[atlas:bill]

AN ACT Relating to taxation of businesses selling conifer seeds or growing seedlings; adding a new section to chapter 82.08 RCW; adding a new section to chapter 82.12 RCW; and creating new sections.

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

NEW SECTION. Sec. 1. The legislature finds that in-state sellers of conifer tree seeds and persons growing customer-owned conifer seeds into seedlings are placed at a marketplace disadvantage compared to persons doing the same activity out of state because of the unique storage and growing requirements of conifer seeds. It is the intent of the legislature to eliminate this disadvantage by providing a limited sales tax exemption for the sale of conifer tree seeds to be used to grow timber outside Washington, or sold to an Indian tribe or member to grow timber in Indian country, if upon sale the seed is immediately placed into freezer storage operated by the seller.

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

(1) The tax levied by RCW 82.08.020 shall not apply to the sale of conifer tree seed that is immediately placed into freezer storage operated by the seller and is: (a) To be used for growing timber outside Washington; or (b) sold to an Indian tribe or member and is to be used for growing timber in Indian country. This section applies only if the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller shall retain a copy of the certificate for the seller's files. For the purposes of this section, "Indian country" has the meaning given in RCW 82.24.010.

(2) If a buyer of conifer seeds normally is engaged in growing timber both within and outside Washington and is not able to determine at the time of purchase whether the conifer seeds acquired, or the seedlings germinated from the conifer seeds acquired, will be used for growing timber within or outside Washington, the buyer may defer payment of the sales tax until it is determined that the conifer seeds, or seedlings germinated from the conifer seeds, are or will be planted for growing timber in Washington. The buyer shall account for the selling price paid of any conifer seed purchased with an exemption certificate under this section that is used to grow timber in Washington and shall remit the sales tax on the conifer seed to the department.

(3) A buyer who pays retail sales tax on the purchase of conifer seed and subsequently determines that the sale qualifies for the tax exemption provided in this section is entitled to a deduction on the buyer's tax return equal to the cost to the buyer of purchased seed. The deduction is allowed only if the buyer keeps and preserves records that show from whom the conifer seeds were purchased, the date of the purchase, the amount of the purchase, and the tax that was paid.

NEW SECTION. Sec. 3. A new section is added to chapter 82.12 RCW to read as follows:

The provisions of this chapter shall not apply in respect to the use of conifer seed to grow seedlings if the seedlings are grown by a person other than the owner of the seeds. This section applies only if the seedlings will be used for growing timber outside Washington, or if the owner of the seeds is an Indian tribe or member and the seedlings will be used for growing timber in Indian country.

If the owner of conifer seeds is not able to determine at the time the seed is used in a growing process whether the use of the seed is exempt of tax under this section, the owner may defer payment of the use tax until it is determined that the seedlings are or will be planted for growing timber in Washington. For the purposes of this section, "Indian country" has the meaning given in RCW 82.24.010.

NEW SECTION. Sec. 4. This act applies retroactively.