S-2603.1  _______________________________________________

                    SUBSTITUTE SENATE BILL 5721

          _______________________________________________

State of Washington      55th Legislature     1997 Regular Session

By Senate Committee on Ways & Means (originally sponsored by Senators Anderson, Spanel and McDonald)

Read first time 04/02/97.

Providing tax exemptions for bare-boat charters.

    AN ACT Relating to sales and use tax exemptions for vessels used in bare-boat charter businesses; adding a new section to chapter 82.08 RCW; and adding a new section to chapter 82.12 RCW.

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

NEW SECTION. Sec. 1.  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 of vessels for use in a bare-boat charter business, except that the subsequent rental of the vessel by a bare-boat charter business is subject to the tax levied by RCW 82.08.020.

    (2) For purposes of this section and section 2 of this act, a "bare-boat charter business" means a person that, under a written agreement with the owner of the vessel, rents the vessel, without a crew, as an agent of the owner on a commission basis primarily to persons other than the owner of the vessel.  A vessel is rented "primarily to persons other than the owner of the vessel" if the amount of time the vessel is rented to all persons other than the owner of the vessel during a calendar year exceeds the amount of time the vessel is used by the owner of the vessel during the same year.

NEW SECTION. Sec. 2.  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 an owner, for business purposes, of a vessel used in a bare-boat charter business as defined in section 1 of this act.  For purposes of this subsection, "business purposes" means use that is reasonable and necessary for the maintenance or repair of the vessel, and use that consists of delivering or transporting the vessel for the convenience of the bare-boat charter business.  Any use of the vessel under this subsection in excess of five days in any calendar year shall be presumed to be for the owner's personal enjoyment, unless the owner can show by clear and convincing evidence that the use in excess of five days was for business purposes.

    (2) Any use of the vessel by the owner for the owner's personal enjoyment is subject to the tax imposed in this chapter based on the value of the vessel at the time of the use unless the owner uses the vessel under a written agreement with the bare-boat charter business that requires the owner of the vessel to pay a commission and the tax imposed by RCW 82.08.020 or this chapter based on a reasonable rental amount reflecting fair market value for the use of the vessel.

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