[atlas:bill]

AN ACT Relating to leasehold excise taxation; amending RCW 82.29A.120, 82.29A.050, and 82.29A.080; and providing an effective date.

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

Sec. 1. RCW 82.29A.120 and 1994 c 95 s 2 are each amended to read as follows:

(1) After computation of the taxes imposed pursuant to RCW 82.29A.030 and 82.29A.040 there shall be allowed the following credits in determining the tax payable:

((~~(1)~~)) (a) With respect to a leasehold interest other than a product lease, executed with an effective date of April 1, 1986, or thereafter, or a leasehold interest in respect to which the department of revenue under the authority of RCW 82.29A.020 does adjust the contract rent base used for computing the tax provided for in RCW 82.29A.030, there shall be allowed a credit against the tax as otherwise computed equal to the amount, if any, that such tax exceeds the property tax that would apply to such leased property without regard to any property tax exemption under RCW 84.36.381, if it were privately owned by the lessee or if it were privately owned by any sublessee if the value of the credit inures to the sublessee((. For lessees and sublessees who would qualify for a property tax exemption under RCW 84.36.381 if the property were privately owned, the tax otherwise due after this credit shall be reduced by a percentage equal to the percentage reduction in property tax that would result from the property tax exemption under RCW 84.36.381.

~~(2)~~));

(b) With respect to a leasehold interest consisting of residential and recreational lots that are subleased for residential and recreational purposes for which taxable rent is determined under RCW 82.29A.020(2)(b), there shall be allowed a credit against the tax as otherwise computed and after any credit under (a) of this subsection equal to the amount, if any, that the tax due after any credit under (a) of this subsection exceeds an increase in revenue on the leasehold interest from the prior year of the lesser of six percent or the inflation factor. The inflation factor is the percentage change in the implicit price deflator for personal consumption expenditures for the United States as published for the most recent twelve-month period by the bureau of economic analysis of the federal department of commerce in September of the year before the taxes are payable;

(2) For lessees and sublessees who would qualify for a property tax exemption under RCW 84.36.381 if the property were privately owned, the tax otherwise due after the credits authorized in subsection (1) of this section shall be reduced by a percentage equal to the percentage reduction in property tax that would result from the property tax exemption under RCW 84.36.381.

Sec. 2. RCW 82.29A.050 and 1992 c 206 s 6 are each amended to read as follows:

(1) Except as provided in subsection (2) of this section, the leasehold excise taxes provided for in RCW 82.29A.030 and 82.29A.040 shall be paid by the lessee to the lessor and the lessor shall collect such tax and remit the same to the department of revenue. The tax shall be payable at the same time as payments are due to the lessor for use of the property from which the leasehold interest arises, and in the case of payment of contract rent to a person other than the lessor, at the time of payment. The tax payment shall be accompanied by such information as the department of revenue may require. In the case of prepaid contract rent the payment may be prorated in accordance with instructions of the department of revenue and the prorated portion of the tax shall be due, one-half not later than May 31 and the other half not later than November 30 each year.

(2) Leasehold excise taxes on a leasehold interest consisting of three thousand or more residential and recreational lots that are subleased for residential and recreational purposes for which taxable rent is determined under RCW 82.29A.020(2)(b) shall be paid by the sublessee, or the lessee if there is no sublessee for a particular lot, to the county treasurer at such times and subject to the same penalties as property taxes under RCW 84.56.020. Immediately following the last day of each month, the county treasurer shall remit the taxes collected to the state treasurer. The state treasurer shall deposit the local leasehold tax moneys into the local leasehold excise tax account. The remittance shall be accompanied by such information as the department of revenue may require. However, if the tax imposed on any sublessee becomes delinquent for a period of two years, the lessee shall be responsible for paying such back taxes and penalties to the county within thirty days of receipt of a notice from the county to the lessee reporting the delinquency.

(3) The lessor receiving taxes payable under the provisions of this chapter shall remit the same together with a return provided by the department, to the department of revenue on or before the last day of the month following the month in which the tax is collected. The department may relieve any taxpayer or class of taxpayers from the obligation of filing monthly returns and may require the return to cover other reporting periods, but in no event shall returns be filed for a period greater than one year. The lessor shall be fully liable for collection and remittance of the tax. The amount of tax until paid by the lessee to the lessor shall constitute a debt from the lessee to the lessor. The tax required by this chapter shall be stated separately from contract rent, and if not so separately stated for purposes of determining the tax due from the lessee to the lessor and from the lessor to the department, the contract rent does not include the tax imposed by this chapter. Where a lessee has failed to pay to the lessor the tax imposed by this chapter and the lessor has not paid the amount of the tax to the department, the department may, in its discretion, proceed directly against the lessee for collection of the tax: PROVIDED, That taxes due where contract rent has not been paid shall be reported by the lessor to the department and the lessee alone shall be liable for payment of the tax to the department.

((~~(3)~~)) (4) Each person having a leasehold interest subject to the tax provided for in this chapter arising out of a lease of federally owned or federal trust lands shall report and remit the tax due directly to the department of revenue in the same manner and at the same time as the lessor would be required to report and remit the tax if such lessor were a state public entity.

Sec. 3. RCW 82.29A.080 and 1985 c 57 s 84 are each amended to read as follows:

The counties and cities shall contract, prior to the effective date of an ordinance imposing a leasehold excise tax, with the department of revenue for administration and collection. The department of revenue shall deduct a percentage amount, as provided by such contract, not to exceed two percent of the taxes collected, for administration and collection expenses incurred by the department. No amount may be deducted for taxes collected under RCW 82.29A.080(2). The remainder of any portion of any tax authorized by RCW 82.29A.040 which is collected by the department of revenue shall be deposited by the state department of revenue in the local leasehold excise tax account hereby created in the state treasury. Moneys in the local leasehold excise tax account may be spent only for distribution to counties and cities imposing a leasehold excise tax.

NEW SECTION. Sec. 4. This act takes effect January 1, 2000.