S-1405               _______________________________________________

                                                   SENATE BILL NO. 5707

                        _______________________________________________

State of Washington                               51st Legislature                              1989 Regular Session

By Senators DeJarnatt, Owen, von Reichbauer, Conner and Johnson

Read first time 2/3/89 and referred to Committee on  Ways & Means.

AN ACT Relating to sales tax exemption for public corporations engaged in artistic or cultural programs; amending RCW 82.04.4328; and adding a new section to chapter 82.08 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

        Sec. 1.  Section 6, chapter 140, Laws of 1981 as amended by section 7, chapter 471, Laws of 1985 and RCW 82.04.4328 are each amended to read as follows:

          (1) For the purposes of RCW 82.04.4322, 82.04.4324, 82.04.4326, 82.04.4327, 82.08.031, and 82.12.031, the term "artistic or cultural organization" means an organization which is organized and operated exclusively for the purpose of providing artistic or cultural exhibitions, presentations, or performances or cultural or art education programs, as defined in subsection (((2))) (4) of this section, for viewing or attendance by the general public.

(2)  The organization must be either:

(a) A not-for-profit corporation under chapter 24.03 RCW and managed by a governing board of not less than eight individuals none of whom is a paid employee of the organization or by a corporation sole under chapter 24.12 RCW; or

(b) A public corporation established under RCW 35.21.730 for the purpose of constructing or reconstructing one or more historic ships.

(3)  In addition, in order for a not-for-profit corporation described in subsection (2)(a) of this section to qualify for deduction or exemption from taxation under RCW 82.04.4322, 82.04.4324, 82.04.4326, 82.04.4327, 82.08.031, and 82.12.031, the corporation shall satisfy the following conditions:

          (a) No part of its income may be paid directly or indirectly to its members, stockholders, officers, directors, or trustees except in the form of services rendered by the corporation in accordance with its purposes and bylaws;

          (b) Salary or compensation paid to its officers and executives must be only for actual services rendered, and at levels comparable to the salary or compensation of like positions within the state;

          (c) Assets of the corporation must be irrevocably dedicated to the activities for which the exemption is granted and, on the liquidation, dissolution, or abandonment by the corporation, may not inure directly or indirectly to the benefit of any member or individual except a nonprofit organization, association, or corporation which also would be entitled to the exemption;

          (d) The corporation must be duly licensed or certified when licensing or certification is required by law or regulation;

          (e) The amounts received that qualify for exemption must be used for the activities for which the exemption is granted;

          (f) Services must be available regardless of race, color, national origin, or ancestry; and

          (g) The director of revenue shall have access to its books in order to determine whether the corporation is exempt from taxes.

          (((2))) (4) The term "artistic or cultural exhibitions, presentations, or performances or cultural or art education programs" includes and is limited to:

          (a) An exhibition or presentation of works of art or objects of cultural or historical significance, such as those commonly displayed in art or history museums;

          (b) A musical or dramatic performance or series of performances; or

          (c) An educational seminar or program, or series of such programs, offered by the organization to the general public on an artistic, cultural, or historical subject.

NEW SECTION. Sec. 2.  A new section is added to chapter 82.08 RCW to read as follows:

          Section 1 of this act applies retroactively to all purchases made on or after January 1, 1987.  A public corporation which qualifies for an exemption from sales or use tax may obtain a refund of any tax paid on purchases made on or after January 1, 1987, where such purchases would now be exempt from taxation under section 1 of this act.