SENATE BILL REPORT

SB 5122

BYSenators Matson, Smith, Wojahn, Moore, Lee, Benitz, Conner, Hansen, Sutherland, Smitherman, Fleming and McMullen

Providing a business and occupation tax deduction for amusement device owners.

Senate Committee on Ways & Means

Senate Hearing Date(s):February 1, 1990

Senate Staff:Bill Freund (786-7715)

AS OF JANUARY 31, 1990

BACKGROUND:

The business and occupation (B&O) tax is levied on the privilege of engaging in business.  It is based on gross proceeds of sales without any deduction for costs, expenses or losses.

Owners of amusement devices, such as pinball machines and video games typically lease these devices to store operators with the income split between the owner and the store operator.  Common practice is for the owner of the device to remove the money from the device and then split the proceeds with the store operator.

Under current law, the owner of the device is liable for B&O tax on 100 percent of the proceeds.  The store operator is also liable for B&O tax on amounts received from the owner of the device.

SUMMARY:

Owners of amusement devices may deduct from taxable amounts the share paid to persons upon whose premises the device is operated.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Effective Date:The bill takes effect October 1, 1989.