AN
ACT Relating to consolidating business and occupation tax rates into fewer
categories; amending RCW 82.04.255, 82.04.290, 82.04.293, and 82.04.4452;
creating a new section; repealing RCW 82.04.055; and providing an effective
date.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
82.04.255 and 1996 c 1 s 1 are each amended to read as follows:
Upon
every person engaging within the state as a real estate broker; as to such
persons, the amount of the tax with respect to such business shall be equal to
the gross income of the business, multiplied by the rate of ((1.75)) 1.5
percent.
The
measure of the tax on real estate commissions earned by the real estate broker
shall be the gross commission earned by the particular real estate brokerage
office including that portion of the commission paid to salesmen or associate
brokers in the same office on a particular transaction: PROVIDED, HOWEVER,
That where a real estate commission is divided between an originating brokerage
office and a cooperating brokerage office on a particular transaction, each
brokerage office shall pay the tax only upon their respective shares of said
commission: AND PROVIDED FURTHER, That where the brokerage office has paid the
tax as provided herein, salesmen or associate brokers within the same brokerage
office shall not be required to pay a similar tax upon the same transaction.
Sec.
2. RCW
82.04.290 and 1996 c 1 s 2 are each amended to read as follows:
(1)
((Upon every person engaging within this state in the business of providing
selected business services other than or in addition to those enumerated in RCW
82.04.250 or 82.04.270; as to such persons the amount of tax on account of such
activities shall be equal to the gross income of the business multiplied by the
rate of 2.0 percent.
(2)
Upon every person engaging within this state in banking, loan, security,
investment management, investment advisory, or other financial businesses,
other than or in addition to those enumerated in subsection (3) of this
section; as to such persons, the amount of the tax with respect to such
business shall be equal to the gross income of the business, multiplied by the
rate of 1.6 percent.
(3))) Upon
every person engaging within this state in the business of providing
international investment management services, as to such persons, the amount of
tax with respect to such business shall be equal to the gross income or gross
proceeds of sales of the business multiplied by a rate of 0.275 percent.
(((4)))
(2) Upon every person engaging within this state in any business
activity other than or in addition to those enumerated in RCW 82.04.230,
82.04.240, 82.04.250, 82.04.255, 82.04.260, 82.04.270, and 82.04.280, and
subsection((s)) (1)((, (2), and (3))) of this section; as to such
persons the amount of tax on account of such activities shall be equal to the
gross income of the business multiplied by the rate of ((1.75)) 1.5
percent.
This
section includes, among others, and without limiting the scope hereof (whether
or not title to materials used in the performance of such business passes to
another by accession, confusion or other than by outright sale), persons
engaged in the business of rendering any type of service which does not
constitute a "sale at retail" or a "sale at wholesale."
The value of advertising, demonstration, and promotional supplies and materials
furnished to an agent by his principal or supplier to be used for
informational, educational and promotional purposes shall not be considered a
part of the agent's remuneration or commission and shall not be subject to
taxation under this section.
Sec.
3. RCW
82.04.293 and 1995 c 229 s 1 are each amended to read as follows:
For
purposes of RCW 82.04.290(((3))):
(1)
A person is engaged in the business of providing international investment
management services, if:
(a)
Such person is engaged primarily in the business of providing investment
management services; and
(b)
At least ten percent of the gross income of such person is derived from
providing investment management services to any of the following: (i) Persons
or collective investment funds residing outside the United States; or (ii)
persons or collective investment funds with at least ten percent of their
investments located outside the United States.
(2)
"Investment management services" means investment research,
investment consulting, portfolio management, fund administration, fund
distribution, investment transactions, or related investment services.
(3)
"Collective investment fund" includes:
(a)
A mutual fund or other regulated investment company, as defined in section
851(a) of the internal revenue code of 1986, as amended;
(b)
An "investment company," as that term is used in section 3(a) of the
investment company act of 1940, as well as any entity that would be an
investment company for this purpose but for the exemptions contained in section
3(c)(1) or (11);
(c)
An "employee benefit plan," which includes any plan, trust,
commingled employee benefit trust, or custodial arrangement that is subject to
the employee retirement income security act of 1974, as amended, 29 U.S.C. Sec.
1001 et seq., or that is described in sections 125, 401, 403, 408, 457, and
501(c)(9) and (17) through (23) of the internal revenue code of 1986, as
amended, or a similar plan maintained by a state or local government, or a plan,
trust, or custodial arrangement established to self-insure benefits required by
federal, state, or local law;
(d)
A fund maintained by a tax-exempt organization, as defined in section 501(c)(3)
of the internal revenue code of 1986, as amended, for operating,
quasi-endowment, or endowment purposes;
(e)
Funds that are established for the benefit of such tax-exempt organizations,
such as charitable remainder trusts, charitable lead trusts, charitable annuity
trusts, or other similar trusts; or
(f)
Collective investment funds similar to those described in (a) through (e) of
this subsection created under the laws of a foreign jurisdiction.
(4)
Investments are located outside the United States if the underlying assets in
which the investment constitutes a beneficial interest reside or are created,
issued or held outside the United States.
Sec.
4. RCW
82.04.4452 and 1994 sp.s. c 5 s 2 are each amended to read as follows:
(1)
In computing the tax imposed under this chapter, a credit is allowed for each
person whose research and development spending during the year in which the
credit is claimed exceeds 0.92 percent of the person's taxable amount during
the same calendar year.
(2)
The credit is equal to the greater of the amount of qualified research and
development expenditures of a person or eighty percent of amounts received by a
person other than a public educational or research institution in compensation
for the conduct of qualified research and development, multiplied by the rate
((of 0.515 percent)) provided in RCW 82.04.260(6) in the case of
a nonprofit corporation or nonprofit association engaging within this state in
research and development, and ((2.5 percent)) the rate provided in
RCW 82.04.290(2) for every other person.
(3)
Any person entitled to the credit provided in subsection (2) of this section as
a result of qualified research and development conducted under contract may
assign all or any portion of the credit to the person contracting for the
performance of the qualified research and development.
(4)
The credit, including any credit assigned to a person under subsection (3) of
this section, shall be taken against taxes due for the same calendar year in
which the qualified research and development expenditures are incurred. The
credit, including any credit assigned to a person under subsection (3) of this
section, for each calendar year shall not exceed the lesser of two million
dollars or the amount of tax otherwise due under this chapter for the calendar
year.
(5)
Any person taking the credit, including any credit assigned to a person under
subsection (3) of this section, whose research and development spending during
the calendar year in which the credit is claimed fails to exceed 0.92 percent
of the person's taxable amount during the same calendar year shall be liable
for payment of the additional taxes represented by the amount of credit taken
together with interest, but not penalties. Interest shall be due at the rate
provided for delinquent excise taxes retroactively to the date the credit was
taken until the taxes are paid. Any credit assigned to a person under
subsection (3) of this section that is disallowed as a result of this section
may be taken by the person who performed the qualified research and development
subject to the limitations set forth in subsection (4) of this section.
(6)
Any person claiming the credit, and any person assigning a credit as provided
in subsection (3) of this section, shall file an affidavit form prescribed by
the department which shall include the amount of the credit claimed, an
estimate of the anticipated qualified research and development expenditures
during the calendar year for which the credit is claimed, an estimate of the
taxable amount during the calendar year for which the credit is claimed, and
such additional information as the department may prescribe.
(7)
A person claiming the credit shall agree to supply the department with
information necessary to measure the results of the tax credit program for
qualified research and development expenditures.
(8)
The department shall use the information required under subsection (7) of this
section to perform three assessments on the tax credit program authorized under
this section. The assessments will take place in 1997, 2000, and 2003. The
department shall prepare reports on each assessment and deliver their reports
by September 1, 1997, September 1, 2000, and September 1, 2003. The
assessments shall measure the effect of the program on job creation, the number
of jobs created for Washington residents, company growth, the introduction of
new products, the diversification of the state's economy, growth in research
and development investment, the movement of firms or the consolidation of
firms' operations into the state, and such other factors as the department
selects.
(9)
For the purpose of this section:
(a)
"Qualified research and development expenditures" means operating
expenses, including wages, compensation of a proprietor or a partner in a
partnership as determined under rules adopted by the department, benefits,
supplies, and computer expenses, directly incurred in qualified research and
development by a person claiming the credit provided in this section. The term
does not include amounts paid to a person other than a public educational or
research institution to conduct qualified research and development. Nor does
the term include capital costs and overhead, such as expenses for land,
structures, or depreciable property.
(b)
"Qualified research and development" shall have the same meaning as
in RCW 82.63.010.
(c)
"Research and development spending" means qualified research and
development expenditures plus eighty percent of amounts paid to a person other
than a public educational or research institution to conduct qualified research
and development.
(d)
"Taxable amount" means the taxable amount subject to the tax imposed
in this chapter required to be reported on the person's combined excise tax
returns during the year in which the credit is claimed, less any taxable amount
for which a credit is allowed under RCW 82.04.440.
(10)
This section shall expire December 31, 2004.
NEW
SECTION. Sec. 5. RCW
82.04.055 and 1993 sp.s. c 25 s 201 are each repealed.
NEW
SECTION. Sec. 6. This
act does not affect any existing right acquired or liability or obligation
incurred under the sections amended or repealed in this act or under any rule
or order adopted under those sections, nor does it affect any proceeding
instituted under those sections.
NEW SECTION. Sec. 7. This
act takes effect July 1, 1998.
