Z-0699.2  _______________________________________________

                         SENATE BILL 6058

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State of Washington      56th Legislature     1999 Regular Session

By Senators Loveland, Honeyford, Sellar, Oke, Stevens and Rasmussen; by request of Department of Revenue

Read first time 02/26/1999.  Referred to Committee on Ways & Means.

Providing that growing or packing agricultural products is not a manufacturing activity for tax purposes.

    AN ACT Relating to stating the intent of the legislature that the activities of growing or packing agricultural products is not a manufacturing activity; amending RCW 82.04.120; creating new sections; and declaring an emergency.

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

NEW SECTION. Sec. 1.  The legislature finds that the recent appellate court decision in the case of Valley Fruit v. Department of Revenue, has created confusion regarding the taxability of apple growers, packers, and farmers and the availability of different exemptions for apple growers, packers, and farmers.  It is the intent of the legislature to make clear that growing or packing any agricultural product, is not a manufacturing activity.

    Sec. 2.  RCW 82.04.120 and 1998 c 168 s 1 are each amended to read as follows:

    "To manufacture" embraces all activities of a commercial or industrial nature wherein labor or skill is applied, by hand or machinery, to materials so that as a result thereof a new, different or useful substance or article of tangible personal property is produced for sale or commercial or industrial use, and shall include:  (1) The production or fabrication of special made or custom made articles; and (2) the production or fabrication of dental appliances, devices, restorations, substitutes, or other dental laboratory products by a dental laboratory or dental technician.

    "To manufacture" shall not include:  Conditioning of seed for use in planting; cubing hay or alfalfa; ((or)) activities which consist of cutting, grading, or ice glazing seafood which has been cooked, frozen, or canned outside this state; the growing, harvesting, or producing of agricultural products; or packing of agricultural products, including sorting, washing, rinsing, grading, waxing, treating with fungicide, packaging, chilling, or placing in controlled atmospheric storage.

NEW SECTION. Sec. 3.  This act is intended to clarify that this is the intent of the legislature both retroactively and prospectively.

NEW SECTION. Sec. 4.  If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 5.  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.

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