BILL REQ. #:  H-1242.1 



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HOUSE BILL 1944
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State of Washington62nd Legislature2011 Regular Session

By Representatives Haler, Pettigrew, and Seaquist

Read first time 02/11/11.   Referred to Committee on Ways & Means.



     AN ACT Relating to the taxation and permitting of vessels in Washington; amending RCW 82.08.0266, 82.08.02665, 88.02.570, 88.02.640, and 82.49.020; adding a new section to chapter 82.08 RCW; adding new sections to chapter 82.12 RCW; adding new sections to chapter 82.14 RCW; adding a new section to chapter 88.02 RCW; creating a new section; and providing an effective date.

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

NEW SECTION.  Sec. 1   (1) Washington state has some of the most desirable cruising waters in the world for pleasure boaters and especially large yachts. It is beneficial to employment and the economy to encourage boaters to call Washington their home port. A larger yacht will contribute significant revenue to the local community in which it is moored. Job losses in the marine industry have been significant because pleasure boaters have moved their vessels out of the state to other states and countries. The state also loses out by losing the associated sales and use tax revenue from the purchase of these vessels.
     (2) The legislature finds that passage of this act will save jobs and increase employment as Washington once again becomes a destination for boaters.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.08 RCW to read as follows:
     (1) The tax imposed in RCW 82.08.020 applies only up to three hundred thousand dollars of the selling price of a vessel. Except as provided in subsection (2) of this section, any amount above three hundred thousand dollars is not subject to the tax imposed in RCW 82.08.020.
     (2) A buyer claiming a partial exemption under subsection (1) of this section for the purchase of a watercraft is liable for the additional tax imposed under RCW 82.08.020 on that portion of the selling price of the watercraft that exceeds three hundred thousand dollars, if the watercraft is used in a manner inconsistent with the definition of vessel in this section. The buyer must pay the additional tax due under this subsection (2), along with any applicable penalties and interest under chapter 82.32 RCW, directly to the department. For purposes of the tax imposed under this subsection, the limitation period on assessments in RCW 82.32.050 begins to run from the date that the watercraft is first used in a manner inconsistent with the definition of vessel in this section.
     (3) For the purposes of this section, "vessel" means every privately owned watercraft used or capable of being used as a means of transportation on the water, other than a seaplane, and that is used solely for personal purposes and is not required to be listed and assessed as provided in RCW 84.40.065.

Sec. 3   RCW 82.08.0266 and 1999 c 358 s 5 are each amended to read as follows:
     The tax levied by RCW 82.08.020 ((shall)) does not apply to sales to nonresidents of this state ((for use outside of this state)) of watercraft requiring coast guard registration or registration by the state of principal use according to the Federal Boating Act of 1958, even though delivery be made within this state, but only when:
     (1)(a) The watercraft will not be used within this state for more than forty-five days; and
     (((2))) (b) An appropriate exemption certificate supported by identification ascertaining residence as required by the department of revenue and signed by the purchaser or ((his)) the purchaser's agent establishing the fact that the purchaser is a nonresident and that the watercraft is for use outside of this state, a copy of which ((shall be retained by the dealer)) the dealer must retain; or
     (2) The buyer has purchased a nonresident/visitor annual permit as provided in section 8 of this act for the vessel. Sellers making tax exempt sales under this subsection must retain a copy of the buyer's nonresident/visitor annual permit.

Sec. 4   RCW 82.08.02665 and 1999 c 358 s 6 are each amended to read as follows:
     The tax levied by RCW 82.08.020 does not apply to sales of vessels to residents of foreign countries ((for use outside of this state, even though delivery is made within this state)), but only if:
     (1)(a) The vessel will not be used within this state for more than forty-five days; and
     (((2))) (b) An appropriate exemption certificate supported by identification as required by the department of revenue and signed by the purchaser or the purchaser's agent establishes the fact that the purchaser is a resident of a foreign country and that the vessel is for use outside of this state. A copy of the exemption certificate is to be retained by the dealer; or
     (2) The buyer has purchased a nonresident/visitor annual permit as provided in section 8 of this act for the vessel. Sellers making tax exempt sales under this subsection must retain a copy of the buyer's nonresident/visitor annual permit.
     (3)(a) As used in this section, except as otherwise provided in (b) of this subsection, "vessel" means every watercraft used or capable of being used as a means of transportation on the water, other than a seaplane.
     (b) For purposes of the exemption provided in subsection (2) of this section, "vessel" has the same meaning as in section 2 of this act.

NEW SECTION.  Sec. 5   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The tax imposed in RCW 82.12.020 applies only up to three hundred thousand dollars of the value of the vessel used. Except as provided in subsection (2) of this section, the value of a vessel that is above three hundred thousand dollars is not subject to the tax imposed in RCW 82.12.020.
     (2) A taxpayer claiming a partial exemption under subsection (1) of this section for the use of a watercraft is liable for the additional tax imposed under RCW 82.12.020 on that portion of the value of the watercraft used that exceeds three hundred thousand dollars, including any applicable penalties and interest under chapter 82.32 RCW, if the watercraft is used in a manner inconsistent with the definition of vessel in this section. This subsection does not apply to a taxpayer with respect to the use of a watercraft, if the taxpayer is subject to the additional tax due in section 2(2) of this act with respect to the watercraft. For purposes of the tax imposed under this subsection, the limitation period on assessments in RCW 82.32.050 begins to run from the date that the watercraft is first used in a manner inconsistent with the definition of vessel in this section.
     (3) For the purposes of this section, "vessel" has the same meaning as in section 2 of this act.

NEW SECTION.  Sec. 6   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The tax imposed under RCW 82.12.020 does not apply to the use of a vessel, as defined in section 2 of this act, so long as:
     (a) The vessel is used solely for the personal use of the owner; and
     (b) The owner has a valid nonresident/visitor annual permit under section 8 of this act for the vessel. The nonresident/visitor annual permit must be obtained within sixty days of the first use of the vessel on Washington waters or of the first use of the vessel on Washington waters after the expiration of the previous nonresident/visitor annual permit obtained for the vessel.
     (2) If a taxpayer becomes ineligible for the exemption in subsection (1) of this section, the limitation period on assessments in RCW 82.32.050 begins to run from the date that either of the conditions in subsection (1)(a) or (b) of this section are not met.

NEW SECTION.  Sec. 7   A new section is added to chapter 82.14 RCW to read as follows:
     (1) For purposes of a local sales tax imposed under the authority of this chapter, RCW 81.104.170, or any other provision of law on the sale of a vessel, the tax applies in the same manner as in section 2 of this act.
     (2) For purposes of a local use tax imposed under the authority of this chapter, RCW 81.104.170, or any other provision of law on the use of a vessel, the tax applies in the same manner as in section 5 of this act.
     (3) For the purposes of this section, "vessel" has the same meaning as in section 2 of this act.

NEW SECTION.  Sec. 8   A new section is added to chapter 88.02 RCW to read as follows:
     (1) Except as otherwise provided in subsection (2) of this section, a vessel owner may purchase a nonresident/visitor annual permit if the vessel:
     (a) Is currently registered or numbered under the provisions of RCW 88.02.570; and
     (b) Will be used on Washington state waters solely for the personal use of the owner for no longer than twelve consecutive months.
     (2) Solely for the purposes of this section, "vessel" means the same as provided in section 2 of this act.
     (3) A nonresident/visitor annual permit may be obtained from the department, county auditor, or other agent or subagent appointed by the director. The nonresident/visitor annual permit:
     (a) Must show the date the vessel first came into Washington state; and
     (b) Is valid for one year.
     (4) The department, county auditor, or other agent or subagent appointed by the director must collect the fee required in RCW 88.02.640(1)(m) when issuing a nonresident/visitor annual permit. The fee must be calculated by using the same methods used to calculate the tax under chapter 82.49 RCW.
     (5) A nonresident/visitor annual permit is not required under this section if the vessel is used in conducting temporary business activity within Washington state.
     (6) The department must adopt rules to implement this section, including rules on issuing and displaying the nonresident/visitor annual permit.

Sec. 9   RCW 88.02.570 and 2010 c 161 s 1018 are each amended to read as follows:
     Vessel registration is required under this chapter except for the following:
     (1) A military vessel owned by the United States government;
     (2) A public vessel owned by the United States government, unless the vessel is a type used for recreation;
     (3) A vessel clearly identified as being:
     (a) Owned by a state, county, or city; and
     (b) Used primarily for governmental purposes;
     (4)(a) Except as otherwise provided in (b) of this subsection (4), a vessel either (((a))) (i) registered or numbered under the laws of a country other than the United States or (((b))) (ii) having a valid United States customs service cruising license issued pursuant to 19 C.F.R. Sec. 4.94. Either vessel is exempt from registration only for the first sixty days of use on Washington state waters. On or before the sixty-first day of use on Washington state waters, any vessel in the state under this subsection must obtain a vessel visitor permit as required under RCW 88.02.610;
     (b) A vessel, as defined in section 2 of this act, for which the owner is issued a nonresident/visitor annual permit under section 8 of this act and registered under RCW 88.02.550;
     (5)(a) A vessel that is currently registered or numbered under the laws of the state of principal operation or that has been issued a valid number under federal law. However, either vessel must be registered in Washington state if the state of principal operation changes to Washington state by the sixty-first day after the vessel arrives in Washington state;
     (b) A vessel, as defined in section 2 of this act, for which the owner is issued a nonresident/visitor annual permit under section 8 of this act and registered under RCW 88.02.550;
     (6)(a) A vessel owned by a nonresident if:
     (((a))) (i) The vessel is located upon the waters of this state exclusively for repairs, alteration, or reconstruction, or any testing related to these services;
     (((b))) (ii) An employee of the facility providing these services is on board the vessel during any testing; and
     (((c))) (iii) The nonresident files an affidavit with the department of revenue by the sixty-first day verifying that the vessel is located upon the waters of this state for these services.
     (b) The nonresident ((shall)) must continue to file an affidavit every sixty days thereafter, as long as the vessel is located upon the waters of this state exclusively for repairs, alteration, reconstruction, or testing;
     (7) A vessel equipped with propulsion machinery of less than ten horsepower that:
     (a) Is owned by the owner of a vessel for which a valid vessel number has been issued;
     (b) Displays the number of that numbered vessel followed by the suffix "1" in the manner prescribed by the department; and
     (c) Is used as a tender for direct transportation between the numbered vessel and the shore and for no other purpose;
     (8) A vessel under sixteen feet in overall length that has no propulsion machinery of any type or that is not used on waters subject to the jurisdiction of the United States or on the high seas beyond the territorial seas for vessels owned in the United States and are powered by propulsion machinery of ten or less horsepower;
     (9) A vessel with no propulsion machinery of any type for which the primary mode of propulsion is human power;
     (10) A vessel primarily engaged in commerce that has or is required to have a valid marine document as a vessel of the United States. A commercial vessel that the department of revenue determines has the external appearance of a vessel that would otherwise be required to register under this chapter, must display decals issued annually by the department of revenue that indicate the vessel's exempt status;
     (11) A vessel primarily engaged in commerce that is owned by a resident of a country other than the United States;
     (12)(a) A vessel owned by a nonresident natural person brought into the state for use or enjoyment while temporarily within the state for not more than six months in any continuous twelve-month period that (((a))) (i) is currently registered or numbered under the laws of the state of principal use or (((b))) (ii) has been issued a valid number under federal law. This type of vessel is exempt from registration only for the first sixty days of use on Washington state waters. On or before the sixty-first day of use on Washington state waters, any vessel under this subsection must obtain a nonresident vessel permit as required under RCW 88.02.620;
     (b) A vessel, as defined in section 2 of this act, for which the owner is issued a nonresident/visitor annual permit under section 8 of this act and registered under RCW 88.02.550;
     (13) A vessel used in this state by a nonresident individual possessing a valid use permit issued under RCW 82.08.700 or 82.12.700; and
     (14) A vessel held for sale by any licensed dealer.

Sec. 10   RCW 88.02.640 and 2010 c 161 s 1028 are each amended to read as follows:
     (1) In addition to any other fees and taxes required by law, the department, county auditor or other agent, or subagent appointed by the director ((shall)) must charge the following vessel fees:

FEEAMOUNTAUTHORITYDISTRIBUTION
(a) Dealer temporary permit$5.00RCW 88.02.800(2)General fund
(b) Derelict vessel and invasive species removalSubsection (3) of this sectionSubsections (3) and (4) of this sectionSubsection (3) of this section
(c) Duplicate registration$1.25RCW 88.02.590(1)(c)General fund
(d) FilingRCW 46.17.005RCW 46.17.005RCW 46.68.440
(e) License plate technologyRCW 46.17.015RCW 46.17.015RCW 46.68.400
(f) License serviceRCW 46.17.025RCW 46.17.025RCW 46.68.220
(g) Nonresident vessel permit$25.00RCW 88.02.620(3)Subsection (6) of this section
(h) Registration$10.50RCW 88.02.560(2)General fund
(i) Replacement decal$1.25RCW 88.02.595(1)(c)General fund
(j) Title application$5.00RCW 88.02.515General fund
(k) Transfer$1.00RCW 88.02.560(7)General fund
(l) Vessel visitor permit$30.00RCW 88.02.610(3)General fund
(m) Nonresident/visitor annual permit.5% of the fair market value of the vesselSection 8 of this actGeneral fund


     (2) The five dollar dealer temporary permit fee required in subsection (1) of this section must be credited to the payment of registration fees at the time application for registration is made.
     (3)(a) Until June 30, 2012, the derelict vessel and invasive species removal fee required in subsection (1) of this section is five dollars and must be distributed as follows:
     (i) One dollar and fifty cents must be deposited in the aquatic invasive species prevention account created in RCW 77.12.879;
     (ii) One dollar must be deposited into the freshwater aquatic algae control account created in RCW 43.21A.667;
     (iii) Fifty cents must be deposited into the aquatic invasive species enforcement account created in RCW 43.43.400; and
     (iv) Two dollars must be deposited in the derelict vessel removal account created in RCW 79.100.100.
     (b) On and after June 30, 2012, the derelict vessel and invasive species removal fee is two dollars and must be deposited into the derelict vessel removal account created in RCW 79.100.100. If the department of natural resources indicates that the balance of the derelict vessel removal account, not including any transfer or appropriation of funds into the account or funds deposited into the account collected under subsection (5) of this section reaches one million dollars as of March 1st of any year, the collection of the two dollar derelict vessel and invasive species removal fee must be suspended for the following fiscal year.
     (4) Until January 1, 2014, an annual derelict vessel removal surcharge of one dollar must be charged with each vessel registration. The surcharge:
     (a) Is to address the significant backlog of derelict vessels accumulated in Washington state waters that pose a threat to the health and safety of the people and to the environment;
     (b) Is to be used only for the removal of vessels that are less than seventy-five feet in length; and
     (c) Must be deposited into the derelict vessel removal account created in RCW 79.100.100.
     (5) The twenty-five dollar nonresident vessel permit fee must be paid by the vessel owner to the department for the cost of providing the identification document by the department. Any moneys remaining from the fee after the payment of costs must be allocated to counties by the state treasurer for approved boating safety programs under RCW 88.02.655.
     (6) The thirty dollar vessel visitor permit fee must be distributed as follows:
     (a) Five dollars must be deposited in the derelict vessel removal account created in RCW 79.100.100;
     (b) The department may keep an amount to cover costs for providing the vessel visitor permit;
     (c) Any moneys remaining must be allocated to counties by the state treasurer for approved boating safety programs under RCW 88.02.655; and
     (d) Any fees required for licensing agents under RCW 46.17.005 are in addition to any other fee or tax due for the titling and registration of vessels.

Sec. 11   RCW 82.49.020 and 1984 c 250 s 1 are each amended to read as follows:
     The following are exempt from the tax imposed under this chapter:
     (1) Vessels exempt from the registration requirements of chapter 88.02 RCW, except as provided in subsection (7) of this section;
     (2) Vessels used exclusively for commercial fishing purposes;
     (3) Vessels under sixteen feet in overall length;
     (4) Vessels owned and operated by the United States, a state of the United States, or any municipality or political subdivision thereof;
     (5) Vessels owned by a nonprofit organization or association engaged in character building of boys and girls under eighteen years of age and solely used for such purposes, as determined by the department for the purposes of RCW 84.36.030; ((and))
     (6) Vessels owned and held for sale by a dealer, but not rented on a regular commercial basis; and
     (7) Vessels, as defined in section 2 of this act, for which the nonresident owner has purchased a nonresident/visitor annual permit as provided in section 8 of this act.

NEW SECTION.  Sec. 12   This act takes effect August 1, 2011.

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