SENATE BILL REPORT

SB 5523

 

As Passed Senate, February 6, 2002

 

Title:  An act relating to overpayments of tax concerning leased equipment when a remedy to refund the overpayment no longer exists under the nonclaim statute.

 

Brief Description:  Authorizing an offset for certain overpayments of tax concerning leased equipment.

 

Sponsors:  Senators Horn, Rossi and Snyder.

 

Brief History:

Committee Activity:  Ways & Means:  2/26/01, 3/26/01 [DP].

Passed Senate:  4/4/01, 48-0; 2/6/02, 44-0.

SENATE COMMITTEE ON WAYS & MEANS

 

Majority Report:  Do pass.

Signed by Senators Brown, Chair; Constantine, Vice Chair; Fairley, Vice Chair; Fraser, Hewitt, Honeyford, Kohl‑Welles, Long, Parlette, Rasmussen, Regala, Roach, Rossi, Sheahan, B. Sheldon, Snyder, Spanel, Thibaudeau, Winsley and Zarelli.

 

Staff:  David Schumacher (786‑7474)

 

Background:  The sales tax is imposed on retail sale of most items of tangible personal property and some services.  Use tax is imposed on the use of an item in Washington when the acquisition of the item or service has not been subject to sales tax.  The combined state and local sales and use tax rate ranges between 7 and 8.6 percent, depending on location.

 

The retail sales tax applies to sales of property to consumers.  Property that is purchased for resale or leasing is exempt from the retail sales tax because it is not a sale to a consumer.  However, the subsequent leasing of such property to consumers is subject to sales tax.

 

By statute, there exists a four-year time limit on tax refunds or credits for taxes, penalties or interest due.

 

Summary of Bill:  An exception is granted to the four-year limitation of refunds regarding overpayments of sales tax on leased equipment.  A taxpayer is allowed to credit the sales tax paid incorrectly on the original sale to offset the amount of sales taxes subsequently owed on the leased property.

 

Appropriation:  None.

 

Fiscal Note:  Available.

 

Effective Date:  Ninety days after adjournment of session in which bill is passed.

 

Testimony For:  This prevents an unfair situation from ever occurring again.  It gives the Department of Revenue reasonable flexibility to solve this type of problem in the future.

 

Testimony Against:  None.

 

Testified:  PRO:  Robin Rosauer, Lighthouse Properties; Mark Craig, Crown Grocery Company;  Tom Dooley, AWB.