BILL REQ. #:  H-3719.1 

Read first time 01/30/12.   Referred to Committee on Ways & Means.

     AN ACT Relating to replacing the business and occupation tax with a flat rate corporate net income tax; amending RCW 82.03.130 and 82.03.140; adding a new section to chapter 35.102 RCW; adding a new title to the Revised Code of Washington to be codified as Title 82A RCW; repealing RCW 82.04.220, 82.04.230, 82.04.240, 82.04.2403, 82.04.2404, 82.04.250, 82.04.255, 82.04.257, 82.04.260, 82.04.261, 82.04.263, 82.04.270, 82.04.272, 82.04.280, 82.04.285, 82.04.286, 82.04.290, 82.04.29001, 82.04.29002, 82.04.2905, 82.04.2906, 82.04.2907, 82.04.2908, 82.04.2909, 82.04.293, 82.04.298, 82.04.315, 82.04.317, 82.04.330, 82.04.331, 82.04.332, 82.04.333, 82.04.334, 82.04.337, 82.04.392, 82.04.405, 82.04.416, 82.04.421, 82.04.422, 82.04.425, 82.04.426, 82.04.4261, 82.04.4262, 82.04.4267, 82.04.4281, 82.04.4287, 82.04.4292, 82.04.4294, 82.04.4295, 82.04.4296, 82.04.433, 82.04.4333, 82.04.4339, 82.04.4451, 82.04.44525, 82.04.447, 82.04.4482, 82.04.4486, 82.04.601, 82.62.030, 82.04.340, 82.04.424, 82.04.4272, 82.04.4285, 82.04.43391, 82.04.540, 82.04.645, 82.04.650, 82.04.410, 82.04.339, 82.04.3395, 82.04.363, 82.04.3651, 82.04.367, 82.04.368, 82.04.370, 82.04.380, 82.04.385, 82.04.395, 82.04.397, 82.04.399, 82.04.408, 82.04.415, 82.04.418, 82.04.419, 82.04.4201, 82.04.4251, 82.04.4282, 82.04.4291, 82.04.4293, 82.04.432, 82.04.4322, 82.04.4324, 82.04.4326, 82.04.4327, 82.04.4332, 82.04.434, 82.04.600, 82.04.610, 82.04.615, 82.04.335, 82.04.338, 82.04.4271, 82.04.640, 82.04.4298, 82.04.324, 82.04.326, 82.04.327, 82.04.355, 82.04.4263, 82.04.4264, 82.04.4265, 82.04.4289, 82.04.4297, 82.04.4311, 82.04.4337, 82.04.620, and 82.04.635; prescribing penalties; and providing effective dates.

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

NEW SECTION.  Sec. 101   DEFINITIONS. Unless the context clearly requires otherwise, the definitions in this section apply throughout this title. Except as provided in this section, any term used in this title has the same meaning as when used in a comparable context in the internal revenue code.
     (1) "Department" means the state department of revenue.
     (2) "Internal revenue code" means the United States internal revenue code of 1986 and amendments thereto, as existing and in effect on January 1, 2012.
     (3) "Taxable income" means federal taxable income after making the additions, subtractions, apportionments, and allocations provided under this title.
     (4) "Taxable year" means the taxpayer's taxable year as defined under the internal revenue code.
     (5) "Taxpayer" means a corporation receiving income subject to tax under this title.

NEW SECTION.  Sec. 102   CORPORATE PRIVILEGE TAX IMPOSED. Beginning January 1, 2014, a tax is imposed at the rate of 7.0 percent for each taxable year on the taxable income of corporations for the privilege of engaging in business within the state.

NEW SECTION.  Sec. 103   TAXABLE INCOME MODIFICATIONS. In computing taxable income, modifications must be made to the taxpayer's federal taxable income as required under this section, unless the modification has the effect of duplicating an item of income or deduction.
     (1) Add amounts that have been deducted in computing federal taxable income to the extent the amounts have been carried over from taxable years ending before the effective date of this section.
     (2) Add amounts that have been deducted in computing federal taxable income to the extent the amounts have been carried back from future taxable years.
     (3) Add taxes on or measured by net income that have been deducted under the internal revenue code in computing federal taxable income.
     (4) Add gross income that has been excluded under 26 U.S.C. Sec. 103 of the internal revenue code in computing federal taxable income, except gross income derived from obligations of the state of Washington or political subdivisions of the state of Washington. However, the amount added under this subsection must be reduced by any expenses incurred in the production of amounts added under this subsection, to the extent the expenses have not been deducted in computing federal taxable income.
     (5) Deduct gross income that the state is prohibited from taxing under the Constitution or laws of the United States, to the extent the gross income was included in computing federal taxable income. However, the amount deducted under this subsection must be reduced by any expenses incurred in the production of amounts subtracted under this subsection, to the extent the expenses have been deducted in computing federal taxable income.
     (6) Deduct income attributable to activities subject to tax under chapter 82.04 RCW for periods prior to the effective date of this section, to the extent the gross income was included in computing federal taxable income. However, the amount deducted under this subsection must be reduced by any expenses incurred in the production of such income, to the extent the expenses have been deducted in computing federal taxable income.
     (7) Deduct income attributable to activities subject to tax under chapter 82.16 RCW, to the extent the gross income was included in computing federal taxable income. However, the amount deducted under this subsection must be reduced by any expenses incurred in the production of such income to the extent the expenses have been deducted in calculating federal taxable income.
     (8) Deduct income attributable to insurance business upon which a tax based on gross premiums is paid to the state. However, the amount deducted under this subsection must be reduced by any expense incurred in the production of such income to the extent the expense has been deducted in calculating federal taxable income.
     (9) Add any amounts subject to tax under subchapter F, chapter 1, subtitle A of the internal revenue code. For the purposes of computations under this section, if a nonprofit organization has no federal taxable income, or a negative federal taxable income, federal taxable income must be treated as if it were zero.
     (10) Add amounts upon which an S corporation is subject to tax under subchapter S, chapter 1, subtitle A of the internal revenue code.

NEW SECTION.  Sec. 104   TAX RETURNS FOR FRACTIONAL YEAR. If the first taxable year of any taxpayer with respect to which a tax is imposed by this title ends before December 31st of the calendar year in which this title becomes effective, referred to in this section as a fractional taxable year, the taxable income for the fractional taxable year shall be the taxpayer's taxable income for the entire taxable year, adjusted by one of the following methods, at the taxpayer's election:
     (1) The taxable income must be multiplied by a fraction. The numerator of the fraction is the number of days in the fractional taxable year. The denominator of the fraction is the number of days in the entire taxable year.
     (2) The taxable income must be adjusted, in accordance with rules of the department, so as to include only such income and be reduced only by such deductions as can be clearly determined from the permanent records of the taxpayer to be attributable to the fractional taxable year.

NEW SECTION.  Sec. 105   ESTIMATION AGREEMENTS. The department may reasonably estimate the items of business or nonbusiness income of a taxpayer having an office within the state and one or more other states or foreign countries that may be apportioned or allocated to the state and may enter into estimation agreements with such taxpayers for the determination of their liability for the tax imposed by this title.

NEW SECTION.  Sec. 106   APPORTIONMENT AND ALLOCATION OF INCOME. (1) For corporations other than financial organizations or public utilities, all income must be apportioned and allocated to this state except income that is apportioned or allocated to another state under RCW 82.56.010.
     (2) For financial organizations and public utilities, as defined in Article IV, section 1(d) and (f) of RCW 82.56.010, that are taxable both within this state and in another state within the meaning of Article IV, section 3 of RCW 82.56.010, the amount of net income to be apportioned or allocated, or both, to this state must be determined in accordance with rules adopted by the department. The rules must, as far as the department deems practical, be consistent with the provisions of Article IV of RCW 82.56.010. In developing the rules, the department shall also give appropriate consideration to any uniform regulations adopted by the multistate tax commission pursuant to Article VII of RCW 82.56.010, and to the rules of other states in which the financial organizations and public utilities are also taxable.

NEW SECTION.  Sec. 107   COMBINED REPORTING. (1) The department may permit or require a corporation that is subject to taxation under this title and is a part of a water's edge combined group to file a combined report covering the combined operations of the group. The report must contain such information as is designated in rules adopted by the department.
     (2) A corporation is a part of a water's edge combined group if it is engaged in business activities that are integrated with, dependent upon, or that contribute to the business activities of the group as a whole. Only corporations meeting one or more of the following descriptions may be included in a water's edge combined group:
     (a) Corporations included or includable in a consolidated return for federal income tax purposes;
     (b) United States possessions corporations;
     (c) Corporations incorporated in any United States possession or territory;
     (d) Domestic international sales corporations or foreign sales corporations;
     (e) Corporations incorporated in a country that either does not impose an income tax or imposes an income tax at a rate lower than ninety percent of the federal tax rate on the federally defined income tax base, if:
     (i) Fifty percent or more of either the sales or purchases or of payments of income or expenses, exclusive of payments for intangible property, or payments of eighty percent or more of all expenses are made directly or indirectly to one or more members of a water's edge combined group; or
     (ii) The corporation conducts no significant economic activity;
     (f) Foreign corporations having at least a threshold level of business activity in the United States, as determined under rules of the department;
     (g) United States corporations that are members of a group of two or more corporations with a common owner or owners, either corporate or noncorporate, where more than fifty percent of the voting stock of each member corporation is directly or indirectly owned by the common owner or owners or by one or more of the member corporations.
     (3) The income attributable to the Washington activities of a corporation that is a part of a water's edge combined group must be determined by the apportionment of the entire business net income of the group and the allocation of nonbusiness income of the corporation, using the factors and methods in section 106 of this act and the rules of the department adopted under section 106 of this act. Business net income may include income of corporations that do not have federal taxable income because they are not subject to federal taxation.

NEW SECTION.  Sec. 108   ESTIMATED TAX IMPOSED--DUE DATE OF ESTIMATED TAXES--AMOUNT OF ESTIMATED TAX--UNDERPAYMENT PENALTY. (1) Each taxpayer who is required by the internal revenue code to make payment of estimated taxes must pay to the department on forms prescribed by the department the estimated taxes due under this title.
     (2) The provisions of the internal revenue code relating to the determination of reporting periods and due dates of payments of estimated tax apply to the estimated tax payments due under this section.
     (3) The amount of the estimated tax is the annualized tax divided by the number of months in the reporting period. No estimated tax is due if the annualized tax is less than five hundred dollars. The provisions of RCW 82.32.050 and 82.32.090 apply to underpayments of estimated tax but do not apply to underpayments if the tax remitted to the department under this title is either ninety percent of the tax shown on the return or one hundred percent of the tax shown on the previous year's tax return.
     (4) For purposes of this section, the annualized tax is the taxpayer's projected tax liability for the taxable year as computed under section 6654 of the internal revenue code and the regulations thereunder.

NEW SECTION.  Sec. 109   METHOD OF ACCOUNTING. (1) A taxpayer's method of accounting for purposes of the tax imposed under this title must be the same as the taxpayer's method of accounting for federal income tax purposes. If no method of accounting has been regularly used by a taxpayer for federal income tax purposes or if the method used does not clearly reflect income, tax due under this title is computed by a method of accounting that in the opinion of the department fairly reflects income.
     (2) If a corporation's method of accounting is changed for federal income tax purposes, it must be similarly changed for purposes of this title.

NEW SECTION.  Sec. 110   CORPORATIONS REQUIRED TO FILE RETURNS. (1) All taxpayers must file with the department, on forms prescribed by the department, an income tax return for each taxable year. A corporation owing no tax for a taxable year is not required to file a return for that year. Each corporation required to file a return under this title must, without assessment, notice, or demand, pay any tax due thereon to the department on or before the date fixed for the filing of the return.
     (2) The department may by rule require that certain taxpayers file, on forms prescribed by the department, informational returns for any period.
     (3) If an adjustment to a taxpayer's federal return is made by the taxpayer or the internal revenue service, the taxpayer must, within ninety days of the final determination of the adjustment by the internal revenue service or within thirty days of the filing of a federal return adjusted by the taxpayer, file with the department on forms prescribed by the department, a corrected return reflecting the adjustments as finally determined. The taxpayer must pay any additional tax due resulting from the finally determined internal revenue service adjustment or a taxpayer adjustment without notice and assessment. The period of limitation for the collection of the additional tax, interest, and penalty due as a result of an adjustment by the taxpayer or a finally determined internal revenue service adjustment begins at the later of thirty days following the final determination of the adjustment or the date of the filing of the corrected return.

NEW SECTION.  Sec. 111   DUE DATE FOR FILING A RETURN--EXTENSIONS--INTEREST AND PENALTIES. The due date of a return required to be filed with the department is the due date of the federal income tax return or informational return for federal income tax purposes. The department has the authority to grant extensions of times by which returns required to be filed by this title may be submitted. The department also has the authority to grant extensions of time to pay tax with regard to taxes imposed by this title. Interest at the rate as specified in RCW 82.32.050 accrues during any extension period and the interest and penalty provisions of chapter 82.32 RCW apply to late payments and deficiencies. Notwithstanding the limitation of RCW 82.32.090, in the case of the late filing of an informational return, there is imposed a penalty the amount of which must be established by the department by rule. The penalty may not exceed fifty dollars per month for a maximum of ten months. RCW 82.32.105 applies to this section.

NEW SECTION.  Sec. 112   RECORDS--RETURNS. (1) Every taxpayer required to deduct and withhold the tax imposed under this title must keep records, render statements, make returns, file reports, and perform other acts as the department requires by rule. Each return must be made under penalty of perjury and on forms prescribed by the department. The department may require other statements and reports be made under penalty of perjury and on forms prescribed by the department. The department may require any taxpayer required to deduct and withhold the tax imposed under this title to furnish to the department a correct copy of any return or document that the taxpayer has filed with the internal revenue service or received from the internal revenue service.
     (2) All books and records and other papers and documents required to be kept under this title are subject to inspection by the department at all times during business hours of the day.

NEW SECTION.  Sec. 113   PROVISIONS OF INTERNAL REVENUE CODE CONTROL. (1) To the extent possible without being inconsistent with this title, all of the provisions of the internal revenue code relating to the following subjects apply to the taxes imposed under this title:
     (a) Liability of transferees;
     (b) Time and manner of making returns, extensions of time for filing returns, verification of returns, and the time when a return is deemed filed.
     (2) The department by rule may provide modifications and exceptions to the provisions in subsection (1) of this section, if reasonably necessary to facilitate the prompt, efficient, and equitable collection of tax under this title.

NEW SECTION.  Sec. 114   ADMINISTRATIVE PROVISIONS. Chapter 82.32 RCW applies to the taxes imposed in this chapter.

NEW SECTION.  Sec. 115   RULES. The department may adopt rules under chapter 34.05 RCW for the administration and enforcement of this title. The rules, to the extent possible without being inconsistent with this title, must follow the internal revenue code and the regulations and rulings of the United States department of the treasury with respect to the federal income tax. The department may adopt as a part of these rules any portions of the internal revenue code and treasury department regulations and rulings, in whole or in part.

NEW SECTION.  Sec. 116   CRIMES. (1) Any person who knowingly attempts to evade the tax imposed under this title or payment thereof is guilty of a class C felony as provided in chapter 9A.20 RCW.
     (2) Any person required to collect tax imposed under this title who knowingly fails to collect, truthfully account for, or pay over the tax is guilty of a class C felony as provided in chapter 9A.20 RCW.
     (3) Any person who knowingly fails to pay tax, pay estimated tax, make returns, keep records, or supply information, as required under this title, is guilty of a gross misdemeanor as provided in chapter 9A.20 RCW.

NEW SECTION.  Sec. 117   DISTRIBUTION OF REVENUE. Revenue from the corporate privilege tax imposed in section 102 of this act must be distributed as follows:
     (1) Five and one-half percent must be deposited in the freight mobility investment account created in RCW 46.68.300.
     (2) Five and one-half percent must be deposited in the freight mobility multimodal account created in RCW 46.68.310.
     (3) Eleven percent must be deposited in the investing in innovation account created in RCW 43.333.030 with an emphasis on low-cost clean energy and water infrastructure projects. None of the funds may be used for administration.
     (4) Eleven percent must be deposited in the general fund and used solely for watershed protection and restoration efforts statewide as determined by the state conservation commission. None of the funds may be used for administration.
     (5) Thirty-three percent must be deposited in the general fund and used solely for support of public baccalaureate institutions. Funds provided in this subsection must be used in the following priority order:
     (a) At least seventy percent to lower tuition costs for resident undergraduate students;
     (b) At least twenty-five percent to provide additional funding for the state need grant; and
     (c) Up to five percent for general support of public baccalaureate institutions.
     (6) Thirty-four percent must be deposited in the general fund and used solely for support of the state board for community and technical colleges with an emphasis on adult basic education and technical degrees. First priority for funding provided in this subsection must be given to individuals eligible for the credit provided in 26 U.S.C. Sec. 32 of the federal internal revenue code of 1986, as amended. None of the funds may be used for administration.

Sec. 118   RCW 82.03.130 and 2005 c 253 s 7 are each amended to read as follows:
     (1) The board ((shall have)) has jurisdiction to decide the following types of appeals:
     (a) Appeals taken pursuant to RCW 82.03.190.
     (b) Appeals from a county board of equalization pursuant to RCW 84.08.130.
     (c) Appeals by an assessor or landowner from an order of the director of revenue made pursuant to RCW 84.08.010 and 84.08.060, if filed with the board of tax appeals within thirty days after the mailing of the order, the right to such an appeal being hereby established.
     (d) Appeals by an assessor or owner of an intercounty public utility or private car company from determinations by the director of revenue of equalized assessed valuation of property and the apportionment thereof to a county made pursuant to chapter 84.12 and 84.16 RCW, if filed with the board of tax appeals within thirty days after mailing of the determination, the right to such appeal being hereby established.
     (e) Appeals by an assessor, landowner, or owner of an intercounty public utility or private car company from a determination of any county indicated ratio for such county compiled by the department of revenue pursuant to RCW 84.48.075((: PROVIDED, That)). However:
     (i) ((Said)) The appeal must be filed after review of the ratio under RCW 84.48.075(3) and not later than fifteen days after the mailing of the certification; and
     (ii) The hearing before the board ((shall)) must be expeditiously held in accordance with rules prescribed by the board and ((shall)) takes precedence over all matters of the same character.
     (f) Appeals from the decisions of sale price of second-class shorelands on navigable lakes by the department of natural resources pursuant to RCW ((79.94.210)) 79.125.450.
     (g) Appeals from urban redevelopment property tax apportionment district proposals established by governmental ordinances pursuant to RCW 39.88.060.
     (h) Appeals from interest rates as determined by the department of revenue for use in valuing farmland under current use assessment pursuant to RCW 84.34.065.
     (i) Appeals from revisions to stumpage value tables used to determine value by the department of revenue pursuant to RCW 84.33.091.
     (j) Appeals from denial of tax exemption application by the department of revenue pursuant to RCW 84.36.850.
     (k) Appeals pursuant to RCW 84.40.038(3).
     (l) Appeals pursuant to RCW 84.39.020.
     (m) Appeals relating to income tax deficiencies and refunds including penalties and interest under Title 82A RCW.
     (2) Except as otherwise specifically provided by law hereafter, the provisions of RCW 1.12.070 ((shall)) apply to all notices of appeal filed with the board of tax appeals.

Sec. 119   RCW 82.03.140 and 2000 c 103 s 1 are each amended to read as follows:
     (1) In all appeals over which the board has jurisdiction under RCW 82.03.130, a party taking an appeal may elect either a formal or an informal hearing, such election to be made according to rules of practice and procedure to be promulgated by the board((: PROVIDED, That)). However, nothing ((shall)) prevents the assessor or taxpayer, as a party to an appeal pursuant to RCW 84.08.130, within twenty days from the date of the receipt of the notice of appeal, from filing with the clerk of the board notice of intention that the hearing be a formal one((: PROVIDED, HOWEVER, That)).
     (2) Nothing ((herein shall)) in this section may be construed to modify the provisions of RCW 82.03.190((: AND PROVIDED FURTHER, That)).
     (3) Upon an appeal under RCW 82.03.130(1) (e) or (m), the director of revenue may, within ten days from the date of its receipt of the notice of appeal, file with the clerk of the board notice of its ((intention that the hearing be held pursuant to chapter 34.05 RCW)) election of a formal hearing.
     (4) In the event that appeals are taken from the same decision, order, or determination, as the case may be, by different parties and only one of such parties elects a formal hearing, a formal hearing ((shall)) must be granted.

NEW SECTION.  Sec. 201   The following acts or parts of acts, as now existing or hereafter amended, are each repealed, effective January 1, 2014:
     (1) RCW 82.04.220 (Business and occupation tax imposed) and 2011 1st sp.s. c 20 s 101, 2010 1st sp.s. c 23 s 102, & 1961 c 15 s 82.04.220;
     (2) RCW 82.04.230 (Tax upon extractors) and 2006 c 300 s 5, 1993 sp.s. c 25 s 101, 1971 ex.s. c 281 s 2, 1969 ex.s. c 262 s 33, 1967 ex.s. c 149 s 7, & 1961 c 15 s 82.04.230;
     (3) RCW 82.04.240 (Tax on manufacturers) and 2010 c 114 s 104, 2004 c 24 s 4, 2003 c 149 s 3, 1998 c 312 s 3, 1993 sp.s. c 25 s 102, 1981 c 172 s 1, 1979 ex.s. c 196 s 1, 1971 ex.s. c 281 s 3, 1969 ex.s. c 262 s 34, 1967 ex.s. c 149 s 8, 1965 ex.s. c 173 s 5, & 1961 c 15 s 82.04.240;
     (4) RCW 82.04.2403 (Manufacturer tax not applicable to cleaning fish) and 1994 c 167 s 1;
     (5) RCW 82.04.2404 (Manufacturers -- Processors for hire--Semiconductor materials) and 2010 c 114 s 105 & 2006 c 84 s 2;
     (6) RCW 82.04.250 (Tax on retailers) and 2010 1st sp.s. c 23 s 509, 2010 1st sp.s. c 23 s 508, 2010 1st sp.s. c 11 s 1, 2008 c 81 s 5, 2006 c 177 s 5, & 2003 2nd sp.s. c 1 s 2;
     (7) RCW 82.04.255 (Tax on real estate brokers) and 2011 c 322 s 2, 1997 c 7 s 1, 1996 c 1 s 1, 1993 sp.s. c 25 s 202, 1985 c 32 s 2, 1983 2nd ex.s. c 3 s 1, 1983 c 9 s 1, & 1970 ex.s. c 65 s 3;
     (8) RCW 82.04.257 (Tax on digital products and services) and 2010 c 111 s 301 & 2009 c 535 s 401;
     (9) RCW 82.04.260 (Tax on manufacturers and processors of various foods and by-products -- Research and development organizations -- Travel agents -- Certain international activities -- Stevedoring and associated activities -- Low-level waste disposers -- Insurance producers, surplus line brokers, and title insurance agents--Hospitals -- Commercial airplane activities -- Timber product activities -- Canned salmon processors) and 2011 c 2 s 203, 2010 1st sp.s. c 23 s 506, & 2010 c 114 s 107;
     (10) RCW 82.04.261 (Surcharge on timber and wood product manufacturers, extractors, and wholesalers) and 2010 1st sp.s. c 23 s 510;
     (11) RCW 82.04.263 (Tax on cleaning up radioactive waste and other by-products of weapons production and nuclear research and development) and 2009 c 469 s 202 & 1996 c 112 s 3;
     (12) RCW 82.04.270 (Tax on wholesalers) and 2004 c 24 s 5, 2003 2nd sp.s. c 1 s 5, 2001 1st sp.s. c 9 s 3, & 1999 c 358 s 2;
     (13) RCW 82.04.272 (Tax on warehousing and reselling prescription drugs) and 2003 c 168 s 401 & 1998 c 343 s 1;
     (14) RCW 82.04.280 (Tax on printers, publishers, highway contractors, extracting or processing for hire, cold storage warehouse or storage warehouse operation, insurance general agents, radio and television broadcasting, government contractors -- Cold storage warehouse defined -- Storage warehouse defined -- Periodical or magazine defined) and 2010 c 106 s 206, 2010 c 106 s 205, 2009 c 461 s 3, 2009 c 461 s 2, 2006 c 300 s 7, 2006 c 300 s 6, 2004 c 24 s 6, 2003 c 149 s 4, 1998 c 343 s 3, 1994 c 112 s 1, 1993 sp.s. c 25 s 303, 1993 sp.s. c 25 s 106, 1986 c 226 s 2, 1983 c 132 s 1, 1975 1st ex.s. c 90 s 3, 1971 ex.s. c 299 s 5, 1971 ex.s. c 281 s 7, & 1970 ex.s. c 8 s 2;
     (15) RCW 82.04.285 (Tax on contests of chance) and 2005 c 369 s 5;
     (16) RCW 82.04.286 (Tax on horse races) and 2005 c 369 s 6;
     (17) RCW 82.04.290 (Tax on international investment management services or other business or service activities) and 2011 c 174 s 101, 2008 c 81 s 6, 2005 c 369 s 8, 2004 c 174 s 2, 2003 c 343 s 2, & 2001 1st sp.s. c 9 s 6;
     (18) RCW 82.04.29001 (Creation and distribution of custom software -- Customization of prewritten computer software -- Taxable services) and 2003 c 168 s 602 & 1998 c 332 s 4;
     (19) RCW 82.04.29002 (Additional tax on certain business and service activities) and 2010 1st sp.s. c 23 s 1101;
     (20) RCW 82.04.2905 (Tax on providing day care) and 1998 c 312 s 7;
     (21) RCW 82.04.2906 (Tax on certain chemical dependency services) and 2003 c 343 s 1;
     (22) RCW 82.04.2907 (Tax on royalties) and 2010 1st sp.s. c 23 s 107, 2010 c 111 s 302, 2009 c 535 s 407, 2001 c 320 s 3, & 1998 c 331 s 1;
     (23) RCW 82.04.2908 (Tax on provision of room and domiciliary care to boarding home residents) and 2005 c 514 s 302 & 2004 c 174 s 1;
     (24) RCW 82.04.2909 (Tax on aluminum smelters) and 2011 c 174 s 301;
     (25) RCW 82.04.293 (International investment management services--Definitions) and 1997 c 7 s 3 & 1995 c 229 s 1;
     (26) RCW 82.04.298 (Tax on qualified grocery distribution cooperatives) and 2011 c 2 s 204, 2010 1st sp.s. c 23 s 511, 2008 c 49 s 1, & 2001 1st sp.s. c 9 s 1;
     (27) RCW 82.04.315 (Exemptions -- International banking facilities) and 1982 c 95 s 7;
     (28) RCW 82.04.317 (Exemptions -- Motor vehicle sales by manufacturers at wholesale auctions to dealers) and 1997 c 4 s 1;
     (29) RCW 82.04.330 (Exemptions -- Sales of agricultural products) and 2001 c 118 s 3, 1993 sp.s. c 25 s 305, 1988 c 253 s 2, & 1987 c 23 s 4;
     (30) RCW 82.04.331 (Exemptions -- Wholesale sales to farmers of seed for planting, conditioning seed for planting owned by others) and 1998 c 170 s 2;
     (31) RCW 82.04.332 (Exemptions -- Buying and selling at wholesale unprocessed milk, wheat, oats, dry peas, dry beans, lentils, triticale, canola, corn, rye, and barley) and 2007 c 131 s 1 & 1998 c 312 s 2;
     (32) RCW 82.04.333 (Exemptions -- Small harvesters) and 2011 c 101 s 4, 2007 c 48 s 5, & 1990 c 141 s 1;
     (33) RCW 82.04.334 (Exemptions -- Standing timber) and 2010 1st sp.s. c 23 s 512 & 2007 c 48 s 3;
     (34) RCW 82.04.337 (Exemptions -- Amounts received by hop growers or dealers for processed hops shipped outside the state) and 1987 c 495 s 1;
     (35) RCW 82.04.392 (Exemptions -- Mortgage brokers' third-party provider services trust accounts) and 1998 c 311 s 3 & 1997 c 106 s 21;
     (36) RCW 82.04.405 (Exemptions -- Credit unions) and 1998 c 311 s 4 & 1970 ex.s. c 101 s 3;
     (37) RCW 82.04.416 (Exemptions -- Operation of state route No. 16) and 1998 c 179 s 3;
     (38) RCW 82.04.421 (Exemptions -- Out-of-state membership sales in discount programs) and 1997 c 408 s 1;
     (39) RCW 82.04.422 (Exemptions -- Wholesale sales of motor vehicles) and 2004 c 81 s 1 & 2001 c 258 s 1;
     (40) RCW 82.04.425 (Exemptions -- Accommodation sales) and 1980 c 37 s 78, 1965 ex.s. c 173 s 9, & 1961 c 15 s 82.04.425;
     (41) RCW 82.04.426 (Exemptions -- Semiconductor microchips) and 2010 c 114 s 110 & 2003 c 149 s 2;
     (42) RCW 82.04.4261 (Exemptions -- Federal small business innovation research program) and 2004 c 2 s 9;
     (43) RCW 82.04.4262 (Exemptions -- Federal small business technology transfer program) and 2004 c 2 s 10;
     (44) RCW 82.04.4267 (Exemptions -- Operation of parking/business improvement areas) and 2005 c 476 s 1;
     (45) RCW 82.04.4281 (Deductions -- Investments, dividends, interest on loans) and 2007 c 54 s 9, 2002 c 150 s 2, & 1980 c 37 s 2;
     (46) RCW 82.04.4287 (Deductions -- Compensation for receiving, washing, etc., horticultural products for person exempt under RCW 82.04.330 -- Materials and supplies used) and 1980 c 37 s 8;
     (47) RCW 82.04.4292 (Deductions -- Interest on investments or loans secured by mortgages or deeds of trust) and 2010 1st sp.s. c 23 s 301 & 1980 c 37 s 12;
     (48) RCW 82.04.4294 (Deductions -- Interest on loans to farmers and ranchers, producers or harvesters of aquatic products, or their cooperatives) and 1980 c 37 s 14;
     (49) RCW 82.04.4295 (Deductions -- Manufacturing activities completed outside the United States) and 1980 c 37 s 15;
     (50) RCW 82.04.4296 (Deductions -- Reimbursement for accommodation expenditures by funeral homes) and 1980 c 37 s 16;
     (51) RCW 82.04.433 (Deductions -- Sales of fuel for consumption outside United States' waters by vessels in foreign commerce) and 2009 c 494 s 2 & 1985 c 471 s 16;
     (52) RCW 82.04.4333 (Credit -- Job training services -- Approval) and 1996 c 1 s 4;
     (53) RCW 82.04.4339 (Deductions -- Grants to support salmon restoration) and 2004 c 241 s 1;
     (54) RCW 82.04.4451 (Credit against tax due -- Maximum credit -- Table) and 2010 1st sp.s. c 23 s 1102, 1997 c 238 s 2, & 1994 sp.s. c 2 s 1;
     (55) RCW 82.04.44525 (Credit -- New employment for international service activities in eligible areas -- Designation of census tracts for eligibility -- Records -- Tax due upon ineligibility -- Interest assessment--Information from employment security department) and 2009 c 535 s 1104, 2008 c 81 s 9, & 1998 c 313 s 2;
     (56) RCW 82.04.447 (Credit -- Natural or manufactured gas purchased by direct service industrial customers -- Reports) and 2001 c 214 s 9;
     (57) RCW 82.04.4482 (Credit -- Sales of electricity or gas to an aluminum smelter) and 2004 c 24 s 9;
     (58) RCW 82.04.4486 (Credit -- Syrup taxes paid by buyer) and 2006 c 245 s 1;
     (59) RCW 82.04.601 (Exemptions -- Affixing stamp services for cigarette sales) and 2007 c 221 s 5;
     (60) RCW 82.62.030 (Allowance of tax credits -- Limitations) and 2007 c 485 s 3, 2001 c 320 s 13, 1999 c 164 s 306, 1997 c 366 s 5, 1996 c 1 s 3, & 1986 c 116 s 17;
     (61) RCW 82.04.340 (Exemptions -- Boxing, sparring, or wrestling matches) and 2000 c 103 s 6, 1988 c 19 s 4, & 1961 c 15 s 82.04.340;
     (62) RCW 82.04.424 (Exemptions -- Certain in-state activities) and 2003 c 76 s 2;
     (63) RCW 82.04.4272 (Deductions -- Direct mail delivery charges) and 2005 c 514 s 114;
     (64) RCW 82.04.4285 (Deductions -- Motor vehicle fuel and special fuel taxes) and 1998 c 176 s 3 & 1980 c 37 s 6;
     (65) RCW 82.04.43391 (Deductions -- Commercial aircraft loan interest and fees) and 2010 1st sp.s. c 23 s 112;
     (66) RCW 82.04.540 (Professional employer organizations -- Taxable under RCW 82.04.290(2) -- Deduction) and 2006 c 301 s 1;
     (67) RCW 82.04.645 (Exemptions -- Financial institutions -- Amounts received from certain affiliated persons) and 2011 c 174 s 102 & 2010 1st sp.s. c 23 s 110;
     (68) RCW 82.04.650 (Exemptions -- Investment conduits and securitization entities) and 2010 1st sp.s. c 23 s 111;
     (69) RCW 82.04.410 (Exemptions -- Hatching eggs and poultry) and 1967 ex.s. c 149 s 15 & 1961 c 15 s 82.04.410;
     (70) RCW 82.04.339 (Exemptions -- Day care provided by churches) and 1992 c 81 s 1;
     (71) RCW 82.04.3395 (Exemptions -- Child care resource and referral services by nonprofit organizations) and 1995 2nd sp.s. c 11 s 3;
     (72) RCW 82.04.363 (Exemptions -- Camp or conference center -- Items sold or furnished by nonprofit organization) and 2009 c 535 s 409 & 1997 c 388 s 1;
     (73) RCW 82.04.3651 (Exemptions -- Amounts received by nonprofit organizations for fund-raising activities) and 2010 c 106 s 208, 1999 c 358 s 3, & 1998 c 336 s 2;
     (74) RCW 82.04.367 (Exemptions -- Nonprofit organizations that are guarantee agencies, issue debt, or provide guarantees for student loans) and 1998 c 324 s 1 & 1987 c 433 s 1;
     (75) RCW 82.04.368 (Exemptions -- Nonprofit organizations -- Credit and debt services) and 1993 c 390 s 1;
     (76) RCW 82.04.370 (Exemptions -- Certain fraternal and beneficiary organizations) and 1961 c 293 s 4 & 1961 c 15 s 82.04.370;
     (77) RCW 82.04.380 (Exemptions -- Certain corporations furnishing aid and relief) and 1961 c 15 s 82.04.380;
     (78) RCW 82.04.385 (Exemptions -- Operation of sheltered workshops) and 1988 c 176 s 915, 1988 c 13 s 1, 1972 ex.s. c 134 s 1, & 1970 ex.s. c 81 s 3;
     (79) RCW 82.04.395 (Exemptions -- Certain materials printed in school district and educational service district printing facilities) and 1979 ex.s. c 196 s 12;
     (80) RCW 82.04.397 (Exemptions -- Certain materials printed in county, city, or town printing facilities) and 1979 ex.s. c 196 s 14;
     (81) RCW 82.04.399 (Exemptions -- Sales of academic transcripts) and 1996 c 272 s 1;
     (82) RCW 82.04.408 (Exemptions -- Housing finance commission) and 1983 c 161 s 25;
     (83) RCW 82.04.415 (Exemptions -- Sand, gravel and rock taken from county or city pits or quarries, processing and handling costs) and 1965 ex.s. c 173 s 10;
     (84) RCW 82.04.418 (Exemptions -- Grants by United States government to municipal corporations or political subdivisions) and 1983 1st ex.s. c 66 s 2;
     (85) RCW 82.04.419 (Exemptions -- County, city, town, school district, or fire district activity) and 1983 1st ex.s. c 66 s 3;
     (86) RCW 82.04.4201 (Exemptions -- Sales/leasebacks by regional transit authorities) and 2000 2nd sp.s. c 4 s 24;
     (87) RCW 82.04.4251 (Exemptions -- Convention and tourism promotion) and 2006 c 310 s 1;
     (88) RCW 82.04.4282 (Deductions -- Fees, dues, charges) and 2009 c 535 s 410, 1994 c 124 s 3, 1989 c 392 s 1, & 1980 c 37 s 3;
     (89) RCW 82.04.4291 (Deductions -- Compensation received by a political subdivision from another political subdivision for services taxable under RCW 82.04.290) and 1980 c 37 s 11;
     (90) RCW 82.04.4293 (Deductions -- Interest on obligations of the state, its political subdivisions, and municipal corporations) and 1980 c 37 s 13;
     (91) RCW 82.04.432 (Deductions -- Municipal sewer service fees or charges) and 1967 ex.s. c 149 s 17;
     (92) RCW 82.04.4322 (Deductions -- Artistic or cultural organization -- Compensation from United States, state, etc., for artistic or cultural exhibitions, performances, or programs) and 1981 c 140 s 1;
     (93) RCW 82.04.4324 (Deductions -- Artistic or cultural organization -- Deduction for tax under RCW 82.04.240 -- Value of articles for use in displaying art objects or presenting artistic or cultural exhibitions, performances, or programs) and 1981 c 140 s 2;
     (94) RCW 82.04.4326 (Deductions -- Artistic or cultural organizations -- Tuition charges for attending artistic or cultural education programs) and 1981 c 140 s 3;
     (95) RCW 82.04.4327 (Deductions -- Artistic and cultural organizations -- Income from business activities) and 1985 c 471 s 6;
     (96) RCW 82.04.4332 (Deductions -- Tuition fees of foreign degree-granting institutions) and 1993 c 181 s 10;
     (97) RCW 82.04.434 (Credit -- Public safety standards and testing) and 1991 c 13 s 1;
     (98) RCW 82.04.600 (Exemptions -- Materials printed in county, city, town, school district, educational service district, library or library district) and 1979 ex.s. c 266 s 8;
     (99) RCW 82.04.610 (Exemptions -- Import or export commerce) and 2007 c 477 s 2;
     (100) RCW 82.04.615 (Exemptions -- Certain limited purpose public corporations, commissions, and authorities) and 2007 c 381 s 1;
     (101) RCW 82.04.335 (Exemptions -- Agricultural fairs) and 1965 ex.s. c 145 s 1;
     (102) RCW 82.04.338 (Exemptions -- Hop commodity commission or hop commodity board business) and 1998 c 200 s 1;
     (103) RCW 82.04.4271 (Deductions -- Membership fees and certain service fees by nonprofit youth organization) and 1981 c 74 s 1;
     (104) RCW 82.04.640 (Exemptions -- Washington vaccine association--Certain assessments received) and 2010 c 174 s 16;
     (105) RCW 82.04.4298 (Deductions -- Repair, maintenance, replacement, etc., of residential structures and commonly held property -- Eligible organizations) and 1980 c 37 s 18;
     (106) RCW 82.04.324 (Exemptions -- Qualifying blood, tissue, or blood and tissue banks) and 2004 c 82 s 1 & 1995 2nd sp.s. c 9 s 3;
     (107) RCW 82.04.326 (Exemptions -- Qualified organ procurement organizations) and 2002 c 113 s 1;
     (108) RCW 82.04.327 (Exemptions -- Adult family homes) and 1987 1st ex.s. c 4 s 1;
     (109) RCW 82.04.355 (Exemptions -- Ride sharing) and 1999 c 358 s 8 & 1979 c 111 s 17;
     (110) RCW 82.04.4263 (Exemptions -- Income received by the life sciences discovery fund authority) and 2005 c 424 s 11;
     (111) RCW 82.04.4264 (Exemptions -- Nonprofit boarding homes -- Room and domiciliary care) and 2005 c 514 s 301;
     (112) RCW 82.04.4265 (Exemptions -- Comprehensive cancer centers) and 2005 c 514 s 401;
     (113) RCW 82.04.4289 (Exemption -- Compensation for patient services or attendant sales of drugs dispensed pursuant to prescription by certain nonprofit organizations) and 2003 c 168 s 402, 1998 c 325 s 1, 1993 c 492 s 305, 1981 c 178 s 2, & 1980 c 37 s 10;
     (114) RCW 82.04.4297 (Deductions -- Compensation from public entities for health or social welfare services -- Exception) and 2011 1st sp.s. c 19 s 2, 2002 c 314 s 3, 2001 2nd sp.s. c 23 s 2, 1988 c 67 s 1, & 1980 c 37 s 17;
     (115) RCW 82.04.4311 (Deductions -- Compensation received under the federal medicare program by certain hospitals or health centers) and 2005 c 86 s 1 & 2002 c 314 s 2;
     (116) RCW 82.04.4337 (Deductions -- Certain amounts received by boarding homes) and 2004 c 174 s 7;
     (117) RCW 82.04.620 (Exemptions -- Certain prescription drugs) and 2007 c 447 s 1; and
     (118) RCW 82.04.635 (Exemptions -- Nonprofits providing legal services to low-income persons) and 2009 c 508 s 1.

NEW SECTION.  Sec. 301   A new section is added to chapter 35.102 RCW to read as follows:
     Beginning January 1, 2014, a city may not impose a business and occupation tax or other gross receipts tax. This section does not apply to the utility taxes listed in RCW 35.102.020.

NEW SECTION.  Sec. 401   CODIFICATION. Sections 101 through 117 of this act constitute a new title in the Revised Code of Washington, to be codified as Title 82A RCW.

NEW SECTION.  Sec. 402   SEVERABILITY CLAUSE. 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.

NEW SECTION.  Sec. 403   EFFECTIVE DATE. Except for sections 102, 108, and 201 of this act, this act takes effect January 1, 2013.

NEW SECTION.  Sec. 404   EFFECTIVE DATE. Sections 102, 108, and 201 of this act take effect January 1, 2014.