H-4066.2  _______________________________________________

                          HOUSE BILL 3155

          _______________________________________________

State of Washington      56th Legislature     2000 Regular Session

By Representative Thomas

Read first time .  Referred to Committee on .

Changing taxation.

    AN ACT Relating to taxation; amending RCW 41.40.052, 82.03.130, 82.03.140, 82.04.060, 82.04.460, 82.04.480, 82.08.020, 82.08.0255, 82.08.090, 82.12.010, 82.12.020, 82.12.0252, 82.12.0255, 82.12.0256, 82.12.035, 82.12.060, 82.04.230, 82.04.240, 82.04.250, 82.04.255, 82.04.263, 82.04.2635, 82.04.270, 82.04.270, 82.04.280, 82.04.280, 82.04.2905, 82.04.2907, 82.45.060, 82.04.290, 82.04.290, and 82.04.290; reenacting and amending RCW 82.04.050, 82.04.190, 82.04.250, 82.04.260, 82.04.290, 82.04.290, and 82.04.290; adding new sections to chapter 82.08 RCW; adding new sections to chapter 82.12 RCW; adding a new title to the Revised Code of Washington to be codified as Title 82A RCW; creating a new section;  repealing RCW 82.08.02525, 82.08.0253, 82.08.02535, 82.08.02537, 82.08.0256, 82.08.02565, 82.08.02566, 82.08.02567, 82.08.02568, 82.08.02569, 82.08.0257, 82.08.02573, 82.08.0258, 82.08.0259, 82.08.0261, 82.08.0262, 82.08.0263, 82.08.0264, 82.08.0265, 82.08.0266, 82.08.02665, 82.08.0267, 82.08.0268, 82.08.0269, 82.08.0271, 82.08.0272, 82.08.0273, 82.08.0274, 82.08.02745, 82.08.0275, 82.08.0276, 82.08.0277, 82.08.0278, 82.08.0279, 82.08.02795, 82.08.0282, 82.08.0285, 82.08.0287, 82.08.02875, 82.08.0288, 82.08.0289, 82.08.0291, 82.08.02915, 82.08.02917, 82.08.0294, 82.08.0296, 82.08.0298, 82.08.0299, 82.08.031, 82.08.0311, 82.08.0315, 82.08.036, 82.08.810, 82.08.811, 82.08.812, 82.08.820, 82.08.830, 82.08.832, 82.12.02525, 82.12.02545, 82.12.02565, 82.12.02566, 82.12.02567, 82.12.02568, 82.12.02569, 82.12.0257, 82.12.0258, 82.12.0259, 82.12.02595, 82.12.0261, 82.12.0262, 82.12.0263, 82.12.0264, 82.12.0265, 82.12.0267, 82.12.0268, 82.12.02685, 82.12.0269, 82.12.0271, 82.12.0272, 82.12.0273, 82.12.0274, 82.12.02745, 82.12.0276, 82.12.0279, 82.12.0282, 82.12.0283, 82.12.0284, 82.12.02915, 82.12.02917, 82.12.0294, 82.12.0296, 82.12.0298, 82.12.031, 82.12.0311, 82.12.0315, 82.12.0345, 82.12.0347, 82.12.038, 82.12.800, 82.12.801, 82.12.802, 82.12.810, 82.12.811, 82.12.812, 82.12.820, and 82.12.832; prescribing penalties; providing contingent effective dates; and providing expiration dates.

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

                              PART I

                            INCOME TAX

NEW SECTION. Sec. 101.  DEFINITIONS.  Unless the context clearly requires otherwise, the definitions in this section apply throughout this title.  Except as provided in this section, any term used in this title has the same meaning as when used in a comparable context in the internal revenue code.

    (1) "Adjusted gross income" means adjusted gross income as determined under the internal revenue code.

    (2) "Department" means the state department of revenue.

    (3) "Director" means the director of the department.

    (4) "Federal base income" means:

    (a) For individuals, adjusted gross income.

    (b) For all other persons, taxable income as determined under the internal revenue code.

    (5) "Individual" means a natural person.

    (6) "Internal revenue code" means the United States internal revenue code of 1986 and amendments thereto, as existing and in effect on January 1, 2000.

    (7) "Person" includes individuals, partnerships, firms, companies, fiduciaries, estates, trusts, and corporations.

    (8) "Resident individual" includes:

    (a) An individual who has resided in this state for the entire taxable year;

    (b) An individual who is domiciled in this state unless the individual:

    (i) Maintains no permanent place of abode in this state;

    (ii) Does maintain a permanent place of abode elsewhere; and

    (iii) Spends in the aggregate not more than thirty days in the taxable year in this state;

    (c) An individual who is not domiciled in this state, but maintains a permanent place of abode in this state and spends in the aggregate more than one hundred eighty-three days of the taxable year in this state unless the individual establishes to the satisfaction of the director of the department that the individual is in the state only for temporary or transitory purposes; and

    (d) An individual who claims the state of Washington as the individual's tax home for federal income tax purposes.

    (9) "Resident estate" means an estate of which a personal representative was appointed by a Washington court, or, an estate the administration of which is carried on in this state.

    (10) "Resident trust" means a trust whose situs as determined by RCW 11.96.040 is within the state of Washington.

    (11) "Taxable income" means federal base income after making the additions, subtractions, apportionments, and allocations provided under this title.

    (12) "Taxable year" means the taxpayer's taxable year as defined under the internal revenue code.

    (13) "Taxpayer" means a person receiving income subject to tax under this title.

NEW SECTION. Sec. 102.  INCOME TAX IMPOSED.  A tax is imposed on taxable income of each individual, estate, and trust at the rate of one and nine-tenths percent.  A tax is imposed on the taxable income of each corporation at the rate of six percent.

NEW SECTION. Sec. 103.  TAXABLE INCOME MODIFICATIONS.  In computing taxable income, modifications shall be made to the taxpayer's federal base income as required under this section, unless the modification has the effect of duplicating an item of income or deduction.

    (1) Add amounts that have been deducted in computing federal base income to the extent the amounts have been carried over from taxable years ending before the effective date of this section.

    (2) Add amounts that have been deducted in computing federal base income to the extent the amounts have been carried back from future taxable years.

    (3) Add taxes on or measured by net income that have been deducted under the internal revenue code in computing federal base income.

    (4) Add gross income that has been excluded under section 103 of the internal revenue code in computing federal base income, except gross income derived from obligations of the state of Washington or political subdivisions of the state of Washington.

    (5) Subtract any expenses incurred in the production of amounts added under subsection (4) of this section, to the extent the expenses have not been deducted in computing federal base income.

    (6) Subtract gross income that the state is prohibited from taxing under the Constitution or laws of the United States, to the extent the gross income was included in computing federal base income.

    (7) Add any expenses incurred in the production of amounts subtracted under subsection (6) of this section, to the extent the expenses have been deducted in computing federal base income.

NEW SECTION. Sec. 104.  TAX RETURNS FOR FRACTIONAL YEAR.  (1) If the first taxable year of any taxpayer with respect to which a tax is imposed by this title ends before December 31st of the calendar year in which this title becomes effective, referred to in this section as a fractional taxable year, the taxable income for the fractional taxable year shall be the taxpayer's taxable income for the entire taxable year, adjusted by one of the following methods, at the taxpayer's election:

    (a) The taxable income shall be multiplied by a fraction.  The numerator of the fraction is the number of days in the fractional taxable year.  The denominator of the fraction is the number of days in the entire taxable year.

    (b) The taxable income shall be adjusted, in accordance with rules of the department, so as to include only such income and be reduced only by such deductions as can be clearly determined from the permanent records of the taxpayer to be attributable to the fractional taxable year.

    (2) If an individual taxpayer's taxable income is adjusted under subsection (1) of this section, the deduction amounts allowed under section 402 of this act for the taxpayer shall be reduced by multiplying the amount of the exemption by a fraction.  The numerator of the fraction is the number of days in the taxpayer's fractional taxable year.  The denominator of the fraction is the number of days in the entire taxable year.

NEW SECTION. Sec. 105.  APPORTIONMENT AND ALLOCATION OF INCOME‑-INDIVIDUALS, ESTATES, AND TRUSTS.  (1) For resident individuals, estates, and trusts, all income shall be apportioned and allocated to this state.

    (2) For nonresident individuals, estates, and trusts, income derived from sources within this state shall be apportioned and allocated to this state.  For purposes of this title:

    (a) The adjusted gross income of a nonresident derived from sources within this state is the net amount of items of income, gain, loss, and deduction of the nonresident's federal adjusted gross income that are derived from or connected with sources in this state including any distributive share of partnership income and deductions, and any share of estate or trust income and deductions, including any unrelated business income of an otherwise exempt trust or organization.

    (b) Items of income, gain, loss, and deduction derived from or connected with sources within this state are those items attributable to the ownership or disposition of any interest in real or tangible personal property in this state, and a business, trade, profession, or occupation carried on within this state.

    (c) Deduction with respect to expenses, capital losses, and net operating losses shall be based solely on income, gains, losses, and deductions derived from or connected with sources in this state but shall otherwise be determined in the same manner as the corresponding federal deduction except as provided in this title.

    (d) Income from intangible personal property, including annuities, dividends, interest, and gains from the disposition of intangible personal property, constitutes income derived from sources within the state of Washington only to the extent that such income is from property employed in a business, trade, profession, or occupation carried on within this state:  PROVIDED, That distributed and undistributed income of an electing S corporation for federal tax purposes derived from or connected with sources within this state is income derived from sources within this state for a nonresident shareholder.  A net operating loss of such corporation does constitute a loss or deduction connected with sources within this state for a nonresident shareholder.

    (e) Compensation paid by the United States for service in the armed forces of the United States performed in this state by a nonresident does not constitute income derived from sources within this state.

    (f) If a business, trade, profession, or occupation is carried on partly within and partly without this state, the determination of net income derived or connected with sources within this state as provided in this section, shall be made by apportionment and allocation under chapter 82.56 RCW.

NEW SECTION. Sec. 106.  ESTATES, TRUSTS, AND BENEFICIARIES.  (1) The taxable incomes of estates, trusts, and beneficiaries thereof shall be computed by including a share of the modifications under sections 103 through 105 of this act and the credits allowed under section 107 of this act.  Each taxpayer's share of a modification or credit is the amount of modification or credit multiplied by a fraction.  The numerator of the fraction is the taxpayer's share of the distributable net income of the estate or trust.  The denominator of the fraction is the total distributable net income of the estate or trust.  The fraction shall never be greater than one.

    (2) As used in this section, "distributable net income" means distributable net income as defined in the internal revenue code.  If an estate or trust has no federal distributable net income, the term means the income of the estate or trust that is distributed or is required to be distributed during the taxable year under local law or the terms of the estate or trust instrument.

    (3) Any portion of a modification that is not included in calculating the taxable incomes of the beneficiaries shall be included in calculating the taxable income of the trust or estate.

NEW SECTION. Sec. 107.  CREDIT FOR INCOME TAXES DUE ANOTHER JURISDICTION.  (1) The intent of this section is to prevent double taxation of income potentially subject to tax in both Washington and another jurisdiction.

    (2) As used in this section, "another jurisdiction" means another state or foreign country, or a political subdivision of another state or foreign country.

    (3) A resident individual, estate, or trust is allowed a credit against the tax imposed under this title, equal to the lesser of:

    (a) The amount of tax paid to another jurisdiction on net income derived from sources within the other jurisdiction; or

    (b) The amount of tax due under this title, before application of credits allowable by this title, multiplied by a fraction.  The numerator of the fraction is the amount of the taxpayer's adjusted gross income subject to tax in the other jurisdiction.  The denominator of the fraction is the taxpayer's total adjusted gross income as modified under section 103 of this act.  The fraction shall never be greater than one.

    (4) If the laws of another jurisdiction contain a provision exempting a resident of Washington from net income taxes on income derived from sources in that jurisdiction, the director is authorized to enter into a reciprocal agreement with that jurisdiction providing a similar tax exemption for residents of that jurisdiction for income derived from sources within Washington.

    (5) The amount of tax credits received by any taxpayer under this section shall not exceed the total amount of tax due, and there shall be no carryback or carryforward of any unused credits.

NEW SECTION. Sec. 108.  DUAL RESIDENCE.  If an individual is regarded as a resident both of this state and another jurisdiction for state personal income tax purposes, the department shall reduce the tax on that portion of the individual's income that is subjected to tax in both jurisdictions solely by virtue of dual residence, if the other taxing jurisdiction allows a similar reduction.  The reduction shall equal the lower of the two taxes applicable to the income taxed twice, multiplied by a fraction.  The numerator of the fraction is the tax imposed by this state on the income taxed twice.  The denominator of the fraction is the tax imposed by both jurisdictions on the income taxed twice.  The fraction shall never be greater than one.

NEW SECTION. Sec. 109.  EMPLOYER WITHHOLDING‑-REQUIREMENTS.  (1) Every employer making a payment of wages or salaries earned in this state, regardless of the place where the payment is made, and who is required by the internal revenue code to withhold taxes, shall deduct and withhold tax as prescribed by the department by rule.  The rules prescribed shall reasonably reflect the annual tax liability under this title of the employee under this title.  Every employer making such a deduction and withholding shall furnish to the employee a record of the amount of tax deducted and withheld from the employee on forms provided by the department.

    (2) If the employee is a resident of this state and earns income from personal services entirely performed in another state that imposes an income tax on the income, and the employer withholds income taxes under the laws of the state in which the income is earned, the employer is not required to withhold any tax imposed by this title on the income if the laws of the state in which the income is earned allow a similar exemption for its residents who earn income in this state.

NEW SECTION. Sec. 110.  LIABILITY OF EMPLOYER FOR TAX WITHHELD.  Any person required to deduct and withhold the tax imposed by this title is liable to the department for the payment of the amount deducted and withheld, and is not liable to any other person for the amount of tax deducted and withheld under this title or for the act of withholding.  The amount of tax so deducted and withheld shall be held to be a special fund in trust for this state.

NEW SECTION. Sec. 111.  CREDIT FOR TAX WITHHELD‑-HOW CLAIMED.  The amount deducted and withheld as tax under section 109 of this act during any taxable year shall be allowed as a credit against the tax imposed for the taxable year by this title.  If the liability of any individual for taxes, interest, penalties, or other amounts due the state of Washington is less than the total amount of the credit that the individual is entitled to claim under this section, the individual is entitled to a refund from the department in the amount of the excess of the credit over the amounts otherwise due.  If any individual entitled to claim a credit under this section is not otherwise required by this title to file a return, a refund may be obtained in the amount of the credit by filing a return, with applicable sections completed, to claim the refund.  No credit or refund is allowed under this section unless the credit or refund is claimed on a return filed for the taxable year for which the amount was deducted and withheld.

NEW SECTION. Sec. 112.  WITHHOLDING‑-FAILURE TO PAY OR COLLECT‑-PENALTIES.  (1) The tax required by this title to be collected by the employer shall be deemed to be held in trust by the employer until paid to the department.

    (2) In case any employer, or a responsible person within the meaning of section 6672 of the internal revenue code, fails to collect the tax imposed by this title or having collected the tax fails to pay it to the department, the employer or responsible person shall, nevertheless, be personally liable to the state for the amount of the tax.  The interest and penalty provisions of chapter 82.32 RCW apply to this section.

NEW SECTION. Sec. 113.  ESTIMATED TAX IMPOSED‑-DUE DATE OF ESTIMATED TAXES‑-AMOUNT OF ESTIMATED TAX‑-UNDERPAYMENT PENALTY.  (1) Each taxpayer who is required by the internal revenue code to make payment of estimated taxes shall pay to the department on forms prescribed by the department the estimated taxes due under this title.

    (2) The provisions of the internal revenue code relating to the determination of reporting periods and due dates of payments of estimated tax apply to the estimated tax payments due under this section.

    (3) The amount of the estimated tax shall be the annualized tax divided by the number of months in the reporting period.  No estimated tax shall be due if the annualized tax is less than five hundred dollars.  The provisions of RCW 82.32.050 and 82.32.090 shall apply to underpayments of estimated tax but shall not apply to underpayments if the tax remitted to the department under sections 101 through 122 of this act is either ninety percent of the tax shown on the return or one hundred percent of the tax shown on the previous year's tax return.

    (4) For purposes of this section, the annualized tax is the taxpayer's projected tax liability for the taxable year as computed under section 6654 of the internal revenue code and the regulations thereunder.

NEW SECTION. Sec. 114.  METHOD OF ACCOUNTING.  (1) A taxpayer's method of accounting for purposes of the tax imposed under this title shall be the same as the taxpayer's method of accounting for federal income tax purposes.  If no method of accounting has been regularly used by a taxpayer for federal income tax purposes or if the method used does not clearly reflect income, tax due under this title shall be computed by a method of accounting that in the opinion of the department fairly reflects income.

    (2) If a person's method of accounting is changed for federal income tax purposes, it shall be similarly changed for purposes of this title.

NEW SECTION. Sec. 115.  PERSONS REQUIRED TO FILE RETURNS.  (1)  All taxpayers shall file with the department, on forms prescribed by the department, an income tax return for each taxable year.  An individual owing no tax for a taxable year is not required to file a return for that year.  Each person required to file a return under this title shall, without assessment, notice, or demand, pay any tax due thereon to the department on or before the date fixed for the filing of the return.

    (2) The department may by rule require that certain taxpayers file, on forms prescribed by the department, informational returns for any period.

    (3) If an adjustment to a taxpayer's federal return is made by the taxpayer or the internal revenue service, the taxpayer shall, within ninety days of the final determination of the adjustment by the internal revenue service or within thirty days of the filing of a federal return adjusted by the taxpayer, file with the department on forms prescribed by the department, a corrected return reflecting the adjustments as finally determined.  The taxpayer shall pay any additional tax due resulting from the finally determined internal revenue service adjustment or a taxpayer adjustment without notice and assessment.  The period of limitation for the collection of the additional tax, interest, and penalty due as a result of an adjustment by the taxpayer or a finally determined internal revenue service adjustment shall begin at the later of thirty days following the final determination of the adjustment or the date of the filing of the corrected return.

NEW SECTION. Sec. 116.  DUE DATE FOR FILING A RETURN‑-EXTENSIONS‑-INTEREST AND PENALTIES.  The due date of a return required to be filed with the department shall be the due date of the federal income tax return or informational return for federal income tax purposes.  The department has the authority to grant extensions of times by which returns required to be filed by this title may be submitted.  The department also has the authority to grant extensions of time to pay tax with regard to taxes imposed by this title.  Interest at the rate as specified in RCW 82.32.050 shall accrue during any extension period and the interest and penalty provisions of chapter 82.32 RCW shall apply to late payments and deficiencies.  Notwithstanding the limitation of RCW 82.32.090, in the case of the late filing of an informational return, there shall be imposed a penalty the amount of which shall be established by the department by rule.  The penalty shall not exceed fifty dollars per month for a maximum of ten months.  RCW 82.32.105 shall apply to this section.

NEW SECTION. Sec. 117.  JOINT RETURN.  (1) If the federal income tax liabilities of both spouses are determined on a joint federal return for the taxable year, they shall file a joint return under this title.

    (2) If neither spouse is required to file a federal income tax return for the taxable year, a joint return shall be filed under this title under the same conditions under which a joint return may be filed for purposes of the federal income tax.

    (3) If the federal income tax liability of either spouse is determined on a separate federal return for the taxable year, they shall file separate returns under this title.

    (4) In any case in which a joint return is filed under this section, the liability of the husband and wife is joint and several, unless the spouse is relieved of liability under section 6013 of the internal revenue code.

NEW SECTION. Sec. 118.  RECORDS‑-RETURNS.  (1) Every taxpayer and every person required to deduct and withhold the tax imposed under this title shall keep records, render statements, make returns, file reports, and perform other acts as the department requires by rule.  Each return shall be made under penalty of perjury and on forms prescribed by the department.  The department may require other statements and reports be made under penalty of perjury and on forms prescribed by the department.  The department may require any taxpayer and any person required to deduct and withhold the tax imposed under this title to furnish to the department a correct copy of any return or document that the taxpayer has filed with the internal revenue service or received from the internal revenue service.

    (2) All books and records and other papers and documents required to be kept under this title are subject to inspection by the department at all times during business hours of the day.

NEW SECTION. Sec. 119.  PROVISIONS OF INTERNAL REVENUE CODE CONTROL.  (1) To the extent possible without being inconsistent with this title, all of the provisions of the internal revenue code relating to the following subjects apply to the taxes imposed under this title:

    (a) Time of payment of tax deducted and withheld under section 501 of this act;

    (b) Liability of transferees;

    (c) Time and manner of making returns, extensions of time for filing returns, verification of returns, and the time when a return is deemed filed.

    (2) The department by rule may provide modifications and exceptions to the provisions in subsection (1) of this section, if reasonably necessary to facilitate the prompt, efficient, and equitable collection of tax under this title.

NEW SECTION. Sec. 120.  REFUNDS OF OVERPAYMENTS‑-OTHER ADMINISTRATIVE PROVISIONS.  (1) The department shall refund all taxes improperly paid or collected.

    (2) The following sections apply to the administration of taxes imposed under this title:  RCW 82.32.020, 82.32.050, 82.32.060, 82.32.070, 82.32.090, 82.32.100, 82.32.105, 82.32.110, 82.32.120, 82.32.130, 82.32.140, 82.32.150, 82.32.160, 82.32.170, 82.32.180, 82.32.190, 82.32.200, 82.32.210, 82.32.220, 82.32.230, 82.32.235, 82.32.237, 82.32.240, 82.32.245, 82.32.260, 82.32.265, 82.32.300, 82.32.310, 82.32.320, 82.32.330, 82.32.340, 82.32.350, 82.32.360, and 82.32.380.

NEW SECTION. Sec. 121.  RULES.  The department may adopt rules under chapter 34.05 RCW for the administration and enforcement of this title.  The rules, to the extent possible without being inconsistent with this title, shall follow the internal revenue code and the regulations and rulings of the United States department of the treasury with respect to the federal income tax.  The department may adopt as a part of these rules any portions of the internal revenue code and treasury department regulations and rulings, in whole or in part.

NEW SECTION. Sec. 122.  CRIMES.  (1) Any person who knowingly attempts to evade the tax imposed under this title or payment thereof is guilty of a class C felony as provided in chapter 9A.20 RCW.

    (2) Any person required to collect tax imposed under this title who knowingly fails to collect, truthfully account for, or pay over the tax is guilty of a class C felony as provided in chapter 9A.20 RCW.

    (3) Any person who knowingly fails to pay tax, pay estimated tax, make returns, keep records, or supply information, as required under this title, is guilty of a gross misdemeanor as provided in chapter 9A.20 RCW.

    Sec. 123.  RCW 41.40.052 and 1999 c 83 s 1 are each amended to read as follows:

    (1) Subject to subsections (2) and (3) of this section, the right of a person to a pension, an annuity, or retirement allowance, any optional benefit, any other right accrued or accruing to any person under the provisions of this chapter, the various funds created by this chapter, and all moneys and investments and income thereof, are hereby exempt from any state, county, municipal, or other local tax, and shall not be subject to execution, garnishment, attachment, the operation of bankruptcy or insolvency laws, or other process of law whatsoever, and shall be unassignable.

    (2)(a) This section shall not be deemed to prohibit a beneficiary of a retirement allowance from authorizing deductions therefrom for payment of premiums due on any group insurance policy or plan issued for the benefit of a group comprised of public employees of the state of Washington or its political subdivisions and which has been approved for deduction in accordance with rules that may be adopted by the state health care authority and/or the department, and this section shall not be deemed to prohibit a beneficiary of a retirement allowance from authorizing deductions therefrom for payment of dues and other membership fees to any retirement association or organization the membership of which is composed of retired public employees, if a total of three hundred or more of such retired employees have authorized such deduction for payment to the same retirement association or organization.

    (b) This section does not prohibit a beneficiary of a retirement allowance from authorizing deductions from that allowance for charitable purposes on the same terms as employees and public officers under RCW 41.04.035 and 41.04.036.

    (3) Subsection (1) of this section shall not prohibit the department from complying with (a) a wage assignment order for child support issued pursuant to chapter 26.18 RCW, (b) an order to withhold and deliver issued pursuant to chapter 74.20A RCW, (c) a notice of payroll deduction issued pursuant to RCW 26.23.060, (d) a mandatory benefits assignment order issued by the department, (e) a court order directing the department of retirement systems to pay benefits directly to an obligee under a dissolution order as defined in RCW 41.50.500(3) which fully complies with RCW 41.50.670 and 41.50.700, or (f) any administrative or court order expressly authorized by federal law.

(4) Subsection (1) of this section does not exempt any pension or other benefit received under this chapter from tax under Title 82A RCW, nor does it prohibit the department of retirement systems from complying with the tax withholding requirements of that title.

    Sec. 124.  RCW 82.03.130 and 1998 c 54 s 1 are each amended to read as follows:

    (1) The board shall have jurisdiction to decide the following types of appeals:

    (a) Appeals taken pursuant to RCW 82.03.190.

    (b) Appeals from a county board of equalization pursuant to RCW 84.08.130.

    (c) Appeals by an assessor or landowner from an order of the director of revenue made pursuant to RCW 84.08.010 and 84.08.060, if filed with the board of tax appeals within thirty days after the mailing of the order, the right to such an appeal being hereby established.

    (d) Appeals by an assessor or owner of an intercounty public utility or private car company from determinations by the director of revenue of equalized assessed valuation of property and the apportionment thereof to a county made pursuant to chapter 84.12 and 84.16 RCW, if filed with the board of tax appeals within thirty days after mailing of the determination, the right to such appeal being hereby established.

    (e) Appeals by an assessor, landowner, or owner of an intercounty public utility or private car company from a determination of any county indicated ratio for such county compiled by the department of revenue pursuant to RCW 84.48.075:  PROVIDED, That

    (i) Said appeal be filed after review of the ratio under RCW 84.48.075(3) and not later than fifteen days after the mailing of the certification; and

    (ii) The hearing before the board shall be expeditiously held in accordance with rules prescribed by the board and shall take precedence over all matters of the same character.

    (f) Appeals from the decisions of sale price of second class shorelands on navigable lakes by the department of natural resources pursuant to RCW 79.94.210.

    (g) Appeals from urban redevelopment property tax apportionment district proposals established by governmental ordinances pursuant to RCW 39.88.060.

    (h) Appeals from interest rates as determined by the department of revenue for use in valuing farmland under current use assessment pursuant to RCW 84.34.065.

    (i) Appeals from revisions to stumpage value tables used to determine value by the department of revenue pursuant to RCW 84.33.091.

    (j) Appeals from denial of tax exemption application by the department of revenue pursuant to RCW 84.36.850.

    (k) Appeals pursuant to RCW 84.40.038(3).

(l) Appeals relating to income tax deficiencies and refunds including penalties and interest under Title 82A RCW.

    (2) Except as otherwise specifically provided by law hereafter, the provisions of RCW 1.12.070 shall apply to all notices of appeal filed with the board of tax appeals.

    Sec. 125.  RCW 82.03.140 and 1988 c 222 s 4 are each amended to read as follows:

    In all appeals over which the board has jurisdiction under RCW 82.03.130, a party taking an appeal may elect either a formal or an informal hearing, such election to be made according to rules of practice and procedure to be promulgated by the board:  PROVIDED, That nothing shall prevent the assessor or taxpayer, as a party to an appeal pursuant to RCW 84.08.130, within twenty days from the date of the receipt of the notice of appeal, from filing with the clerk of the board notice of intention that the hearing be a formal one:  PROVIDED, HOWEVER, That nothing herein shall be construed to modify the provisions of RCW 82.03.190:  AND PROVIDED FURTHER, That upon an appeal under RCW 82.03.130(((5))) (1) (e) or (l), the director of revenue may, within ten days from the date of its receipt of the notice of appeal, file with the clerk of the board notice of its ((intention that the hearing be held pursuant to chapter 34.05 RCW)) election of a formal hearing.  In the event that appeals are taken from the same decision, order, or determination, as the case may be, by different parties and only one of such parties elects a formal hearing, a formal hearing shall be granted.

                              PART II

                     SALES AND USE TAX REFORM

    Sec. 201.  RCW 82.04.050 and 1998 c 332 s 2, 1998 c 315 s 1, 1998 c 308 s 1, and 1998 c 275 s 1 are each reenacted and amended to read as follows:

    (1) "Sale at retail" or "retail sale" means every sale of tangible personal property (including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of their business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than a sale to a person who presents a resale certificate under RCW 82.04.470 and who:

    (a) Purchases for the purpose of resale as tangible personal property in the regular course of business without intervening use by such person; or

    (b) Installs, repairs, cleans, alters, imprints, improves, constructs, or decorates real or personal property of or for consumers, if such tangible personal property becomes an ingredient or component of such real or personal property without intervening use by such person; or

    (c) Purchases for the purpose of consuming the property purchased in producing for sale a new article of tangible personal property or substance, of which such property becomes an ingredient or component or is a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale; or

    (d) Purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon; or

    (e) Purchases for the purpose of providing the property to consumers as part of competitive telephone service, as defined in RCW 82.04.065.  The term shall include every sale of tangible personal property which is used or consumed or to be used or consumed in the performance of any activity classified as a "sale at retail" or "retail sale" even though such property is resold or utilized as provided in (a), (b), (c), (d), or (e) of this subsection following such use.  The term also means every sale of tangible personal property to persons engaged in any business which is taxable under RCW 82.04.280 (2) and (7) and 82.04.290.

    (2) The term "sale at retail" or "retail sale" shall include the sale of or charge made for tangible personal property consumed and/or for labor and services rendered in respect to the following:

    (a) The installing, repairing, cleaning, altering, imprinting, or improving of tangible personal property of or for consumers, including charges made for the mere use of facilities in respect thereto, but excluding charges made for the use of coin-operated laundry facilities when such facilities are situated in an apartment house, rooming house, or mobile home park for the exclusive use of the tenants thereof, and also excluding sales of laundry service to nonprofit health care facilities((, and excluding services rendered in respect to live animals, birds and insects));

    (b) The constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for consumers, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, and shall also include the sale of services or charges made for the clearing of land and the moving of earth excepting the mere leveling of land used in commercial farming or agriculture;

    (c) The charge for labor and services rendered in respect to constructing, repairing, or improving any structure upon, above, or under any real property owned by an owner who conveys the property by title, possession, or any other means to the person performing such construction, repair, or improvement for the purpose of performing such construction, repair, or improvement and the property is then reconveyed by title, possession, or any other means to the original owner;

    (d) The sale of or charge made for labor and services rendered in respect to the cleaning, fumigating, razing or moving of existing buildings or structures((, but shall not include the charge made for janitorial services; and for purposes of this section the term "janitorial services" shall mean those cleaning and caretaking services ordinarily performed by commercial janitor service businesses including, but not limited to, wall and window washing, floor cleaning and waxing, and the cleaning in place of rugs, drapes and upholstery.  The term "janitorial services" does not include painting, papering, repairing, furnace or septic tank cleaning, snow removal or sandblasting));

    (e) The sale of or charge made for labor and services rendered in respect to automobile towing and similar automotive transportation services, but not in respect to those required to report and pay taxes under chapter 82.16 RCW;

    (f) The sale of and charge made for the furnishing of lodging and all other services by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property, as distinguished from the renting or leasing of real property, and it shall be presumed that the occupancy of real property for a continuous period of one month or more constitutes a rental or lease of real property and not a mere license to use or enjoy the same;

    (g) The sale of or charge made for tangible personal property, labor and services to persons taxable under (a), (b), (c), (d), (e), and (f) of this subsection when such sales or charges are for property, labor and services which are used or consumed in whole or in part by such persons in the performance of any activity defined as a "sale at retail" or "retail sale" even though such property, labor and services may be resold after such use or consumption.  Nothing contained in this subsection shall be construed to modify subsection (1) of this section and nothing contained in subsection (1) of this section shall be construed to modify this subsection.

    (3) The term "sale at retail" or "retail sale" shall include the sale of or charge made for all personal, business, or professional services including amounts designated as interest, rents, fees, admission, and other service emoluments however designated, ((received by persons engaging in the following business activities:

    (a) Amusement and recreation services including but not limited to golf, pool, billiards, skating, bowling, ski lifts and tows, day trips for sightseeing purposes, and others, when provided to consumers;

    (b) Abstract, title insurance, and escrow services;

    (c) Credit bureau services;

    (d) Automobile parking and storage garage services;

    (e) Landscape maintenance and horticultural services but excluding (i) horticultural services provided to farmers and (ii) pruning, trimming, repairing, removing, and clearing of trees and brush near electric transmission or distribution lines or equipment, if performed by or at the direction of an electric utility;

    (f) Service charges associated with tickets to professional sporting events; and

    (g) The following personal services:  Physical fitness services, tanning salon services, tattoo parlor services, steam bath services, turkish bath services, escort services, and dating services)) unless the purchaser presents a resale certificate under RCW 82.04.470 and purchases for the purpose of:

(a) Selling the service without intervening use by the purchaser in the regular course of business; or

(b) Incorporating the service as an integral part of a service specified in this subsection that will be sold in the regular course of business.

    (4) The term shall also include the renting or leasing of tangible personal property to consumers and the rental of equipment with an operator.

    (5) The term shall also include the providing of telephone service, as defined in RCW 82.04.065, to consumers.

    (6) The term shall also include the sale of canned software other than a sale to a person who presents a resale certificate under RCW 82.04.470, regardless of the method of delivery to the end user, but shall not include custom software or the customization of canned software.

    (7) The term shall not include the sale of or charge made for labor and services rendered in respect to the building, repairing, or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind.

    (8) The term shall also not include sales of chemical sprays or washes to persons for the purpose of postharvest treatment of fruit for the prevention of scald, fungus, mold, or decay, nor shall it include sales of feed, seed, seedlings, fertilizer, agents for enhanced pollination including insects such as bees, and spray materials to:  (a) Persons who participate in the federal conservation reserve program, the environmental quality incentives program, the wetlands reserve program, and the wildlife habitat incentives program, or their successors administered by the United States department of agriculture; (b) farmers for the purpose of producing for sale any agricultural product; and (c) farmers acting under cooperative habitat development or access contracts with an organization exempt from federal income tax under 26 U.S.C. Sec. 501(c)(3) or the Washington state department of fish and wildlife to produce or improve wildlife habitat on land that the farmer owns or leases.

    (9) The term shall not include the sale of or charge made for labor and services rendered in respect to the constructing, repairing, decorating, or improving of new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing, or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation.  Nor shall the term include the sale of services or charges made for the clearing of land and the moving of earth of or for the United States, any instrumentality thereof, or a county or city housing authority.  Nor shall the term include the sale of services or charges made for cleaning up for the United States, or its instrumentalities, radioactive waste and other byproducts of weapons production and nuclear research and development.

    (10) Until July 1, 2003, the term shall not include the sale of or charge made for labor and services rendered for environmental remedial action as defined in RCW 82.04.2635(2).

    Sec. 202.  RCW 82.04.060 and 1998 c 332 s 5 are each amended to read as follows:

    "Sale at wholesale" or "wholesale sale" means any of the following when not a sale at retail:  (1) Any sale of tangible personal property; (2) any sale of ((amusement or recreation)) services as defined in RCW 82.04.050(3)(((a))); (3) any sale of canned software; or (4) any sale of telephone service as defined in RCW 82.04.065((, which is not a sale at retail and)).  "Sale at wholesale" or "wholesale sale" also means any charge made for labor and services rendered for persons who are not consumers, in respect to real or personal property, if such charge is expressly defined as a retail sale by RCW 82.04.050 when rendered to or for consumers:  PROVIDED, That the term "real or personal property" as used in this section shall not include any natural products named in RCW 82.04.100.

    Sec. 203.  RCW 82.04.190 and 1998 c 332 s 6 and 1998 c 308 s 2 are each reenacted and amended to read as follows:

    "Consumer" means the following:

    (1) Any person who purchases, acquires, owns, holds, or uses any article of tangible personal property irrespective of the nature of the person's business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than for the purpose (a) of resale as tangible personal property in the regular course of business or (b) of incorporating such property as an ingredient or component of real or personal property when installing, repairing, cleaning, altering, imprinting, improving, constructing, or decorating such real or personal property of or for consumers or (c) of consuming such property in producing for sale a new article of tangible personal property or a new substance, of which such property becomes an ingredient or component or as a chemical used in processing, when the primary purpose of such chemical is to create a chemical reaction directly through contact with an ingredient of a new article being produced for sale or (d) purchases for the purpose of consuming the property purchased in producing ferrosilicon which is subsequently used in producing magnesium for sale, if the primary purpose of such property is to create a chemical reaction directly through contact with an ingredient of ferrosilicon;

    (2)(a) Any person engaged in any business activity taxable under RCW 82.04.290; (b) any person who purchases, acquires, or uses any telephone service as defined in RCW 82.04.065, other than for resale in the regular course of business; (c) any person who purchases, acquires, or uses any amusement and recreation service defined in RCW 82.04.050(3)(((a))), other than for resale in the regular course of business; and (d) any person who is an end user of software;

    (3) Any person engaged in the business of contracting for the building, repairing or improving of any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state of Washington or by the United States and which is used or to be used primarily for foot or vehicular traffic including mass transportation vehicles of any kind as defined in RCW 82.04.280, in respect to tangible personal property when such person incorporates such property as an ingredient or component of such publicly owned street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle by installing, placing or spreading the property in or upon the right of way of such street, place, road, highway, easement, bridge, tunnel, or trestle or in or upon the site of such mass public transportation terminal or parking facility;

    (4) Any person who is an owner, lessee or has the right of possession to or an easement in real property which is being constructed, repaired, decorated, improved, or otherwise altered by a person engaged in business, excluding only (a) municipal corporations or political subdivisions of the state in respect to labor and services rendered to their real property which is used or held for public road purposes, and (b) the United States, instrumentalities thereof, and county and city housing authorities created pursuant to chapter 35.82 RCW in respect to labor and services rendered to their real property.  Nothing contained in this or any other subsection of this definition shall be construed to modify any other definition of "consumer";

    (5) Any person who is an owner, lessee, or has the right of possession to personal property which is being constructed, repaired, improved, cleaned, imprinted, or otherwise altered by a person engaged in business;

    (6) Any person engaged in the business of constructing, repairing, decorating, or improving new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing or attaching of any article of tangible personal property therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation; also, any person engaged in the business of clearing land and moving earth of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW.  Any such person shall be a consumer within the meaning of this subsection in respect to tangible personal property incorporated into, installed in, or attached to such building or other structure by such person;

    (7) ((Any person who is a lessor of machinery and equipment, the rental of which is exempt from the tax imposed by RCW 82.08.020 under RCW 82.08.02565, with respect to the sale of or charge made for tangible personal property consumed in respect to repairing the machinery and equipment, if the tangible personal property has a useful life of less than one year.  Nothing contained in this or any other subsection of this section shall be construed to modify any other definition of "consumer";

    (8))) Any person engaged in the business of cleaning up for the United States, or its instrumentalities, radioactive waste and other byproducts of weapons production and nuclear research and development; ((and

    (9))) (8) Until July 1, 2003, any person engaged in the business of conducting environmental remedial action as defined in RCW 82.04.2635(2); and

(9) Any person who purchases, acquires, uses, or receives the benefit of any service specified in RCW 82.04.050(3), unless the person purchases for the purpose of:

(a) Selling the service without intervening use by the purchaser in the regular course of business; or

(b) Incorporating the service as an integral part of a service specified in this subsection that will be sold in the regular course of business.

    Sec. 204.  RCW 82.04.460 and 1985 c 7 s 154 are each amended to read as follows:

    (1) Any person rendering services taxable under RCW 82.04.290 and maintaining places of business both within and without this state which contribute to the rendition of such services shall, for the purpose of computing tax liability under RCW 82.04.290, apportion to this state that portion of his gross income which is derived from services rendered within this state.  Where such apportionment cannot be accurately made by separate accounting methods, the taxpayer shall apportion to this state that proportion of his total income which the cost of doing business within the state bears to the total cost of doing business both within and without the state.

    (2) Notwithstanding the provision of subsection (1) of this section, persons doing business both within and without the state who receive gross income from service charges, as defined in RCW 63.14.010 (relating to amounts charged for granting the right or privilege to make deferred or installment payments) or who receive gross income from engaging in business as financial institutions within the scope of chapter 82.14A RCW (relating to city taxes on financial institutions) shall apportion or allocate gross income taxable under RCW 82.04.290 to this state pursuant to rules promulgated by the department consistent with uniform rules for apportionment or allocation developed by the states.

    (3) The department shall by rule provide a method or methods of apportioning or allocating gross income derived from sales of telephone services taxed under this chapter or services defined as a retail sale under RCW 82.04.050(3), if the gross proceeds of sales subject to tax under this chapter do not fairly represent the extent of the taxpayer's income attributable to this state.  The rules shall be, so far as feasible, consistent with the methods of apportionment contained in this section and shall require the consideration of those facts, circumstances, and apportionment factors as will result in an equitable and constitutionally permissible division of the services.

    Sec. 205.  RCW 82.04.480 and 1975 1st ex.s. c 278 s 44 are each amended to read as follows:

    Every consignee, bailee, factor, or auctioneer having either actual or constructive possession of tangible personal property, or having possession of the documents of title thereto, with power to sell such tangible personal property in his or its own name and actually so selling, and every agent with power to sell a service defined as a retail sale in the agent's own name and actually so selling, shall be deemed the seller of such tangible personal property or service within the meaning of this chapter; and further, the consignor, bailor, principal, or owner shall be deemed a seller of such property or service to the consignee, bailee, factor, ((or)) auctioneer, or agent.

    The burden shall be upon the taxpayer in every case to establish the fact that he or she is not engaged in the business of selling tangible personal property or service but is acting merely as broker or agent in promoting sales for a principal.  Such claim will be allowed only when the taxpayer's accounting records are kept in such manner as the department ((of revenue)) shall by general ((regulation)) rule provide.

NEW SECTION. Sec. 206.  A new section is added to chapter 82.08 RCW to read as follows:

    The tax levied by RCW 82.08.020 does not apply to sales of medical services.  For the purposes of this section, "medical services" means services provided by physicians, dentists, chiropractors, optometrists, podiatrists, and other health care practitioners; general medical and surgical hospitals, psychiatric and substance abuse hospitals, specialty hospitals, outpatient care centers, family planning centers, outpatient mental health and substance abuse centers, health maintenance organization medical centers, kidney dialysis centers, freestanding ambulatory surgery and emergency centers, medical and diagnostic laboratories, diagnostic imaging centers, home health care providers, ambulance businesses, blood and organ banks, nursing care facilities, residential mental retardation facilities, residential mental health and substance abuse facilities, care facilities for the elderly, continuing care retirement communities, and homes for the elderly.

    Sec. 207.  RCW 82.08.020 and 1998 c 321 s 36 (Referendum Bill No. 49) are each amended to read as follows:

    (1) There is levied and there shall be collected a tax on each retail sale in this state equal to ((six and five-tenths)) three percent of the selling price.

    (2) ((There is levied and there shall be collected an additional tax on each retail car rental, regardless of whether the vehicle is licensed in this state, equal to five and nine-tenths percent of the selling price.  The revenue collected under this subsection shall be deposited and distributed in the same manner as motor vehicle excise tax revenue collected under RCW 82.44.020(1).

    (3))) The ((taxes)) tax imposed under this chapter shall apply to successive retail sales of the same property.

    (((4))) (3) The rate((s)) provided in this section ((apply)) applies to taxes imposed under chapter 82.12 RCW as provided in RCW 82.12.020.

    Sec. 208.  RCW 82.08.0255 and 1998 c 176 s 4 are each amended to read as follows:

    (1) The tax levied by RCW 82.08.020 shall not apply to sales of((:

    (a) Motor vehicle fuel used in aircraft by the manufacturer thereof for research, development, and testing purposes; and

    (b))) motor vehicle and special fuel if((:

    (i) The fuel is purchased for the purpose of public transportation and the purchaser is entitled to a refund or an exemption under RCW 82.36.275 or 82.38.080(3); or

    (ii) The fuel is purchased by a private, nonprofit transportation provider certified under chapter 81.66 RCW and the purchaser is entitled to a refund or an exemption under RCW 82.36.285 or 82.38.080(1)(h); or

    (iii))) the fuel is taxable under chapter 82.36 or 82.38 RCW.

    (2) Any person who has paid the tax imposed by RCW 82.08.020 on the sale of special fuel delivered in this state shall be entitled to a credit or refund of such tax with respect to fuel subsequently established to have been actually transported and used outside this state by persons engaged in interstate commerce.  The tax shall be claimed as a credit or refunded through the tax reports required under RCW 82.38.150.

    Sec. 209.  RCW 82.08.090 and 1975 1st ex.s. c 278 s 49 are each amended to read as follows:

(1) In the case of installment sales and leases of personal property, the department ((of revenue, by regulation)) by rule, may provide for the collection of taxes upon the installments of the purchase price, or amount of rental, as of the time the same fall due.

(2) In the case of services defined as a retail sale under RCW 82.04.050(3), the seller may collect taxes based upon payments of the purchase price, as of the time the payments are made, regardless of the accounting method used by the seller or whether the sales were made under an installment agreement.

NEW SECTION. Sec. 210.  A new section is added to chapter 82.08 RCW to read as follows:

    (1) A seller shall collect the retail sales tax on all sales of services defined as retail sales under RCW 82.04.050(3) unless the buyer provides the seller with a multistate use certificate.  A buyer shall not provide a multistate use certificate if the service relates to or affects only a location, market, property, or individual in this state.

    (2) The department shall adopt rules providing the form and information required to be on multistate use certificates.  The department shall establish by rule evidence by which a buyer may demonstrate that the criteria in subsection (1) of this section apply.

    (3) If a transaction involves both a service for which tax is collectible under this section, and a service for which tax is not collectible under this section, the charges shall be separately identified and stated with respect to the collectible and noncollectible portions of the transaction.  Failure to separately state the charges creates a presumption that tax is collectible upon the entire transaction under this section.

    (4) If the seller does not collect tax under this section, the buyer shall remit any tax due with the buyer's next regularly scheduled return.

    Sec. 211.  RCW 82.12.010 and 1994 c 93 s 1 are each amended to read as follows:

    For the purposes of this chapter:

    (1)(a) "Value of the article used" shall mean the consideration, whether money, credit, rights, or other property except trade-in property of like kind, expressed in terms of money, paid or given or contracted to be paid or given by the purchaser to the seller for the article of tangible personal property, the use of which is taxable under this chapter.  The term includes, in addition to the consideration paid or given or contracted to be paid or given, the amount of any tariff or duty paid with respect to the importation of the article used.  In case the article used is acquired by lease or by gift or is extracted, produced, or manufactured by the person using the same or is sold under conditions wherein the purchase price does not represent the true value thereof, the value of the article used shall be determined as nearly as possible according to the retail selling price at place of use of similar products of like quality and character under such rules as the department of revenue may prescribe.

    (b) In case the articles used are acquired by bailment, the value of the use of the articles so used shall be in an amount representing a reasonable rental for the use of the articles so bailed, determined as nearly as possible according to the value of such use at the places of use of similar products of like quality and character under such rules as the department of revenue may prescribe.  In case any such articles of tangible personal property are used in respect to the construction, repairing, decorating, or improving of, and which become or are to become an ingredient or component of, new or existing buildings or other structures under, upon, or above real property of or for the United States, any instrumentality thereof, or a county or city housing authority created pursuant to chapter 35.82 RCW, including the installing or attaching of any such articles therein or thereto, whether or not such personal property becomes a part of the realty by virtue of installation, then the value of the use of such articles so used shall be determined according to the retail selling price of such articles, or in the absence of such a selling price, as nearly as possible according to the retail selling price at place of use of similar products of like quality and character or, in the absence of either of these selling price measures, such value may be determined upon a cost basis, in any event under such rules as the department of revenue may prescribe.

    (c) In the case of articles owned by a user engaged in business outside the state which are brought into the state for no more than one hundred eighty days in any period of three hundred sixty-five consecutive days and which are temporarily used for business purposes by the person in this state, the value of the article used shall be an amount representing a reasonable rental for the use of the articles, unless the person has paid tax under this chapter or chapter 82.08 RCW upon the full value of the article used, as defined in (a) of this subsection.

    (d) In the case of articles manufactured or produced by the user and used in the manufacture or production of products sold or to be sold to the department of defense of the United States, the value of the articles used shall be determined according to the value of the ingredients of such articles.

    (e) In the case of an article manufactured or produced for purposes of serving as a prototype for the development of a new or improved product, the value of the article used shall be determined by:  (i) The retail selling price of such new or improved product when first offered for sale; or (ii) the value of materials incorporated into the prototype in cases in which the new or improved product is not offered for sale;

    (2) "Value of the service used" means the consideration, whether money, credit, rights, or other property, expressed in terms of money, paid or given or contracted to be paid or given by the purchaser to the seller for the service, the use of which is taxable under this chapter.  If the service is received by gift or under conditions wherein the purchase price does not represent the true value of the service, the value of the service used shall be determined as nearly as possible according to the selling price at the place of use of similar services under rules prescribed by the department of revenue;

(3) "Use," "used," "using," or "put to use" shall have their ordinary meaning, and shall mean:

(a) With respect to tangible personal property, the first act within this state by which the taxpayer takes or assumes dominion or control over the article of tangible personal property (as a consumer), and include installation, storage, withdrawal from storage, or any other act preparatory to subsequent actual use or consumption within this state; and

(b) With respect to a service defined as a retail sale, the receipt by the taxpayer of any part of the benefit afforded the service;

    (((3))) (4) "Taxpayer" and "purchaser" include all persons included within the meaning of the word "buyer" and the word "consumer" as defined in chapters 82.04 and 82.08 RCW;

    (((4))) (5) "Retailer" means every seller as defined in RCW 82.08.010 and every person engaged in the business of selling tangible personal property or services at retail and every person required to collect from purchasers the tax imposed under this chapter;

    (((5))) (6) The meaning ascribed to words and phrases in chapters 82.04 and 82.08 RCW, insofar as applicable, shall have full force and effect with respect to taxes imposed under the provisions of this chapter.  "Consumer," in addition to the meaning ascribed to it in chapters 82.04 and 82.08 RCW insofar as applicable, shall also mean any person who distributes or displays, or causes to be distributed or displayed, any article of tangible personal property, except newspapers, the primary purpose of which is to promote the sale of products or services.

    Sec. 212.  RCW 82.12.020 and 1999 c 358 s 9 are each amended to read as follows:

    (1) There is hereby levied and there shall be collected from every person in this state a tax or excise for the privilege of using within this state as a consumer:  (a) Any article of tangible personal property purchased at retail, or acquired by lease, gift, repossession, or bailment, or extracted or produced or manufactured by the person so using the same, or otherwise furnished to a person engaged in any business taxable under RCW 82.04.280 (2) or (7); or (b) any canned software, regardless of the method of delivery, but excluding canned software that is either provided free of charge or is provided for temporary use in viewing information, or both.

    (2) This tax shall apply to the use of every service defined as a retail sale in RCW 82.04.050(3)(((a))) and the use of every article of tangible personal property, including property acquired at a casual or isolated sale, and including byproducts used by the manufacturer thereof, except as hereinafter provided, irrespective of whether the article or similar articles are manufactured or are available for purchase within this state.

    (3) Except as provided in RCW 82.12.0252, payment by one purchaser or user of tangible personal property or service of the tax imposed by chapter 82.08 or 82.12 RCW shall not have the effect of exempting any other purchaser or user of the same property or service from the taxes imposed by such chapters.

    (4) The tax shall be levied and collected in an amount equal to the value of the article used by the taxpayer multiplied by the rate in effect for the retail sales tax under RCW 82.08.020.

NEW SECTION. Sec. 213.  A new section is added to chapter 82.12 RCW to read as follows:

    The provisions of this chapter do not apply with respect to the use of medical services as defined in section 206 of this act.

    Sec. 214.  RCW 82.12.0252 and 1980 c 37 s 52 are each amended to read as follows:

    The provisions of this chapter shall not apply in respect to the use of any article of tangible personal property or service defined as a retail sale purchased at retail or acquired by lease, gift or bailment if the sale thereof to, or the use thereof by, the present user or ((his)) the user's bailor or donor has already been subjected to the tax under chapter 82.08 or 82.12 RCW and such tax has been paid by the present user or by his bailor or donor; or in respect to the use of property acquired by bailment and such tax has once been paid based on reasonable rental as determined by RCW 82.12.060 measured by the value of the article at time of first use multiplied by the tax rate imposed by chapter 82.08 or 82.12 RCW as of the time of first use; or in respect to the use of any article of tangible personal property acquired by bailment, if the property was acquired by a previous bailee from the same bailor for use in the same general activity and such original bailment was prior to June 9, 1961.

    Sec. 215.  RCW 82.12.0255 and 1980 c 37 s 55 are each amended to read as follows:

    The provisions of this chapter shall not apply in respect to the use of any article of tangible personal property or any service defined as a retail sale which the state is prohibited from taxing under the Constitution of the state or under the Constitution or laws of the United States.

    Sec. 216.  RCW 82.12.0256 and 1998 c 176 s 5 are each amended to read as follows:

    The provisions of this chapter shall not apply in respect to the use of((:

    (1) Motor vehicle fuel used in aircraft by the manufacturer thereof for research, development, and testing purposes; and

    (2) Special fuel purchased in this state upon which a refund is obtained as provided in RCW 82.38.180(2); and

    (3))) motor vehicle and special fuel if((:

    (a) The fuel is used for the purpose of public transportation and the purchaser is entitled to a refund or an exemption under RCW 82.36.275 or 82.38.080(3); or

    (b) The fuel is purchased by a private, nonprofit transportation provider certified under chapter 81.66 RCW and the purchaser is entitled to a refund or an exemption under RCW 82.36.285 or 82.38.080(1)(h); or

    (c))) the fuel is taxable under chapter 82.36 or 82.38 RCW:  PROVIDED, That the use of motor vehicle and special fuel upon which a refund of the applicable fuel tax is obtained shall not be exempt under this ((subsection (3)(c))) section, and the director of licensing shall deduct from the amount of such tax to be refunded the amount of tax due under this chapter and remit the same each month to the department of revenue.

    Sec. 217.  RCW 82.12.035 and 1996 c 148 s 6 are each amended to read as follows:

    A credit shall be allowed against the taxes imposed by this chapter upon the use of tangible personal property, or services taxable under RCW 82.04.050(3)(((a))), in the state of Washington in the amount that the present user thereof or his or her bailor or donor has paid a retail sales or use tax with respect to such property to any other state of the United States, any political subdivision thereof, the District of Columbia, and any foreign country or political subdivision thereof, prior to the use of such property in Washington.

    Sec. 218.  RCW 82.12.060 and 1975 1st ex.s. c 278 s 54 are each amended to read as follows:

(1) In the case of installment sales and leases of personal property, the department, by ((regulation)) rule, may provide for the collection of taxes upon the installments of the purchase price, or amount of rental, as of the time the same fall due.

(2) In the case of property acquired by bailment, the department, by ((regulation)) rule, may provide for payment of the tax due in installments based on the reasonable rental for the property as determined under RCW 82.12.010(1).

(3) In the case of services defined as a retail sale under RCW 82.04.050(3), the seller may collect taxes based upon payments of the purchase price, as of the time the payments are made, regardless of the accounting method used by the seller or whether the sales were made under an installment agreement.

NEW SECTION. Sec. 219.  A new section is added to chapter 82.12 RCW to read as follows:

    (1) The entire value of a service used in this state is subject to tax under this chapter, unless apportionment is allowed under this section.

    (2) A taxpayer maintaining places of business both within and without this state may apportion the value of service used by the taxpayer.  The taxable portion of the value of the service equals the full value of the service multiplied by an apportionment fraction, the  numerator of which is the property factor plus the payroll factor plus the sales factor, and the denominator of which is three.  The taxpayer's sales, property, and payroll factors shall be calculated as provided in RCW 82.56.010, except the department may alter the components of the apportionment factors by rule to be consistent with uniform rules for apportionment or allocation developed by the states for particular industries.

    (3) The department shall provide by rule for the time and manner of recalculating the apportionment formula.  The apportionment factor shall not be required to be recalculated more often than annually.

    (4) If the requirements of this section do not fairly represent the extent of the taxpayer's use of a service in this state, the taxpayer may petition for, or the department may require, in respect to all or any part of the taxpayer's use of services, if reasonable:

    (a) Separate accounting;

    (b) The exclusion of any one or more of the factors;

    (c) The inclusion of one or more additional factors that will fairly represent the taxpayer's use of services in this state; or

    (d) The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's use of services.

NEW SECTION. Sec. 220.  The following acts or parts of acts are each repealed:

(1) RCW 82.08.02525 (Exemptions--Sale of copied public records by state and local agencies) and 1996 c 63 s 1;

(2) RCW 82.08.0253 (Exemptions--Sale and distribution of newspapers) and 1980 c 37 s 21;

(3) RCW 82.08.02535 (Exemptions--Sales and distribution of magazines or periodicals by subscription for fund-raising) and 1995 2nd sp.s. c 8 s 1;

(4) RCW 82.08.02537 (Exemptions--Sales of academic transcripts) and 1996 c 272 s 2;

(5) RCW 82.08.0256 (Exemptions--Sale of the operating property of a public utility to the state or a political subdivision) and 1980 c 37 s 24;

(6) RCW 82.08.02565 (Exemptions--Sales of machinery and equipment for manufacturing, research and development, or a testing operation--Labor and services for installation--Exemption certificate--Rules) and 1999 c 211 s 5, 1999 c 211 s 3, & 1998 c 330 s 1;

(7) RCW 82.08.02566 (Exemptions--Sales of tangible personal property incorporated in prototype for parts, auxiliary equipment, and aircraft modification--Limitations on yearly exemption) and 1997 c 302 s 1 & 1996 c 247 s 4;

(8) RCW 82.08.02567 (Exemptions--Sales of, or labor and services for installation of, machinery and equipment used in generating electricity using wind, sun, or landfill gas--Exemption certificate--Rules) and 1999 c 358 s 4, 1998 c 309 s 1, & 1996 c 166 s 1;

(9) RCW 82.08.02568 (Exemptions--Sales of carbon and similar substances that become an ingredient or component of anodes or cathodes used in producing aluminum for sale) and 1996 c 170 s 1;

(10) RCW 82.08.02569 (Exemptions--Sales of tangible personal property related to a building or structure that is an integral part of a laser interferometer gravitational wave observatory) and 1996 c 113 s 1;

(11) RCW 82.08.0257 (Exemptions--Auction sales of tangible personal property used in farming) and 1980 c 37 s 25;

(12) RCW 82.08.02573 (Exemptions--Sales by a nonprofit organization for fund-raising activities) and 1998 c 336 s 3;

(13) RCW 82.08.0258 (Exemptions--Sales to federal corporations providing aid and relief) and 1980 c 37 s 26;

(14) RCW 82.08.0259 (Exemptions--Sales of purebred livestock for breeding--Cattle and milk cows) and 1980 c 37 s 27;

(15) RCW 82.08.0261 (Exemptions--Sales of personal property for use connected with private or common carriers in interstate or foreign commerce) and 1980 c 37 s 28;

(16) RCW 82.08.0262 (Exemptions--Sales of airplanes, locomotives, railroad cars, or watercraft for use in interstate or foreign commerce or outside the territorial waters of the state or airplanes sold to United States government--Components thereof and of motor vehicles or trailers used for constructing, repairing, cleaning, etc.--Labor and services for constructing, repairing, cleaning, etc.) and 1998 c 311 s 5, 1994 c 43 s 1, & 1980 c 37 s 29;

(17) RCW 82.08.0263 (Exemptions--Sales of motor vehicles and trailers for use in transporting persons or property in interstate or foreign commerce) and 1998 c 311 s 6, 1995 c 63 s 1, & 1980 c 37 s 30;

(18) RCW 82.08.0264 (Exemptions--Sales of motor vehicles, trailers, or campers to nonresidents for use outside the state) and 1980 c 37 s 31;

(19) RCW 82.08.0265 (Exemptions--Sales to nonresidents of tangible personal property which becomes a component of property of the nonresident by installing, repairing, etc.--Labor and services for installing, repairing, etc.) and 1980 c 37 s 32;

(20) RCW 82.08.0266 (Exemptions--Sales of watercraft to nonresidents for use outside the state) and 1999 c 358 s 5 & 1980 c 37 s 33;

(21) RCW 82.08.02665 (Exemptions--Sales of watercraft, vessels to residents of foreign countries) and 1999 c 358 s 6 & 1993 c 119 s 1;

(22) RCW 82.08.0267 (Exemptions--Sales of poultry for producing poultry and poultry products for sale) and 1980 c 37 s 34;

(23) RCW 82.08.0268 (Exemptions--Sales of machinery and implements, and related parts and labor, for farming to nonresidents for use outside the state) and 1998 c 167 s 1 & 1980 c 37 s 35;

(24) RCW 82.08.0269 (Exemptions--Sales for use in states, territories, and possessions of the United States which are not contiguous to any other state) and 1980 c 37 s 36;

(25) RCW 82.08.0271 (Exemptions--Sales to municipal corporations, the state, and political subdivisions of tangible personal property, labor and services on watershed protection and flood prevention contracts) and 1980 c 37 s 37;

(26) RCW 82.08.0272 (Exemptions--Sales of semen for artificial insemination of livestock) and 1980 c 37 s 38;

(27) RCW 82.08.0273 (Exemptions--Sales to nonresidents of tangible personal property for use outside the state--Proof of nonresident status--Penalties) and 1993 c 444 s 1, 1988 c 96 s 1, 1982 1st ex.s. c 5 s 1, & 1980 c 37 s 39;

(28) RCW 82.08.0274 (Exemptions--Sales of form lumber to person engaged in constructing, repairing, etc., structures for consumers) and 1980 c 37 s 40;

(29) RCW 82.08.02745 (Exemptions--Charges for labor and services or sales of tangible personal property related to agricultural employee housing--Exemption certificate--Rules) and 1997 c 438 s 1 & 1996 c 117 s 1;

(30) RCW 82.08.0275 (Exemptions--Sales of and labor and service charges for mining, sorting, crushing, etc., of sand, gravel, and rock from county or city quarry for public road purposes) and 1980 c 37 s 41;

(31) RCW 82.08.0276 (Exemptions--Sales of wearing apparel for use only as a sample for display for sale) and 1980 c 37 s 42;

(32) RCW 82.08.0277 (Exemptions--Sales of pollen) and 1980 c 37 s 43;

(33) RCW 82.08.0278 (Exemptions--Sales between political subdivisions resulting from annexation or incorporation) and 1980 c 37 s 44;

(34) RCW 82.08.0279 (Exemptions--Renting or leasing of motor vehicles and trailers to a nonresident for use in the transportation of persons or property across state boundaries) and 1980 c 37 s 45;

(35) RCW 82.08.02795 (Exemptions--Sales to free hospitals) and 1993 c 205 s 1;

(36) RCW 82.08.0282 (Exemptions--Sales of returnable containers for beverages and foods) and 1980 c 37 s 47;

(37) RCW 82.08.0285 (Exemptions--Sales of ferry vessels to the state or local governmental units--Components thereof--Labor and service charges) and 1980 c 37 s 50;

(38) RCW 82.08.0287 (Exemptions--Sales of passenger motor vehicles as ride-sharing vehicles) and 1996 c 244 s 4, 1995 c 274 s 2, 1993 c 488 s 2, & 1980 c 166 s 1;

(39) RCW 82.08.02875 (Exemptions--Vehicle parking charges subject to tax at stadium and exhibition center) and 1997 c 220 s 203;

(40) RCW 82.08.0288 (Exemptions--Lease of certain irrigation equipment) and 1983 1st ex.s. c 55 s 5;

(41) RCW 82.08.0289 (Exemptions--Certain network telephone service) and 1983 2nd ex.s. c 3 s 30;

(42) RCW 82.08.0291 (Exemptions--Sales of amusement and recreation services or personal services by nonprofit youth organization--Local government physical fitness classes) and 1994 c 85 s 1 & 1981 c 74 s 2;

(43) RCW 82.08.02915 (Exemptions--Sales used by health or social welfare organizations for alternative housing for youth in crisis) and 1998 c 183 s 1, 1997 c 386 s 56, & 1995 c 346 s 1;

(44) RCW 82.08.02917 (Youth in crisis--Definition--Limited purpose) and 1995 c 346 s 3;

(45) RCW 82.08.0294 (Exemptions--Sales of feed for cultivating or raising fish for sale) and 1985 c 148 s 3;

(46) RCW 82.08.0296 (Exemptions--Sales of feed consumed by livestock at a public livestock market) and 1986 c 265 s 1;

(47) RCW 82.08.0298 (Exemptions--Sales of diesel fuel for use in operating watercraft in commercial deep sea fishing or commercial passenger fishing boat operations outside the state) and 1987 c 494 s 1;

(48) RCW 82.08.0299 (Exemptions--Emergency lodging for homeless persons--Conditions) and 1988 c 61 s 1;

(49) RCW 82.08.031 (Exemptions--Sales to artistic or cultural organizations of certain objects acquired for exhibition or presentation) and 1981 c 140 s 4;

(50) RCW 82.08.0311 (Exemptions--Sales of materials and supplies used in packing horticultural products) and 1988 c 68 s 1;

(51) RCW 82.08.0315 (Exemptions--Rentals or sales related to motion picture or video productions--Exceptions--Certificate) and 1997 c 61 s 1 & 1995 2nd sp.s. c 5 s 1;

(52) RCW 82.08.036 (Exemptions--Vehicle battery core deposits or credits--Replacement vehicle tire fees--"Core deposits or credits" defined) and 1989 c 431 s 45;

(53) RCW 82.08.810 (Exemptions--Air pollution control facilities at a thermal electric generation facility--Exceptions--Exemption certificate--Payments on cessation of operation) and 1997 c 368 s 2;

(54) RCW 82.08.811 (Exemptions--Coal used at coal-fired thermal electric generation facility--Application--Demonstration of progress in air pollution control--Notice of emissions violations--Reapplication--Payments on cessation of operation) and 1997 c 368 s 4;

(55) RCW 82.08.812 (Exemptions--Coal used at coal-fired thermal electric generation facility--Forfeiture upon use of nonlocal coal sources--Reinstatement) and 1997 c 368 s 5;

(56) RCW 82.08.820 (Exemptions--Remittance--Warehouse and grain elevators and distribution centers--Material-handling and racking equipment--Construction of warehouse or elevator--Information sheet--Rules--Records--Exceptions) and 1997 c 450 s 2;

(57) RCW 82.08.830 (Exemptions--Sales at camp or conference center by nonprofit organization) and 1997 c 388 s 2;

(58) RCW 82.08.832 (Exemptions--Sales of gun safes) and 1998 c 178 s 1;

(59) RCW 82.12.02525 (Exemptions--Sale of copied public records by state and local agencies) and 1996 c 63 s 2;

(60) RCW 82.12.02545 (Exemption--Use of naval aircraft training equipment transferred due to base closure) and 1995 c 128 s 1;

(61) RCW 82.12.02565 (Exemptions--Machinery and equipment used for manufacturing, research and development, or a testing operation) and 1999 c 211 s 6, 1998 c 330 s 2, 1996 c 247 s 3, & 1995 1st sp.s. c 3 s 3;

(62) RCW 82.12.02566 (Exemptions--Use of tangible personal property incorporated in prototype for aircraft parts, auxiliary equipment, and aircraft modification--Limitations on yearly exemption) and 1997 c 302 s 2 & 1996 c 247 s 5;

(63) RCW 82.12.02567 (Exemptions--Use of machinery and equipment used in generating electricity using wind, sun, or landfill gas) and 1999 c 358 s 10, 1998 c 309 s 2, & 1996 c 166 s 2;

(64) RCW 82.12.02568 (Exemptions--Use of carbon and similar substances that become an ingredient or component of anodes or cathodes used in producing aluminum for sale) and 1996 c 170 s 2;

(65) RCW 82.12.02569 (Exemptions--Use of tangible personal property related to a building or structure that is an integral part of a laser interferometer gravitational wave observatory) and 1996 c 113 s 2;

(66) RCW 82.12.0257 (Exemptions--Use of tangible personal property of the operating property of a public utility by state or political subdivision) and 1980 c 37 s 57;

(67) RCW 82.12.0258 (Exemptions--Use of tangible personal property previously used in farming and purchased from farmer at auction) and 1980 c 37 s 58;

(68) RCW 82.12.0259 (Exemptions--Use of tangible personal property by federal corporations providing aid and relief) and 1980 c 37 s 59;

(69) RCW 82.12.02595 (Exemptions--Use of donated tangible personal property by nonprofit organization or governmental entity or for purpose donated--Use of related property) and 1998 c 182 s 1 & 1995 c 201 s 1;

(70) RCW 82.12.0261 (Exemptions--Use of purebred livestock for breeding--Cattle and milk cows) and 1980 c 37 s 60;

(71) RCW 82.12.0262 (Exemptions--Use of poultry for producing poultry and poultry products for sale) and 1980 c 37 s 61;

(72) RCW 82.12.0263 (Exemptions--Use of fuel by extractor or manufacturer thereof) and 1980 c 37 s 62;

(73) RCW 82.12.0264 (Exemptions--Use of dual-controlled motor vehicles by school for driver training) and 1980 c 37 s 63;

(74) RCW 82.12.0265 (Exemptions--Use by bailee of tangible personal property consumed in research, development, etc., activities) and 1980 c 37 s 64;

(75) RCW 82.12.0267 (Exemptions--Use of semen in artificial insemination of livestock) and 1980 c 37 s 66;

(76) RCW 82.12.0268 (Exemptions--Use of form lumber by persons engaged in constructing, repairing, etc., structures for consumers) and 1980 c 37 s 67;

(77) RCW 82.12.02685 (Exemptions--Use of tangible personal property related to agricultural employee housing) and 1997 c 438 s 2 & 1996 c 117 s 2;

(78) RCW 82.12.0269 (Exemptions--Use of sand, gravel, or rock to extent of labor and service charges for mining, sorting, crushing, etc., thereof from county or city quarry for public road purposes) and 1980 c 37 s 68;

(79) RCW 82.12.0271 (Exemptions--Use of wearing apparel only as a sample for display for sale) and 1980 c 37 s 69;

(80) RCW 82.12.0272 (Exemptions--Use of tangible personal property in single trade shows) and 1980 c 37 s 70;

(81) RCW 82.12.0273 (Exemptions--Use of pollen) and 1980 c 37 s 71;

(82) RCW 82.12.0274 (Exemptions--Use of tangible personal property by political subdivision resulting from annexation or incorporation) and 1980 c 37 s 72;

(83) RCW 82.12.02745 (Exemptions--Use by free hospitals of certain items) and 1993 c 205 s 2;

(84) RCW 82.12.0276 (Exemptions--Use of returnable containers for beverages and foods) and 1980 c 37 s 74;

(85) RCW 82.12.0279 (Exemptions--Use of ferry vessels by the state or local governmental units--Components thereof) and 1980 c 37 s 77;

(86) RCW 82.12.0282 (Exemptions--Use of vans as ride-sharing vehicles) and 1999 c 358 s 11, 1996 c 88 s 4, 1993 c 488 s 4, & 1980 c 166 s 2;

(87) RCW 82.12.0283 (Exemptions--Use of certain irrigation equipment) and 1983 1st ex.s. c 55 s 6;

(88) RCW 82.12.0284 (Exemptions--Use of computers or computer components, accessories, or software donated to schools or colleges) and 1983 1st ex.s. c 55 s 7;

(89) RCW 82.12.02915 (Exemptions--Use of items by health or social welfare organizations for alternative housing for youth in crisis) and 1998 c 183 s 2, 1997 c 386 s 57, & 1995 c 346 s 2;

(90) RCW 82.12.02917 (Exemptions--Use of amusement and recreation services by nonprofit youth organization) and 1999 c 358 s 7;

(91) RCW 82.12.0294 (Exemptions--Use of feed for cultivating or raising fish for sale) and 1985 c 148 s 4;

(92) RCW 82.12.0296 (Exemptions--Use of feed consumed by livestock at a public livestock market) and 1986 c 265 s 2;

(93) RCW 82.12.0298 (Exemptions--Use of diesel fuel in operating watercraft in commercial deep sea fishing or commercial passenger fishing boat operations outside the state) and 1987 c 494 s 2;

(94) RCW 82.12.031 (Exemptions--Use by artistic or cultural organizations of certain objects) and 1981 c 140 s 5;

(95) RCW 82.12.0311 (Exemptions--Use of materials and supplies in packing horticultural products) and 1988 c 68 s 2;

(96) RCW 82.12.0315 (Exemptions--Rental or sales related to motion picture or video productions--Exceptions) and 1995 2nd sp.s. c 5 s 2;

(97) RCW 82.12.0345 (Exemptions--Use of newspapers) and 1994 c 124 s 11;

(98) RCW 82.12.0347 (Exemptions--Use of academic transcripts) and 1996 c 272 s 3;

(99) RCW 82.12.038 (Exemptions--Vehicle battery core deposits or credits--Replacement vehicle tire fees--"Core deposits or credits" defined) and 1989 c 431 s 46;

(100) RCW 82.12.800 (Exemptions--Uses of vessel, vessel's trailer by manufacturer) and 1997 c 293 s 1;

(101) RCW 82.12.801 (Exemptions--Uses of vessel, vessel's trailer by dealer) and 1997 c 293 s 2;

(102) RCW 82.12.802 (Vessels held in inventory by dealer or manufacturer--Tax on personal use--Documentation--Rules) and 1997 c 293 s 3;

(103) RCW 82.12.810 (Exemptions--Air pollution control facilities at a thermal electric generation facility--Exceptions--Payments on cessation of operation) and 1997 c 368 s 3;

(104) RCW 82.12.811 (Exemptions--Coal used at coal-fired thermal electric generation facility--Application--Demonstration of progress in air pollution control--Notice of emissions violations-- Reapplication--Payments on cessation of operation) and 1997 c 368 s 6;

(105) RCW 82.12.812 (Exemptions--Coal used at coal-fired thermal electric generation facility--Forfeiture upon use of nonlocal coal sources--Reinstatement) and 1997 c 368 s 7;

(106) RCW 82.12.820 (Exemptions--Remittance--Warehouse and grain elevators and distribution centers--Material-handling and racking equipment--Construction of warehouse or elevator--Information sheet--Rules--Records--Exceptions) and 1997 c 450 s 3; and

(107) RCW 82.12.832 (Exemptions--Use of gun safes) and 1998 c 178 s 2.

                             PART III

                    BUSINESS AND OCCUPATION TAX

    Sec. 301.  RCW 82.04.230 and 1993 sp.s. c 25 s 101 are each amended to read as follows:

    Upon every person engaging within this state in business as an extractor; as to such persons the amount of the tax with respect to such business shall be equal to the value of the products, including byproducts, extracted for sale or for commercial or industrial use, multiplied by the rate of ((0.484)) 0.33 percent.

    The measure of the tax is the value of the products, including byproducts, so extracted, regardless of the place of sale or the fact that deliveries may be made to points outside the state.

    Sec. 302.  RCW 82.04.240 and 1998 c 312 s 3 are each amended to read as follows:

    Upon every person except persons taxable under RCW 82.04.260 (1), (2), (4), (5), or (6) engaging within this state in business as a manufacturer; as to such persons the amount of the tax with respect to such business shall be equal to the value of the products, including byproducts, manufactured, multiplied by the rate of ((0.484)) 0.33 percent.

    The measure of the tax is the value of the products, including byproducts, so manufactured regardless of the place of sale or the fact that deliveries may be made to points outside the state.

    Sec. 303.  RCW 82.04.250 and 1998 c 312 s 4 are each amended to read as follows:

    (EFFECTIVE UNTIL JULY 1, 2001.)  (1) Upon every person except persons taxable under RCW 82.04.260(5) or subsection (2) of this section engaging within this state in the business of making sales at retail, as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the business, multiplied by the rate of ((0.471)) 0.33 percent.

    (2) Upon every person engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the business, multiplied by the rate of ((0.484)) 0.33 percent.

    Sec. 304.  RCW 82.04.250 and 1998 c 343 s 5 and 1998 c 312 s 4 are each reenacted and amended to read as follows:

    (EFFECTIVE JULY 1, 2001.)  (1) Upon every person except persons taxable under RCW 82.04.260(5), 82.04.272, or subsection (2) of this section engaging within this state in the business of making sales at retail, as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the business, multiplied by the rate of ((0.471)) 0.33 percent.

    (2) Upon every person engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, as to such persons, the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the business, multiplied by the rate of ((0.484)) 0.33 percent.

    Sec. 305.  RCW 82.04.255 and 1997 c 7 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 ((1.5)) 0.33 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. 306.  RCW 82.04.260 and 1998 c 312 s 5 and 1998 c 311 s 2 are each reenacted and amended to read as follows:

    (1) Upon every person engaging within this state in the business of manufacturing:

    (a) Wheat into flour, barley into pearl barley, soybeans into soybean oil, canola into canola oil, canola meal, or canola byproducts, or sunflower seeds into sunflower oil; as to such persons the amount of tax with respect to such business shall be equal to the value of the flour, pearl barley, oil, canola meal, or canola byproduct manufactured, multiplied by the rate of 0.138 percent;

    (b) Seafood products which remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing by that person; as to such persons the amount of tax with respect to such business shall be equal to the value of the products manufactured, multiplied by the rate of 0.138 percent; and

    (c) By canning, preserving, freezing, processing, or dehydrating fresh fruits and vegetables, or selling at wholesale fresh fruits and vegetables canned, preserved, frozen, processed, or dehydrated by the seller and sold to purchasers who transport in the ordinary course of business the goods out of this state; as to such persons the amount of tax with respect to such business shall be equal to the value of the products canned, preserved, frozen, processed, or dehydrated multiplied by the rate of 0.138 percent.  As proof of sale to a person who transports in the ordinary course of business goods out of this state, the seller shall annually provide a statement in a form prescribed by the department and retain the statement as a business record.

    (2) Upon every person engaging within this state in the business of splitting or processing dried peas; as to such persons the amount of tax with respect to such business shall be equal to the value of the peas split or processed, multiplied by the rate of 0.138 percent.

    (3) Upon every nonprofit corporation and nonprofit association engaging within this state in research and development, as to such corporations and associations, the amount of tax with respect to such activities shall be equal to the gross income derived from such activities multiplied by the rate of ((0.484)) 0.33 percent.

    (4) Upon every person engaging within this state in the business of slaughtering, breaking and/or processing perishable meat products and/or selling the same at wholesale only and not at retail; as to such persons the tax imposed shall be equal to the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.

    (5) Upon every person engaging within this state in the business of making sales, at retail or wholesale, of nuclear fuel assemblies manufactured by that person, as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of sales of the assemblies multiplied by the rate of 0.275 percent.

    (6) Upon every person engaging within this state in the business of manufacturing nuclear fuel assemblies, as to such persons the amount of tax with respect to such business shall be equal to the value of the products manufactured multiplied by the rate of 0.275 percent.

    (7) Upon every person engaging within this state in the business of acting as a travel agent or tour operator; as to such persons the amount of the tax with respect to such activities shall be equal to the gross income derived from such activities multiplied by the rate of 0.275 percent.

    (8) Upon every person engaging within this state in business as an international steamship agent, international customs house broker, international freight forwarder, vessel and/or cargo charter broker in foreign commerce, and/or international air cargo agent; as to such persons the amount of the tax with respect to only international activities shall be equal to the gross income derived from such activities multiplied by the rate of 0.275 percent.

    (9) Upon every person engaging within this state in the business of stevedoring and associated activities pertinent to the movement of goods and commodities in waterborne interstate or foreign commerce; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds derived from such activities multiplied by the rate of 0.275 percent.  Persons subject to taxation under this subsection shall be exempt from payment of taxes imposed by chapter 82.16 RCW for that portion of their business subject to taxation under this subsection.  Stevedoring and associated activities pertinent to the conduct of goods and commodities in waterborne interstate or foreign commerce are defined as all activities of a labor, service or transportation nature whereby cargo may be loaded or unloaded to or from vessels or barges, passing over, onto or under a wharf, pier, or similar structure; cargo may be moved to a warehouse or similar holding or storage yard or area to await further movement in import or export or may move to a consolidation freight station and be stuffed, unstuffed, containerized, separated or otherwise segregated or aggregated for delivery or loaded on any mode of transportation for delivery to its consignee.  Specific activities included in this definition are:  Wharfage, handling, loading, unloading, moving of cargo to a convenient place of delivery to the consignee or a convenient place for further movement to export mode; documentation services in connection with the receipt, delivery, checking, care, custody and control of cargo required in the transfer of cargo; imported automobile handling prior to delivery to consignee; terminal stevedoring and incidental vessel services, including but not limited to plugging and unplugging refrigerator service to containers, trailers, and other refrigerated cargo receptacles, and securing ship hatch covers.

    (10) Upon every person engaging within this state in the business of disposing of low-level waste, as defined in RCW 43.145.010; as to such persons the amount of the tax with respect to such business shall be equal to the gross income of the business, excluding any fees imposed under chapter 43.200 RCW, multiplied by the rate of ((3.3)) 0.33 percent.

    If the gross income of the taxpayer is attributable to activities both within and without this state, the gross income attributable to this state shall be determined in accordance with the methods of apportionment required under RCW 82.04.460.

    (11) Upon every person engaging within this state as an insurance agent, insurance broker, or insurance solicitor licensed under chapter 48.17 RCW; as to such persons, the amount of the tax with respect to such licensed activities shall be equal to the gross income of such business multiplied by the rate of ((0.484)) 0.33 percent.

    (12) Upon every person engaging within this state in business as a hospital, as defined in chapter 70.41 RCW, that is operated as a nonprofit corporation or by the state or any of its political subdivisions, as to such persons, the amount of tax with respect to such activities shall be equal to the gross income of the business multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5 percent thereafter.  The moneys collected under this subsection shall be deposited in the health services account created under RCW 43.72.900.

    Sec. 307.  RCW 82.04.263 and 1996 c 112 s 3 are each amended to read as follows:

    Upon every person engaging within this state in the business of cleaning up for the United States, or its instrumentalities, radioactive waste and other byproducts of weapons production and nuclear research and development; as to such persons the amount of the tax with respect to such business shall be equal to the value of the gross income of the business multiplied by the rate of ((0.471)) 0.33 percent.

    For the purposes of this chapter, "cleaning up radioactive waste and other byproducts of weapons production and nuclear research and development" means the activities of handling, storing, treating, immobilizing, stabilizing, or disposing of radioactive waste, radioactive tank waste and capsules, nonradioactive hazardous solid and liquid wastes, or spent nuclear fuel; spent nuclear fuel conditioning; removal of contamination in soils and ground water; decontamination and decommissioning of facilities; and activities integral and necessary to the direct performance of cleanup.

    Sec. 308.  RCW 82.04.2635 and 1998 c 308 s 3 are each amended to read as follows:

    (1) Upon every person engaging within this state in the business of environmental remedial action, the amount of tax with respect to such business shall be equal to the value of the gross income of the business multiplied by the rate ((0.471)) of 0.33 percent.

    (2) For purposes of this chapter, "environmental remedial action" means:

    (a) Those services related to the identification, investigation, or cleanup arising out of the release or threatened release of hazardous substances that are conducted under contract with the department of ecology or under an enforcement order, agreed order, or consent decree executed by the department of ecology, or those services, when evaluated as a whole, that are the substantial equivalent of a department of ecology-conducted or supervised remedial action under the model toxics control act, chapter 70.105D RCW; or

    (b) Those services related to the identification, investigation, or cleanup of a facility that are conducted under contract with the United States environmental protection agency or under an order or consent decree executed by the United States environmental protection agency, or that are consistent with the national contingency plan adopted under the comprehensive environmental response compensation and liability act, 42 U.S.C. Sec. 9605 as it exists on July 1, 1998, and those services are conducted at facilities that are included on the national priorities list adopted under 42 U.S.C. Sec. 9605 as it exists on July 1, 1998, or at facilities subject to a removal action authorized under 42 U.S.C. Sec. 9604 as it exists on July 1, 1998.

    (3) A site is eligible for environmental remedial action upon submittal, via certified mail to the department of ecology and the department of revenue, of the following:

    (a) A certification from the owner, the department of ecology, or the United States environmental protection agency, containing the following information:

    (i) The location of the site, shown on a map and identified by parcel number or numbers and street address;

    (ii) The name and address and daytime phone number of a contact person;

    (iii) A statement that the proposed environmental remedial actions will be conducted by the department of ecology or its authorized contractor under chapter 70.105D RCW or will be substantially equivalent to a department of ecology-conducted or supervised remedial action under the model toxics control act, chapter 70.105D RCW, or will be conducted by the United States environmental protection agency or its authorized contractor or will be consistent with the national contingency plan under 42 U.S.C. Sec. 9605 as it exists on July 1, 1998; and

    (iv) A description of the proposed environmental remedial actions to be taken; and

    (b)(i) A certification from a certified underground storage tank service supervisor as authorized in chapter 90.76 RCW, from a professional engineer licensed in the state of Washington, or from an environmental professional who subscribes to a code of professional responsibility administered by a recognized organization representing such professions containing the following information:

    (A) Confirmation that an environmental remedial action as defined in this section is to be conducted at the site;

    (B) The location of the site, shown on a map and identified by parcel number or numbers and street address, and the approximate location of the proposed environmental remedial action; and

    (C) The name, address, telephone number, and uniform business identifier of the person providing the certification; or

    (ii) If applicable to the site, a copy of an enforcement order, agreed order, or consent decree executed by the department of ecology or the United States environmental protection agency.

    (4) The department of revenue shall respond in writing to the owner within thirty days confirming receipt of the certification, or certifications, of eligibility.

    (5) The owner shall provide a copy of the confirmation from the department of revenue to each person who renders environmental remedial action at the site.  Each person who renders such action shall separately state the charges for labor and services associated with the environmental remedial action.

    (6) Upon completion of the environmental remedial action, the owner shall submit to the department of ecology a report documenting the environmental remedial actions conducted at the site and documenting compliance with the requirements of chapter 70.105D RCW.

    (7) In addition to any other penalties, a person who files a certificate with the department of ecology or the department of revenue that contains falsehoods or misrepresentations are subject to penalties authorized under chapter 18.43 or 90.76 RCW or RCW 9A.76.175.  Also, a person who improperly reports the person's tax class shall be assessed a penalty of fifty percent of the tax due, in addition to other taxes or penalties, together with interest.  The department of revenue shall waive the penalty imposed under this section if it finds that the falsehoods or misrepresentations or improper reporting of the tax classification was due to circumstances beyond the control of the person.

    (8) This section expires July 1, 2003.

    Sec. 309.  RCW 82.04.270 and 1999 c 358 s 1 are each amended to read as follows:

    (EFFECTIVE UNTIL JULY 1, 2001.)  Upon every person except persons taxable under RCW 82.04.260(5) engaging within this state in the business of making sales at wholesale; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of sales of such business multiplied by the rate of ((0.484)) 0.33 percent.

    Sec. 310.  RCW 82.04.270 and 1999 c 358 s 2 are each amended to read as follows:

    (EFFECTIVE JULY 1, 2001.)  Upon every person except persons taxable under RCW 82.04.260(5) or 82.04.272 engaging within this state in the business of making sales at wholesale; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of sales of such business multiplied by the rate of ((0.484)) 0.33 percent.

    Sec. 311.  RCW 82.04.280 and 1994 c 112 s 1 are each amended to read as follows:

    (EFFECTIVE UNTIL JULY 1, 2001.)  Upon every person engaging within this state in the business of:  (1) Printing, and of publishing newspapers, periodicals, or magazines; (2) building, repairing or improving any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used, primarily for foot or vehicular traffic including mass transportation vehicles of any kind and including any readjustment, reconstruction or relocation of the facilities of any public, private or cooperatively owned utility or railroad in the course of such building, repairing or improving, the cost of which readjustment, reconstruction, or relocation, is the responsibility of the public authority whose street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle is being built, repaired or improved; (3) extracting for hire or processing for hire; (4) operating a cold storage warehouse or storage warehouse, but not including the rental of cold storage lockers; (5) representing and performing services for fire or casualty insurance companies as an independent resident managing general agent licensed under the provisions of RCW 48.05.310; (6) radio and television broadcasting, excluding network, national and regional advertising computed as a standard deduction based on the national average thereof as annually reported by the Federal Communications Commission, or in lieu thereof by itemization by the individual broadcasting station, and excluding that portion of revenue represented by the out-of-state audience computed as a ratio to the station's total audience as measured by the 100 micro-volt signal strength and delivery by wire, if any; (7) engaging in activities which bring a person within the definition of consumer contained in RCW 82.04.190(6); as to such persons, the amount of tax on such business shall be equal to the gross income of the business multiplied by the rate of ((0.484)) 0.33 percent.

    As used in this section, "cold storage warehouse" means a storage warehouse used to store fresh and/or frozen perishable fruits or vegetables, meat, seafood, dairy products, or fowl, or any combination thereof, at a desired temperature to maintain the quality of the product for orderly marketing.

    As used in this section, "storage warehouse" means a building or structure, or any part thereof, in which goods, wares, or merchandise are received for storage for compensation, except field warehouses, fruit warehouses, fruit packing plants, warehouses licensed under chapter 22.09 RCW, public garages storing automobiles, railroad freight sheds, docks and wharves, and "self-storage" or "mini storage" facilities whereby customers have direct access to individual storage areas by separate entrance.

    As used in this section, "periodical or magazine" means a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication.

    Sec. 312.  RCW 82.04.280 and 1998 c 343 s 3 are each amended to read as follows:

    (EFFECTIVE JULY 1, 2001.)  Upon every person engaging within this state in the business of:  (1) Printing, and of publishing newspapers, periodicals, or magazines; (2) building, repairing or improving any street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used, primarily for foot or vehicular traffic including mass transportation vehicles of any kind and including any readjustment, reconstruction or relocation of the facilities of any public, private or cooperatively owned utility or railroad in the course of such building, repairing or improving, the cost of which readjustment, reconstruction, or relocation, is the responsibility of the public authority whose street, place, road, highway, easement, right of way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle is being built, repaired or improved; (3) extracting for hire or processing for hire; (4) operating a cold storage warehouse or storage warehouse, but not including the rental of cold storage lockers; (5) representing and performing services for fire or casualty insurance companies as an independent resident managing general agent licensed under the provisions of RCW 48.05.310; (6) radio and television broadcasting, excluding network, national and regional advertising computed as a standard deduction based on the national average thereof as annually reported by the Federal Communications Commission, or in lieu thereof by itemization by the individual broadcasting station, and excluding that portion of revenue represented by the out-of-state audience computed as a ratio to the station's total audience as measured by the 100 micro-volt signal strength and delivery by wire, if any; (7) engaging in activities which bring a person within the definition of consumer contained in RCW 82.04.190(6); as to such persons, the amount of tax on such business shall be equal to the gross income of the business multiplied by the rate of ((0.484)) 0.33 percent.

    As used in this section, "cold storage warehouse" means a storage warehouse used to store fresh and/or frozen perishable fruits or vegetables, meat, seafood, dairy products, or fowl, or any combination thereof, at a desired temperature to maintain the quality of the product for orderly marketing.

    As used in this section, "storage warehouse" means a building or structure, or any part thereof, in which goods, wares, or merchandise are received for storage for compensation, except field warehouses, fruit warehouses, fruit packing plants, warehouses licensed under chapter 22.09 RCW, public garages storing automobiles, railroad freight sheds, docks and wharves, and "self-storage" or "mini storage" facilities whereby customers have direct access to individual storage areas by separate entrance.  "Storage warehouse" does not include a building or structure, or that part of such building or structure, in which an activity taxable under RCW 82.04.272 is conducted.

    As used in this section, "periodical or magazine" means a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication.

    Sec. 313.  RCW 82.04.290 and 1998 c 331 s 2, 1998 c 312 s 8, and 1998 c 308 s 4 are each reenacted and amended to read as follows:

    (EFFECTIVE UNTIL JULY 1, 2001.)  (1) 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.

    (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, 82.04.2905, 82.04.280, 82.04.2635, and 82.04.2907, and subsection (1) 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 ((1.5)) 0.33 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. 314.  RCW 82.04.290 and 1998 c 343 s 4, 1998 c 331 s 2, 1998 c 312 s 8, and 1998 c 308 s 4 are each reenacted and amended to read as follows:

    (EFFECTIVE JULY 1, 2001, UNTIL JULY 1, 2003.)  (1) 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.

    (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, 82.04.2905, 82.04.280, 82.04.2635, 82.04.2907, and 82.04.272, and subsection (1) 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 ((1.5)) 0.33 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. 315.  RCW 82.04.290 and 1998 c 343 s 4, 1998 c 331 s 2, 1998 c 312 s 8, and 1998 c 308 s 5 are each reenacted and amended to read as follows:

    (EFFECTIVE JULY 1, 2003.)  (1) 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.

    (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, 82.04.2905, 82.04.280, 82.04.2907, and 82.04.272, and subsection (1) 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 ((1.5)) 0.33 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. 316.  RCW 82.04.2905 and 1998 c 312 s 7 are each amended to read as follows:

    Upon every person engaging within this state in the business of providing child care for periods of less than twenty-four hours; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds derived from such sales multiplied by the rate of ((0.484)) 0.33 percent.

    Sec. 317.  RCW 82.04.2907 and 1998 c 331 s 1 are each amended to read as follows:

    Upon every person engaging within this state in the business of receiving income from royalties or charges in the nature of royalties for the granting of intangible rights, such as copyrights, licenses, patents, or franchise fees, the amount of tax with respect to such business shall be equal to the gross income from royalties or charges in the nature of royalties from the business multiplied by the rate of ((0.484)) 0.33 percent.

    "Royalties" means compensation for the use of intangible property, such as copyrights, patents, licenses, franchises, trademarks, trade names, and similar items.  It does not include compensation for any natural resource.

                              PART IV

                     REAL PROPERTY EXCISE TAX

    Sec. 401.  RCW 82.45.060 and 1987 c 472 s 14 are each amended to read as follows:

    (((1))) There is imposed an excise tax upon each sale of real property at the rate of one ((and twenty-eight one-hundredths)) percent of the selling price.  An amount equal to seven and seven-tenths percent of the proceeds of this tax to the state treasurer shall be deposited in the public works assistance account created in RCW 43.155.050.

    (((2) There is imposed an additional excise tax through June 30, 1989, upon each sale of real property at the rate of six one-hundredths of one percent of the selling price.  The tax imposed under this subsection shall be deposited in the conservation area account under RCW 79.71.110.))

                              PART V

                           MISCELLANEOUS

NEW SECTION. Sec. 501.  CAPTIONS AND HEADINGS.  Section captions and part headings as used in this act constitute no part of the law.

NEW SECTION. Sec. 502.  Sections 303, 309, 311, and 313 of this act expire July 1, 2001.

NEW SECTION. Sec. 503.  Section 314 of this act expires July 1, 2003.

NEW SECTION. Sec. 504.  Sections 304, 310, 312, and 314 of this act take effect July 1, 2001, only if the contingency in section 508 of this act requiring passage of a constitutional amendment occurs.

NEW SECTION. Sec. 505.  Section 315 of this act takes effect July 1, 2003, only if the contingency in section 508 of this act requiring passage of a constitutional amendment occurs.

NEW SECTION. Sec. 506.  CODIFICATION.  Sections 101 through 122 of this act constitute a new title, to be codified as Title 82A RCW.

NEW SECTION. Sec. 507.  SEVERABILITY CLAUSE.  If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 508.  Except as provided in sections 504 and 505 of this act, this act takes effect January 1, 2001, if an amendment to Article VII of the state Constitution authorizing an income tax and setting maximum tax rates is validly submitted to and is approved and ratified by the voters at the next general election.  If the proposed amendment is not so approved and ratified, this act is null and void in its entirety.

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