BILL REQ. #:  H-1142.1 

Read first time 02/15/2007.   Referred to Committee on Finance.

     AN ACT Relating to authorizing state administration and collection of local business and occupation taxes and public utility taxes; amending RCW 35.102.010, 35.102.020, 82.32.010, 82.32.300, 35.102.030, 35.102.040, 35.102.060, 35.102.070, 35.102.080, 35.102.090, 35.102.120, 35.102.130, 35.102.140, 35.102.160, and 35.102.1301; adding new sections to chapter 35.102 RCW; creating a new section; providing an effective date; and declaring an emergency.

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

Sec. 1   RCW 35.102.010 and 2003 c 79 s 1 are each amended to read as follows:
     The legislature finds that businesses in Washington are concerned about the potential for multiple taxation that arises due to the various city business and occupation taxes and are concerned about the lack of uniformity among city jurisdictions. The current system has a negative impact on Washington's business climate. The legislature further finds that local business and occupation tax revenue provides a sizable portion of city revenue that is used for essential services. The legislature recognizes that local government services contribute to a healthy business climate.
     The legislature intends to provide for a more uniform system of city business and occupation taxes that eliminates multiple taxation, while allowing for some continued local control and flexibility to cities. Therefore, the legislature further finds that a uniform system for the collection and administration of local business and occupation taxes and public utility taxes is necessary.

Sec. 2   RCW 35.102.020 and 2003 c 79 s 2 are each amended to read as follows:
     ((Chapter 79, Laws of 2003 does not apply)) (1) This chapter applies to municipal business and occupation taxes and public utility taxes. Public utility taxes include, but are not limited to taxes on any service that historically or traditionally has been taxed as a utility business for municipal tax purposes, such as:
     (((1))) (a) A light and power business or a natural gas distribution business, as defined in RCW 82.16.010;
     (((2))) (b) A telephone business, as defined in RCW 82.04.065;
     (((3))) (c) Cable television services;
     (((4))) (d) Sewer or water services;
     (((5))) (e) Drainage services;
     (((6))) (f) Solid waste services; or
     (((7))) (g) Steam services.
     (2) For the purposes of administration and collection under this chapter, municipal business and occupation and public utility tax classifications are to be uniform to the extent determined by the department with the state business and occupation and public utility tax classifications. Such classifications are to be determined by the department in consultation with the cities and the association of Washington businesses.

NEW SECTION.  Sec. 3   A new section is added to chapter 35.102 RCW to read as follows:
     All business and occupation taxes and public utility taxes imposed by a city are to be collected and administered by the department of revenue as provided in this chapter and in accordance with the provisions of chapter 82.32 RCW.

NEW SECTION.  Sec. 4   A new section is added to chapter 35.102 RCW to read as follows:
     All of the provisions contained in chapter 82.32 RCW shall have full force and application with respect to taxes imposed under the provisions of this chapter.

Sec. 5   RCW 82.32.010 and 1998 c 304 s 12 are each amended to read as follows:
     The provisions of this chapter shall apply with respect to the taxes imposed under chapters 82.04 through 82.14 RCW, under RCW 82.14B.030(3), under chapters 82.16 through 82.29A RCW of this title, under chapter 84.33 RCW, under chapter 35.102 RCW, and under other titles, chapters, and sections in such manner and to such extent as indicated in each such title, chapter, or section.

Sec. 6   RCW 82.32.300 and 1997 c 420 s 9 are each amended to read as follows:
     The administration of this and chapters 82.04 through 82.27 RCW of this title and chapter 35.102 RCW is vested in the department of revenue which shall prescribe forms and rules of procedure for the determination of the taxable status of any person, for the making of returns and for the ascertainment, assessment and collection of taxes and penalties imposed thereunder.
     The department of revenue shall make and publish rules and regulations, not inconsistent therewith, necessary to enforce provisions of this chapter and chapters 82.02 through 82.23B ((and)), 82.27, and 35.102 RCW, and the liquor control board shall make and publish rules necessary to enforce chapters 82.24 and 82.26 RCW, which shall have the same force and effect as if specifically included therein, unless declared invalid by the judgment of a court of record not appealed from.
     The department may employ such clerks, specialists, and other assistants as are necessary. Salaries and compensation of such employees shall be fixed by the department and shall be charged to the proper appropriation for the department.
     The department shall exercise general supervision of the collection of taxes and, in the discharge of such duty, may institute and prosecute such suits or proceedings in the courts as may be necessary and proper.

Sec. 7   RCW 35.102.030 and 2003 c 79 s 3 are each amended to read as follows:
     The definitions in ((this section apply throughout chapter 79, Laws of 2003, unless)) chapters 82.04, 82.16, and 82.32 RCW apply throughout this chapter, unless the terms are defined otherwise in this section or the context clearly requires otherwise.
     (1) (("Business" has the same meaning as given in chapter 82.04 RCW.
     (2))) "City" means a city, town, or code city.
     (2) "Department" means the department of revenue.
     (3) "Business and occupation tax" or "gross receipts tax" means a tax imposed on or measured by the value of products, the gross income of the business, or the gross proceeds of sales, as the case may be, and that is the legal liability of the business.
     (4) (("Value of products" has the same meaning as given in chapter 82.04 RCW.
     (5) "Gross income of the business" has the same meaning as given in chapter 82.04 RCW.
     (6) "Gross proceeds of sales" has the same meaning as given in chapter 82.04 RCW.)) "Public utility tax" means a tax imposed on the gross income of a utility business or the gross proceeds of sales of a utility business by a city for municipal tax purposes.

Sec. 8   RCW 35.102.040 and 2006 c 301 s 7 are each amended to read as follows:
     (1)(a) The cities, working through the association of Washington cities, shall form a model ordinance development committee made up of a representative sampling of cities that as of July 27, 2003, impose a business and occupation tax. This committee shall work through the association of Washington cities to adopt a model ordinance on municipal gross receipts business and occupation tax. The model ordinance and subsequent amendments shall be adopted using a process that includes opportunity for substantial input from business stakeholders and other members of the public. Input shall be solicited from statewide business associations and from local chambers of commerce and downtown business associations in cities that levy a business and occupation tax.
     (b) The municipal research council shall contract to post the model ordinance on an internet web site and to make paper copies available for inspection upon request. The department of revenue and the department of licensing shall post copies of or links to the model ordinance on their internet web sites. Additionally, a city that imposes a business and occupation tax or public utility tax must make copies of its ordinance available for inspection and copying as provided in chapter 42.56 RCW.
     (c) The definitions and tax classifications in the model ordinance may not be amended more frequently than once every four years, however the model ordinance may be amended at any time to comply with changes in state law. Any amendment to a mandatory provision of the model ordinance must be adopted with the same effective date by all cities. The model ordinance must be amended to include provisions relating to the department's administration and collection of municipal business and occupation taxes and public utility taxes under this chapter.
     (2) A city that imposes a business and occupation tax or public utility tax must adopt the mandatory provisions of the model ordinance. The following provisions are mandatory:
     (a) A system of credits that meets the requirements of RCW 35.102.060 and a form for such use;
     (b) A ((uniform, minimum small business tax threshold of at least the equivalent of twenty thousand dollars in gross income annually. A city may elect to deviate from this requirement by creating a higher threshold or exemption but it shall not deviate lower than the level required in this subsection. If a city has a small business threshold or exemption in excess of that provided in this subsection as of January 1, 2003, and chooses to deviate below the threshold or exemption level that was in place as of January 1, 2003, the city must notify all businesses licensed to do business within the city at least one hundred twenty days prior to the potential implementation of a lower threshold or exemption amount)) true gross receipts tax, as determined by the department;
     (c) Tax reporting frequencies that meet the requirements of RCW 35.102.070;
     (d) Penalty and interest provisions that meet the requirements of RCW 35.102.080 and 35.102.090;
     (e) Claim periods that meet the requirements of RCW 35.102.100;
     (f) Refund provisions that meet the requirements of RCW 35.102.110; and
     (g) Definitions, which at a minimum, must include the definitions enumerated in RCW 35.102.030 and 35.102.120, and chapters 82.04 and 82.16 RCW. ((The definitions in chapter 82.04 RCW shall be used as the baseline for all definitions in the model ordinance, and any deviation in the model ordinance from these definitions must be described by a comment in the model ordinance.))
     (3) ((Except for the deduction required by RCW 35.102.160 and the system of credits developed to address multiple taxation under subsection (2)(a) of this section, a city may adopt its own provisions for tax exemptions, tax credits, and tax deductions.
     (4) Any city that adopts an ordinance that deviates from the nonmandatory provisions of the model ordinance shall make a description of such differences available to the public, in written and electronic form)) The administration and collection of municipal business and occupation and public utility taxes is to be uniform to the extent provided by the department.
     (4) A city may not adopt a minimum small business tax threshold.
     (5) It is the intent of this chapter that any municipal business and occupation taxes and local public utility taxes adopted pursuant to this chapter are subject to the authority of the department of revenue for the administration and collection of such taxes. However, the tax rates imposed shall be determined by the cities, subject to any existing limitations provided otherwise in statute or the state Constitution.
     (6) The rule-making powers of the department of revenue contained in RCW 82.08.060 and 82.32.300 shall be applicable to this chapter.

NEW SECTION.  Sec. 9   A new section is added to chapter 35.102 RCW to read as follows:
     The department shall develop and implement a process for the collection and administration of municipal business and occupation taxes and public utility taxes in accordance with this chapter. In developing and implementing such a process, the department shall, among the other requirements of this chapter:
     (1) Determine when payments of business and occupation taxes or public utility taxes imposed by cities, along with reports and returns for such taxes on forms prescribed by the department, are due to the department;
     (2) Have authority to make administrative rulings and interpretations, enter into legal action, appeal decisions, or adjudicate, on behalf of the cities which impose taxes subject to this chapter;
     (3) Establish reporting thresholds in consultation with the cities and the association of Washington businesses;
     (4) Develop mechanisms, under RCW 35.102.1301, to allow the provisions of this chapter to be applied in a revenue neutral manner; and
     (5) Provide that the initial collection and administration process by the department for any city that adopts a municipal business and occupation tax or public utility tax for the first time must begin on: (a) January 1st in the year following the adoption of the tax, if the tax was adopted by the city between the months of January and June; or (b) July 1st in the year following the adoption of the tax, if the tax was adopted by the city between the months of July and December.

NEW SECTION.  Sec. 10   A new section is added to chapter 35.102 RCW to read as follows:
     Any appeal made of a tax payment imposed by a city under this chapter must be made to superior court as provided under RCW 82.32.180 or to the board of tax appeals under chapter 82.03 RCW.

Sec. 11   RCW 35.102.060 and 2003 c 79 s 6 are each amended to read as follows:
     (1) ((A city)) For cities that impose((s)) a business and occupation tax or public utility tax, the department shall provide for a system of credits to avoid multiple taxation ((as follows)), which includes but is not limited to the following:
     (a) Persons who engage in business activities that are within the purview of more than one classification of the tax shall be taxable under each applicable classification.
     (b) Notwithstanding anything to the contrary in this section, if imposition of the tax would place an undue burden upon interstate commerce or violate constitutional requirements, a taxpayer shall be allowed a credit only to the extent necessary to preserve the validity of the tax.
     (c) Persons taxable under the retailing or wholesaling classification with respect to selling products in a city shall be allowed a credit against those taxes for any eligible gross receipts taxes paid by the person (i) with respect to the manufacturing of the products sold in the city, and (ii) with respect to the extracting of the products, or the ingredients used in the products, sold in the city. The amount of the credit shall not exceed the tax liability arising with respect to the sale of those products.
     (d) Persons taxable under the manufacturing classification with respect to manufacturing products in a city shall be allowed a credit against that tax for any eligible gross receipts tax paid by the person with respect to extracting the ingredients of the products manufactured in the city and with respect to manufacturing the products other than in the city. The amount of the credit shall not exceed the tax liability arising with respect to the manufacturing of those products.
     (e) Persons taxable under the retailing or wholesaling classification with respect to selling products in a city shall be allowed a credit against those taxes for any eligible gross receipts taxes paid by the person with respect to the printing, or the printing and publishing, of the products sold within the city. The amount of the credit shall not exceed the tax liability arising with respect to the sale of those products.
     (2) The model ordinance shall be drafted to address the issue of multiple taxation for those tax classifications that are in addition to those enumerated in subsection (1)(c) through (e) of this section. The objective of any such provisions shall be to eliminate multiple taxation of the same income by two or more cities.

Sec. 12   RCW 35.102.070 and 2003 c 79 s 7 are each amended to read as follows:
     A city that imposes a business and occupation tax or public utility tax shall allow reporting and payment of tax ((on a monthly, quarterly, or annual basis. The frequency for any particular person may be assigned at the discretion of the city, except that monthly reporting may be assigned only if it can be demonstrated that the taxpayer is remitting excise tax to the state on a monthly basis. For persons assigned a monthly frequency, payment is due within the same time period provided for monthly taxpayers under RCW 82.32.045. For persons assigned a quarterly or annual frequency, payment is due within the same time period as provided for quarterly or annual frequency under RCW 82.32.045)) in accordance with the reporting requirements developed by the department, under section 9 of this act, pursuant to chapter 82.32 RCW.

Sec. 13   RCW 35.102.080 and 2003 c 79 s 8 are each amended to read as follows:
     (((1) A city that imposes a business and occupation tax shall compute interest charged a taxpayer on an underpaid tax or penalty in accordance with RCW 82.32.050.
     (2) A city that imposes a business and occupation tax shall compute interest paid on refunds or credits of amounts paid or other recovery allowed a taxpayer in accordance with RCW 82.32.060.)) The department shall compute interest charged a taxpayer on an underpaid tax or penalty for the department's administration and collection of the underpaid tax or penalty in accordance with RCW 82.32.050.

Sec. 14   RCW 35.102.090 and 2003 c 79 s 9 are each amended to read as follows:
     ((A city that imposes a business and occupation tax shall provide for the imposition of penalties in accordance with chapter 82.32 RCW.)) Penalties imposed by the department for the administration and collection of any underpaid municipal business and occupation tax or public utility tax, must be in accordance with chapter 82.32 RCW.

Sec. 15   RCW 35.102.120 and 2003 c 79 s 12 are each amended to read as follows:
     (1) In addition to the definitions in RCW 35.102.030, the following terms and phrases must be defined in the model ordinance under RCW 35.102.040, ((and)) as provided by the department. Such definitions shall include any specific requirements as noted in this subsection and be uniform, to the extent determined by the department, to any definitions provided for the state business and occupation tax or state public utility tax by the department:
     (a) Eligible gross receipts tax.
     (b) Extracting.
     (c) Manufacturing. Software development may not be defined as a manufacturing activity.
     (d) Retailing.
     (e) Retail sale.
     (f) Services. The term "services" excludes retail or wholesale services.
     (g) Wholesale sale.
     (h) Wholesaling.
     (i) To manufacture.
     (j) Commercial and industrial use.
     (k) Engaging in business.
     (l) Person.
     (2) Any tax classifications in addition to those enumerated in subsection (1) of this section that are included in the model ordinance must be uniform among all cities.

Sec. 16   RCW 35.102.130 and 2003 c 79 s 13 are each amended to read as follows:
     A city that imposes a business and occupation tax or public utility tax shall provide for the allocation and apportionment of a person's gross income, other than persons subject to the provisions of chapter 82.14A RCW, as follows:
     (1) Gross income derived from all activities other than those taxed as service or royalties shall be allocated to the location where the activity takes place.
     (a) In the case of sales of tangible personal property, the activity takes place where delivery to the buyer occurs.
     (b) If a business activity allocated under this subsection (1) takes place in more than one city and all cities impose a gross receipts tax or public utility tax on the same activity, a credit shall be allowed as provided in RCW 35.102.060; if not all of the cities impose a gross receipts tax or public utility tax on the same activity, the affected cities shall allow another credit or allocation system as they and the taxpayer agree.
     (2) Gross income derived as royalties from the granting of intangible rights shall be allocated to the commercial domicile of the taxpayer.
     (3) Gross income derived from activities taxed as services shall be apportioned to a city by multiplying apportionable income by a fraction, the numerator of which is the payroll factor plus the service-income factor and the denominator of which is two.
     (a) The payroll factor is a fraction, the numerator of which is the total amount paid in the city during the tax period by the taxpayer for compensation and the denominator of which is the total compensation paid everywhere during the tax period. Compensation is paid in the city if:
     (i) The individual is primarily assigned within the city;
     (ii) The individual is not primarily assigned to any place of business for the tax period and the employee performs fifty percent or more of his or her service for the tax period in the city; or
     (iii) The individual is not primarily assigned to any place of business for the tax period, the individual does not perform fifty percent or more of his or her service in any city(([,])), and the employee resides in the city.
     (b) The service income factor is a fraction, the numerator of which is the total service income of the taxpayer in the city during the tax period, and the denominator of which is the total service income of the taxpayer everywhere during the tax period. Service income is in the city if:
     (i) The customer location is in the city; or
     (ii) The income-producing activity is performed in more than one location and a greater proportion of the service-income-producing activity is performed in the city than in any other location, based on costs of performance, and the taxpayer is not taxable at the customer location; or
     (iii) The service-income-producing activity is performed within the city, and the taxpayer is not taxable in the customer location.
     (c) If the allocation and apportionment provisions of this subsection do not fairly represent the extent of the taxpayer's business activity in the city or cities in which the taxpayer does business, the taxpayer may petition for or the tax administrators may jointly require, in respect to all or any part of the taxpayer's business activity, that one of the following methods be used jointly by the cities to allocate or apportion gross income, if reasonable:
     (i) Separate accounting;
     (ii) The use of a single factor;
     (iii) The inclusion of one or more additional factors that will fairly represent the taxpayer's business activity in the city; or
     (iv) The employment of any other method to effectuate an equitable allocation and apportionment of the taxpayer's income.
     (4) The definitions in this subsection apply throughout this section.
     (a) "Apportionable income" means the gross income of the business taxable under the service classifications of a city's gross receipts tax, including income received from activities outside the city if the income would be taxable under the service classification if received from activities within the city, less any exemptions or deductions available.
     (b) "Compensation" means wages, salaries, commissions, and any other form of remuneration paid to individuals for personal services that are or would be included in the individual's gross income under the federal internal revenue code.
     (c) "Individual" means any individual who, under the usual common law rules applicable in determining the employer-employee relationship, has the status of an employee of that taxpayer.
     (d) "Customer location" means the city or unincorporated area of a county where the majority of the contacts between the taxpayer and the customer take place.
     (e) "Primarily assigned" means the business location of the taxpayer where the individual performs his or her duties.
     (f) "Service-taxable income" or "service income" means gross income of the business subject to tax under either the service or royalty classification.
     (g) "Tax period" means the calendar year during which tax liability is accrued. If taxes are reported by a taxpayer on a basis more frequent than once per year, taxpayers shall calculate the factors for the previous calendar year for reporting in the current calendar year and correct the reporting for the previous year when the factors are calculated for that year, but not later than the end of the first quarter of the following year.
     (h) "Taxable in the customer location" means either that a taxpayer is subject to a gross receipts tax in the customer location for the privilege of doing business, or that the government where the customer is located has the authority to subject the taxpayer to gross receipts tax regardless of whether, in fact, the government does so.

Sec. 17   RCW 35.102.140 and 2003 c 79 s 14 are each amended to read as follows:
     Cities imposing business and occupation taxes or public utility taxes must comply with all requirements of RCW 35.102.020 through 35.102.130 by December 31, ((2004)) 2007. A city that has not complied with the requirements of RCW 35.102.020 through 35.102.130 by December 31, ((2004)) 2007, may not impose a tax that is imposed by a city on the privilege of engaging in business activities. Cities imposing business and occupation taxes or public utility taxes after December 31, ((2004)) 2007, must comply with RCW 35.102.020 through 35.102.130.

Sec. 18   RCW 35.102.160 and 2006 c 301 s 6 are each amended to read as follows:
     (1) ((A city that imposes its business and occupation tax on professional employer services performed by a professional employer organization, regardless of the tax classification applicable to such services,)) The department shall provide a deduction identical to the deduction in RCW 82.04.540(2) for the business and occupation tax on professional employer services performed by a professional employer.
     (2) For the purposes of this section, "professional employer organization" and "professional employer services" have the same meanings as in RCW 82.04.540.

Sec. 19   RCW 35.102.1301 and 2003 c 79 s 15 are each amended to read as follows:
     (1) The department ((of revenue)) shall conduct a study of the net fiscal impacts of this chapter ((79, Laws of 2003)), with particular emphasis on the revenue impacts of the apportionment and allocation method contained in RCW 35.102.130 and any revenue impact resulting from the increased uniformity and consistency provided through the model ordinance. In conducting the study, the department shall use, and regularly consult with, a committee composed of an equal representation from interested business representatives and from a representative sampling of cities imposing business and occupation taxes. The department shall report the final results of the study to the governor and the fiscal committees of the legislature by November 30, 2005. In addition, the department shall provide progress reports to the governor and the fiscal committees of the legislature on November 30, 2003, and November 30, 2004. As part of its report, the department shall examine and recommend options to address any adverse revenue impacts to local jurisdictions.
     (2) The department shall conduct a study of the net fiscal impacts of this act, with particular emphasis on the revenue impacts of developing uniform classifications for public utility taxes collected under this chapter and the standardization of reporting thresholds. In conducting the study, the department shall consult with the cities and association of Washington businesses. The department shall report the final results of the study to the fiscal committees of the legislature by November 30, 2007. Such report must include the department's recommendations to address any adverse revenue impacts to local jurisdictions.
     (3) For the purposes of this section, "net fiscal impacts" means accounting for the potential of both positive and negative fiscal impacts on local jurisdictions that may result from chapter 79, Laws of 2003.
     (((3))) (4) It is the intent of the legislature through this study to provide accurate fiscal impact analysis and recommended options to alleviate revenue impacts from chapter 79, Laws of 2003 so as to allow local jurisdictions to anticipate and appropriately address any potential adverse revenue impacts from chapter 79, Laws of 2003.

NEW SECTION.  Sec. 20   A new section is added to chapter 35.102 RCW to read as follows:
     Cities, shall contract, prior to the effective date of this section for the administration and collection to the state department of revenue, which shall deduct a percentage amount, as provided by contract, not to exceed two percent of the taxes collected for administration and collection expenses incurred by the department. The remainder of any portion of any tax authorized by this chapter that is collected by the department of revenue shall be deposited by the state department of revenue in the municipal business and occupation and public utility tax account hereby created in the state treasury. Moneys in the municipal business and occupation and public utility tax account may be spent only for distribution to cities imposing a municipal business and occupation tax or public utility tax. All administrative provisions in chapters 82.03, 82.04, and 82.32 RCW, as they now exist or may hereafter be amended, shall, insofar as they are applicable to state business and occupation or public utility taxes, be applicable to taxes imposed pursuant to this chapter. Except as provided in RCW 43.08.190, all earnings of investments of balances in the municipal business and occupation and public utility tax account shall be credited to the municipal business and occupation and public utility tax account and distributed to the cities monthly.

NEW SECTION.  Sec. 21   A new section is added to chapter 35.102 RCW to read as follows:
     (1) Except as provided in subsections (2), (3), and (4) of this section, a municipal business and occupation tax or public utility tax change shall take effect (a) no sooner than seventy-five days after the department receives notice of the change and (b) only on the first day of January, April, July, or October.
     (2) In the case of a municipal business and occupation tax or public utility tax that is a credit against the state business and occupation tax or state public utility tax, a municipal business and occupation tax or public utility tax change shall take effect (a) no sooner than thirty days after the department receives notice of the change and (b) only on the first day of a month.
     (3)(a) A municipal business and occupation tax or public utility tax rate increase imposed on services applies to the first billing period starting on or after the effective date of the increase.
     (b) A municipal business and occupation tax or public utility tax rate decrease imposed on services applies to bills rendered on or after the effective date of the decrease.
     (c) For the purposes of this subsection (3), "services" means the performance of business activities subject to either a municipal business and occupation tax or public utility tax.

NEW SECTION.  Sec. 22   A new section is added to chapter 35.102 RCW to read as follows:
     Monthly the state treasurer shall make distributions from the municipal business and occupation tax or public utility tax account to the counties, cities, transportation authorities, public facilities districts, and transportation benefit districts the amount of tax collected on behalf of each taxing authority, less the deduction provided for in RCW 82.14.050. The state treasurer shall make the distribution under this section without appropriation.

NEW SECTION.  Sec. 23   A new section is added to chapter 35.102 RCW to read as follows:
     It is the intent of this chapter that any definitions or classifications for taxes adopted pursuant to this chapter be identical to the definitions and classifications for state business and occupation taxes or public utility taxes in chapters 82.16 and 82.04 RCW, unless otherwise prohibited by federal law, and with other municipal business and occupation taxes and public utility taxes adopted pursuant to this chapter. The department shall, as soon as practicable, and with the assistance of the appropriate associations of county prosecutors and city attorneys, draft a model resolution and ordinance for administration and collection of municipal business and occupation and public utility taxes.

NEW SECTION.  Sec. 24   A new section is added to chapter 35.102 RCW to read as follows:
     The taxes provided by this chapter may be deposited by any taxpayer prior to the due date thereof with the treasurer or other legal depository for the benefit of the funds to which they belong to be credited against any future tax or assessment that may be levied or become due from the taxpayer. However, the taxpayer may with the concurrence of the legislative authority designate a particular fund of such county or city against which such prepayment of tax or assessment is made. Such prepayment of taxes or assessments shall not be considered to be a debt for the purpose of the limitation of indebtedness imposed by law on a city.
     By agreement made pursuant to chapter 39.34 RCW, cities may utilize tax revenues received under the authority of this chapter for any purpose within their power or powers, privileges or authority exercised or capable of exercise by the cities.

NEW SECTION.  Sec. 25   A new section is added to chapter 35.102 RCW to read as follows:
     When permitted by resolution or ordinance, any tax authorized by this chapter may be paid prior to the taxable event to which it may be attributable. Such prepayment shall be made by deposit with the treasurer or other legal depository for the benefit of the funds to which they belong. They shall be credited by any county or city against any future tax that may become due from a taxpayer. However, the taxpayer with the concurrence of the legislative authority may designate a particular fund of the city against which such prepayment of tax is made. Prepayment of taxes under this section shall not relieve any taxpayer from remitting the full amount of any tax imposed under the authority of this chapter upon the occurrence of the taxable event.

NEW SECTION.  Sec. 26   A new section is added to chapter 35.102 RCW to read as follows:
     A person with three or more cities to which such person is required to report municipal business and occupation or public utility taxes, must electronically file with the department all returns, forms, and other information that the department requires in an electronic format as provided or as approved by the department. Any return, form, or information required to be filed in an electronic format under this section is not filed until received by the department in an electronic format. As used in this section, "returns" has the same meaning as "return" in RCW 82.32.050.

NEW SECTION.  Sec. 27   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. 28   This act applies to taxes levied in 2008 and collected in 2009.

NEW SECTION.  Sec. 29   Section 16 of this act takes effect January 1, 2008.

NEW SECTION.  Sec. 30   Except for section 16 of this act, 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.