BILL REQ. #: S-2136.5
State of Washington | 62nd Legislature | 2011 Regular Session |
Read first time 04/14/11. Referred to Committee on Ways & Means.
AN ACT Relating to modifying excise tax laws to provide funding for essential government services; amending RCW 82.04.4281, 82.04.4292, 82.04.240, 82.04.2404, 82.04.260, 82.04.263, 82.04.272, 82.04.290, 82.04.2905, 82.04.2906, 82.04.2907, 82.04.2908, and 82.04.294; reenacting and amending RCW 82.04.250, 82.04.2909, and 82.32.790; creating a new section; and providing contingent effective dates.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 101 (1) The legislature finds that there is a
critical need to maintain public services that support the high quality
of life in Washington state by providing opportunities for
Washingtonians to live healthy, productive, and successful lives,
providing care and support for those who are unable to care for
themselves, and helping to ensure that Washington remains a safe,
beautiful, vibrant place to live, work, and raise a family.
(2) The legislature recognizes that many previously enacted tax
preferences have a stated intent to encourage economic activity or to
support a public benefit or service. However, the legislature finds
that many other tax preferences lack such a statement or purpose, or
were enacted under very different economic conditions than the
conditions that prevail in 2011. As a result, there are questions as
to the current justification or fairness of these tax preferences in
light of the continued tax burden on other taxpayers whose tax payments
do support vital state services to the public at a time of sharply
reduced overall revenues. The legislature finds that the state
revenues provided for these tax preferences would be more wisely
invested for funding the quality-of-life public services for which
there is a critical need to maintain. The legislature further finds
that during this economic crisis and the necessity to balance the
budget, cuts should be spread out among all that benefit from state
funding. At a time when virtually every area of the budget is being
reduced by substantial amounts, those that are receiving preferential
tax treatment must also bear some of the burden to balance the budget.
(3) Therefore, it is the legislature's intent that if Referendum
Bill No. .... (Senate Bill No. .... (S-2241/11)) is approved by voters,
the funds saved by the modification of the tax preferences in this act
be used to support schools, colleges, health care, public safety,
environmental protection, and other core functions of the state.
Sec. 201 RCW 82.04.4281 and 2007 c 54 s 9 are each amended to
read as follows:
(1) In computing tax there may be deducted from the measure of tax:
(a) ((Amounts)) The first two hundred fifty thousand dollars
derived from investments in a calendar year;
(b) Amounts derived as dividends or distributions from the capital
account by a parent from its subsidiary entities; and
(c) Amounts derived from interest on loans between subsidiary
entities and a parent entity or between subsidiaries of a common parent
entity, but only if the total investment and loan income is less than
five percent of gross receipts of the business annually.
(2) The following are not deductible under subsection (1)(a) of
this section:
(a) Amounts received from loans, except as provided in subsection
(1)(c) of this section, or the extension of credit to another,
revolving credit arrangements, installment sales, the acceptance of
payment over time for goods or services, or any of the foregoing that
have been transferred by the originator of the same to an affiliate of
the transferor; or
(b) Amounts received by a banking, lending, or security business.
(3) The definitions in this subsection apply only to this section.
(a) "Banking business" means a person engaging in business as a
national or state-chartered bank, a mutual savings bank, a savings and
loan association, a trust company, an alien bank, a foreign bank, a
credit union, a stock savings bank, or a similar entity that is
chartered under Title 30, 31, 32, or 33 RCW, or organized under Title
12 U.S.C.
(b) "Lending business" means a person engaged in the business of
making secured or unsecured loans of money, or extending credit, and
(i) more than one-half of the person's gross income is earned from such
activities and (ii) more than one-half of the person's total
expenditures are incurred in support of such activities.
(c) The terms "loan" and "extension of credit" do not include
ownership of or trading in publicly traded debt instruments, or
substantially equivalent instruments offered in a private placement.
(d) "Security business" means a person, other than an issuer, who
is engaged in the business of effecting transactions in securities as
a broker, dealer, or broker-dealer, as those terms are defined in the
securities act of Washington, chapter 21.20 RCW, or the federal
securities act of 1933. "Security business" does not include any
company excluded from the definition of broker or dealer under the
federal investment company act of 1940 or any entity that is not an
investment company by reason of sections 3(c)(1) and 3(c)(3) through
3(c)(14) thereof.
Sec. 301 RCW 82.04.4292 and 2010 1st sp.s. c 23 s 301 are each
amended to read as follows:
(1) In computing tax there may be deducted from the measure of tax
by those engaged in banking, loan, security or other financial
businesses, interest received on investments or loans primarily secured
by first mortgages or trust deeds on nontransient residential
properties.
(2) Interest deductible under this section includes the portion of
fees charged to borrowers, including points and loan origination fees,
that is recognized over the life of the loan as an adjustment to yield
in the taxpayer's books and records according to generally accepted
accounting principles.
(3) Subsections (1) and (2) of this section notwithstanding, the
following is a nonexclusive list of items that are not deductible under
this section:
(a) Fees for specific services such as: Document preparation fees;
finder fees; brokerage fees; title examination fees; fees for credit
checks; notary fees; loan application fees; interest lock-in fees if
the loan is not made; servicing fees; and similar fees or amounts;
(b) Fees received in consideration for an agreement to make funds
available for a specific period of time at specified terms, commonly
referred to as commitment fees;
(c) Any other fees, or portion of a fee, that is not recognized
over the life of the loan as an adjustment to yield in the taxpayer's
books and records according to generally accepted accounting
principles;
(d) Gains on the sale of valuable rights such as service release
premiums, which are amounts received when servicing rights are sold;
and
(e) Gains on the sale of loans, except deferred loan origination
fees and points deductible under subsection (2) of this section, are
not to be considered part of the proceeds of sale of the loan.
(4) Notwithstanding subsection (3) of this section, in computing
tax there may be deducted from the measure of tax by those engaged in
banking, loan, security, or other financial businesses, amounts
received for servicing loans primarily secured by first mortgages or
trust deeds on nontransient residential properties, including such
loans that secure mortgage-backed or mortgage-related securities, but
only if:
(a)(i) The loans were originated by the person claiming a deduction
under this subsection (4) and that person either sold the loans on the
secondary market or securitized the loans and sold the securities on
the secondary market; or
(ii)(A) The person claiming a deduction under this subsection (4)
acquired the loans from the person that originated the loans through a
merger or acquisition of substantially all of the assets of the person
who originated the loans, or the person claiming a deduction under this
subsection (4) is affiliated with the person that originated the loans.
For purposes of this subsection, "affiliated" means under common
control. "Control" means the possession, directly or indirectly, of
more than fifty percent of the power to direct or cause the direction
of the management and policies of a person, whether through the
ownership of voting shares, by contract, or otherwise; and
(B) Either the person who originated the loans or the person
claiming a deduction under this subsection (4) sold the loans on the
secondary market or securitized the loans and sold the securities on
the secondary market; and
(b) The amounts received for servicing the loans are determined by
a percentage of the interest paid by the borrower and are only received
if the borrower makes interest payments.
(5)(a) The deductions provided in this section are not available to
any person that is located in more than ten states. For the purposes
of this subsection, a person is located in a state if:
(i) The person or an affiliate of the person maintains a branch,
office, or one or more employees or representatives in the state; and
(ii) Such in-state presence allows borrowers or potential borrowers
to contact the branch, office, employee, or representative concerning
the acquiring, negotiating, renegotiating, or restructuring of, or
making payments on, mortgages issued or to be issued by the person or
an affiliate of the person.
(b) For purposes of this subsection, "affiliate" means a person is
"affiliated," as defined in subsection (4) of this section, with
another person.
Sec. 401 RCW 82.04.240 and 2010 c 114 s 104 are each amended to
read as follows:
(1) Upon every person engaging within this state in business as a
manufacturer, except persons taxable as manufacturers under other
provisions of this chapter; as to such persons the amount of the tax
with respect to such business is equal to the value of the products,
including byproducts, manufactured, multiplied by the rate of 0.484
percent.
(2)(a) Upon every person engaging within this state in the business
of manufacturing semiconductor materials, as to such persons the amount
of tax with respect to such business is, in the case of manufacturers,
equal to the value of the product manufactured, or, in the case of
processors for hire, equal to the gross income of the business,
multiplied by the rate of ((0.275)) 0.3273 percent. For the purposes
of this subsection "semiconductor materials" means silicon crystals,
silicon ingots, raw polished semiconductor wafers, compound
semiconductors, integrated circuits, and microchips.
(b) A person reporting under the tax rate provided in this
subsection (2) must file a complete annual report with the department
under RCW 82.32.534.
(c) This subsection (2) expires twelve years after the effective
date of this act.
(3) The measure of the tax is the value of the products, including
byproducts, so manufactured regardless of the place of sale or the fact
that deliveries may be made to points outside the state.
Sec. 402 RCW 82.04.2404 and 2010 c 114 s 105 are each amended to
read as follows:
(1) Upon every person engaging within this state in the business of
manufacturing or processing for hire semiconductor materials, as to
such persons the amount of tax with respect to such business is, in the
case of manufacturers, equal to the value of the product manufactured,
or, in the case of processors for hire, equal to the gross income of
the business, multiplied by the rate of ((0.275)) 0.3273 percent.
(2) For the purposes of this section "semiconductor materials"
means silicon crystals, silicon ingots, raw polished semiconductor
wafers, and compound semiconductor wafers.
(3) A person reporting under the tax rate provided in this section
must file a complete annual report with the department under RCW
82.32.534.
(4) This section expires December 1, 2018.
Sec. 403 RCW 82.04.250 and 2010 1st sp.s. c 23 s 509 and 2010 1st
sp.s. c 23 s 508 are each reenacted and amended to read as follows:
(1) Upon every person engaging within this state in the business of
making sales at retail, except persons taxable as retailers under other
provisions of this chapter, as to such persons, the amount of tax with
respect to such business is equal to the gross proceeds of sales of the
business, multiplied by the rate of 0.471 percent.
(2) Upon every person engaging within this state in the business of
making sales at retail that are exempt from the tax imposed under
chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or
82.08.0263, except persons taxable under RCW 82.04.260(((10))) (11) or
subsection (3) of this section, as to such persons, the amount of tax
with respect to such business is equal to the gross proceeds of sales
of the business, multiplied by the rate of 0.484 percent.
(3) Until July 1, 2024, upon every person classified by the federal
aviation administration as a federal aviation regulation part 145
certificated repair station and that is engaging within this state in
the business of making sales at retail that are exempt from the tax
imposed under chapter 82.08 RCW by reason of RCW 82.08.0261,
82.08.0262, or 82.08.0263, as to such persons, the amount of tax with
respect to such business is equal to the gross proceeds of sales of the
business, multiplied by the rate of ((.2904)) 0.3356 percent.
Sec. 404 RCW 82.04.260 and 2011 c 2 s 203 (Initiative Measure No.
1107) are each amended to read as follows:
(1) Upon every person engaging within this state in the business of
manufacturing:
(a) Wheat into flour, barley into pearl barley, soybeans into
soybean oil, canola into canola oil, canola meal, or canola by-products, or sunflower seeds into sunflower oil; as to such persons the
amount of tax with respect to such business is equal to the value of
the flour, pearl barley, oil, canola meal, or canola by-product
manufactured, multiplied by the rate of ((0.138)) 0.2245 percent;
(b) Beginning July 1, 2012, seafood products that remain in a raw,
raw frozen, or raw salted state at the completion of the manufacturing
by that person; or selling manufactured seafood products that remain in
a raw, raw frozen, or raw salted state at the completion of the
manufacturing, to purchasers who transport in the ordinary course of
business the goods out of this state; as to such persons the amount of
tax with respect to such business is equal to the value of the products
manufactured or the gross proceeds derived from such sales, multiplied
by the rate of 0.138 percent. Sellers must keep and preserve records
for the period required by RCW 82.32.070 establishing that the goods
were transported by the purchaser in the ordinary course of business
out of this state;
(c) Beginning July 1, 2012, dairy products that as of September 20,
2001, are identified in 21 C.F.R., chapter 1, parts 131, 133, and 135,
including by-products from the manufacturing of the dairy products such
as whey and casein; or selling the same to purchasers who transport in
the ordinary course of business the goods out of state; as to such
persons the tax imposed is equal to the value of the products
manufactured or the gross proceeds derived from such sales multiplied
by the rate of 0.138 percent. Sellers must keep and preserve records
for the period required by RCW 82.32.070 establishing that the goods
were transported by the purchaser in the ordinary course of business
out of this state;
(d) Beginning July 1, 2012, fruits or vegetables by canning,
preserving, freezing, processing, or dehydrating fresh fruits or
vegetables, or selling at wholesale fruits or vegetables manufactured
by the seller by canning, preserving, freezing, processing, or
dehydrating fresh fruits or vegetables and sold to purchasers who
transport in the ordinary course of business the goods out of this
state; as to such persons the amount of tax with respect to such
business is equal to the value of the products manufactured or the
gross proceeds derived from such sales multiplied by the rate of 0.138
percent. Sellers must keep and preserve records for the period
required by RCW 82.32.070 establishing that the goods were transported
by the purchaser in the ordinary course of business out of this state;
(e) Until July 1, 2009, alcohol fuel, biodiesel fuel, or biodiesel
feedstock, as those terms are defined in RCW 82.29A.135; as to such
persons the amount of tax with respect to the business is equal to the
value of alcohol fuel, biodiesel fuel, or biodiesel feedstock
manufactured, multiplied by the rate of 0.138 percent; and
(f) Wood biomass fuel as defined in RCW 82.29A.135; as to such
persons the amount of tax with respect to the business is equal to the
value of wood biomass fuel manufactured, multiplied by the rate of
((0.138)) 0.2245 percent.
(2) Upon every person engaging within this state in the business of
splitting or processing dried peas; as to such persons the amount of
tax with respect to such business is equal to the value of the peas
split or processed, multiplied by the rate of ((0.138)) 0.2245 percent.
(3) Upon every nonprofit corporation and nonprofit association
engaging within this state in research and development, as to such
corporations and associations, the amount of tax with respect to such
activities is equal to the gross income derived from such activities
multiplied by the rate of 0.484 percent.
(4) Upon every person engaging within this state in the business of
slaughtering, breaking and/or processing perishable meat products
and/or selling the same at wholesale only and not at retail; as to such
persons the tax imposed is equal to the gross proceeds derived from
such sales multiplied by the rate of ((0.138)) 0.2245 percent.
(5) Upon every person engaging within this state in the business of
acting as a travel agent or tour operator; as to such persons the
amount of the tax with respect to such activities is equal to the gross
income derived from such activities multiplied by the rate of ((0.275))
0.5813 percent.
(6) Upon every person engaging within this state in business as an
international steamship agent, international customs house broker,
international freight forwarder, vessel and/or cargo charter broker in
foreign commerce, and/or international air cargo agent; as to such
persons the amount of the tax with respect to only international
activities is equal to the gross income derived from such activities
multiplied by the rate of ((0.275)) 0.5813 percent.
(7) Upon every person engaging within this state in the business of
stevedoring and associated activities pertinent to the movement of
goods and commodities in waterborne interstate or foreign commerce; as
to such persons the amount of tax with respect to such business is
equal to the gross proceeds derived from such activities multiplied by
the rate of ((0.275)) 0.5813 percent. Persons subject to taxation
under this subsection are exempt from payment of taxes imposed by
chapter 82.16 RCW for that portion of their business subject to
taxation under this subsection. Stevedoring and associated activities
pertinent to the conduct of goods and commodities in waterborne
interstate or foreign commerce are defined as all activities of a
labor, service or transportation nature whereby cargo may be loaded or
unloaded to or from vessels or barges, passing over, onto or under a
wharf, pier, or similar structure; cargo may be moved to a warehouse or
similar holding or storage yard or area to await further movement in
import or export or may move to a consolidation freight station and be
stuffed, unstuffed, containerized, separated or otherwise segregated or
aggregated for delivery or loaded on any mode of transportation for
delivery to its consignee. Specific activities included in this
definition are: Wharfage, handling, loading, unloading, moving of
cargo to a convenient place of delivery to the consignee or a
convenient place for further movement to export mode; documentation
services in connection with the receipt, delivery, checking, care,
custody and control of cargo required in the transfer of cargo;
imported automobile handling prior to delivery to consignee; terminal
stevedoring and incidental vessel services, including but not limited
to plugging and unplugging refrigerator service to containers,
trailers, and other refrigerated cargo receptacles, and securing ship
hatch covers.
(8) Upon every person engaging within this state in the business of
disposing of low-level waste, as defined in RCW 43.145.010; as to such
persons the amount of the tax with respect to such business is equal to
the gross income of the business, excluding any fees imposed under
chapter 43.200 RCW, multiplied by the rate of 3.3 percent.
If the gross income of the taxpayer is attributable to activities
both within and without this state, the gross income attributable to
this state must be determined in accordance with the methods of
apportionment required under RCW 82.04.460.
(9) Upon every person engaging within this state as an insurance
producer or title insurance agent licensed under chapter 48.17 RCW or
a surplus line broker licensed under chapter 48.15 RCW; as to such
persons, the amount of the tax with respect to such licensed activities
is equal to the gross income of such business multiplied by the rate of
((0.484)) 0.738 percent.
(10) Upon every person engaging within this state in business as a
hospital, as defined in chapter 70.41 RCW, that is operated as a
nonprofit corporation or by the state or any of its political
subdivisions, as to such persons, the amount of tax with respect to
such activities is equal to the gross income of the business multiplied
by the rate of 0.75 percent through June 30, 1995, and 1.5 percent
thereafter.
(11)(a) Beginning October 1, 2005, upon every person engaging
within this state in the business of manufacturing commercial
airplanes, or components of such airplanes, or making sales, at retail
or wholesale, of commercial airplanes or components of such airplanes,
manufactured by the seller, as to such persons the amount of tax with
respect to such business is, in the case of manufacturers, equal to the
value of the product manufactured and the gross proceeds of sales of
the product manufactured, or in the case of processors for hire, equal
to the gross income of the business, multiplied by the rate of:
(i) 0.4235 percent ((from)) beginning October 1, 2005, through June
30, 2007; ((and))
(ii) 0.2904 percent beginning July 1, 2007, until the effective
date of this section; and
(iii) 0.3388 percent beginning the effective date of this section.
(b) Beginning July 1, 2008, upon every person who is not eligible
to report under the provisions of (a) of this subsection (11) and is
engaging within this state in the business of manufacturing tooling
specifically designed for use in manufacturing commercial airplanes or
components of such airplanes, or making sales, at retail or wholesale,
of such tooling manufactured by the seller, as to such persons the
amount of tax with respect to such business is, in the case of
manufacturers, equal to the value of the product manufactured and the
gross proceeds of sales of the product manufactured, or in the case of
processors for hire, be equal to the gross income of the business,
multiplied by the rate of:
(i) 0.2904 percent beginning July 1, 2007, until the effective date
of this section; and
(ii) 0.3388 percent beginning the effective date of this section.
(c) For the purposes of this subsection (11), "commercial airplane"
and "component" have the same meanings as provided in RCW 82.32.550.
(d) In addition to all other requirements under this title, a
person reporting under the tax rate provided in this subsection (11)
must file a complete annual report with the department under RCW
82.32.534.
(e) This subsection (11) does not apply on and after July 1, 2024.
(12)(a) Until July 1, 2024, upon every person engaging within this
state in the business of extracting timber or extracting for hire
timber; as to such persons the amount of tax with respect to the
business is, in the case of extractors, equal to the value of products,
including by-products, extracted, or in the case of extractors for
hire, equal to the gross income of the business, multiplied by the rate
of ((0.4235 percent from July 1, 2006, through June 30, 2007, and
0.2904 percent from July 1, 2007,)):
(i) 0.4235 percent beginning July 1, 2006, through June 30, 2007;
(ii) 0.2904 percent beginning July 1, 2007, until the effective
date of this section; and
(iii) 0.3388 percent beginning the effective date of this section
through June 30, 2024.
(b) Until July 1, 2024, upon every person engaging within this
state in the business of manufacturing or processing for hire: (i)
Timber into timber products or wood products; or (ii) timber products
into other timber products or wood products; as to such persons the
amount of the tax with respect to the business is, in the case of
manufacturers, equal to the value of products, including by-products,
manufactured, or in the case of processors for hire, equal to the gross
income of the business, multiplied by the rate of ((0.4235 percent from
July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1,
2007,)):
(A) 0.4235 percent beginning July 1, 2006, through June 30, 2007;
(B) 0.2904 percent beginning July 1, 2007, until the effective date
of this section; and
(C) 0.3388 percent beginning the effective date of this section
through June 30, 2024.
(c) Until July 1, 2024, upon every person engaging within this
state in the business of selling at wholesale: (i) Timber extracted by
that person; (ii) timber products manufactured by that person from
timber or other timber products; or (iii) wood products manufactured by
that person from timber or timber products; as to such persons the
amount of the tax with respect to the business is equal to the gross
proceeds of sales of the timber, timber products, or wood products
multiplied by the rate of ((0.4235 percent from July 1, 2006, through
June 30, 2007, and 0.2904 percent from July 1, 2007,)):
(A) 0.4235 percent beginning July 1, 2006, through June 30, 2007;
(B) 0.2904 percent beginning July 1, 2007, until the effective date
of this section; and
(C) 0.3388 percent beginning the effective date of this section
through June 30, 2024.
(d) Until July 1, 2024, upon every person engaging within this
state in the business of selling standing timber; as to such persons
the amount of the tax with respect to the business is equal to the
gross income of the business multiplied by the rate of ((0.2904))
0.3388 percent. For purposes of this subsection (12)(d), "selling
standing timber" means the sale of timber apart from the land, where
the buyer is required to sever the timber within thirty months from the
date of the original contract, regardless of the method of payment for
the timber and whether title to the timber transfers before, upon, or
after severance.
(e) For purposes of this subsection, the following definitions
apply:
(i) "Biocomposite surface products" means surface material products
containing, by weight or volume, more than fifty percent recycled paper
and that also use nonpetroleum-based phenolic resin as a bonding agent.
(ii) "Paper and paper products" means products made of interwoven
cellulosic fibers held together largely by hydrogen bonding. "Paper
and paper products" includes newsprint; office, printing, fine, and
pressure-sensitive papers; paper napkins, towels, and toilet tissue;
kraft bag, construction, and other kraft industrial papers; paperboard,
liquid packaging containers, containerboard, corrugated, and solid-fiber containers including linerboard and corrugated medium; and
related types of cellulosic products containing primarily, by weight or
volume, cellulosic materials. "Paper and paper products" does not
include books, newspapers, magazines, periodicals, and other printed
publications, advertising materials, calendars, and similar types of
printed materials.
(iii) "Recycled paper" means paper and paper products having fifty
percent or more of their fiber content that comes from postconsumer
waste. For purposes of this subsection (12)(e)(iii), "postconsumer
waste" means a finished material that would normally be disposed of as
solid waste, having completed its life cycle as a consumer item.
(iv) "Timber" means forest trees, standing or down, on privately or
publicly owned land. "Timber" does not include Christmas trees that
are cultivated by agricultural methods or short-rotation hardwoods as
defined in RCW 84.33.035.
(v) "Timber products" means:
(A) Logs, wood chips, sawdust, wood waste, and similar products
obtained wholly from the processing of timber, short-rotation hardwoods
as defined in RCW 84.33.035, or both;
(B) Pulp, including market pulp and pulp derived from recovered
paper or paper products; and
(C) Recycled paper, but only when used in the manufacture of
biocomposite surface products.
(vi) "Wood products" means paper and paper products; dimensional
lumber; engineered wood products such as particleboard, oriented strand
board, medium density fiberboard, and plywood; wood doors; wood
windows; and biocomposite surface products.
(f) Except for small harvesters as defined in RCW 84.33.035, a
person reporting under the tax rate provided in this subsection (12)
must file a complete annual survey with the department under RCW
82.32.585.
(13) Upon every person engaging within this state in inspecting,
testing, labeling, and storing canned salmon owned by another person,
as to such persons, the amount of tax with respect to such activities
is equal to the gross income derived from such activities multiplied by
the rate of ((0.484)) 0.738 percent.
(14)(a) Upon every person engaging within this state in the
business of printing a newspaper, publishing a newspaper, or both, the
amount of tax on such business is equal to the gross income of the
business multiplied by the rate of ((0.2904)) 0.3388 percent.
(b) A person reporting under the tax rate provided in this
subsection (14) must file a complete annual report with the department
under RCW 82.32.534.
Sec. 405 RCW 82.04.263 and 2009 c 469 s 202 are each amended to
read as follows:
(1) Upon every person engaging within this state in the business of
cleaning up for the United States, or its instrumentalities,
radioactive waste and other by-products of weapons production and
nuclear research and development; as to such persons the amount of the
tax with respect to such business ((shall be)) is equal to the gross
income of the business multiplied by the rate of ((0.471)) 0.7283
percent.
(2) For the purposes of this chapter, "cleaning up radioactive
waste and other by-products of weapons production and nuclear research
and development" means:
(a) The activities of handling, storing, treating, immobilizing,
stabilizing, or disposing of radioactive waste, radioactive tank waste
and capsules, nonradioactive hazardous solid and liquid wastes, or
spent nuclear fuel;
(b) Spent nuclear fuel conditioning;
(c) Removal of contamination in soils and groundwater;
(d) Decontamination and decommissioning of facilities; and
(e) Services supporting the performance of cleanup. For the
purposes of this subsection (2)(e), a service supports the performance
of cleanup if it:
(i) Is within the scope of work under a clean-up contract with the
United States department of energy; or
(ii) Assists in the accomplishment of a requirement of a clean-up
project undertaken by the United States department of energy under a
subcontract entered into with the prime contractor or another
subcontractor in furtherance of a clean-up contract between the United
States department of energy and a prime contractor.
(3) A service does not assist in the accomplishment of a
requirement of a clean-up project undertaken by the United States
department of energy if the same services are routinely provided to
businesses not engaged in clean-up activities, except that the
following services are always deemed to contribute to the
accomplishment of a requirement of a clean-up project undertaken by the
United States department of energy:
(a) Information technology and computer support services;
(b) Services rendered in respect to infrastructure; and
(c) Security, safety, and health services.
(4) The legislature intends that the examples provided in this
subsection be used as a guideline when determining whether a service is
"routinely provided to businesses not engaged in clean-up activities"
as that phrase is used in subsection (3) of this section.
(a) The radioactive waste clean-up classification does not apply to
general accounting services but does apply to performance audits
performed for persons cleaning up radioactive waste.
(b) The radioactive waste clean-up classification does not apply to
general legal services but does apply to those legal services that
assist in the accomplishment of a requirement of a clean-up project
undertaken by the United States department of energy. Thus, legal
services provided to contest any local, state, or federal tax liability
or to defend a company against a workers' compensation claim arising
from a worksite injury do not qualify for the radioactive waste clean-up classification. But, legal services related to the resolution of a
contractual dispute between the parties to a clean-up contract between
the United States department of energy and a prime contractor do
qualify.
(c) General office janitorial services do not qualify for the
radioactive waste clean-up classification, but the specialized cleaning
of equipment exposed to radioactive waste does qualify.
Sec. 406 RCW 82.04.272 and 2003 c 168 s 401 are each amended to
read as follows:
(1) Upon every person engaging within this state in the business of
warehousing and reselling drugs for human use pursuant to a
prescription; as to such persons, the amount of the tax ((shall be)) is
equal to the gross income of the business multiplied by the rate of
((0.138)) 0.2245 percent.
(2) For the purposes of this section:
(a) "Prescription" and "drug" have the same meaning as in RCW
82.08.0281; and
(b) "Warehousing and reselling drugs for human use pursuant to a
prescription" means the buying of drugs for human use pursuant to a
prescription from a manufacturer or another wholesaler, and reselling
of the drugs to persons selling at retail or to hospitals, clinics,
health care providers, or other providers of health care services, by
a wholesaler or retailer who is registered with the federal drug
enforcement administration and licensed by the state board of pharmacy.
Sec. 407 RCW 82.04.290 and 2008 c 81 s 6 are each amended to read
as follows:
(1) Upon every person engaging within this state in the business of
providing international investment management services, as to such
persons, the amount of tax with respect to such business ((shall be))
is equal to the gross income or gross proceeds of sales of the business
multiplied by a rate of ((0.275)) 0.6563 percent.
(2)(a) Upon every person engaging within this state in any business
activity other than or in addition to an activity taxed explicitly
under another section in this chapter or subsection (3) of this
section; as to such persons the amount of tax on account of such
activities ((shall be)) is equal to the gross income of the business
multiplied by the rate of 1.5 percent.
(b) This subsection (2) includes, among others, and without
limiting the scope hereof (whether or not title to materials used in
the performance of such business passes to another by accession,
confusion or other than by outright sale), persons engaged in the
business of rendering any type of service which does not constitute a
"sale at retail" or a "sale at wholesale." The value of advertising,
demonstration, and promotional supplies and materials furnished to an
agent by his principal or supplier to be used for informational,
educational and promotional purposes ((shall)) is not ((be)) considered
a part of the agent's remuneration or commission and ((shall)) is not
((be)) subject to taxation under this section.
(3)(a) Until July 1, 2024, upon every person engaging within this
state in the business of performing aerospace product development for
others, as to such persons, the amount of tax with respect to such
business ((shall be)) is equal to the gross income of the business
multiplied by a rate of ((0.9)) 1.05 percent.
(b) "Aerospace product development" has the meaning as provided in
RCW 82.04.4461.
Sec. 408 RCW 82.04.2905 and 1998 c 312 s 7 are each amended to
read as follows:
Upon every person engaging within this state in the business of
providing child care for periods of less than twenty-four hours; as to
such persons the amount of tax with respect to such business ((shall
be)) is equal to the gross proceeds derived from such sales multiplied
by the rate of ((0.484)) 0.738 percent.
Sec. 409 RCW 82.04.2906 and 2003 c 343 s 1 are each amended to
read as follows:
(1) Upon every person engaging within this state in the business of
providing intensive inpatient or recovery house residential treatment
services for chemical dependency, certified by the department of social
and health services, for which payment from the United States or any
instrumentality thereof or from the state of Washington or any
municipal corporation or political subdivision thereof is received as
compensation for or to support those services; as to such persons the
amount of tax with respect to such business ((shall be)) is equal to
the gross income from such services multiplied by the rate of ((0.484))
0.738 percent.
(2) If the persons described in subsection (1) of this section
receive income from sources other than those described in subsection
(1) of this section or provide services other than those named in
subsection (1) of this section, that income and those services are
subject to tax as otherwise provided in this chapter.
Sec. 410 RCW 82.04.2907 and 2010 1st sp.s. c 23 s 107 are each
amended to read as follows:
(1) Upon every person engaging within this state in the business of
receiving income from royalties, the amount of tax with respect to the
business is equal to the gross income from royalties multiplied by the
rate of ((0.484)) 0.738 percent.
(2) For the purposes of this section, "gross income from royalties"
means compensation for the use of intangible property, including
charges in the nature of royalties, regardless of where the intangible
property will be used. For purposes of this subsection, "intangible
property" includes copyrights, patents, licenses, franchises,
trademarks, trade names, and similar items. "Gross income from
royalties" does not include compensation for any natural resource, the
licensing of prewritten computer software to the end user, or the
licensing of digital goods, digital codes, or digital automated
services to the end user as defined in RCW 82.04.190(11).
Sec. 411 RCW 82.04.2908 and 2005 c 514 s 302 are each amended to
read as follows:
(1) Upon every person engaging within this state in the business of
providing room and domiciliary care to residents of a boarding home
licensed under chapter 18.20 RCW, the amount of tax with respect to
such business ((shall be)) is equal to the gross income of the
business, multiplied by the rate of ((0.275)) 0.5813 percent.
(2) For the purposes of this section, "domiciliary care" has the
meaning provided in RCW 18.20.020.
Sec. 412 RCW 82.04.2909 and 2010 1st sp.s. c 2 s 1 and 2010 c 114
s 108 are each reenacted and amended to read as follows:
(1) Upon every person who is an aluminum smelter engaging within
this state in the business of manufacturing aluminum; as to such
persons the amount of tax with respect to such business is, in the case
of manufacturers, equal to the value of the product manufactured, or in
the case of processors for hire, equal to the gross income of the
business, multiplied by the rate of ((.2904)) 0.3388 percent.
(2) Upon every person who is an aluminum smelter engaging within
this state in the business of making sales at wholesale of aluminum
manufactured by that person, as to such persons the amount of tax with
respect to such business is equal to the gross proceeds of sales of the
aluminum multiplied by the rate of ((.2904)) 0.3388 percent.
(3) A person reporting under the tax rate provided in this section
must file a complete annual report with the department under RCW
82.32.534.
(4) This section expires January 1, ((2012)) 2017.
Sec. 413 RCW 82.04.294 and 2010 c 114 s 109 are each amended to
read as follows:
(1)(a) Beginning October 1, 2005, upon every person engaging within
this state in the business of manufacturing solar energy systems using
photovoltaic modules, or of manufacturing solar grade silicon to be
used exclusively in components of such systems; as to such persons the
amount of tax with respect to such business is, in the case of
manufacturers, equal to the value of the product manufactured, or in
the case of processors for hire, equal to the gross income of the
business, multiplied by the rate of 0.2904 percent.
(b) Beginning October 1, 2009, upon every person engaging within
this state in the business of manufacturing solar energy systems using
photovoltaic modules, or of manufacturing solar grade silicon, silicon
solar wafers, silicon solar cells, thin film solar devices, or compound
semiconductor solar wafers to be used exclusively in components of such
systems; as to such persons the amount of tax with respect to such
business is, in the case of manufacturers, equal to the value of the
product manufactured, or in the case of processors for hire, equal to
the gross income of the business, multiplied by the rate of ((0.275
percent)):
(i) 0.275 percent beginning October 1, 2009, until the effective
date of this section; and
(ii) 0.3273 percent beginning the effective date of this section.
(2)(a) Beginning October 1, 2005, upon every person engaging within
this state in the business of making sales at wholesale of solar energy
systems using photovoltaic modules and manufactured by the seller, or
of solar grade silicon manufactured by the seller to be used
exclusively in components of such systems; as to such persons the
amount of tax with respect to the business is equal to the gross
proceeds of sales of the solar energy systems using photovoltaic
modules, or of the solar grade silicon to be used exclusively in
components of such systems, multiplied by the rate of 0.2904 percent.
(b) Beginning October 1, 2009, upon every person engaging within
this state in the business of making sales at wholesale of solar energy
systems using photovoltaic modules, or of solar grade silicon, silicon
solar wafers, silicon solar cells, thin film solar devices, or compound
semiconductor solar wafers to be used exclusively in components of such
systems, manufactured by that person; as to such persons the amount of
tax with respect to such business is equal to the gross proceeds of
sales of the solar energy systems using photovoltaic modules, or of the
solar grade silicon to be used exclusively in components of such
systems, multiplied by the rate of ((0.275)) 0.3168 percent.
(3) Beginning October 1, 2009, silicon solar wafers, silicon solar
cells, thin film solar devices, or compound semiconductor solar wafers
are "semiconductor materials" for the purposes of RCW 82.08.9651 and
82.12.9651.
(4) The definitions in this subsection apply throughout this
section.
(a) "Compound semiconductor solar wafers" means a semiconductor
solar wafer composed of elements from two or more different groups of
the periodic table.
(b) "Module" means the smallest nondivisible self-contained
physical structure housing interconnected photovoltaic cells and
providing a single direct current electrical output.
(c) "Photovoltaic cell" means a device that converts light directly
into electricity without moving parts.
(d) "Silicon solar cells" means a photovoltaic cell manufactured
from a silicon solar wafer.
(e) "Silicon solar wafers" means a silicon wafer manufactured for
solar conversion purposes.
(f) "Solar energy system" means any device or combination of
devices or elements that rely upon direct sunlight as an energy source
for use in the generation of electricity.
(g) "Solar grade silicon" means high-purity silicon used
exclusively in components of solar energy systems using photovoltaic
modules to capture direct sunlight. "Solar grade silicon" does not
include silicon used in semiconductors.
(h) "Thin film solar devices" means a nonparticipating substrate on
which various semiconducting materials are deposited to produce a
photovoltaic cell that is used to generate electricity.
(5) A person reporting under the tax rate provided in this section
must file a complete annual report with the department under RCW
82.32.534.
(6) This section expires June 30, 2014.
Sec. 501 RCW 82.32.790 and 2010 c 114 s 201 and 2010 c 106 s 401
are each reenacted and amended to read as follows:
(1)(a) Section 401, chapter . . ., Laws of 2011 (this act), section
206, chapter 106, Laws of 2010, sections 104, 110, 117, 123, 125, 129,
131, and 150, chapter 114, Laws of 2010, section 3, chapter 461, Laws
of 2009, section 7, chapter 300, Laws of 2006, and section 4, chapter
149, Laws of 2003 are contingent upon the siting and commercial
operation of a significant semiconductor microchip fabrication facility
in the state of Washington.
(b) For the purposes of this section:
(i) "Commercial operation" means the same as "commencement of
commercial production" as used in RCW 82.08.965.
(ii) "Semiconductor microchip fabrication" means "manufacturing
semiconductor microchips" as defined in RCW 82.04.426.
(iii) "Significant" means the combined investment of new buildings
and new machinery and equipment in the buildings, at the commencement
of commercial production, will be at least one billion dollars.
(2) Chapter 149, Laws of 2003 takes effect the first day of the
month in which a contract for the construction of a significant
semiconductor fabrication facility is signed, as determined by the
director of the department of revenue.
(3)(a) The department of revenue must provide notice of the
effective date of sections 104, 110, 117, 123, 125, 129, 131, and 150,
chapter 114, Laws of 2010(([,])), section 3, chapter 461, Laws of 2009,
section 7, chapter 300, Laws of 2006, and section 4, chapter 149, Laws
of 2003 to affected taxpayers, the legislature, and others as deemed
appropriate by the department.
(b) If, after making a determination that a contract has been
signed and chapter 149, Laws of 2003 is effective, the department
discovers that commencement of commercial production did not take place
within three years of the date the contract was signed, the department
must make a determination that chapter 149, Laws of 2003 is no longer
effective, and all taxes that would have been otherwise due are deemed
deferred taxes and are immediately assessed and payable from any person
reporting tax under RCW 82.04.240(2) or claiming an exemption or credit
under section 2 or 5 through 10, chapter 149, Laws of 2003. The
department is not authorized to make a second determination regarding
the effective date of chapter 149, Laws of 2003.
NEW SECTION. Sec. 502 This act takes effect if Referendum Bill
No. .... (Senate Bill No. .... (S-2241/11)) is approved by the voters
at the next general election.