BILL REQ. #:  S-0550.4 

Read first time 01/24/2003.   Referred to Committee on Economic Development.

     AN ACT Relating to sales and use tax exemptions for new employment positions; adding a new section to chapter 82.08 RCW; and adding a new section to chapter 82.12 RCW.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.08 RCW to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to (a) the sale of tangible goods used in the construction of qualified buildings; (b) the sale of qualified machinery and equipment that will be part of a qualified building; or (c) the sale of services and labor performed in respect to the construction of a qualified building.
     (2) Application for exemption of taxes under this section must be made before initiation of the construction of the qualified building or acquisition of qualified equipment or machinery. The application shall be made to the department in a form and manner prescribed by the department. The application shall contain information regarding the location of the qualified building, the applicant's average employment in the state for the prior year, estimated or actual new employment related to the project, estimated or actual wages of employees related to the project, estimated or actual costs, time schedules for completion and operation, and other information required by the department. The department shall rule on the application within sixty days.
     (3) The department shall issue a sales and use tax exemption certificate for state and local sales and use taxes due under this chapter and chapters 82.12 and 82.14 RCW, if the applicant establishes that at the time the construction is operationally complete the applicant will create at least fifteen qualified employment positions per one million dollars of investment.
     (4) The qualified employment position must be filled by the end of the calendar year following the year in which the project is certified as operationally complete. If a person does not meet the requirements for qualified employment positions by the end of the second calendar year following the year in which the project is certified as operationally complete, the department shall determine the total amount of taxes that have been exempted under this section and section 2 of this act and collect the taxes in the same manner as other deficient taxes. The taxes shall be considered deficient from the time the department determines that the person has not met the requirements of this subsection (4) and has notified the person.
     (5) Unless the context clearly requires otherwise, the following definitions apply throughout this section.
     (a) "Applicant" means a person applying for a tax exemption under this section.
     (b) "Manufacturing" means the same as defined in RCW 82.04.120. "Manufacturing" also includes computer programming, the production of computer software and hardware, and other computer-related services, and the activities performed by research and development laboratories and commercial testing laboratories.
     (c) "Person" has the meaning given in RCW 82.04.030.
     (d) "Qualified building" 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 the facilities are an essential or an integral part of a factory, mill, plant, or laboratory used for manufacturing or research and development and will create upon completion of the qualified building at least fifteen qualified employment positions per one million dollars of investment. The qualified building may be partly used for other purposes, as long as the construction costs for these other purposes do not constitute more than twenty-five percent of the total cost of the qualified building as determined by the department.
     (e) "Qualified employment position" means a permanent full-time employee employed at the qualified building during the entire year.
     (f) "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.
     (g) "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. 2   A new section is added to chapter 82.12 RCW to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to (a) the sale of tangible goods used in the construction of qualified buildings; (b) the sale of qualified machinery and equipment that will be part of a qualified building; or (c) the sale of services and labor performed in respect to the construction of qualified buildings.
     (2) The provisions of section 1 of this act apply to this section.