Z-1041.2  _______________________________________________

                          HOUSE BILL 2428

          _______________________________________________

State of Washington      55th Legislature     1998 Regular Session

By Representatives Boldt, Schoesler, Mulliken, McDonald, O'Brien, Dunshee, Cooke, Backlund, Dunn, Thompson and Eickmeyer; by request of Department of Revenue

Read first time 01/14/98.  Referred to Committee on Finance.

Exempting fund-raising activities by nonprofit organizations from sales and use taxation.

    AN ACT Relating to fund-raising activities; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.08 RCW; creating a new section; and repealing RCW 82.04.365, 82.04.366, 82.08.02571, and 82.08.02572.

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

NEW SECTION. Sec. 1.  The legislature finds that nonprofit educational, charitable, religious, scientific, and social welfare organizations provide many public benefits to the people of the state of Washington.  Therefore, the legislature finds that it is in the best interests of the state of Washington to provide a limited excise tax exemption for fund-raising activities for certain nonprofit organizations.

NEW SECTION. Sec. 2.  A new section is added to chapter 82.04 RCW to read as follows:

    (1) This chapter does not apply to amounts received by nonprofit organizations, as defined in subsection (2) of this section, for fund-raising activities.

    (2) As used in this section, a "nonprofit organization" means:

    (a) An organization exempt from tax under section 501(c) (3), (4), or (10) of the federal internal revenue code (26 U.S.C. Sec. 501(c) (3), (4), or (10));

    (b) A nonprofit organization that would qualify under (a) of this subsection except that it is not organized as a nonprofit corporation; or

    (c) A nonprofit organization that means all of the following criteria:

    (i) The members, stockholders, officers, directors, or trustees of the organization do not receive any part of the organization's gross income, except as payment for services rendered;

    (ii) The compensation received by any person for services rendered to the organization does not exceed an amount reasonable under the circumstances; and

    (iii) The activities of the organization do not include a substantial amount of political activity, including but not limited to influencing legislation and participation in any campaign on behalf of any candidate for political office.

    (3) As used in this section, the term "fund-raising activity" means both activities involving the direct solicitation of money or other property and the anticipated exchange of goods or services for money between the soliciting organization and the organization or person solicited, for the purpose of furthering the goals of the nonprofit organization.  "Fund-raising activity" does not include the operation of a regular place of business in which sales are made during regular hours such as a bookstore, thrift shop, restaurant, or similar business.

NEW SECTION. Sec. 3.  A new section is added to chapter 82.08 RCW to read as follows:

    The tax levied by RCW 82.08.020 does not apply to a sale made by a nonprofit organization if the gross income from the sale is exempt under section 2 of this act.

NEW SECTION. Sec. 4.  The following acts or parts of acts are each repealed:

(1) RCW 82.04.365 and 1995 2nd sp.s. c 11 s 1 & 1979 ex.s. c 196 s 7;

(2) RCW 82.04.366 and 1991 c 51 s 1;

(3) RCW 82.08.02571 and 1991 c 51 s 2; and

(4) RCW 82.08.02572 and 1995 2nd sp.s. c 11 s 2.

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