AN
ACT Relating to stating the intent of the legislature that the activities of
growing or packing agricultural products is not a manufacturing activity;
amending RCW 82.04.120, 82.60.020, and 82.62.010; creating a new section; and
declaring an emergency.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
82.04.120 and 1999 c 211 s 2 are each amended to read as follows:
"To
manufacture" embraces all activities of a commercial or industrial nature
wherein labor or skill is applied, by hand or machinery, to materials so that
as a result thereof a new, different or useful substance or article of tangible
personal property is produced for sale or commercial or industrial use, and
shall include: (1) The production or fabrication of special made or custom
made articles; (2) the production or fabrication of dental appliances, devices,
restorations, substitutes, or other dental laboratory products by a dental
laboratory or dental technician; (3) cutting, delimbing, and measuring of
felled, cut, or taken trees; and (4) crushing and/or blending of rock, sand,
stone, gravel, or ore.
"To
manufacture" shall not include: Conditioning of seed for use in planting;
cubing hay or alfalfa; activities which consist of cutting, grading, or ice
glazing seafood which has been cooked, frozen, or canned outside this state; ((or))
the growing, harvesting, or ((production)) producing of
agricultural products; or packing of agricultural products, including
sorting, washing, rinsing, grading, waxing, treating with fungicide, packaging,
chilling, or placing in controlled atmospheric storage.
Sec.
2. RCW
82.60.020 and 1999 c 164 s 301 are each amended to read as follows:
Unless
the context clearly requires otherwise, the definitions in this section apply
throughout this chapter.
(1)
"Applicant" means a person applying for a tax deferral under this
chapter.
(2)
"Department" means the department of revenue.
(3)
"Eligible area" means a county with fewer than one hundred persons
per square mile as determined annually by the office of financial management
and published by the department of revenue effective for the period July 1st
through June 30th.
(4)(a)
"Eligible investment project" means an investment project in an
eligible area as defined in subsection (3) of this section.
(b)
The lessor/owner of a qualified building is not eligible for a deferral unless
the underlying ownership of the buildings, machinery, and equipment vests
exclusively in the same person, or unless the lessor by written contract agrees
to pass the economic benefit of the deferral to the lessee in the form of
reduced rent payments.
(c)
"Eligible investment project" does not include any portion of an
investment project undertaken by a light and power business as defined in RCW
82.16.010(5), other than that portion of a cogeneration project that is used to
generate power for consumption within the manufacturing site of which the
cogeneration project is an integral part, or investment projects which have
already received deferrals under this chapter.
(5)
"Investment project" means an investment in qualified buildings or
qualified machinery and equipment, including labor and services rendered in the
planning, installation, and construction of the project.
(6)
"Manufacturing" means ((all activities of a commercial or
industrial nature wherein labor or skill is applied, by hand or machinery, to
materials so that as a result thereof a new, different, or useful substance or
article of tangible personal property is produced for sale or commercial or
industrial use and shall include the production or fabrication of specially
made or custom made articles)) the same as defined in RCW 82.04.120.
"Manufacturing" also includes computer programming, the production of
computer software, and other computer-related services, and the activities
performed by research and development laboratories and commercial testing
laboratories.
(7)
"Person" has the meaning given in RCW 82.04.030.
(8)
"Qualified buildings" means construction of new structures, and
expansion or renovation of existing structures for the purpose of increasing
floor space or production capacity used for manufacturing and research and
development activities, including plant offices and warehouses or other
facilities for the storage of raw material or finished goods if such facilities
are an essential or an integral part of a factory, mill, plant, or laboratory
used for manufacturing or research and development. If a building is used
partly for manufacturing or research and development and partly for other
purposes, the applicable tax deferral shall be determined by apportionment of
the costs of construction under rules adopted by the department.
(9)
"Qualified machinery and equipment" means all new industrial and
research fixtures, equipment, and support facilities that are an integral and
necessary part of a manufacturing or research and development operation.
"Qualified machinery and equipment" includes: Computers; software;
data processing equipment; laboratory equipment; manufacturing components such
as belts, pulleys, shafts, and moving parts; molds, tools, and dies; operating
structures; and all equipment used to control or operate the machinery.
(10)
"Recipient" means a person receiving a tax deferral under this
chapter.
(11)
"Research and development" means the development, refinement,
testing, marketing, and commercialization of a product, service, or process
before commercial sales have begun. As used in this subsection,
"commercial sales" excludes sales of prototypes or sales for market
testing if the total gross receipts from such sales of the product, service, or
process do not exceed one million dollars.
Sec.
3. RCW
82.62.010 and 1999 c 164 s 305 are each amended to read as follows:
Unless
the context clearly requires otherwise, the definitions in this section apply
throughout this chapter.
(1)
"Applicant" means a person applying for a tax credit under this
chapter.
(2)
"Department" means the department of revenue.
(3)
"Eligible area" means an area as defined in RCW 82.60.020.
(4)(a)
"Eligible business project" means manufacturing or research and
development activities which are conducted by an applicant in an eligible area
at a specific facility, provided the applicant's average full-time qualified
employment positions at the specific facility will be at least fifteen percent
greater in the year for which the credit is being sought than the applicant's
average full-time qualified employment positions at the same facility in the
immediately preceding year.
(b)
"Eligible business project" does not include any portion of a
business project undertaken by a light and power business as defined in RCW
82.16.010(5) or that portion of a business project creating qualified full-time
employment positions outside an eligible area or those recipients of a sales
tax deferral under chapter 82.61 RCW.
(5)
"Manufacturing" means ((all activities of a commercial or
industrial nature wherein labor or skill is applied, by hand or machinery, to
materials so that as a result thereof a new, different, or useful substance or
article of tangible personal property is produced for sale or commercial or
industrial use and shall include the production or fabrication of specially
made or custom made articles)) the same as defined in RCW 82.04.120.
"Manufacturing" also includes computer programming, the production of
computer software, and other computer-related services, and the activities
performed by research and development laboratories and commercial testing
laboratories.
(6)
"Person" has the meaning given in RCW 82.04.030.
(7)
"Qualified employment position" means a permanent full-time employee
employed in the eligible business project during the entire tax year.
(8)
"Tax year" means the calendar year in which taxes are due.
(9)
"Recipient" means a person receiving tax credits under this chapter.
(10)
"Research and development" means the development, refinement,
testing, marketing, and commercialization of a product, service, or process
before commercial sales have begun. As used in this subsection,
"commercial sales" excludes sales of prototypes or sales for market
testing if the total gross receipts from such sales of the product, service, or
process do not exceed one million dollars.
NEW
SECTION. Sec. 4. This
act is intended to clarify that this is the intent of the legislature both
retroactively and prospectively.
NEW
SECTION. Sec. 5. 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. 6. This
act is necessary for the immediate preservation of the public peace, health, or
safety, or support of the state government and its existing public
institutions, and takes effect immediately.
