BILL REQ. #:  H-1536.1 

Read first time 02/16/09.   Referred to Committee on Finance.

     AN ACT Relating to modifying the definition of "manufacturer" for tax purposes to exclude persons who contract with other persons to reproduce content on a tangible medium for retail or wholesale distribution; and amending RCW 82.04.110.

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

Sec. 1   RCW 82.04.110 and 1997 c 453 s 1 are each amended to read as follows:
     (1) Except as otherwise provided in this section, "manufacturer" means every person who, either directly or by contracting with others for the necessary labor or mechanical services, manufactures for sale or for commercial or industrial use from his or her own materials or ingredients any articles, substances, or commodities.
     (2)(a) When the owner of equipment or facilities furnishes, or sells to the customer prior to manufacture, all or a portion of the materials that become a part or whole of the manufactured article, the department shall prescribe equitable rules for determining tax liability((: PROVIDED, That)).
     (b) A person who produces aluminum master alloys is a processor for hire rather than a manufacturer, regardless of the portion of the aluminum provided by that person's customer((: PROVIDED FURTHER, That)). For the purposes of this subsection (2)(b), "aluminum master alloy" means an alloy registered with the Aluminum Association as a grain refiner or a hardener alloy using the American National Standards Institute designating system H35.3.
     (3) A nonresident of this state who is the owner of materials processed for it in this state by a processor for hire shall not be deemed to be engaged in business in this state as a manufacturer because of the performance of such processing work for it in this state((: PROVIDED FURTHER, That)).
     (4) The owner of materials from which a nuclear fuel assembly is made for it by a processor for hire shall not be subject to tax under this chapter as a manufacturer of the fuel assembly.
     ((For the purposes of this section, "aluminum master alloy" means an alloy registered with the Aluminum Association as a grain refiner or a hardener alloy using the American National Standards Institute designating system H35.3.)) (5)(a) A person who contracts with another person to reproduce content on a tangible medium for retail or wholesale distribution is deemed not to be engaged in business in this state as a manufacturer with respect to such activity, regardless of whether the reproduction work is performed for it in this state. The person performing the reproduction work is deemed to be a processor for hire, unless the reproduction work involves printing within the meaning of RCW 82.04.280(1), in which case the person is taxable under RCW 82.04.280(1) in respect to the reproduction work.
     (b) For purposes of this subsection (5):
     (i) "Content" means text, information, data, still images, moving images, sound recordings, and computer software. "Content" includes both proprietary content and public domain content.
     (ii) "Tangible medium" means paper, tape, film, disk, and any other tangible vehicle used in the inscribing, storing, or recording of content.