BILL REQ. #:  H-2597.3 

Read first time 04/14/11.   Referred to Committee on Ways & Means.

     AN ACT Relating to implementing recommendations related to the tax preference review process conducted by the joint legislative audit and review committee and the citizen commission for performance measurement of tax preferences; amending RCW 48.14.020, 82.08.0262, 82.08.0253, 82.12.0345, 82.04.280, 82.04.280, 84.36.840, 82.04.330, 82.04.410, 82.16.010, 82.16.020, 82.16.020, 82.04.4282, 82.16.050, and 48.36A.240; reenacting and amending RCW 82.16.010 and 82.32.790; adding a new section to chapter 82.04 RCW; creating new sections; repealing RCW 82.04.350, 82.08.0257, 84.36.130, and 82.04.4289; providing effective dates; providing a contingent effective date; providing an expiration date; providing a contingent expiration date; and declaring an emergency.

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

NEW SECTION.  Sec. 101   The legislature finds that there is no ascertainable reason for the exemption in RCW 48.14.020(3), which relates to ocean marine and foreign trade insurance contracts, and therefore repeals the exemption.

Sec. 102   RCW 48.14.020 and 2009 c 161 s 3 are each amended to read as follows:
     (1) Subject to other provisions of this chapter, each authorized insurer except title insurers ((shall)) must on or before the first day of March of each year pay to the state treasurer through the commissioner's office a tax on premiums. Except as provided in subsection (2) of this section, such tax ((shall be)) is in the amount of two percent of all premiums, excluding amounts returned to or the amount of reductions in premiums allowed to holders of industrial life policies for payment of premiums directly to an office of the insurer, collected or received by the insurer under RCW 48.14.090 during the preceding calendar year other than ocean marine and foreign trade insurances, after deducting premiums paid to policyholders as returned premiums, upon risks or property resident, situated, or to be performed in this state. For tax purposes, the reporting of premiums ((shall)) must be on a written basis or on a paid-for basis consistent with the basis required by the annual statement. For the purposes of this section the consideration received by an insurer for the granting of an annuity ((shall)) is not ((be)) deemed to be a premium.
     (2) In the case of insurers which require the payment by their policyholders at the inception of their policies of the entire premium thereon in the form of premiums or premium deposits which are the same in amount, based on the character of the risks, regardless of the length of term for which such policies are written, such tax ((shall be)) is in the amount of two percent of the gross amount of such premiums and premium deposits upon policies on risks resident, located, or to be performed in this state, in force as of the thirty-first day of December next preceding, less the unused or unabsorbed portion of such premiums and premium deposits computed at the average rate thereof actually paid or credited to policyholders or applied in part payment of any renewal premiums or premium deposits on one-year policies expiring during such year.
     (3) ((Each authorized insurer shall with respect to all ocean marine and foreign trade insurance contracts written within this state during the preceding calendar year, on or before the first day of March of each year pay to the state treasurer through the commissioner's office a tax of ninety-five one-hundredths of one percent on its gross underwriting profit. Such gross underwriting profit shall be ascertained by deducting from the net premiums (i.e., gross premiums less all return premiums and premiums for reinsurance) on such ocean marine and foreign trade insurance contracts the net losses paid (i.e., gross losses paid less salvage and recoveries on reinsurance ceded) during such calendar year under such contracts. In the case of insurers issuing participating contracts, such gross underwriting profit shall not include, for computation of the tax prescribed by this subsection, the amounts refunded, or paid as participation dividends, by such insurers to the holders of such contracts.
     (4))) The state does hereby preempt the field of imposing excise or privilege taxes upon insurers or their appointed insurance producers, other than title insurers, and no county, city, town or other municipal subdivision ((shall have)) has the right to impose any such taxes upon such insurers or these insurance producers.
     (((5))) (4) If an authorized insurer collects or receives any such premiums on account of policies in force in this state which were originally issued by another insurer and which other insurer is not authorized to transact insurance in this state on its own account, such collecting insurer ((shall be)) is liable for and ((shall)) must pay the tax on such premiums.

Sec. 103   RCW 82.08.0262 and 2009 c 503 s 1 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to:
     (a) Sales of airplanes (i) to the United States government; (ii) ((for use)) used primarily in conducting interstate or foreign commerce; or (iii) ((for use)) used primarily in providing intrastate air transportation by a commuter air carrier;
     (b) Sales of locomotives, railroad cars, or watercraft ((for use)) used primarily in conducting interstate or foreign commerce by transporting therein or therewith property and persons for hire or for use in conducting commercial deep sea fishing operations outside the territorial waters of the state;
     (c) Sales of tangible personal property that becomes a component part of such airplanes, locomotives, railroad cars, or watercraft, and of motor vehicles or trailers whether owned by or leased with or without drivers and used by the holder of a carrier permit issued by the interstate commerce commission or its successor agency authorizing transportation by motor vehicle across the boundaries of this state, in the course of constructing, repairing, cleaning, altering, or improving the same; and
     (d) Sales of or charges made for labor and services rendered in respect to such constructing, repairing, cleaning, altering, or improving.
     (2) The term "commuter air carrier" means an air carrier holding authority under Title 14, Part 298 of the code of federal regulations that carries passengers on at least five round trips per week on at least one route between two or more points according to its published flight schedules that specify the times, days of the week, and places between which those flights are performed.

Sec. 104   RCW 82.08.0253 and 2009 c 535 s 506 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to:
     (a) The distribution and newsstand sale of printed newspapers; and
     (b) The sale of newspapers transferred electronically, provided that the electronic version of a printed newspaper:
     (i) Shares content with the printed newspaper; and
     (ii) Is prominently identified by the same name as the printed newspaper or otherwise conspicuously indicates that it is a complement to the printed newspaper.
     (2) For purposes of this section, "printed newspaper" means a publication issued regularly at stated intervals at least twice a month and printed on newsprint in tabloid or broadsheet format folded loosely together without stapling, glue, or any other binding of any kind, including any supplement of a printed newspaper.
     (3)(a) The legislature intends that democracy requires an informed citizenry that has free access to unbiased information.      
     (b) A newspaper is immediately ineligible for the tax exemption under this section, if the newspaper gains a dominant market share and becomes a dominant provider of opinion in the market wherein it promotes the bias of its editorial board without opposing opinion by another newspaper in the same market, unless the newspaper implements a plan to correct the dissemination of biased information to the citizenry.

Sec. 105   RCW 82.12.0345 and 2009 c 535 s 618 are each amended to read as follows:
     The tax imposed by RCW 82.12.020 does not apply in respect to the use of:
     (1) Printed newspapers as defined in RCW 82.08.0253; and
     (2) Newspapers transferred electronically, provided that the electronic version of a printed newspaper:
     (a) Shares content with the printed newspaper; and
     (b) Is prominently identified by the same name as the printed newspaper or otherwise conspicuously indicates that it is a complement to the printed newspaper.
     (3)(a) The legislature intends that democracy requires an informed citizenry that has free access to unbiased information.      
     (b) A newspaper is immediately ineligible for the tax exemption under this section, if the newspaper gains a dominant market share and becomes a dominant provider of opinion in the market wherein it promotes the bias of its editorial board without opposing opinion by another newspaper in the same market, unless the newspaper implements a plan to correct the dissemination of biased information to the citizenry.

Sec. 201   RCW 82.04.280 and 2010 c 106 s 205 are each amended to read as follows:
     (1) Upon every person engaging within this state in the business of: (a) Printing materials other than newspapers, and of publishing periodicals or magazines; (b) building, repairing or improving any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used, primarily for foot or vehicular traffic including mass transportation vehicles of any kind and including any readjustment, reconstruction or relocation of the facilities of any public, private or cooperatively owned utility or railroad in the course of such building, repairing or improving, the cost of which readjustment, reconstruction, or relocation, is the responsibility of the public authority whose street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle is being built, repaired or improved; (c) extracting for hire or processing for hire, except persons taxable as extractors for hire or processors for hire under another section of this chapter; (d) operating a cold storage warehouse or storage warehouse, but not including the rental of cold storage lockers; (e) representing and performing services for fire or casualty insurance companies as an independent resident managing general agent ((licensed under the provisions of chapter 48.17 RCW)); (f) radio and television broadcasting, excluding network, national and regional advertising computed as a standard deduction ((based on the national average thereof as annually reported by the federal communications commission)), which the department must publish by rule every fifth year by September 30th, or in lieu thereof by itemization by the individual broadcasting station, and excluding that portion of revenue represented by the out-of-state audience computed as a ratio to the station's total audience as measured by the 100 micro-volt signal strength and delivery by wire, if any; (g) engaging in activities which bring a person within the definition of consumer contained in RCW 82.04.190(6); as to such persons, the amount of tax on such business is equal to the gross income of the business multiplied by the rate of 0.484 percent.
     (2) For the purposes of this section, the following definitions apply unless the context clearly requires otherwise.
     (a) "Cold storage warehouse" means a storage warehouse used to store fresh and/or frozen perishable fruits or vegetables, meat, seafood, dairy products, or fowl, or any combination thereof, at a desired temperature to maintain the quality of the product for orderly marketing.
     (b) "Storage warehouse" means a building or structure, or any part thereof, in which goods, wares, or merchandise are received for storage for compensation, except field warehouses, fruit warehouses, fruit packing plants, warehouses licensed under chapter 22.09 RCW, public garages storing automobiles, railroad freight sheds, docks and wharves, and "self-storage" or "mini storage" facilities whereby customers have direct access to individual storage areas by separate entrance. "Storage warehouse" does not include a building or structure, or that part of such building or structure, in which an activity taxable under RCW 82.04.272 is conducted.
     (c) "Periodical or magazine" means a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication.

Sec. 202   RCW 82.04.280 and 2010 c 106 s 206 are each amended to read as follows:
     (1) Upon every person engaging within this state in the business of: (a) Printing materials other than newspapers, and of publishing periodicals or magazines; (b) building, repairing or improving any street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle which is owned by a municipal corporation or political subdivision of the state or by the United States and which is used or to be used, primarily for foot or vehicular traffic including mass transportation vehicles of any kind and including any readjustment, reconstruction or relocation of the facilities of any public, private or cooperatively owned utility or railroad in the course of such building, repairing or improving, the cost of which readjustment, reconstruction, or relocation, is the responsibility of the public authority whose street, place, road, highway, easement, right-of-way, mass public transportation terminal or parking facility, bridge, tunnel, or trestle is being built, repaired or improved; (c) extracting for hire or processing for hire, except persons taxable as extractors for hire or processors for hire under another section of this chapter; (d) operating a cold storage warehouse or storage warehouse, but not including the rental of cold storage lockers; (e) representing and performing services for fire or casualty insurance companies as an independent resident managing general agent ((licensed under the provisions of chapter 48.17 RCW)); (f) radio and television broadcasting, excluding network, national and regional advertising computed as a standard deduction ((based on the national average thereof as annually reported by the federal communications commission)), which the department must publish by rule every fifth year by September 30th, or in lieu thereof by itemization by the individual broadcasting station, and excluding that portion of revenue represented by the out-of-state audience computed as a ratio to the station's total audience as measured by the 100 micro-volt signal strength and delivery by wire, if any; (g) engaging in activities which bring a person within the definition of consumer contained in RCW 82.04.190(6); as to such persons, the amount of tax on such business is equal to the gross income of the business multiplied by the rate of 0.484 percent.
     (2) For the purposes of this section, the following definitions apply unless the context clearly requires otherwise.
     (a) "Cold storage warehouse" means a storage warehouse used to store fresh and/or frozen perishable fruits or vegetables, meat, seafood, dairy products, or fowl, or any combination thereof, at a desired temperature to maintain the quality of the product for orderly marketing.
     (b) "Storage warehouse" means a building or structure, or any part thereof, in which goods, wares, or merchandise are received for storage for compensation, except field warehouses, fruit warehouses, fruit packing plants, warehouses licensed under chapter 22.09 RCW, public garages storing automobiles, railroad freight sheds, docks and wharves, and "self-storage" or "mini storage" facilities whereby customers have direct access to individual storage areas by separate entrance. "Storage warehouse" does not include a building or structure, or that part of such building or structure, in which an activity taxable under RCW 82.04.272 is conducted.
     (c) "Periodical or magazine" means a printed publication, other than a newspaper, issued regularly at stated intervals at least once every three months, including any supplement or special edition of the publication.

NEW SECTION.  Sec. 203   A new section is added to chapter 82.04 RCW to read as follows:
     For the standard deduction in RCW 82.04.280(6), the department must study radio and television broadcasting, excluding network, national and regional advertising to establish the standard deduction computed as a ratio of the network, national and regional advertising revenue to the total advertising revenue of the radio or television station expressed as a percentage. The department must complete the study using the best available information. This study must be completed by August 1, 2011, and the standard deduction must be published by rule by December 1, 2011. The study must be repeated every fifth year thereafter by March 30th and the rule must be published every fifth year by September 30th.

NEW SECTION.  Sec. 301   (1) The legislature recognizes the rich and diverse traditions represented by Washington's nonprofit homes for the sick or infirm and nonprofit hospitals for the sick and the value they provide to the residents and communities they serve as well as the employees who provide loving compassionate care.
     (2) The legislature finds requiring uniform and public reporting of community benefit is one way these facilities can continue to demonstrate the value provided in a manner consistent with the values of transparency and public accountability. Further, the legislature finds that Washington should adopt national standards for reporting of community benefits for nonprofit hospitals and nonprofit homes for the sick or infirm.

Sec. 302   RCW 84.36.840 and 2007 c 111 s 305 are each amended to read as follows:
     (1) In order to determine whether organizations, associations, corporations, or institutions, except those exempted under RCW 84.36.020 and 84.36.030, are exempt from property taxes, and before the exemption ((shall be)) is allowed for any year, the superintendent or manager or other proper officer of the organization, association, corporation, or institution claiming exemption from taxation ((shall)) must file with the department of revenue a statement certifying that the income and the receipts thereof, including donations to it, have been applied to the actual expenses of operating and maintaining it, or for its capital expenditures, and to no other purpose. This report ((shall)) must also include a statement of the receipts and disbursements of the exempt organization, association, corporation, or institution.
     (2) Educational institutions claiming exemption under RCW 84.36.050 ((shall)) must also file a list of all property claimed to be exempt, the purpose for which it is used, the revenue derived from it for the preceding year, the use to which the revenue was applied, the number of students who attended the school or college, the total revenues of the institution with the source from which they were derived, and the purposes to which the revenues were applied, listing the items of such revenues and expenditures in detail.
     (3) Nonprofit homes for the sick or infirm and nonprofit hospitals for the sick claiming exemptions under RCW 84.36.040(1) (d) and (e) must also file on an annual basis no later than June 30th of each year, with the department of revenue a community benefit report for the preceding year. Community benefits include, but are not limited to: Community health improvement services; health professions education; subsidized health services; research; financial and in-kind contributions; community-building activities; community benefit operations; and charity care, including unreimbursed costs of indigent government sponsored programs and medicaid shortfall. Nonprofit hospitals for the sick must file a copy of the federal income tax form 990 "Schedule H" with the department to report data on community benefits, including charity care. Nonprofit homes for the sick or infirm must file a report on community benefits, including charity care, on a standardized form developed by the department. The standardized form must provide the same or similar relevant data as required for the federal income tax form 990 "Schedule H" to report data on community benefits, including charity care. Reports filed under this subsection must be submitted electronically to the department by June 30, 2012, for community benefits provided during calendar year 2011, and by June 30th in each subsequent year thereafter. The department must provide electronic notice of the filing due date by May 31st of each year. The department may waive the requirement to file reports electronically for good cause shown. If the report is not received by the filing deadline, the exemption must be removed. However, the department must allow a reasonable extension of time for filing upon receipt of a written request on or before the required filing date and for good cause shown therein.
     (4) The reports required under subsections (1) and (2) of this section may be submitted electronically, in a format provided or approved by the department, or mailed to the department. The reports ((shall)) must be submitted on or before March 31st of each year. The department ((shall)) must remove the tax exemption from the property of any organization, association, corporation, or institution that does not file the required report with the department on or before the due date. However, the department ((shall)) must allow a reasonable extension of time for filing upon receipt of a written request on or before the required filing date and for good cause shown therein.

Sec. 401   RCW 82.04.330 and 2001 c 118 s 3 are each amended to read as follows:
     This chapter ((shall)) does not apply to amounts under two million dollars derived by any farmer that sells any agricultural product at wholesale or to any farmer who grows, raises, or produces agricultural products owned by others, such as custom feed operations. This exemption ((shall)) does not apply to any person selling such products at retail or to any person selling manufactured substances or articles.
     This chapter ((shall)) also does not apply to any persons who participate in the federal conservation reserve program or its successor administered by the United States department of agriculture with respect to land enrolled in that program.

Sec. 402   RCW 82.04.410 and 1967 ex.s. c 149 s 15 are each amended to read as follows:
     This chapter ((shall)) does not apply to amounts under two hundred thousand dollars derived by persons engaged in the production and sale of hatching eggs or poultry for use in the production for sale of poultry or poultry products.

Sec. 501   RCW 82.16.010 and 2010 c 106 s 224 are each amended to read as follows:
     For the purposes of this chapter, unless otherwise required by the context:
     (1) "Express business" means the business of carrying property for public hire on the line of any common carrier operated in this state, when such common carrier is not owned or leased by the person engaging in such business.
     (2) "Gas distribution business" means the business of operating a plant or system for the production or distribution for hire or sale of gas, whether manufactured or natural.
     (3) "Gross income" means the value proceeding or accruing from the performance of the particular public service or transportation business involved, including operations incidental thereto, but without any deduction on account of the cost of the commodity furnished or sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses.
     (4) "Light and power business" means the business of operating a plant or system for the generation, production or distribution of electrical energy for hire or sale and/or for the wheeling of electricity for others.
     (5) "Log transportation business" means the business of transporting logs by truck, except when such transportation meets the definition of urban transportation business or occurs exclusively upon private roads.
     (6) (("Motor)) (a) "Transportation business" means the business (((except urban transportation business))) of operating any motor propelled vehicle by which persons or property of others are conveyed for hire, and includes, but is not limited to, the operation of any motor propelled vehicle as an auto transportation company (except urban transportation business), common carrier, or contract carrier as defined by RCW 81.68.010 and 81.80.010. ((However, "motor))
     (b) "Transportation business" also means the business of operating any vehicle for public use in the conveyance of persons or property for hire. Included herein, but without limiting the scope hereof, is the business of operating passenger vehicles of every type and also the business of operating cartage, pickup, or delivery services, including in such services the collection and distribution of property arriving from or destined to a point within or without the state, whether or not such collection or distribution be made by the person performing a local or interstate line-haul of such property.
     (c) "Transportation business" does not mean or include: (((a))) (i) A log transportation business; or (((b))) (ii) the transportation of logs or other forest products exclusively upon private roads or private highways.
     (7)(a) "Public service business" means any of the businesses defined in subsections (1), (2), (4), (6), (8), (9), (10), (((12),)) and (((13))) (12) of this section or any business subject to control by the state, or having the powers of eminent domain and the duties incident thereto, or any business hereafter declared by the legislature to be of a public service nature, except telephone business and low-level radioactive waste site operating companies as redefined in RCW 81.04.010. It includes, among others, without limiting the scope hereof: Airplane transportation, boom, dock, ferry, pipe line, toll bridge, toll logging road, water transportation and wharf businesses.
     (b) The definitions in this subsection (7)(b) apply throughout this subsection (7).
     (i) "Competitive telephone service" has the same meaning as in RCW 82.04.065.
     (ii) "Network telephone service" means the providing by any person of access to a telephone network, telephone network switching service, toll service, or coin telephone services, or the providing of telephonic, video, data, or similar communication or transmission for hire, via a telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. "Network telephone service" includes the provision of transmission to and from the site of an internet provider via a telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. "Network telephone service" does not include the providing of competitive telephone service, the providing of cable television service, the providing of broadcast services by radio or television stations, nor the provision of internet access as defined in RCW 82.04.297, including the reception of dial-in connection, provided at the site of the internet service provider.
     (iii) "Telephone business" means the business of providing network telephone service. It includes cooperative or farmer line telephone companies or associations operating an exchange.
     (iv) "Telephone service" means competitive telephone service or network telephone service, or both, as defined in (b)(i) and (ii) of this subsection.
     (8) "Railroad business" means the business of operating any railroad, by whatever power operated, for public use in the conveyance of persons or property for hire. It ((shall)) does not, however, include any business herein defined as an urban transportation business.
     (9) "Railroad car business" means the business of operating stock cars, furniture cars, refrigerator cars, fruit cars, poultry cars, tank cars, sleeping cars, parlor cars, buffet cars, tourist cars, or any other kinds of cars used for transportation of property or persons upon the line of any railroad operated in this state when such railroad is not owned or leased by the person engaging in such business.
     (10) "Telegraph business" means the business of affording telegraphic communication for hire.
     (11) "Tugboat business" means the business of operating tugboats, towboats, wharf boats or similar vessels in the towing or pushing of vessels, barges or rafts for hire.
     (12) (("Urban transportation business" means the business of operating any vehicle for public use in the conveyance of persons or property for hire, insofar as (a) operating entirely within the corporate limits of any city or town, or within five miles of the corporate limits thereof, or (b) operating entirely within and between cities and towns whose corporate limits are not more than five miles apart or within five miles of the corporate limits of either thereof. Included herein, but without limiting the scope hereof, is the business of operating passenger vehicles of every type and also the business of operating cartage, pickup, or delivery services, including in such services the collection and distribution of property arriving from or destined to a point within or without the state, whether or not such collection or distribution be made by the person performing a local or interstate line-haul of such property.
     (13))) "Water distribution business" means the business of operating a plant or system for the distribution of water for hire or sale.
     (((14))) (13) The meaning attributed, in chapter 82.04 RCW, to the term "tax year," "person," "value proceeding or accruing," "business," "engaging in business," "in this state," "within this state," "cash discount" and "successor" applies equally in the provisions of this chapter.

Sec. 502   RCW 82.16.010 and 2009 c 535 s 1110 are each reenacted and amended to read as follows:
     For the purposes of this chapter, unless otherwise required by the context:
     (1) "Express business" means the business of carrying property for public hire on the line of any common carrier operated in this state, when such common carrier is not owned or leased by the person engaging in such business.
     (2) "Gas distribution business" means the business of operating a plant or system for the production or distribution for hire or sale of gas, whether manufactured or natural.
     (3) "Gross income" means the value proceeding or accruing from the performance of the particular public service or transportation business involved, including operations incidental thereto, but without any deduction on account of the cost of the commodity furnished or sold, the cost of materials used, labor costs, interest, discount, delivery costs, taxes, or any other expense whatsoever paid or accrued and without any deduction on account of losses.
     (4) "Light and power business" means the business of operating a plant or system for the generation, production or distribution of electrical energy for hire or sale and/or for the wheeling of electricity for others.
     (5) (("Motor)) (a) "Transportation business" means the business (((except urban transportation business))) of operating any motor propelled vehicle by which persons or property of others are conveyed for hire, and includes, but is not limited to, the operation of any motor propelled vehicle as an auto transportation company (except urban transportation business), common carrier, or contract carrier as defined by RCW 81.68.010 and 81.80.010. ((However, "motor))
     (b) "Transportation business" also means the business of operating any vehicle for public use in the conveyance of persons or property for hire. Included herein, but without limiting the scope hereof, is the business of operating passenger vehicles of every type and also the business of operating cartage, pickup, or delivery services, including in such services the collection and distribution of property arriving from or destined to a point within or without the state, whether or not such collection or distribution be made by the person performing a local or interstate line-haul of such property.
     (c) "Transportation business" does not mean or include the transportation of logs or other forest products exclusively upon private roads or private highways.
     (6)(a) "Public service business" means any of the businesses defined in subsections (1), (2), (4), (5), (7), (8), (9), (((11),)) and (12) of this section or any business subject to control by the state, or having the powers of eminent domain and the duties incident thereto, or any business hereafter declared by the legislature to be of a public service nature, except telephone business and low-level radioactive waste site operating companies as redefined in RCW 81.04.010. It includes, among others, without limiting the scope hereof: Airplane transportation, boom, dock, ferry, pipe line, toll bridge, toll logging road, water transportation and wharf businesses.
     (b) The definitions in this subsection (6)(b) apply throughout this subsection (6).
     (i) "Competitive telephone service" has the same meaning as in RCW 82.04.065.
     (ii) "Network telephone service" means the providing by any person of access to a telephone network, telephone network switching service, toll service, or coin telephone services, or the providing of telephonic, video, data, or similar communication or transmission for hire, via a telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. "Network telephone service" includes the provision of transmission to and from the site of an internet provider via a telephone network, toll line or channel, cable, microwave, or similar communication or transmission system. "Network telephone service" does not include the providing of competitive telephone service, the providing of cable television service, the providing of broadcast services by radio or television stations, nor the provision of internet access as defined in RCW 82.04.297, including the reception of dial-in connection, provided at the site of the internet service provider.
     (iii) "Telephone business" means the business of providing network telephone service. It includes cooperative or farmer line telephone companies or associations operating an exchange.
     (iv) "Telephone service" means competitive telephone service or network telephone service, or both, as defined in (b)(i) and (ii) of this subsection.
     (7) "Railroad business" means the business of operating any railroad, by whatever power operated, for public use in the conveyance of persons or property for hire. It ((shall)) does not, however, include any business herein defined as an urban transportation business.
     (8) "Railroad car business" means the business of operating stock cars, furniture cars, refrigerator cars, fruit cars, poultry cars, tank cars, sleeping cars, parlor cars, buffet cars, tourist cars, or any other kinds of cars used for transportation of property or persons upon the line of any railroad operated in this state when such railroad is not owned or leased by the person engaging in such business.
     (9) "Telegraph business" means the business of affording telegraphic communication for hire.
     (10) "Tugboat business" means the business of operating tugboats, towboats, wharf boats or similar vessels in the towing or pushing of vessels, barges or rafts for hire.
     (11) (("Urban transportation business" means the business of operating any vehicle for public use in the conveyance of persons or property for hire, insofar as (a) operating entirely within the corporate limits of any city or town, or within five miles of the corporate limits thereof, or (b) operating entirely within and between cities and towns whose corporate limits are not more than five miles apart or within five miles of the corporate limits of either thereof. Included herein, but without limiting the scope hereof, is the business of operating passenger vehicles of every type and also the business of operating cartage, pickup, or delivery services, including in such services the collection and distribution of property arriving from or destined to a point within or without the state, whether or not such collection or distribution be made by the person performing a local or interstate line-haul of such property.
     (12))) "Water distribution business" means the business of operating a plant or system for the distribution of water for hire or sale.
     (((13))) (12) The meaning attributed, in chapter 82.04 RCW, to the term "tax year," "person," "value proceeding or accruing," "business," "engaging in business," "in this state," "within this state," "cash discount" and "successor" ((shall)) apply equally in the provisions of this chapter.

Sec. 503   RCW 82.16.020 and 2009 c 469 s 702 are each amended to read as follows:
     (1) There is levied and ((there shall be)) collected from every person a tax for the act or privilege of engaging within this state in any one or more of the businesses herein mentioned. The tax ((shall be)) is equal to the gross income of the business, multiplied by the rate set out after the business, as follows:
     (a) Express, sewerage collection, and telegraph businesses: Three and six-tenths percent;
     (b) Light and power business: Three and sixty-two one-hundredths percent;
     (c) Gas distribution business: Three and six-tenths percent;
     (d) ((Urban transportation business: Six-tenths of one percent;
     (e) Vessels under sixty-five feet in length, except tugboats, operating upon the waters within the state: Six-tenths of one percent;
     (f))) Motor transportation, railroad, railroad car, and tugboat businesses, and all public service businesses other than ones mentioned above: One and ((eight-tenths)) seventy-five hundredths of one percent;
     (((g))) (e) Water distribution business: Four and seven-tenths percent;
     (((h))) (f) Log transportation business: One and twenty-eight one-hundredths percent.
     (2) An additional tax is imposed on the act or privilege of engaging within this state in any one or more of the businesses mentioned in subsection (1)(a) through (c), and (e) of this section equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.
     (3) Twenty percent of the moneys collected under subsection (1) of this section on water distribution businesses and sixty percent of the moneys collected under subsection (1) of this section on sewerage collection businesses ((shall)) must be deposited in the public works assistance account created in RCW 43.155.050.

Sec. 504   RCW 82.16.020 and 1996 c 150 s 2 are each amended to read as follows:
     (1) There is levied and ((there shall be)) collected from every person a tax for the act or privilege of engaging within this state in any one or more of the businesses herein mentioned. The tax ((shall be)) is equal to the gross income of the business, multiplied by the rate set out after the business, as follows:
     (a) Express, sewerage collection, and telegraph businesses: Three and six-tenths percent;
     (b) Light and power business: Three and sixty-two one-hundredths percent;
     (c) Gas distribution business: Three and six-tenths percent;
     (d) ((Urban transportation business: Six-tenths of one percent;
     (e) Vessels under sixty-five feet in length, except tugboats, operating upon the waters within the state: Six-tenths of one percent;
     (f))) Motor transportation, railroad, railroad car, and tugboat businesses, and all public service businesses other than ones mentioned above: One and ((eight-tenths)) seventy-five hundredths of one percent;
     (((g))) (e) Water distribution business: Four and seven-tenths percent.
     (2) An additional tax is imposed on the act or privilege of engaging within this state in any one or more of the businesses mentioned in subsection (1)(a) through (c), and (e) of this section equal to the rate specified in RCW 82.02.030 multiplied by the tax payable under subsection (1) of this section.
     (3) Twenty percent of the moneys collected under subsection (1) of this section on water distribution businesses and sixty percent of the moneys collected under subsection (1) of this section on sewerage collection businesses ((shall)) must be deposited in the public works assistance account created in RCW 43.155.050.

Sec. 601   RCW 82.04.4282 and 2009 c 535 s 410 are each amended to read as follows:
     In computing tax there may be deducted from the measure of tax amounts derived from bona fide (1) dues and initiation fees paid to nonprofit organizations exempt from the federal income tax under Title 26 U.S.C. Sec. 501(c)(3), (c)(4), (c)(5), (c)(6), (c)(8), (c)(10), or (c)(19) of the federal internal revenue code, as amended as of January 1, 2011, (2) ((dues, (3))) contributions, (((4))) (3) donations, (((5))) (4) tuition fees, (((6))) (5) charges made by a nonprofit trade or professional organization for attending or occupying space at a trade show, convention, or educational seminar sponsored by the nonprofit trade or professional organization, which trade show, convention, or educational seminar is not open to the general public, (((7))) (6) charges made for operation of privately operated kindergartens, and (((8))) (7) endowment funds. This section may not be construed to exempt any person, association, or society from tax liability upon selling tangible personal property, digital goods, digital codes, or digital automated services, or upon providing facilities or other services for which a special charge is made to members or others. If dues are in exchange for any significant amount of goods or services rendered by the recipient thereof to members without any additional charge to the member, or if the dues are graduated upon the amount of goods or services rendered, the value of such goods or services ((shall)) is not ((be)) considered as a deduction under this section.

Sec. 701   RCW 82.16.050 and 2007 c 330 s 1 are each amended to read as follows:
     In computing tax there may be deducted from the gross income the following items:
     (1) Amounts derived by municipally owned or operated public service businesses, directly from taxes levied for the support or maintenance thereof. This subsection may not be construed to exempt service charges which are spread on the property tax rolls and collected as taxes;
     (2) Amounts derived from the sale of commodities to persons in the same public service business as the seller, for resale as such within this state. This deduction is allowed only with respect to water distribution, gas distribution or other public service businesses which furnish water, gas or any other commodity in the performance of public service businesses;
     (3) Amounts actually paid by a taxpayer to another person taxable under this chapter as the latter's portion of the consideration due for services furnished jointly by both, if the total amount has been credited to and appears in the gross income reported for tax by the former;
     (4) The amount of cash discount actually taken by the purchaser or customer;
     (5) The amount of bad debts, as that term is used in 26 U.S.C. Sec. 166, as amended or renumbered as of January 1, 2003, on which tax was previously paid under this chapter;
     (6) Amounts derived from business which the state is prohibited from taxing under the Constitution of this state or the Constitution or laws of the United States;
     (7) Amounts derived from the distribution of water through an irrigation system, for ((irrigation)) agricultural purposes;
     (8) Amounts derived from the transportation of commodities from points of origin in this state to final destination outside this state, or from points of origin outside this state to final destination in this state, with respect to which the carrier grants to the shipper the privilege of stopping the shipment in transit at some point in this state for the purpose of storing, manufacturing, milling, or other processing, and thereafter forwards the same commodity, or its equivalent, in the same or converted form, under a through freight rate from point of origin to final destination;
     (9) Amounts derived from the transportation of commodities from points of origin in the state to an export elevator, wharf, dock or ship side on tidewater or its navigable tributaries to be forwarded, without intervening transportation, by vessel, in their original form, to interstate or foreign destinations. No deduction is allowed under this subsection when the point of origin and the point of delivery to the export elevator, wharf, dock, or ship side are located within the corporate limits of the same city or town;
     (10) Amounts derived from the transportation of agricultural commodities, not including manufactured substances or articles, from points of origin in the state to interim storage facilities in this state for transshipment, without intervening transportation, to an export elevator, wharf, dock, or ship side on tidewater or its navigable tributaries to be forwarded, without intervening transportation, by vessel, in their original form, to interstate or foreign destinations. If agricultural commodities are transshipped from interim storage facilities in this state to storage facilities at a port on tidewater or its navigable tributaries, the same agricultural commodity dealer must operate both the interim storage facilities and the storage facilities at the port.
     (a) The deduction under this subsection is available only when the person claiming the deduction obtains a certificate from the agricultural commodity dealer operating the interim storage facilities, in a form and manner prescribed by the department, certifying that:
     (i) More than ninety-six percent of all of the type of agricultural commodity delivered by the person claiming the deduction under this subsection and delivered by all other persons to the dealer's interim storage facilities during the preceding calendar year was shipped by vessel in original form to interstate or foreign destinations; and
     (ii) Any of the agricultural commodity that is transshipped to ports on tidewater or its navigable tributaries will be received at storage facilities operated by the same agricultural commodity dealer and will be shipped from such facilities, without intervening transportation, by vessel, in their original form, to interstate or foreign destinations.
     (b) As used in this subsection, "agricultural commodity" has the same meaning as agricultural product in RCW 82.04.213;
     (11) Amounts derived from the production, sale, or transfer of electrical energy for resale within or outside the state or for consumption outside the state;
     (12) Amounts derived from the distribution of water by a nonprofit water association and used for capital improvements by that nonprofit water association;
     (13) Amounts paid by a sewerage collection business taxable under RCW 82.16.020(1)(a) to a person taxable under chapter 82.04 RCW for the treatment or disposal of sewage;
     (14) Amounts derived from fees or charges imposed on persons for transit services provided by a public transportation agency. For the purposes of this subsection, "public transportation agency" means a municipality, as defined in RCW 35.58.272, and urban public transportation systems, as defined in RCW 47.04.082. Public transportation agencies shall spend an amount equal to the reduction in tax provided by this tax deduction solely to adjust routes to improve access for citizens using food banks and senior citizen services or to extend or add new routes to assist low-income citizens and seniors.

Sec. 801   RCW 48.36A.240 and 1987 c 366 s 24 are each amended to read as follows:
     Every society organized or licensed under this chapter that is organized as a nonprofit organization, corporation, or association and serves low-income communities is hereby declared to be a charitable and benevolent institution, and all of its funds ((shall be)) is exempt from all and every state, county, district, municipal, and school tax, other than taxes on real estate and office equipment.

NEW SECTION.  Sec. 901   The following acts or parts of acts are each repealed:
     (1) RCW 82.04.350 (Exemptions -- Racing) and 2005 c 369 s 7 & 1961 c 15 s 82.04.350;
     (2) RCW 82.08.0257 (Exemptions -- Auction sales of personal property used in farming) and 2009 c 535 s 511 & 1980 c 37 s 25;
     (3) RCW 84.36.130 (Airport property in this state for smaller airports belonging to municipalities of adjoining states) and 1998 c 201 s 1 1961 c 15 s 84.36.130; and
     (4) RCW 82.04.4289 (Exemption -- Compensation for patient services or attendant sales of drugs dispensed pursuant to prescription by certain nonprofit organizations) and 2003 c 168 s 402, 1998 c 325 s 1, 1993 c 492 s 305, 1981 c 178 s 2, & 1980 c 37 s 10.

Sec. 1001   RCW 82.32.790 and 2010 c 114 s 201 and 2010 c 106 s 401 are each reenacted and amended to read as follows:
     (1)(a) Section 202, chapter . . ., Laws of 2011 (section 202 of this act), section 206, chapter 106, Laws of 2010, sections 104, 110, 117, 123, 125, 129, 131, and 150, chapter 114, Laws of 2010, section 3, chapter 461, Laws of 2009, section 7, chapter 300, Laws of 2006, and section 4, chapter 149, Laws of 2003 are contingent upon the siting and commercial operation of a significant semiconductor microchip fabrication facility in the state of Washington.
     (b) For the purposes of this section:
     (i) "Commercial operation" means the same as "commencement of commercial production" as used in RCW 82.08.965.
     (ii) "Semiconductor microchip fabrication" means "manufacturing semiconductor microchips" as defined in RCW 82.04.426.
     (iii) "Significant" means the combined investment of new buildings and new machinery and equipment in the buildings, at the commencement of commercial production, will be at least one billion dollars.
     (2) Chapter 149, Laws of 2003 takes effect the first day of the month in which a contract for the construction of a significant semiconductor fabrication facility is signed, as determined by the director of the department of revenue.
     (3)(a) The department of revenue must provide notice of the effective date of sections 104, 110, 117, 123, 125, 129, 131, and 150, chapter 114, Laws of 2010(([,])), section 3, chapter 461, Laws of 2009, section 7, chapter 300, Laws of 2006, and section 4, chapter 149, Laws of 2003 to affected taxpayers, the legislature, and others as deemed appropriate by the department.
     (b) If, after making a determination that a contract has been signed and chapter 149, Laws of 2003 is effective, the department discovers that commencement of commercial production did not take place within three years of the date the contract was signed, the department must make a determination that chapter 149, Laws of 2003 is no longer effective, and all taxes that would have been otherwise due are deemed deferred taxes and are immediately assessed and payable from any person reporting tax under RCW 82.04.240(2) or claiming an exemption or credit under section 2 or 5 through 10, chapter 149, Laws of 2003. The department is not authorized to make a second determination regarding the effective date of chapter 149, Laws of 2003.

NEW SECTION.  Sec. 1002   Section 201 of this act expires on the date that section 202 of this act takes effect.

NEW SECTION.  Sec. 1003   Section 202 of this act takes effect if the contingency in section 1001 of this act occurs.

NEW SECTION.  Sec. 1004   Section 203 of 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 July 1, 2011.

NEW SECTION.  Sec. 1005   Sections 501 and 503 of this act expire June 30, 2013.

NEW SECTION.  Sec. 1006   Sections 502 and 504 of this act take effect June 30, 2013.

NEW SECTION.  Sec. 1007   Except for sections 202, 203, 502, and 504 of this act, this act takes effect January 1, 2013.