AN ACT Relating to creating a sales tax holiday for back-to-school clothing and supplies; amending RCW 82.12.040; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; creating new sections; and providing expiration dates.

NEW SECTION. Sec. 1. The legislature finds that Washington families pay thousands of dollars in sales and use tax on their purchases of clothing and school supplies in August before the school year begins. The legislature further finds that a recent study has shown that temporarily exempting some of these purchases from sales and use tax would give Washington families a needed tax break and increase sales, which in turn would generate new jobs and more state and local tax revenue. Therefore, it is the legislature's intent to create a "back-to-school" sales tax holiday.

(1) Subject to the conditions and limitations provided in this section, the tax levied by RCW 82.08.020 does not apply to the sale of the following tangible personal property: (a) Clothing items; and (b) school supply items.

(4) Rules adopted by the department for the administration of this section must be substantially consistent with the streamlined sales and use tax agreement, as that term is used in chapter 82.58 RCW.

(1) The provisions of this chapter do not apply to the use of the following tangible personal property: (a) Clothing items that are not used primarily for business-related activities; and (b) school supply items that are not used primarily for business-related activities.

(3) For the purposes of this section, "business" has the meaning provided in RCW 82.04.140 and also includes activities engaged in by a common school, school district, or educational service district.

(1) Every person who is subject to a collection obligation under chapter 82.08 RCW, except a person making a valid election to comply with the notice and reporting provisions of RCW 82.13.020, must obtain from the department a certificate of registration, and must, at the time of making sales of tangible personal property, digital goods, digital codes, digital automated services, extended warranties, or sales of any service defined as a retail sale in RCW 82.04.050 (2) (a) or (g) or (6)(c), or making transfers of either possession or title, or both, of tangible personal property for use in this state, collect from the purchasers or transferees the tax imposed under this chapter. The tax to be collected under this section must be in an amount equal to the purchase price multiplied by the rate in effect for the retail sales tax under RCW 82.08.020.

(2) Every person who engages in this state in the business of acting as an independent selling agent for persons who do not hold a valid certificate of registration, and who receives compensation by reason of sales of tangible personal property, digital goods, digital codes, digital automated services, extended warranties, or sales of any service defined as a retail sale in RCW 82.04.050 (2) (a) or (g) or (6)(c), of his or her principals for use in this state, must, at the time such sales are made, collect from the purchasers the tax imposed on the purchase price under this chapter, and for that purpose is deemed a retailer as defined in this chapter.

(3) The tax required to be collected by this chapter is deemed to be held in trust by the retailer until paid to the department, and any retailer who appropriates or converts the tax collected to the retailer's own use or to any use other than the payment of the tax provided herein to the extent that the money required to be collected is not available for payment on the due date as prescribed is guilty of a misdemeanor. In case any seller fails to collect the tax herein imposed or having collected the tax, fails to pay the same to the department in the manner prescribed, whether such failure is the result of the seller's own acts or the result of acts or conditions beyond the seller's control, the seller is nevertheless personally liable to the state for the amount of such tax, unless the seller has taken from the buyer a copy of a direct pay permit issued under RCW 82.32.087.

(4) Any retailer who refunds, remits, or rebates to a purchaser, or transferee, either directly or indirectly, and by whatever means, all or any part of the tax levied by this chapter is guilty of a misdemeanor.

(5) Notwithstanding subsections (1) through (4) of this section, any person making sales is not obligated to collect the tax imposed by this chapter if the person would have been obligated to collect retail sales tax on the sale absent a specific exemption provided in chapter 82.08 RCW, and there is no corresponding use tax exemption in this chapter. Nothing in this subsection (5) may be construed as relieving purchasers from liability for reporting and remitting the tax due under this chapter directly to the department.

(6) Notwithstanding subsections (1) through (4) of this section, any person making sales is not obligated to collect the tax imposed by this chapter if the state is prohibited under the Constitution or laws of the United States from requiring the person to collect the tax imposed by this chapter.

(7) Notwithstanding subsections (1) through (4) of this section, any licensed dealer facilitating a firearm sale or transfer between two unlicensed persons by conducting background checks under chapter 9.41 RCW is not obligated to collect the tax imposed by this chapter.

(8) Notwithstanding subsections (1) through (4) of this section, a seller is not obligated to collect the tax imposed by this chapter if the product is exempt from retail sales tax under section 2 of this act, but is not exempt from use tax under section 3 of this act.