BILL REQ. #:  H-4416.2 

READ FIRST TIME 01/27/06.   

     AN ACT Relating to the excise taxation of nonprofit organizations organized and operated for zoological purposes; amending RCW 82.04.4328, 82.04.4322, 82.04.4324, 82.04.4326, 82.04.4327, 82.08.031, and 82.12.031; and creating new sections.

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

NEW SECTION.  Sec. 1   The legislature finds that publicly owned zoological facilities in Washington serve a public purpose by providing educational and recreational opportunities for Washington citizens and spurring economic development in the state. The legislature also finds that private funds are critical to the survival of publicly owned zoological facilities. When a public owner of a zoological facility contracts with a nonprofit corporation to raise private funds through the management and operations of the facility, additional excise taxes apply. The legislature intends these nonprofit organizations to pay the same taxes as other nonprofit artistic and cultural organizations within the state.

Sec. 2   RCW 82.04.4328 and 1985 c 471 s 7 are each amended to read as follows:
     (1) For the purposes of RCW 82.04.4322, 82.04.4324, 82.04.4326, 82.04.4327, 82.08.031, and 82.12.031, the term "artistic or cultural organization" means an organization which is organized and operated exclusively for the purpose of providing artistic ((or)), cultural, or zoological exhibitions, presentations, ((or)) performances, or ((cultural or art)) education programs, as defined in subsection (2) of this section, for viewing or attendance by the general public. The organization must be a not-for-profit corporation under chapter 24.03 RCW and managed by a governing board of not less than eight individuals none of whom is a paid employee of the organization or by a corporation sole under chapter 24.12 RCW. In addition, to qualify for deduction or exemption from taxation under RCW 82.04.4322, 82.04.4324, 82.04.4326, 82.04.4327, 82.08.031, and 82.12.031, the corporation shall satisfy the following conditions:
     (a) No part of its income may be paid directly or indirectly to its members, stockholders, officers, directors, or trustees except in the form of services rendered by the corporation in accordance with its purposes and bylaws;
     (b) Salary or compensation paid to its officers and executives must be only for actual services rendered, and at levels comparable to the salary or compensation of like positions within the state;
     (c) Assets of the corporation must be irrevocably dedicated to the activities for which the exemption is granted and, on the liquidation, dissolution, or abandonment by the corporation, may not inure directly or indirectly to the benefit of any member or individual except a nonprofit organization, association, or corporation which also would be entitled to the exemption;
     (d) The corporation must be duly licensed or certified when licensing or certification is required by law or regulation;
     (e) The amounts received that qualify for exemption must be used for the activities for which the exemption is granted;
     (f) Services must be available regardless of race, color, national origin, or ancestry; and
     (g) The director of revenue shall have access to its books in order to determine whether the corporation is exempt from taxes.
     (2) For the purposes of RCW 82.04.4322, 82.04.4324, 82.04.4326, 82.04.4327, 82.08.031, and 82.12.031, the term "artistic ((or)), cultural, or zoological exhibitions, presentations, ((or)) performances, or ((cultural or art)) education programs," ((includes and is limited to)) means:
     (a) An exhibition or presentation of works of art or objects of cultural or historical significance, such as those commonly displayed in art or history museums;
     (b) A musical or dramatic performance or series of performances; ((or))
     (c) An educational seminar or program, or series of such programs, offered by the organization to the general public on an artistic, cultural, or historical subject; or
     (d) Exhibitions, presentations, performances, or education programs provided at a publicly owned zoological facility operated by a nonprofit organization.

Sec. 3   RCW 82.04.4322 and 1981 c 140 s 1 are each amended to read as follows:
     (1) In computing tax there may be deducted from the measure of tax amounts received from the United States or any instrumentality thereof or from the state of Washington or any municipal corporation or subdivision thereof as compensation for, or to support, artistic ((or)), cultural, or zoological exhibitions, presentations, performances, or education programs provided by an artistic or cultural organization for attendance or viewing by the general public.
     (2) The definitions and conditions in RCW 82.04.4328 apply to this section.

Sec. 4   RCW 82.04.4324 and 1981 c 140 s 2 are each amended to read as follows:
     (1) In computing tax there may be deducted from the measure of tax by persons subject to payment of the tax on manufacturing under RCW 82.04.240, the value of articles to the extent manufacturing activities are undertaken by an artistic or cultural organization solely for the purpose of manufacturing articles for use by the organization in displaying art objects or presenting artistic ((or)), cultural, or zoological exhibitions, presentations, performances, or education programs for attendance or viewing by the general public.
     (2) The definitions and conditions in RCW 82.04.4328 apply to this section.

Sec. 5   RCW 82.04.4326 and 1981 c 140 s 3 are each amended to read as follows:
     (1) In computing tax there may be deducted from the measure of tax amounts received by artistic or cultural organizations as tuition charges collected for the privilege of attending artistic ((or)), cultural, or zoological education programs.
     (2) The definitions and conditions in RCW 82.04.4328 apply to this section.

Sec. 6   RCW 82.04.4327 and 1985 c 471 s 6 are each amended to read as follows:
     (1) In computing tax there may be deducted from the measure of tax those amounts received by artistic or cultural organizations which represent income derived from business activities conducted by the organization.
     (2) The definitions and conditions in RCW 82.04.4328 apply to this section.

Sec. 7   RCW 82.08.031 and 1981 c 140 s 4 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 shall not apply to sales to artistic or cultural organizations of objects which are acquired for the purpose of artistic, cultural, or zoological exhibitions ((or)), presentations, or performances to the general public if the objects are:
     (((1))) (a) Objects of art;
     (((2))) (b) Objects of cultural value;
     (((3))) (c) Objects to be used in the creation of a work of art, other than tools; or
     (((4))) (d) Objects to be used in displaying art objects or presenting artistic ((or)), cultural, or zoological exhibitions or performances.
     (2) The definitions and conditions in RCW 82.04.4328 apply to this section.

Sec. 8   RCW 82.12.031 and 1981 c 140 s 5 are each amended to read as follows:
     (1) The provisions of this chapter shall not apply in respect to the use by artistic or cultural organizations of objects which are acquired for the purpose of artistic, cultural, or zoological exhibitions, presentations, or performances to the general public if the objects are:
     (((1))) (a) Objects of art;
     (((2))) (b) Objects of cultural value;
     (((3))) (c) Objects to be used in the creation of a work of art, other than tools; or
     (((4))) (d) Objects to be used in displaying art objects or presenting artistic ((or)), cultural, or zoological exhibitions or performances.
     (2) The definitions and conditions in RCW 82.04.4328 apply to this section.

NEW SECTION.  Sec. 9   (1) The department of revenue shall review the tax exemptions benefitting zoological exhibitions, presentations, performances, and education programs under sections 2 through 7 of this act. The department shall consider, but not be limited to, the following factors in the review:
     (a) The classes of individuals, types of organizations, or types of industries whose state tax liabilities are directly affected by the exemptions;
     (b) Public policy objectives that might provide a justification for the exemptions, including but not limited to the legislative history, any legislative intent, or the extent to which the exemption encourages business growth or relocation into this state, promotes growth or retention of high wage jobs, or helps stabilize communities;
     (c) Evidence that the existence of the exemptions has contributed to the achievement of any of the public policy objectives;
     (d) The extent to which continuation of the exemptions might contribute to any of the public policy objectives;
     (e) The extent to which the exemptions may provide unintended benefits to an individual, organization, or industry other than those the legislature intended;
     (f) The extent to which terminating the exemptions may have negative effects on the category of taxpayers that currently benefit from the exemptions, and the extent to which resulting higher taxes may have negative effects on employment and the economy;
     (g) The feasibility of modifying the exemptions to provide for adjustment or recapture of the tax benefits of the exemptions if the objectives are not fulfilled;
     (h) Fiscal impacts of the exemptions, including past impacts and expected future impacts if they are continued. For the purposes of this subsection, "fiscal impact" includes an analysis of the general effects of the exemptions on the overall state economy including, but not limited to, the effects of the exemptions on the consumption and expenditures of persons and businesses within the state;
     (i) The extent to which termination of the exemptions would affect the distribution of liability for payment of state taxes;
     (j) Consideration of similar exemptions adopted in other states, and potential public policy benefits that might be gained by incorporating corresponding provisions in Washington.
     (2) The department shall report its findings and recommendations to the finance committee of the house of representatives and the ways and means committee of the senate by December 1, 2016. The department shall provide a recommendation as to whether the exemptions should be continued without modification, modified, scheduled for sunset review at a future date, or terminated immediately. The department may recommend accountability standards for the future review of the exemptions.

NEW SECTION.  Sec. 10   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.