall retain a copy of the certificate for the seller=s files.

(2) The tax levied by RCW 82.08.020 does not apply to construction or improvement of buildings, or sales of or charges made for labor and services rendered in respect to construction or improvement of buildings, located in eligible areas, that are used directly as a call center, but only if the purchaser provides the seller with an exemption certificate in a form and manner prescribed by the department by rule, and the purchaser provides the department with a duplicate of the certificate or a summary of exempt sales as the department may require. The seller shall retain a copy of the certificate for the seller=s files.

(3) For purposes of this section and section 3 of this act:

(a) "Buildings" mean only those structures used directly in a call center operation. If a building is used partly for a call center operation and partly for other purposes, the applicable tax exemption shall be determined by apportionment of the costs of construction under rules adopted by the department. The term "buildings" also includes machinery and equipment that is permanently affixed to and becomes a physical part of a building, such as utility systems for heating, ventilation, air conditioning, plumbing, phones, or electrical;

(b) "Call centers" mean an independent business operation, leased facility, or division of an existing business with fifty or more employees, who are engaged in telecommunications business activities involving financial transactions, technical support operations, customer services, telemarketing, and charitable fund-raising activities;

(c) "Eligible area" means a rural natural resources impact area as defined in RCW 43.31.601, a designated community empowerment zone approved under RCW 43.63A.700, and a militarily impacted area as designated by the governor under RCW 43.06.115; and

(d)(i) "Machinery and equipment" means commercial fixtures, devices, and support facilities, and tangible personal property that becomes an ingredient or component thereof, including repair parts and replacement parts. "Machinery and equipment" includes electronic communications equipment, communications systems infrastructure components, computer software, computer hardware, associated support equipment that is necessary to maintain the communications operations of a call center, and office furniture; and

(ii) "Machinery and equipment" does not include:

(A) Hand tools; and

(B) Property with a useful life of less than one year.

NEW SECTION. Sec. 3. A new section is added to chapter 82.12 RCW to read as follows:

(1) The provisions of this chapter do not apply in respect to the use by a business, located within an eligible area, of machinery and equipment used directly in a call center, or sales of or charges made for labor and services rendered in respect to installing, repairing, cleaning, altering, or improving the machinery and equipment.

(2) The provisions of this chapter do not apply in respect to the new construction or improvement of a building, located within an eligible area, that is used directly as a call center, or sales of or charges made for labor and services rendered in respect to the construction or repair of a building.

(3) The exemption under this section is available only if the user provides the department with:

(a) An exemption certificate in a form and manner prescribed by the department before the construction or improvement of the building;

(b) An exemption certificate in a form and manner prescribed by the department within sixty days of the first use of the machinery and equipment in this state;

(c) An annual summary listing the machinery and equipment by January 31st of the year following the calendar year in which the machinery and equipment is first used in this state.

(4) The definitions in section 2 of this act apply to this section.