S-4641               _______________________________________________

                                                   SENATE BILL NO. 6859

                        _______________________________________________

State of Washington                               51st Legislature                              1990 Regular Session

By Senators McDonald, Gaspard, Hayner, Vognild, Bluechel, Sellar, Warnke, Saling, Owen, Cantu, Amondson, Johnson, Moore, Newhouse, Smith, Bauer and Sutherland

Read first time 1/31/90 and referred to Committee on  Ways & Means.

AN ACT Relating to the tax status of computer software; amending RCW 84.04.080 and 84.04.090; and creating new sections.

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

        Sec. 1.  Section 84.04.080, chapter 15, Laws of 1961 and RCW 84.04.080 are each amended to read as follows:

          "Personal property" for the purposes of taxation, shall be held and construed to embrace and include, without especially defining and enumerating it, all goods, chattels, stocks, estates or moneys; all standing timber held or owned separately from the ownership of the land on which it may stand; all fish trap, pound net, reef net, set net and drag seine fishing locations; all leases of real property and leasehold interests therein for a term less than the life of the holder; all improvements upon lands the fee of which is still vested in the United States, or in the state of Washington; all gas and water mains and pipes laid in roads, streets or alleys; and all property of whatsoever kind, name, nature and description, which the law may define or the courts interpret, declare and hold to be personal property for the purpose of taxation and as being subject to the laws and under the jurisdiction of the courts of this state, whether the same be any marine craft, as ships and vessels, or other property holden under the laws and jurisdiction of the courts of this state, be the same at home or abroad((:  PROVIDED, That)).  Mortgages, notes, accounts, certificates of deposit, tax certificates, judgments, state, county, municipal and taxing district bonds and warrants shall not be considered as property for the purpose of this title, and no deduction shall hereafter be made or allowed on account of any indebtedness owed.  Personal property subject to taxation under this title shall not include computer software, except when the cost thereof is included, without being separately stated, in the cost of an item of tangible personal property.  "Computer software" shall include any program or routine used to cause a computer, or other processing unit, to perform a specific task or set of tasks, including without limitation, operational and applicational programs and all documentation related thereto.

        Sec. 2.  Section 84.04.090, chapter 15, Laws of 1961 as last amended by section 1, chapter 155, Laws of 1987 and RCW 84.04.090 are each amended to read as follows:

          The term "real property" for the purposes of taxation shall be held and construed to mean and include the land itself, whether laid out in town lots or otherwise, and all buildings, structures or improvements or other fixtures of whatsoever kind thereon, except improvements upon lands the fee of which is still vested in the United States, or in the state of Washington, and all rights and privileges thereto belonging or in any wise appertaining, except leases of real property and leasehold interests therein for a term less than the life of the holder; and all substances in and under the same; all standing timber growing thereon, except standing timber owned separately from the ownership of the land upon which the same may stand or be growing; and all property which the law defines or the courts may interpret, declare and hold to be real property under the letter, spirit, intent and meaning of the law for the purposes of taxation.  The term real property shall also include a mobile home which has substantially lost its identity as a mobile unit by virtue of its being permanently fixed in location upon land owned or leased by the owner of the mobile home and placed on a permanent foundation (posts or blocks) with fixed pipe connections with sewer, water, or other utilities((:  PROVIDED, That)).  A mobile home located on land leased by the owner of the mobile home shall be subject to the personal property provisions of chapter 84.56 RCW and RCW 84.60.040.  Real property subject to taxation under this title shall not include computer software, except when the cost thereof is included, without being separately stated, in the cost of an item of real property.  "Computer software" shall include any program or routine used to cause a computer, or other processing unit, to perform a specific task or set of tasks, including without limitation, operational and applicational programs and all documentation related thereto.

NEW SECTION. Sec. 3.     Nothing contained in this act shall create any implication related to liability for property tax with respect to computer software prior to the effective date of this act.

NEW SECTION. Sec. 4.     This act shall be effective for taxes levied for collection in 1991 and thereafter.