BILL REQ. #:  H-3902.1 

Prefiled 12/18/07. Read first time 01/14/08.   Referred to Committee on Finance.

     AN ACT Relating to the excise taxation of bullion; amending RCW 82.04.062; and creating new sections.

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

NEW SECTION.  Sec. 1   When the legislature enacted chapter 471, Laws of 1985, it intended to tax the business of making sales of precious metal bullion the same as sales of other investment products. The business and occupation tax was to be imposed on commissions, not on the value of the investment product traded. Other activities involving precious metal bullion, including reforming precious metal bullion into smaller units, were not taxable.
     However, the method of calculating business and occupation tax for taxpayers engaged in both manufacturing and selling activities changed after chapter 471, Laws of 1985 was enacted. In the judgment of the department of revenue, this change caused the reforming of precious metal bullion into smaller units in this state to be taxable under the manufacturing business and occupation tax classification. It is the intent of this act to reimplement the original intention of the legislature and limit the business and occupation tax imposed on the business of making sales of precious metal bullion to a tax on amounts received as commissions and not to tax the activity of reforming precious metal bullion into different shapes or sizes. It is also the intent of the legislature that the business and occupation tax apply to the markup on the sale of precious metal bullion, where the taxpayer is selling its own precious metal bullion.

Sec. 2   RCW 82.04.062 and 1985 c 471 s 5 are each amended to read as follows:
     (1) For purposes of this chapter, "wholesale sale," "sale at wholesale," "retail sale," and "sale at retail" do not include the sale of precious metal bullion or monetized bullion.
     (2) ((In computing tax under this chapter on the business of making sales of precious metal bullion or monetized bullion, the tax shall be imposed on the amounts received as commissions upon transactions for the accounts of customers over and above the amount paid to other dealers associated in such transactions, but no deduction or offset is allowed on account of salaries or commissions paid to salesmen or other employees.
     (3))) The tax imposed by this chapter does not apply to the melting and reforming of precious metal bullion into different units.
     (3) The sale of precious metal bullion or monetized bullion is taxable under RCW 82.04.290(2) on amounts received:
     (a) Over and above the market price for the bullion sold on the date that the order for the bullion is received, regardless of whether this markup is referred to as a commission, premium, spread, or some other term. A deduction is allowed from the measure of tax for amounts derived from charges to the buyer for shipping, handling, and insurance, but only to the extent that the deduction does not exceed the seller's actual expenditures to third parties for delivery of, and insurance for, the bullion sold; and
     (b) As commissions upon transactions for the accounts of customers over and above the amount paid to other dealers or mints associated in such transactions. No deduction or offset is allowed on account of salaries or commissions paid to salespersons or other employees.
     (4) For purposes of this section, the following definitions apply:
     (a) "Market price" means the seller's highest publicly stated price during a particular date for which the seller is willing to buy precious metal bullion or monetized bullion. If no such publicly stated price is available, current market price means the closing price for the bullion on the New York mercantile exchange. For purposes of this subsection (4)(a), "seller" means a person taxable under subsection (3)(a) of this section.
     (b) "Monetized bullion" means coins or other forms of money manufactured from gold, silver, or other metals and that have been or are used as a medium of exchange under the laws of this state, the United States, or any foreign nation. "Monetized bullion" does not include coins or money sold to be manufactured into jewelry or works of art.
     (c) "Precious metal bullion" means any precious metal ((which)) that: (i) Has been put through a process of smelting or refining, including, but not limited to, gold, silver, platinum group metals, ((rhodium, and palladium,)) and rare earth metals; and ((which)) (ii) is in such state or condition that its value depends upon its contents and not upon its form. ((For purposes of this section, "monetized bullion" means coins or other forms of money manufactured from gold, silver, or other metals and heretofore, now, or hereafter used as a medium of exchange under the laws of this state, the United States, or any foreign nation, but does not include coins or money sold to be manufactured into jewelry or works of art.))

NEW SECTION.  Sec. 3   This act applies both retroactively and prospectively.