SENATE BILL REPORT

SB 5183

BYSenators Hansen, Barr, Gaspard, Bauer, Anderson and Bailey

Modifying the taxation of seed conditioning for use in planting.

Senate Committee on Agriculture

Senate Hearing Date(s):January 20, 1987

Majority Report:  Do pass.

      Signed by Senators Hansen, Chairman; Bauer, Vice Chairman; Anderson, Bailey, Barr, Gaspard.

Senate Staff:Kaleen Cottingham (786-7415)

                  February 2, 1987

AS PASSED SENATE, FEBRUARY 2, 1987

BACKGROUND:

For business and occupation tax purposes, the definition of "to manufacture" includes all activities of a commercial or industrial nature in which labor or skill is applied to materials so that a new, different or useful substance is provided for sale or commercial or industrial use.  Activities which fall within the Department of Revenue interpretation of "to manufacture" subjects the manufacturer to the manufacturing tax only if such product is exported or sold out of state.  If the product is manufactured and sold within the state, the manufacturer is subject to the wholesale tax.

In 1985, the Department of Revenue ruled that the conditioning of seed fell within the definition of "to manufacture," thus subjecting the activity to the B&O tax.

Conditioning of seed involves vibration, air, gravity and occasionally heat to remove dirt, chaff, nonviable seed and other impurities.

SUMMARY:

The conditioning of seed for use in planting is exempted from the definition of "to manufacture."

Fiscal Note:      requested

Senate Committee - Testified: Ken Christianson, Alf Christianson Seed Co.; Les Clemmons, Washington Seed Council