BILL REQ. #:  H-3650.1 

Read first time 01/19/10.   Referred to Committee on Finance.

     AN ACT Relating to a sales and use tax deferral for performing arts centers; and adding a new section to chapter 82.32 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.32 RCW to read as follows:
     (1) The governing board of a nonprofit organization, corporation, or association may apply for deferral of taxes on taxable activity related to an eligible facility. Application must be made to the department in a form and manner prescribed by the department. The application must contain information regarding the location of the facility, estimated or actual costs of the facility, time schedules for completion and operation of the facility, and other information required by the department. The department must rule on the application within sixty days. All applications for the tax deferral under this section must be submitted prior to the initiation of construction and no later than December 31, 2012.
     (2) The department must issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW for sales or charges made for taxable activity related to an eligible facility.
     (3) The nonprofit organization, corporation, or association must begin paying the deferred taxes in the fifth year after the date in which the eligible facility is issued an occupancy permit by the local permit issuing authority. The first payment is due by December 31st of the fifth calendar year after such certified date, with subsequent annual payments due by December 31st of the following nine years. Each payment must equal ten percent of the deferred tax.
     (4) The department may authorize an accelerated repayment schedule upon request of the nonprofit organization, corporation, or association.
     (5) Except as provided in subsection (6) of this section, interest may not be charged on any taxes deferred under this section for the period of deferral. The debt for deferred taxes is not extinguished by insolvency or other failure of the nonprofit organization, corporation, or association.
     (6) If the facility is not operationally complete within five calendar years from issuance of the tax deferral certificate or if at any time the department finds that the facility is not eligible for tax deferral under this section, the amount of deferred taxes outstanding for the facility is immediately due and payable. If deferred taxes must be repaid under this subsection, the department must assess interest, but not penalties, on amounts due under this subsection. Interest is assessed at the rate provided for delinquent taxes under this chapter, retroactively to the date of deferral, and accrues until the deferred taxes due are repaid.
     (7) Applications and any other information received by the department of revenue under this section are not confidential under RCW 82.32.330. This chapter applies to the administration of this section.
     (8) This section applies to taxable activity for an eligible facility that occurs on or after July 1, 2011.
     (9) The following definitions apply to this section:
     (a) "Eligible facility" means a facility that is: (i) Owned and operated by a nonprofit organization, corporation, or association; (ii) used primarily as a performing arts center; and (iii) located in a city with an estimated population between one hundred fifteen thousand and one hundred fifty thousand at the time construction of the facility is initiated.
     (b) "Facility" means a new structure and fixtures that are permanently affixed to and become a physical part of the structure.
     (c) "Nonprofit organization, corporation, or association" means an organization, corporation, or association exempt from tax under section 26 U.S.C. Sec. 501(c)(3) of the federal internal revenue code of 1986, as amended as of the effective date of this act.
     (d) "Performing arts center" means a facility that is used for music, dance, drama, or similar presentations and has a seating capacity of one thousand seven hundred or more.
     (e) "Site preparation" includes soil testing, site clearing and grading, demolition, or any other related activities that are initiated before construction. Site preparation does not include landscaping services or landscaping materials.
     (f) "Taxable activity" means construction of new structures, the acquisition and installation of fixtures, and site preparation.