SENATE BILL REPORT

SB 5096

BYSenators Bluechel, Gaspard, McDonald, Bauer, Conner, Amondson, Anderson, Barr and Johnson

Exempting small timber harvesters from the business and occupation tax.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 27, 1989; March 1, 1989

Majority Report:  Do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Amondson, Bailey, Bauer, Bluechel, Fleming, Gaspard, Hayner, Johnson, Lee, Newhouse, Owen, Smith, Talmadge, Warnke, Williams, Wojahn.

Senate Staff:William Bafus (786-7437)

                  March 14, 1989

AS PASSED SENATE, MARCH 13, 1989

BACKGROUND:

Persons who harvest timber for sale or commercial or industrial use from their own land or from land owned by others under contract or for hire are subject to the business and occupation tax upon "extractors" at a rate of 0.484 percent of gross proceeds.  Persons who harvest 500 thousand board feet or less in a calendar quarter or 1 million board feet or less in a year may be small woodlot owners or small for-hire loggers.  However, this same category may often include persons clearing land for commercial, industrial or residential development purposes.  Such persons are not primarily engaged in the business of growing or harvesting timber.

In order for persons in the latter group to satisfy their business and occupation tax obligation, they are frequently required to open an account with the Department of Revenue, obtain necessary Washington State business licenses, and apply for state and federal taxpayer identification numbers.  It has been argued that the costs to the taxpayer of doing so -- and the costs to the Department of Revenue to process returns yielding quite small amounts of revenue per case -- frequently exceed the additional revenue to the state.

SUMMARY:

Persons who fell, cut or take timber for sale or for commercial or industrial use in amounts not exceeding 500 thousand board feet in a calendar quarter and not exceeding 1 million board feet in a calendar year are exempt from the business and occupation tax.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Senate Committee - Testified: Nels Hansen, Washington Farm Forestry Association (for)