Title: An act relating to the business and occupation taxation of payments and contributions to nonprofit convention and tourism promotion corporations by public entities.

Brief Description: Allowing tax deductions for nonprofit convention and tourism promotion corporations.

Sponsors: Senators Kohl-Welles, Deccio and Shin.

Brief History:

Committee Activity: International Trade & Economic Development: 1/25/06, 1/31/06[DPS-WM, DNP, w/oRec].

SENATE COMMITTEE ON INTERNATIONAL TRADE & ECONOMIC DEVELOPMENT

Majority Report: That Substitute Senate Bill No. 6621 be substituted therefor, and the substitute bill do pass and be referred to Committee on Ways & Means.Signed by Senators Shin, Chair; Sheldon, Vice Chair; Doumit and Eide.

Minority Report: Do not pass.Signed by Senator Pflug, Ranking Minority Member.

Minority Report: That it be referred without recommendation.Signed by Senator Roach.

Staff: Jack Brummel (786-7428)

Background: Washington's major business tax is the business and occupation (B&O) tax. The B&O tax is imposed on the gross receipts of business activities conducted within the state, without any deduction for the costs of doing business. Since the B&O tax is not based on profit, nonprofit organizations are not automatically exempt from the tax. Nonprofits are allowed deductions from gross income for a variety of receipts, including funds received from public entities for artistic or cultural activities or for salmon restoration purposes.

Summary of Substitute Bill: B&O taxes are not applied to a nonprofit organization's income received from state and local governments or public corporations for promoting conventions and tourism.

Substitute Bill Compared to Original Bill: The original bill allowed a tax deduction for the income rather than an exemption.

Appropriation: None.

Fiscal Note: Available.

Committee/Commission/Task Force Created: No.

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

Testimony For: Lodging tax monies are for promotion of tourism, but the law requires that nonprofits receiving it pay B&O tax on it. The money will go farther in promoting tourism if it isn't taxed. The deduction should be an exemption.

Testimony Against: None.

Who Testified: PRO: Becky Bogard, WA Convention and Visitors Bureau, Seattle Visitor and Convention Bureau; Con Welsh, Seattle Convention and Visitors Bureau.