SENATE BILL REPORT

 

 

                                   ESHB 1676

 

 

BYHouse Committee on Revenue (originally sponsored by Representatives H. Sommers, Rust, Holland, Wang and Winsley)

 

 

Altering the sales tax exemption for nonresidents to apply only to border counties.

 

 

House Committe on Revenue

 

 

Senate Committee on Ways & Means

 

      Senate Hearing Date(s):March 29, 1989

 

      Senate Staff:Bill Freund (786-7441)

 

 

                             AS OF MARCH 29, 1989

 

BACKGROUND:

 

In 1965, the Legislature enacted an exemption from sales tax for nonresidents who purchase tangible personal property for use outside of this state.  Nonresidents were required to purchase permits for presentation to retailers at the time of sale.  The intent of the legislation was to assist Washington retailers in competing with retailers in states having no sales tax or a low sales tax rate.

 

The 1988 Legislature amended the statute, effective July 1, 1989, to allow presentation of a valid driver's license and one other piece of identification to qualify for the exemption.  The exemption is available to residents of states and provinces of Canada only if the resident's state or province does not impose a sales tax of 3 percent or more, or if imposing such a tax permits Washington residents an exemption by reason of their residence.

 

Oregon is the only contiguous state or province which does not impose a sales tax.

 

SUMMARY:

 

Residents of states or provinces of Canada are eligible for the nonresident sales tax exemption if their state or province is contiguous to the state of Washington and does not levy a retail sales or use tax of 3 percent or more, or if imposing such a tax, permits Washington residents an exemption by reason of their residence.  Only natural persons (not corporations) are eligible for this exemption.

 

For purposes of the exemption, "border county" is defined as a county contiguous to a state or province of Canada that does not impose a retail sales tax or use tax of 3 percent or more or, if imposing such a tax, permits Washington residents an exemption by reason of their residence.

 

To qualify for the exemption in border counties or in cities on the Columbia River that are no more than 30 miles from the Oregon border, nonresidents must present a valid driver's license and one other piece of identification.  To qualify for the exemption in nonborder counties, nonresidents must present a valid driver's license, one other piece of identification, and a permit issued by the Department of Revenue.

 

Appropriation:    none

 

Revenue:    yes

 

Fiscal Note:      requested February 2, 1989