AN ACT Relating to tax exemptions and credits for structures and equipment used to reduce agricultural burning of cereal grains and field and turf grass grown for seed; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 82.04 RCW; adding a new section to chapter 84.36 RCW; creating a new section; providing expiration dates; and declaring an emergency.

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

NEW SECTION. Sec. 1. It is the intent of the legislature to provide tax exemptions and credits to encourage alternatives to the field burning of cereal grains and field and turf grass grown for seed. The exemptions and credits are available to farmers and to other persons engaged in activities that make it possible to reduce field burning including persons involved in manufacturing or marketing straw or straw-based products, or to reduce the air emissions resulting from such burning. It is the intent of the legislature that the exemptions and credits provided by this act apply not only to facilities and machinery and equipment for alternatives currently available, but also to those that may become available in the future.

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 of machinery and equipment, and to services rendered in respect to constructing structures, installing, constructing, repairing, cleaning, decorating, altering, or improving of structures or eligible machinery and equipment, or to sales of tangible personal property that becomes an ingredient or component of eligible structures or eligible machinery and equipment, if the machinery, equipment, or structure is used more than half of the time:

(a) For gathering, densifying, processing, handling, storing, transporting, or incorporating straw or straw-based products that results in a reduction in field burning of cereal grains and field and turf grass grown for seed; or

(b) To decrease air emissions resulting from field burning of cereal grains and field and turf grass grown for seed.

(2) A person taking the exemption under this section must keep records necessary for the department to verify eligibility under this section. The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller shall retain a copy of the certificate for the seller's files.

(3) The department of ecology and the department of agriculture shall consult with the department with regard to the information necessary for the department to administer this section.

(4) This section expires January 1, 2006.

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 of machinery and equipment, or tangible personal property that becomes an ingredient or component of eligible machinery and equipment used more than half of the time:

(a) For gathering, densifying, processing, handling, storing, transporting, or incorporating straw or straw-based products that will result in a reduction in field burning of cereal grains and field and turf grass grown for seed; or

(b) To decrease air emissions resulting from field burning of cereal grains and field and turf grass grown for seed.

(2) A person taking the exemption under this section must keep records necessary for the department to verify eligibility under this section.

(3) The department of ecology shall provide the department with the information necessary for the department to administer this section.

(4) This section expires January 1, 2006.

NEW SECTION. Sec. 4. A new section is added to chapter 82.04 RCW to read as follows:

(1) A person who is eligible for the exemption under section 2 or 3 of this act may take a credit against tax imposed by this chapter, subject to the limitations in this section.

(2) The credit under this section is equal to fifty percent of the amount of costs expended for constructing structures or acquiring machinery and equipment for which an exemption was taken under section 2 or 3 of this act.

(3) No application is necessary for the credit under this section. A person taking the credit must keep records necessary for the department to verify eligibility under this section. Tax credit may not be claimed for expenditures that occurred before the effective date of this section.

(4) No applicant is eligible for tax credits under this section in excess of the amount of tax that would otherwise be due under this chapter. Approved credit may not be carried over to subsequent calendar years. The credit must be claimed by the due date of the last tax return for the calendar year in which the payment is made. Any unused credit expires. Refunds shall not be given in place of credits.

(5) This section expires January 1, 2006.

NEW SECTION. Sec. 5. A new section is added to chapter 84.36 RCW to read as follows:

Personal property eligible for exemption under section 2 or 3 of this act is exempt from taxation.

This section applies to taxes levied for collection in 2001 through 2006. This section expires January 1, 2007.

NEW SECTION. Sec. 6. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect immediately.