BILL REQ. #:  H-0418.3 

Read first time 01/21/2003.   Referred to Committee on Technology, Telecommunications & Energy.

     AN ACT Relating to tax incentives for the distribution and retail sale of biodiesel and alcohol fuels; amending RCW 82.14.050; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; adding a new section to chapter 82.14 RCW; adding a new section to chapter 84.36 RCW; providing an effective date; providing expiration dates; and declaring an emergency.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.04 RCW to read as follows:
     (1) In computing tax there may be deducted from the measure of tax amounts received from the retail sale, or for the distribution, of biodiesel or alcohol fuel.
     (2) For the purposes of this act, the following definitions apply:
     (a) "Biodiesel fuel" means diesel fuel that consists of a mono alkyl ester of long chain fatty acids derived from vegetable oils or animal fats for use in compression-ignition engines and that meets the requirements of the American society of testing and materials specification D 6751 when blended with conventional diesel fuel.
     (b) "Alcohol fuel" means any alcohol made from a product other than petroleum or natural gas, which is used alone or in combination with gasoline or other petroleum products for use as a fuel for motor vehicles, farm implements and machines, or implements of husbandry.
     (3) This section expires July 1, 2009.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.08 RCW to read as follows:
     (1) Persons who sell biodiesel or alcohol fuel at retail, or who distribute biodiesel or alcohol fuel, and who have paid tax on qualifying investment projects are eligible for an exemption in the form of a remittance.
     (2)(a) A person claiming an exemption from state tax in the form of a remittance under this section must pay the tax imposed under RCW 82.08.020. The buyer may then apply to the department for remittance of all or part of the tax paid.
     If the qualifying investment project is to be used in part for biodiesel or alcohol fuel refueling or distribution and in part for other activities, the amount of tax that may be exempted and claimed shall be based on the expected percentage of sales derived from the new tangible personal property that is attributable to the biodiesel or alcohol fuel refueling or distribution.
     (b) The department shall determine eligibility under this section based on information provided by the buyer and through audit and other administrative records. The buyer shall on a quarterly basis submit an information sheet, in a form and manner as required by the department, specifying the amount of exempted tax claimed and the qualifying investment project for which the exemption is claimed. The buyer shall retain, in adequate detail to enable the department to determine whether the investment project meets the criteria under this section: Invoices; proof of tax paid; documents describing the investment project; and, if part of the project is to be used for activities other than biodiesel or alcohol fuel refueling or distribution, estimates of expected sales attributable to the refueling and distribution and expected sales attributable to other activities.
     (c) The department shall on a quarterly basis remit exempted amounts to qualifying persons who submitted applications during the previous quarter.
     (3) If the part of the qualifying investment project for which an exemption is claimed is used for an activity other than biodiesel or alcohol fuel refueling or distribution within three years of initial operation, all tax exempted under this section shall be due.
     (4) For the purposes of this section, the definitions in section 1 of this act and the following definitions apply:
     (a) "Biodiesel or alcohol fuel refueling" means refueling with, and "biodiesel or alcohol fuel distribution" means the distribution of, fuel that contains at least twenty percent biodiesel fuel by volume or at least ten percent alcohol fuel by volume.
     (b) "Qualifying investment project" means:
     (i) Tangible personal property, and labor and services related to the construction or installation of the personal property, acquired after the effective date of this act and to be used for biodiesel or alcohol fuel refueling; or
     (ii) Motorized vehicles and other tangible personal property directly related to motorized vehicular transportation, acquired after the effective date of this act and to be used for biodiesel or alcohol fuel distribution.
     (5) This section expires July 1, 2009.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.12 RCW to read as follows:
     (1) Persons who sell biodiesel or alcohol fuel at retail, or who distribute biodiesel or alcohol fuel, and who have paid tax on qualifying investment projects are eligible for an exemption in the form of a remittance.
     (2)(a) A person claiming an exemption from state tax in the form of a remittance under this section must pay the tax imposed under RCW 82.12.020. The buyer may then apply to the department for remittance of all or part of the tax paid.
     If the qualifying investment project is to be used in part for biodiesel or alcohol fuel refueling or distribution and in part for other activities, the amount of tax that may be exempted and claimed shall be based on the expected percentage of sales derived from the new tangible personal property that is attributable to the biodiesel or alcohol fuel refueling or distribution.
     (b) Eligibility requirements under this section are the same as those under section 2 of this act.
     (c) The department shall on a quarterly basis remit exempted amounts to qualifying persons who submitted applications during the previous quarter.
     (3) If the part of the qualifying investment project for which an exemption is claimed is used for an activity other than biodiesel or alcohol fuel refueling or distribution within three years of initial operation, all tax exempted under this section shall be due.
     (4) For the purposes of this section, the definitions in sections 1 and 2 of this act apply.
     (5) This section expires July 1, 2009.

NEW SECTION.  Sec. 4   A new section is added to chapter 82.14 RCW to read as follows:
     (1) The legislative authority of a local government jurisdiction may allow an exemption, in the form of a remittance, from taxes under this chapter to persons who sell biodiesel or alcohol fuel at retail, or who distribute biodiesel or alcohol fuel, and who have paid tax on qualifying investment projects.
     (2)(a) If the local government jurisdiction has enacted the exemption under this section, a person may claim an exemption from tax in the form of a remittance under this section after paying all applicable taxes imposed under this chapter. The buyer may then apply to the department for remittance of all or part of the tax paid at the same time application for remittance of state tax is made under section 2 or 3 of this act.
     If the qualifying investment project is to be used in part for biodiesel or alcohol fuel refueling or distribution and in part for other activities, the amount of tax that may be exempted and claimed shall be based on the expected percentage of sales derived from the new tangible personal property that is attributable to the biodiesel or alcohol fuel refueling or distribution.
     (b) Eligibility requirements under this section are the same as those under section 2 of this act.
     (c) If the local government jurisdiction has enacted the exemption under this section, the department shall on a quarterly basis, at the same time amounts are remitted under section 2 or 3 of this act, remit exempted amounts to qualifying persons who submitted applications during the previous quarter.
     (3) If the part of the qualifying investment project for which an exemption is claimed is used for an activity other than biodiesel or alcohol fuel refueling or distribution within three years of initial operation, all tax exempted under this section shall be due.
     (4) For the purposes of this section, "local government jurisdiction" means any entity that has imposed a tax under this chapter, and the definitions in sections 1 and 2 of this act apply.
     (5) This section expires July 1, 2009.

NEW SECTION.  Sec. 5   A new section is added to chapter 84.36 RCW to read as follows:
     (1) A qualifying investment project as defined under section 2(4)(b)(ii) of this act is exempt from taxation, if at least seventy-five percent of the fuel distribution activity is biodiesel or alcohol fuel distribution.
     (2) This section applies to taxes levied for collection in 2004 through 2009. This section expires January 1, 2010.
     (3) For the purposes of this section, the definitions in sections 1 and 2 of this act apply.

Sec. 6   RCW 82.14.050 and 2002 c 56 s 406 are each amended to read as follows:
     The counties, cities, and transportation authorities under RCW 82.14.045, public facilities districts under chapters 36.100 and 35.57 RCW, and regional transportation investment districts shall contract, prior to the effective date of a resolution or ordinance imposing a sales and use tax, the administration and collection to the state department of revenue, which shall deduct a percentage amount, as provided by contract, not to exceed two percent of the taxes collected for administration and collection expenses incurred by the department. The remainder of any portion of any tax authorized by this chapter that is collected by the department of revenue shall be deposited by the state department of revenue in the local sales and use tax account hereby created in the state treasury. Moneys in the local sales and use tax account may be spent only for distribution to counties, cities, transportation authorities, public facilities districts, and regional transportation investment districts imposing a sales and use tax or for sales and use tax remittance claims under section 4 of this act. All administrative provisions in chapters 82.03, 82.08, 82.12, and 82.32 RCW, as they now exist or may hereafter be amended, shall, insofar as they are applicable to state sales and use taxes, be applicable to taxes imposed pursuant to this chapter. Except as provided in RCW 43.08.190, all earnings of investments of balances in the local sales and use tax account shall be credited to the local sales and use tax account and distributed to the counties, cities, transportation authorities, public facilities districts, and regional transportation investment districts monthly.

NEW SECTION.  Sec. 7   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 July 1, 2003.