S-1053

AN ACT Relating to sales and use tax exemptions for call centers in distressed areas; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. The legislature finds that there are still areas of the state that have very high levels of unemployment despite strong statewide economic growth.

The legislature also finds that additional incentives are needed to promote economic stimulation and new employment opportunities in these distressed areas, and that these incentives are essential to increase economic growth in distressed areas.

The legislature intends to accomplish this by providing a sales and use tax exemption on machinery and equipment and buildings used by businesses that establish call centers in distressed areas of the state.

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 to a person, located in an eligible area, of machinery and equipment used directly in a call center operation, or to sales of or charges made for labor and services rendered in respect to installing, repairing, cleaning, altering, or improving the machinery and equipment, but only if the purchaser 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.

(2) The tax levied by RCW 82.08.020 does not apply to constructing or improving of buildings or other structures, or sales of or charges made for labor and services rendered in respect to constructing or improving of buildings or other structures, located in eligible areas, that are used directly as a call center, but only if the purchaser 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 tax imposed by RCW 82.08.020 does not apply to telephone services purchased by a call center for long distance or toll telephone calls to and from the call center. This exemption does not apply to any other network telephone services.

(4) To be eligible for the exemption under this section, the person must make an investment of at least two hundred thousand dollars in buildings or machinery and equipment used directly in the call center operation.

(5) For purposes of this section:

(a) "Buildings" means only those structures used directly in a call center operation. If a building is used partly for a call center operation and partly for other purposes, the applicable tax exemption shall be determined by apportionment of the costs of construction under rules adopted by the department. The term "buildings" also includes machinery and equipment that is permanently affixed to and becomes a physical part of a building, such as utility systems for heating, ventilation, air conditioning, plumbing, phones, or electrical.

(b) "Call centers" means a business operation employing fifty or more employees, who are engaged in telecommunications business activities involving financial transactions, technical support operations, and customer services.

(c) "Eligible area" means a community empowerment zone, as defined in chapter 43.31C RCW and a county with fewer than one hundred persons per square mile or a county smaller than two hundred twenty-five square miles as determined annually by the office of financial management and published by the department of revenue effective for the period July 1st through June 30th.

(d)(i) "Machinery and equipment" means commercial fixtures, devices, and support facilities, and tangible personal property that becomes an ingredient or component thereof, including repair parts and replacement parts. "Machinery and equipment" includes electronic communications equipment, communications systems infrastructure components, computer software, computer hardware, associated support equipment that is necessary to maintain the communications operations of a call center, and office furniture.

(ii) "Machinery and equipment" does not include:

(A) Hand-powered tools; and

(B) Property with a useful life of less than one year.

(6) A person claiming the exemption under this section shall make an annual report to the department. The report shall be in a letter form and shall include the following information: The type of activity, the location of the person, how long the person has been located in the county, and the taxpayer name and registration number. The report must be filed by January 30th of each year in which the exemption was claimed during the previous year. Failure to file a report will not result in the loss of eligibility under this section. However, the department, through its research division, shall contact taxpayers who have not filed the report and obtain the data from the taxpayer or assist the taxpayer in the filing of the report, so that the data and information necessary to measure the program's effectiveness is maintained.

(7) This section applies only to call centers that commence operations on or after the effective date of this act.

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 by a business, located within an eligible area, of machinery and equipment used directly in a call center.

(2) To be eligible for the exemption under this section, the business must make an investment of at least two hundred thousand dollars in buildings or machinery and equipment used directly in the call center operation.

(3) The definitions in section 2 of this act apply to this section.

(4) A person claiming the exemption under this section shall make an annual report to the department. The report shall be in a letter form and shall include the following information: The type of activity, the location of the person, how long the person has been located in the county, and the taxpayer name and registration number. The report must be filed by January 30th of each year in which the exemption was claimed during the previous year. Failure to file a report will not result in the loss of eligibility under this section. However, the department, through its research division, shall contact taxpayers who have not filed the report and obtain the data from the taxpayer or assist the taxpayer in the filing of the report, so that the data and information necessary to measure the program's effectiveness is maintained.

(5) This section applies only to call centers that commence operations on or after the effective date of this act.