BILL REQ. #:  H-4223.1 

READ FIRST TIME 02/07/12.   

     AN ACT Relating to improving accountability for tax preferences; amending RCW 82.32.590, 43.136.045, 43.136.055, 43.136.065, 82.32.585, 82.32.600, 82.32.710, 82.04.240, 82.04.240, 82.04.2404, 82.04.250, 82.04.260, 82.04.290, 82.04.2909, 82.04.294, 82.04.426, 82.04.4461, 82.04.4463, 82.04.448, 82.04.4481, 82.08.805, 82.08.965, 82.08.9651, 82.08.970, 82.08.980, 82.08.986, 82.12.022, 82.12.805, 82.12.965, 82.12.9651, 82.12.970, 82.12.980, 82.16.0421, 82.29A.137, 84.36.645, 84.36.655, 82.04.4277, 82.08.820, and 82.12.820; reenacting and amending RCW 82.32.790; adding new sections to chapter 82.32 RCW; creating new sections; repealing RCW 82.32.534; and providing effective dates.

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

Sec. 1   RCW 82.32.590 and 2011 c 174 s 306 are each amended to read as follows:
     (1) If the department finds that the failure of a taxpayer to file an annual survey under RCW 82.32.585 ((or annual report under RCW 82.32.534)) by the due date was the result of circumstances beyond the control of the taxpayer, the department must extend the time for filing the survey ((or report)). The extension is for a period of thirty days from the date the department issues its written notification to the taxpayer that it qualifies for an extension under this section. The department may grant additional extensions as it deems proper.
     (2) In making a determination whether the failure of a taxpayer to file an annual survey ((or annual report)) by the due date was the result of circumstances beyond the control of the taxpayer, the department must be guided by rules adopted by the department for the waiver or cancellation of penalties when the underpayment or untimely payment of any tax was due to circumstances beyond the control of the taxpayer.
     (3)(a) Subject to the conditions in this subsection (3), a taxpayer who fails to file an ((annual report or)) annual survey required under subsection (1) of this section by the due date of the ((report or)) survey is entitled to an extension of the due date. A request for an extension under this subsection (3) must be made in writing to the department.
     (b) To qualify for an extension under this subsection (3), a taxpayer must have filed all annual reports and surveys, if any, due in prior years under subsection (1) of this section by their respective due dates, beginning with annual reports and surveys due in calendar year 2010. For purposes of this subsection (3)(b), "annual report" means the report that was governed by RCW 82.32.534 until its repeal.
     (c) An extension under this subsection (3) is for ninety days from the original due date of the annual ((report or)) survey.
     (d) No taxpayer may be granted more than one ninety-day extension under this subsection (3).

NEW SECTION.  Sec. 2   The legislature makes the following findings:
     (1) Accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information to evaluate whether the continuation of existing tax preferences is in the public interest.
     (2) The existing annual reports and annual surveys used to gather data from taxpayers to evaluate the effectiveness of tax incentives should be improved and consolidated into a single document. This will provide better information with which to evaluate the effectiveness of tax preferences. This will also provide greater consistency for taxpayers and simplify administration for the department of revenue.
     (3) The process for evaluating tax preferences would be strengthened by:
     (a) Establishing a ten-year expiration date for those tax preferences enacted by the legislature in the future that are subject to the annual survey; and
     (b) Requiring that whenever the joint legislative audit and review committee recommends that a tax preference be modified or terminated immediately, the committee must include in its report to the legislative fiscal committees draft legislation to implement the recommendation.

Sec. 3   RCW 43.136.045 and 2011 c 335 s 2 are each amended to read as follows:
     (1)(a)(i) Except as provided in (a)(ii) of this subsection, the citizen commission for performance measurement of tax preferences must develop a schedule to accomplish an orderly review of tax preferences at least once every ten years.
     (ii) Tax preferences requiring the person receiving or benefiting from the preference to file an annual survey under the provisions of RCW 82.32.585 must be reviewed the earlier of every ten years or one year before their expiration date.
     (b) In determining the schedule, the commission must consider the order the tax preferences were enacted into law, in addition to other factors including but not limited to grouping preferences for review by type of industry, economic sector, or policy area. The commission may elect to include, anywhere in the schedule, a tax preference that has a statutory expiration date. The commission must omit from the schedule tax preferences that are required by constitutional law, sales and use tax exemptions for machinery and equipment for manufacturing, research and development, or testing, the small business credit for the business and occupation tax, sales and use tax exemptions for food and prescription drugs, property tax relief for retired persons, and property tax valuations based on current use, and may omit any tax preference that the commission determines is a critical part of the structure of the tax system. As an alternative to the process under RCW 43.136.055, the commission may recommend to the joint legislative audit and review committee an expedited review process for any tax preference.
     (2) The commission must revise the schedule as needed each year, taking into account newly enacted or terminated tax preferences. The commission must deliver the schedule to the joint legislative audit and review committee by September 1st of each year.
     (3) The commission must provide a process for effective citizen input during its deliberations.

NEW SECTION.  Sec. 4   (1) The legislature finds that to effectively fulfill its role as a financial steward of state tax dollars, the legislature must understand the return on investment associated with each tax preference.
     (2) The legislature therefore intends to add a return on investment measurement to the duties of the joint legislative audit and review committee to provide a rigorous and measurable analysis of value of each tax preference.

Sec. 5   RCW 43.136.055 and 2011 c 335 s 3 are each amended to read as follows:
     (1) The joint legislative audit and review committee must review tax preferences according to the schedule developed under RCW 43.136.045. The committee must consider, but not be limited to, the following factors in the review as relevant to each particular tax preference:
     (a) The classes of individuals, types of organizations, or types of industries whose state tax liabilities are directly affected by the tax preference;
     (b) Public policy objectives that might provide a justification for the tax preference, including but not limited to the legislative history, any legislative intent, or the extent to which the tax preference encourages business growth or relocation into this state, promotes growth or retention of high wage jobs, or helps stabilize communities;
     (c) Evidence that the existence of the tax preference has contributed to the achievement of any of the public policy objectives;
     (d) The extent to which continuation of the tax preference might contribute to any of the public policy objectives;
     (e) The extent to which the tax preference may provide unintended benefits to an individual, organization, or industry other than those the legislature intended;
     (f) The extent to which terminating the tax preference may have negative effects on the category of taxpayers that currently benefit from the tax preference, and the extent to which resulting higher taxes may have negative effects on employment and the economy;
     (g) The feasibility of modifying the tax preference to provide for adjustment or recapture of the tax benefits of the tax preference if the objectives are not fulfilled;
     (h) Fiscal impacts of the tax preference, including past impacts and expected future impacts if it is continued. For the purposes of this subsection, "fiscal impact" includes an analysis of the general effects of the tax preference on the overall state economy, including, but not limited to, the effects of the tax preference on the consumption and expenditures of persons and businesses within the state;
     (i) The extent to which termination of the tax preference would affect the distribution of liability for payment of state taxes;
     (j) The economic impact of the tax preference compared to the economic impact of government activities funded by the tax for which the tax preference is taken at the same level of expenditure as the tax preference. For purposes of this subsection the economic impact shall be determined using the Washington input-output model as published by the office of financial management;
     (k) Consideration of similar tax preferences adopted in other states, and potential public policy benefits that might be gained by incorporating corresponding provisions in Washington;
     (l) The rate of return of the tax preference. The "rate of return" is the ratio of: (i) The amount of direct, indirect, and induced state taxes that are paid to the state as a result of the tax preference; and (ii) the amount of state tax savings claimed by taxpayers as a result of the tax preference. Local taxes may be included as part of the ratio calculation under (l)(i) and (ii) of this subsection if the tax preference provides for a reduction in local taxes. The committee may determine the length of the time period used in the ratio calculation. The rate of return of the tax preference may be considered only where a purpose of the tax preference is job creation or retention. Where appropriate, the committee may deem the seller as the taxpayer with respect to sales and use tax exemptions. The factor under this subsection (1)(l) is not required to be part of a tax preference review until 2013 and thereafter.
     (2) For each tax preference, the committee must provide a recommendation as to whether the tax preference should be continued without modification, modified, scheduled for sunset review at a future date, or terminated immediately. The committee may recommend accountability standards for the future review of a tax preference.

Sec. 6   RCW 43.136.065 and 2006 c 197 s 6 are each amended to read as follows:
     (1) The joint legislative audit and review committee ((shall)) must report its findings and recommendations for scheduled tax preferences to the citizen commission for performance measurement of tax preferences by August 30th of each year. The commission may review and comment on the report of the committee. The committee may revise its report based on the comments of the commission. The committee ((shall)) must prepare a final report that includes the comments of the commission ((and)). The committee must submit the final report to the ((finance)) fiscal committees of the house of representatives and the ((ways and means committee of the)) senate by December 30th.
     (2) ((The joint legislative audit and review committee shall submit a special report reviewing all tax preferences that have statutory expiration dates between June 30, 2005, and January 1, 2007. For the special report, the committee shall complete a review under RCW 43.136.055, and obtain comments of the citizen commission for performance measurement of tax preferences under subsection (1) of this section, to the extent possible. The committee shall submit the special report to the finance committee of the house of representatives and the ways and means committee of the senate by January 12, 2006.
     (3))) Following receipt of a report under this section, the ((finance)) fiscal committees of the house of representatives and the ((ways and means committee of the)) senate ((shall)) must jointly hold a public hearing no later than the end of the second week of any regular legislative session to consider the final report and any related data.

Sec. 7   RCW 82.32.585 and 2011 c 23 s 6 are each amended to read as follows:
     (1)(a) Unless the department extends the due date as provided in RCW 82.32.590, every person claiming a tax preference that requires a survey under this section must file a complete annual survey with the department by the due date as provided in (b) of this subsection.
     (b)(i) Except as provided in (((a))) (b)(ii) of this subsection, the survey is due by April 30th of the year following any calendar year in which a person becomes eligible to claim the tax preference that requires a survey under this section. If a person remains eligible to claim a tax preference in subsequent calendar years, the person must file additional surveys by April 30th of each year following each calendar year that the person remains eligible to claim the tax preference.
     (ii) If the tax preference is a deferral of tax, the first survey must be filed by April 30th of the calendar year following the calendar year in which the investment project is certified by the department as operationally complete, and a survey must be filed by April 30th of each of the seven succeeding calendar years.
     (((b) The department may extend the due date for timely filing of annual surveys under this section as provided in RCW 82.32.590.))
     (2)(((a))) The survey must include information as required in this subsection for the calendar year preceding the calendar year in which the survey is due.
     (a)(i) The amount of the tax preference claimed ((for the calendar year covered by)) must be reported on the survey.
     (ii) For a person that claimed an exemption provided in RCW 82.08.025651 or 82.12.025651, the survey must include the amount of tax exempted under those sections in the prior calendar year for each general area or category of research and development for which exempt machinery and equipment and labor and services were acquired in the prior calendar year.
     (b) The survey must also include the following information for employment positions in Washington, not to include names of employees((, for the year that the tax preference was claimed)):
     (i) The number of total employment positions;
     (ii) Full-time, part-time, and temporary employment positions as a percent of total employment;
     (iii) The number of employment positions according to the following wage bands: Less than thirty thousand dollars; thirty thousand dollars or greater, but less than sixty thousand dollars; and sixty thousand dollars or greater. A wage band containing fewer than three individuals may be combined with another wage band; and
     (iv) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.
     (c) The survey must also include the amount of new capital investment in Washington. For purposes of this subsection (2)(c), the term "capital investment" means the cost of land, structures, and depreciable property located in Washington that are integral to the activities that qualify the business for the tax preference or preferences requiring a survey under this section.
     (d) For persons claiming the tax preference provided under chapter 82.60 or 82.63 RCW, the survey must also include the number of new products or research projects by general classification, and the number of trademarks, patents, and copyrights associated with activities at the investment project.
     (((d))) (e) For persons claiming the credit provided under RCW 82.04.4452, the survey must also include the qualified research and development expenditures ((during the calendar year for which the credit was claimed)), the taxable amount ((during the calendar year for which the credit was claimed)), the number of new products or research projects by general classification, the number of trademarks, patents, and copyrights associated with the research and development activities for which the credit was claimed, and whether the tax preference has been assigned, and who assigned the credit. The definitions in RCW 82.04.4452 apply to this subsection (2)(((d))) (e).
     (((e))) (f) For persons claiming the tax exemption in RCW 82.08.025651 or 82.12.025651, the survey must also include the general areas or categories of research and development for which machinery and equipment and labor and services were acquired, exempt from tax under RCW 82.08.025651 or 82.12.025651((, in the prior calendar year)).
     (((f))) (g) If the person filing a survey under this section did not file a survey under this section or report under RCW 82.32.534 with the department in the previous calendar year, the survey filed under this section must also include the employment, wage, ((and)) benefit, and capital investment information required under (b)(((i) through (iv))) and (c) of this subsection for the calendar year immediately preceding the calendar year for which a tax preference was claimed.
     (3) As part of the annual survey, the department may request additional information necessary to measure the results of, or determine eligibility for, the tax preference.
     (4)(a) All information collected under this section from annual surveys due before April 30, 2013, except the information required in subsection (2)(a) of this section, is deemed taxpayer information under RCW 82.32.330. Information required in subsection (2)(a) of this section and collected from annual surveys due before April 30, 2013, is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request, except ((as provided in subsection (5) of this section)) that persons for whom the actual amount of the tax reduced or saved is less than ten thousand dollars during the period covered by the survey may request the department to treat the amount of the tax reduction or savings as confidential under RCW 82.32.330.
     (b) Beginning with annual surveys due April 30, 2013, all information collected under this section from annual surveys, other than information collected under subsection (3) of this section and the amount of the tax preference claimed under RCW 82.04.4461, is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (c) If the amount of the tax preference claimed as reported on the survey is different than the amount actually claimed or otherwise allowed by the department based on the taxpayer's excise tax returns or other information known to the department, the amount actually claimed or allowed may be disclosed.
     (5) ((Persons for whom the actual amount of the tax reduced or saved is less than ten thousand dollars during the period covered by the survey may request the department to treat the amount of the tax reduction or savings as confidential under RCW 82.32.330.
     (6)))(a) Except as otherwise provided by law, if a person claims a tax preference that requires an annual survey under this section but fails to submit a complete annual survey by the due date of the survey or any extension under RCW 82.32.590, the department must declare the amount of the tax preference claimed for the previous calendar year to be immediately due. If the tax preference is a deferral of tax, twelve and one-half percent of the deferred tax is immediately due. If the economic benefits of the deferral are passed to a lessee, the lessee is responsible for payment to the extent the lessee has received the economic benefit.
     (b) The department must assess interest, but not penalties, on the amounts due under this subsection. The interest must be assessed at the rate provided for delinquent taxes under this chapter, retroactively to the date the tax preference was claimed, and accrues until the taxes for which the tax preference was claimed are repaid. Amounts due under this subsection are not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (((7))) (6)(a) The department must use the information from this section to prepare summary descriptive statistics by category. ((No fewer than three taxpayers may be included in any category.))
     (b)(i) The department must also use the information from this section to compute the relative tax burden, by tax type, for each taxpayer claiming a tax preference requiring a survey under this section. For purposes of this subsection, state and local sales and use taxes are considered one tax type.
     (ii) In addition, for each tax preference requiring a survey under this section the department must compute the aggregate relative tax burden of all persons claiming the tax preference.
     (c) Information created under this subsection and otherwise confidential under RCW 82.32.330 may be disclosed as authorized by RCW 82.32.330(3)(u).
     (d) The department must report ((these)) summary descriptive statistics and relative tax burden information to the legislature each year by ((October)) December 1st.
     (e) For purposes of this subsection, "relative tax burden" means the ratio, measured as a percentage, between the amount of tax paid and the amount of tax that would have been paid by taxpayers without the application of any tax preferences for which a survey under this section must be filed.
     (((8))) (7) For the purposes of this section:
     (a) "Person" has the meaning provided in RCW 82.04.030 and also includes the state and its departments and institutions.
     (b) "Tax preference" has the meaning provided in RCW 43.136.021 and includes only the tax preferences requiring a survey under this section.

NEW SECTION.  Sec. 8   A new section is added to chapter 82.32 RCW to read as follows:
     (1) Unless otherwise provided by statute, any tax preference that is passed by the legislature after the effective date of this section:
     (a) Requires the beneficiaries of the tax preference to file a complete annual survey with the department under RCW 82.32.585 if the beneficiary is a business required to be registered with the department;
     (b)(i) Except as otherwise provided in this subsection, expires on the date that is ten years after the date the tax preference became effective. However, if the date that is ten years after the date the tax preference became effective is not the first day of a fiscal year, the tax preference expires on the first day of the next fiscal year.
     (ii) If a tax preference is a property tax exemption and the date that is ten years after the date the exemption became effective is not the first day of a calendar year, the exemption expires on the first day of the next calendar year; and
     (c) Requires a statement of legislative intent describing the context making the tax preference necessary and providing clear and measurable public policy objectives.
     (2) For purposes of subsection (1) of this section:
     (a) Except as provided in this subsection (2)(a), the beneficiary of a tax preference is the taxpayer entitled to claim the tax preference. However, when the ability of a taxpayer to claim a tax preference is conditioned in this title on the taxpayer passing the economic benefit of that tax preference to someone else, the individual or entity receiving the economic benefit of the tax preference is the beneficiary of the tax preference, not the taxpayer.
     (b) "Tax preference that is passed by the legislature" includes the continuation or expansion of any tax preference originally enacted by the legislature on or before the effective date of this section. For purposes of this subsection (2)(b):
     (i) "Continuation" means that the legislature has taken affirmative action to eliminate or extend an expiration date or otherwise extend the effective period for claiming a tax preference; and
     (ii) "Expansion" means that the legislature has made a change to a tax preference that either increases the number of persons eligible for the tax preference or reduces state tax revenue or the amount of taxable property on the property tax rolls, even if fewer taxpayers will be eligible to claim the tax preference. For purposes of this subsection (2)(b)(ii), the department is responsible for determining whether a change to a tax preference constitutes an expansion and is based on the department's estimate of the impact of the change as reflected in the department's final fiscal note for the legislation that changed the tax preference or in the department's workpapers for such fiscal note. However, if the department did not prepare a fiscal note for the legislation that changed the tax preference or the department is unable to determine from the fiscal note whether the change constitutes an expansion of the tax preference, the department must perform an estimate of the impact of the change within ninety days following the effective date of the change to determine whether the change constitutes an expansion of the tax preference.
     (3) For purposes of this section, the following definitions apply:
     (a) "Fiscal year" means the year beginning July 1st and ending the following June 30th.
     (b) "Tax preference" means the following tax benefits for any state tax administered by the department, including property taxes levied by the state: Exemptions, including exemptions in the form of a remittance or refund of tax paid; deductions; credits; deferrals; or reduced tax rates.

NEW SECTION.  Sec. 9   A new section is added to chapter 82.32 RCW to read as follows:
     (1)(a) Unless otherwise provided by law, a taxpayer may claim a tax preference on and after the expiration date of the tax preference under the following circumstances:
     (i) All conditions necessary for entitlement to the tax preference occurred before the expiration date of the tax preference;
     (ii) The tax preference is a type that must be claimed on a tax return required to be filed with the department, which includes tax exemptions that are not required to be specifically identified on the tax return but that reduce the amount of tax due on the return; and
     (iii) The tax preference is claimed on the tax return for the reporting period that includes the date that the taxpayer became entitled to the tax preference.
     (b) This subsection does not allow:
     (i) A tax preference to be claimed to the extent that it would reduce the amount of tax due on the return to less than zero;
     (ii) A credit to be carried forward to any subsequent reporting period except as specifically provided in the statute that authorized the credit; or
     (iii) Refunds for unused tax preferences.
     (2) The department may not assess use tax against a taxpayer based solely on the expiration of a use tax exemption.
     (3) For purposes of this section, "tax preference" means the following tax benefits for any state tax administered by the department under this chapter: Exemptions, including exemptions in the form of a remittance or refund of tax paid; deductions; credits; deferrals; or reduced tax rates.

Sec. 10   RCW 82.32.600 and 2010 c 114 s 136 are each amended to read as follows:
     (1) Persons required to file annual surveys ((or annual reports)) under RCW ((82.32.534 or)) 82.32.585 must electronically file with the department all surveys, reports, returns, and any other forms or information the department requires in an electronic format as provided or approved by the department. As used in this section, "returns" has the same meaning as "return" in RCW 82.32.050.
     (2) Any survey, report, return, or any other form or information required to be filed in an electronic format under subsection (1) of this section is not filed until received by the department in an electronic format.
     (3) The department may waive the electronic filing requirement in subsection (1) of this section for good cause shown.

Sec. 11   RCW 82.32.710 and 2010 c 114 s 137 are each amended to read as follows:
     (1) A client under the terms of a professional employer agreement is deemed to be the sole employer of a covered employee for purposes of eligibility for any tax credit, exemption, or other tax incentive, arising as the result of the employment of covered employees, provided in RCW 82.04.4333, 82.04.44525, 82.04.448, 82.04.4483, 82.08.965, 82.12.965, 82.16.0495, or 82.60.049 or chapter 82.62 or 82.70 RCW, or any other provision in this title. A client, and not the professional employer organization, is entitled to the benefit of any tax credit, exemption, or other tax incentive arising as the result of the employment of covered employees of that client.
     (2) A client under the terms of a professional employer agreement is deemed to be the sole employer of a covered employee for purposes of ((reports or)) surveys that require the reporting of employment information relating to covered employees of the client, as provided in RCW ((82.32.534 or)) 82.32.585. A client, and not the professional employer organization, is required to complete any survey ((or report)) that requires the reporting of employment information relating to covered employees of that client.
     (3) For the purposes of this section, "client," "covered employee," "professional employer agreement," and "professional employer organization" have the same meanings as in RCW 82.04.540.

Sec. 12   RCW 82.04.240 and 2004 c 24 s 4 are each amended to read as follows:
     (1) Upon every person engaging within this state in business as a manufacturer, except persons taxable as manufacturers under other provisions of this chapter; as to such persons the amount of the tax with respect to such business ((shall be)) is equal to the value of the products, including byproducts, manufactured, multiplied by the rate of 0.484 percent.
     (2) The measure of the tax is the value of the products, including byproducts, so manufactured regardless of the place of sale or the fact that deliveries may be made to points outside the state.

Sec. 13   RCW 82.04.240 and 2010 c 114 s 104 are each amended to read as follows:
     (1) Upon every person engaging within this state in business as a manufacturer, except persons taxable as manufacturers under other provisions of this chapter; as to such persons the amount of the tax with respect to such business is equal to the value of the products, including byproducts, manufactured, multiplied by the rate of 0.484 percent.
     (2)(a) Upon every person engaging within this state in the business of manufacturing semiconductor materials, as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured, or, in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of 0.275 percent. For the purposes of this subsection "semiconductor materials" means silicon crystals, silicon ingots, raw polished semiconductor wafers, compound semiconductors, integrated circuits, and microchips.
     (b) A person reporting under the tax rate provided in this subsection (2) must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (c) This subsection (2) expires twelve years after the effective date of this ((act)) section.
     (3) The measure of the tax is the value of the products, including byproducts, so manufactured regardless of the place of sale or the fact that deliveries may be made to points outside the state.

Sec. 14   RCW 82.04.2404 and 2010 c 114 s 105 are each amended to read as follows:
     (1) Upon every person engaging within this state in the business of manufacturing or processing for hire semiconductor materials, as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured, or, in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of 0.275 percent.
     (2) For the purposes of this section "semiconductor materials" means silicon crystals, silicon ingots, raw polished semiconductor wafers, and compound semiconductor wafers.
     (3) A person reporting under the tax rate provided in this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (4) This section expires December 1, 2018.

Sec. 15   RCW 82.04.250 and 2010 1st sp.s. c 23 s 509 are each amended to read as follows:
     (1) Upon every person engaging within this state in the business of making sales at retail, except persons taxable ((as retailers)) under other provisions of this chapter on the business of making sales at retail, as to such persons, the amount of tax with respect to such business is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.471 percent.
     (2) Upon every person engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, except persons taxable under RCW 82.04.260(((10))) (11) or subsection (3) of this section, as to such persons, the amount of tax with respect to such business is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.484 percent.
     (3)(a) Until July 1, 2024, upon every person classified by the federal aviation administration as a federal aviation regulation part 145 certificated repair station and that is engaging within this state in the business of making sales at retail that are exempt from the tax imposed under chapter 82.08 RCW by reason of RCW 82.08.0261, 82.08.0262, or 82.08.0263, as to such persons, the amount of tax with respect to such business is equal to the gross proceeds of sales of the business, multiplied by the rate of .2904 percent.
     (b) A person reporting under the tax rate provided in this subsection (3) must file a complete annual survey with the department under RCW 82.32.585.

Sec. 16   RCW 82.04.260 and 2011 c 2 s 203 (Initiative Measure No. 1107) are each amended to read as follows:
     (1) Upon every person engaging within this state in the business of manufacturing:
     (a) Wheat into flour, barley into pearl barley, soybeans into soybean oil, canola into canola oil, canola meal, or canola by-products, or sunflower seeds into sunflower oil; as to such persons the amount of tax with respect to such business is equal to the value of the flour, pearl barley, oil, canola meal, or canola by-product manufactured, multiplied by the rate of 0.138 percent;
     (b) Beginning July 1, 2012, seafood products that remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing by that person; or selling manufactured seafood products that remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing, to purchasers who transport in the ordinary course of business the goods out of this state; as to such persons the amount of tax with respect to such business is equal to the value of the products manufactured or the gross proceeds derived from such sales, multiplied by the rate of 0.138 percent. Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;
     (c) Beginning July 1, 2012, dairy products that as of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 131, 133, and 135, including by-products from the manufacturing of the dairy products such as whey and casein; or selling the same to purchasers who transport in the ordinary course of business the goods out of state; as to such persons the tax imposed is equal to the value of the products manufactured or the gross proceeds derived from such sales multiplied by the rate of 0.138 percent. Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;
     (d) Beginning July 1, 2012, fruits or vegetables by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables, or selling at wholesale fruits or vegetables manufactured by the seller by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables and sold to purchasers who transport in the ordinary course of business the goods out of this state; as to such persons the amount of tax with respect to such business is equal to the value of the products manufactured or the gross proceeds derived from such sales multiplied by the rate of 0.138 percent. Sellers must keep and preserve records for the period required by RCW 82.32.070 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state;
     (e) Until July 1, 2009, alcohol fuel, biodiesel fuel, or biodiesel feedstock, as those terms are defined in RCW 82.29A.135; as to such persons the amount of tax with respect to the business is equal to the value of alcohol fuel, biodiesel fuel, or biodiesel feedstock manufactured, multiplied by the rate of 0.138 percent; and
     (f) Wood biomass fuel as defined in RCW 82.29A.135; as to such persons the amount of tax with respect to the business is equal to the value of wood biomass fuel manufactured, multiplied by the rate of 0.138 percent.
     (2) Upon every person engaging within this state in the business of splitting or processing dried peas; as to such persons the amount of tax with respect to such business is equal to the value of the peas split or processed, multiplied by the rate of 0.138 percent.
     (3) Upon every nonprofit corporation and nonprofit association engaging within this state in research and development, as to such corporations and associations, the amount of tax with respect to such activities is equal to the gross income derived from such activities multiplied by the rate of 0.484 percent.
     (4) Upon every person engaging within this state in the business of slaughtering, breaking and/or processing perishable meat products and/or selling the same at wholesale only and not at retail; as to such persons the tax imposed is equal to the gross proceeds derived from such sales multiplied by the rate of 0.138 percent.
     (5) Upon every person engaging within this state in the business of acting as a travel agent or tour operator; as to such persons the amount of the tax with respect to such activities is equal to the gross income derived from such activities multiplied by the rate of 0.275 percent.
     (6) Upon every person engaging within this state in business as an international steamship agent, international customs house broker, international freight forwarder, vessel and/or cargo charter broker in foreign commerce, and/or international air cargo agent; as to such persons the amount of the tax with respect to only international activities is equal to the gross income derived from such activities multiplied by the rate of 0.275 percent.
     (7) Upon every person engaging within this state in the business of stevedoring and associated activities pertinent to the movement of goods and commodities in waterborne interstate or foreign commerce; as to such persons the amount of tax with respect to such business is equal to the gross proceeds derived from such activities multiplied by the rate of 0.275 percent. Persons subject to taxation under this subsection are exempt from payment of taxes imposed by chapter 82.16 RCW for that portion of their business subject to taxation under this subsection. Stevedoring and associated activities pertinent to the conduct of goods and commodities in waterborne interstate or foreign commerce are defined as all activities of a labor, service or transportation nature whereby cargo may be loaded or unloaded to or from vessels or barges, passing over, onto or under a wharf, pier, or similar structure; cargo may be moved to a warehouse or similar holding or storage yard or area to await further movement in import or export or may move to a consolidation freight station and be stuffed, unstuffed, containerized, separated or otherwise segregated or aggregated for delivery or loaded on any mode of transportation for delivery to its consignee. Specific activities included in this definition are: Wharfage, handling, loading, unloading, moving of cargo to a convenient place of delivery to the consignee or a convenient place for further movement to export mode; documentation services in connection with the receipt, delivery, checking, care, custody and control of cargo required in the transfer of cargo; imported automobile handling prior to delivery to consignee; terminal stevedoring and incidental vessel services, including but not limited to plugging and unplugging refrigerator service to containers, trailers, and other refrigerated cargo receptacles, and securing ship hatch covers.
     (8) Upon every person engaging within this state in the business of disposing of low-level waste, as defined in RCW 43.145.010; as to such persons the amount of the tax with respect to such business is equal to the gross income of the business, excluding any fees imposed under chapter 43.200 RCW, multiplied by the rate of 3.3 percent.
     If the gross income of the taxpayer is attributable to activities both within and without this state, the gross income attributable to this state must be determined in accordance with the methods of apportionment required under RCW 82.04.460.
     (9) Upon every person engaging within this state as an insurance producer or title insurance agent licensed under chapter 48.17 RCW or a surplus line broker licensed under chapter 48.15 RCW; as to such persons, the amount of the tax with respect to such licensed activities is equal to the gross income of such business multiplied by the rate of 0.484 percent.
     (10) Upon every person engaging within this state in business as a hospital, as defined in chapter 70.41 RCW, that is operated as a nonprofit corporation or by the state or any of its political subdivisions, as to such persons, the amount of tax with respect to such activities is equal to the gross income of the business multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5 percent thereafter.
     (11)(a) Beginning October 1, 2005, upon every person engaging within this state in the business of manufacturing commercial airplanes, or components of such airplanes, or making sales, at retail or wholesale, of commercial airplanes or components of such airplanes, manufactured by the seller, as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured and the gross proceeds of sales of the product manufactured, or in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of:
     (i) 0.4235 percent from October 1, 2005, through June 30, 2007; and
     (ii) 0.2904 percent beginning July 1, 2007.
     (b) Beginning July 1, 2008, upon every person who is not eligible to report under the provisions of (a) of this subsection (11) and is engaging within this state in the business of manufacturing tooling specifically designed for use in manufacturing commercial airplanes or components of such airplanes, or making sales, at retail or wholesale, of such tooling manufactured by the seller, as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured and the gross proceeds of sales of the product manufactured, or in the case of processors for hire, be equal to the gross income of the business, multiplied by the rate of 0.2904 percent.
     (c) For the purposes of this subsection (11), "commercial airplane" and "component" have the same meanings as provided in RCW 82.32.550.
     (d) In addition to all other requirements under this title, a person reporting under the tax rate provided in this subsection (11) must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (e) This subsection (11) does not apply on and after July 1, 2024.
     (12)(a) Until July 1, 2024, upon every person engaging within this state in the business of extracting timber or extracting for hire timber; as to such persons the amount of tax with respect to the business is, in the case of extractors, equal to the value of products, including by-products, extracted, or in the case of extractors for hire, equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.
     (b) Until July 1, 2024, upon every person engaging within this state in the business of manufacturing or processing for hire: (i) Timber into timber products or wood products; or (ii) timber products into other timber products or wood products; as to such persons the amount of the tax with respect to the business is, in the case of manufacturers, equal to the value of products, including by-products, manufactured, or in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.
     (c) Until July 1, 2024, upon every person engaging within this state in the business of selling at wholesale: (i) Timber extracted by that person; (ii) timber products manufactured by that person from timber or other timber products; or (iii) wood products manufactured by that person from timber or timber products; as to such persons the amount of the tax with respect to the business is equal to the gross proceeds of sales of the timber, timber products, or wood products multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2024.
     (d) Until July 1, 2024, upon every person engaging within this state in the business of selling standing timber; as to such persons the amount of the tax with respect to the business is equal to the gross income of the business multiplied by the rate of 0.2904 percent. For purposes of this subsection (12)(d), "selling standing timber" means the sale of timber apart from the land, where the buyer is required to sever the timber within thirty months from the date of the original contract, regardless of the method of payment for the timber and whether title to the timber transfers before, upon, or after severance.
     (e) For purposes of this subsection, the following definitions apply:
     (i) "Biocomposite surface products" means surface material products containing, by weight or volume, more than fifty percent recycled paper and that also use nonpetroleum-based phenolic resin as a bonding agent.
     (ii) "Paper and paper products" means products made of interwoven cellulosic fibers held together largely by hydrogen bonding. "Paper and paper products" includes newsprint; office, printing, fine, and pressure-sensitive papers; paper napkins, towels, and toilet tissue; kraft bag, construction, and other kraft industrial papers; paperboard, liquid packaging containers, containerboard, corrugated, and solid-fiber containers including linerboard and corrugated medium; and related types of cellulosic products containing primarily, by weight or volume, cellulosic materials. "Paper and paper products" does not include books, newspapers, magazines, periodicals, and other printed publications, advertising materials, calendars, and similar types of printed materials.
     (iii) "Recycled paper" means paper and paper products having fifty percent or more of their fiber content that comes from postconsumer waste. For purposes of this subsection (12)(e)(iii), "postconsumer waste" means a finished material that would normally be disposed of as solid waste, having completed its life cycle as a consumer item.
     (iv) "Timber" means forest trees, standing or down, on privately or publicly owned land. "Timber" does not include Christmas trees that are cultivated by agricultural methods or short-rotation hardwoods as defined in RCW 84.33.035.
     (v) "Timber products" means:
     (A) Logs, wood chips, sawdust, wood waste, and similar products obtained wholly from the processing of timber, short-rotation hardwoods as defined in RCW 84.33.035, or both;
     (B) Pulp, including market pulp and pulp derived from recovered paper or paper products; and
     (C) Recycled paper, but only when used in the manufacture of biocomposite surface products.
     (vi) "Wood products" means paper and paper products; dimensional lumber; engineered wood products such as particleboard, oriented strand board, medium density fiberboard, and plywood; wood doors; wood windows; and biocomposite surface products.
     (f) Except for small harvesters as defined in RCW 84.33.035, a person reporting under the tax rate provided in this subsection (12) must file a complete annual survey with the department under RCW 82.32.585.
     (13) Upon every person engaging within this state in inspecting, testing, labeling, and storing canned salmon owned by another person, as to such persons, the amount of tax with respect to such activities is equal to the gross income derived from such activities multiplied by the rate of 0.484 percent.
     (14)(a) Upon every person engaging within this state in the business of printing a newspaper, publishing a newspaper, or both, the amount of tax on such business is equal to the gross income of the business multiplied by the rate of 0.2904 percent.
     (b) A person reporting under the tax rate provided in this subsection (14) must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.

Sec. 17   RCW 82.04.290 and 2011 c 174 s 101 are each amended to read as follows:
     (1) Upon every person engaging within this state in the business of providing international investment management services, as to such persons, the amount of tax with respect to such business ((shall be)) is equal to the gross income or gross proceeds of sales of the business multiplied by a rate of 0.275 percent.
     (2)(a) Upon every person engaging within this state in any business activity other than or in addition to an activity taxed explicitly under another section in this chapter or subsection (1) or (3) of this section; as to such persons the amount of tax on account of such activities ((shall be)) is equal to the gross income of the business multiplied by the rate of 1.5 percent.
     (b) This subsection (2) includes, among others, and without limiting the scope hereof (whether or not title to materials used in the performance of such business passes to another by accession, confusion or other than by outright sale), persons engaged in the business of rendering any type of service which does not constitute a "sale at retail" or a "sale at wholesale." The value of advertising, demonstration, and promotional supplies and materials furnished to an agent by his principal or supplier to be used for informational, educational and promotional purposes ((shall)) is not ((be)) considered a part of the agent's remuneration or commission and ((shall)) is not ((be)) subject to taxation under this section.
     (3)(a) Until July 1, 2024, upon every person engaging within this state in the business of performing aerospace product development for others, as to such persons, the amount of tax with respect to such business ((shall be)) is equal to the gross income of the business multiplied by a rate of 0.9 percent.
     (b) "Aerospace product development" has the meaning as provided in RCW 82.04.4461.
     (c) A person reporting under the tax rate provided in this subsection (3) must file a complete annual survey with the department under RCW 82.32.585.

Sec. 18   RCW 82.04.2909 and 2011 c 174 s 301 are each amended to read as follows:
     (1) Upon every person who is an aluminum smelter engaging within this state in the business of manufacturing aluminum; as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured, or in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of .2904 percent.
     (2) Upon every person who is an aluminum smelter engaging within this state in the business of making sales at wholesale of aluminum manufactured by that person, as to such persons the amount of tax with respect to such business is equal to the gross proceeds of sales of the aluminum multiplied by the rate of .2904 percent.
     (3) A person reporting under the tax rate provided in this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (4) This section expires January 1, 2017.

Sec. 19   RCW 82.04.294 and 2011 c 179 s 1 are each amended to read as follows:
     (1) Upon every person engaging within this state in the business of manufacturing solar energy systems using photovoltaic modules or stirling converters, or of manufacturing solar grade silicon, silicon solar wafers, silicon solar cells, thin film solar devices, or compound semiconductor solar wafers to be used exclusively in components of such systems; as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured, or in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of 0.275 percent.
     (2) Upon every person engaging within this state in the business of making sales at wholesale of solar energy systems using photovoltaic modules or stirling converters, or of solar grade silicon, silicon solar wafers, silicon solar cells, thin film solar devices, or compound semiconductor solar wafers to be used exclusively in components of such systems, manufactured by that person; as to such persons the amount of tax with respect to such business is equal to the gross proceeds of sales of the solar energy systems using photovoltaic modules or stirling converters, or of the solar grade silicon to be used exclusively in components of such systems, multiplied by the rate of 0.275 percent.
     (3) Silicon solar wafers, silicon solar cells, thin film solar devices, or compound semiconductor solar wafers are "semiconductor materials" for the purposes of RCW 82.08.9651 and 82.12.9651.
     (4) The definitions in this subsection apply throughout this section.
     (a) "Compound semiconductor solar wafers" means a semiconductor solar wafer composed of elements from two or more different groups of the periodic table.
     (b) "Module" means the smallest nondivisible self-contained physical structure housing interconnected photovoltaic cells and providing a single direct current electrical output.
     (c) "Photovoltaic cell" means a device that converts light directly into electricity without moving parts.
     (d) "Silicon solar cells" means a photovoltaic cell manufactured from a silicon solar wafer.
     (e) "Silicon solar wafers" means a silicon wafer manufactured for solar conversion purposes.
     (f) "Solar energy system" means any device or combination of devices or elements that rely upon direct sunlight as an energy source for use in the generation of electricity.
     (g) "Solar grade silicon" means high-purity silicon used exclusively in components of solar energy systems using photovoltaic modules to capture direct sunlight. "Solar grade silicon" does not include silicon used in semiconductors.
     (h) "Stirling converter" means a device that produces electricity by converting heat from a solar source utilizing a stirling engine.
     (i) "Thin film solar devices" means a nonparticipating substrate on which various semiconducting materials are deposited to produce a photovoltaic cell that is used to generate electricity.
     (5) A person reporting under the tax rate provided in this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (6) This section expires June 30, 2014.

Sec. 20   RCW 82.04.426 and 2010 c 114 s 110 are each amended to read as follows:
     (1) The tax imposed by RCW 82.04.240(2) does not apply to any person in respect to the manufacturing of semiconductor microchips.
     (2) For the purposes of this section:
     (a) "Manufacturing semiconductor microchips" means taking raw polished semiconductor wafers and embedding integrated circuits on the wafers using processes such as masking, etching, and diffusion; and
     (b) "Integrated circuit" means a set of microminiaturized, electronic circuits.
     (3) A person reporting under the tax rate provided in this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (4) This section expires nine years after the effective date of this ((act)) section.

Sec. 21   RCW 82.04.4461 and 2010 c 114 s 115 are each amended to read as follows:
     (1)(a)(i) In computing the tax imposed under this chapter, a credit is allowed for each person for qualified aerospace product development. For a person who is a manufacturer or processor for hire of commercial airplanes or components of such airplanes, credit may be earned for expenditures occurring after December 1, 2003. For all other persons, credit may be earned only for expenditures occurring after June 30, 2008.
     (ii) For purposes of this subsection, "commercial airplane" and "component" have the same meanings as provided in RCW 82.32.550.
     (b) Before July 1, 2005, any credits earned under this section must be accrued and carried forward and may not be used until July 1, 2005. These carryover credits may be used at any time thereafter, and may be carried over until used. Refunds may not be granted in the place of a credit.
     (2) The credit is equal to the amount of qualified aerospace product development expenditures of a person, multiplied by the rate of 1.5 percent.
     (3) Except as provided in subsection (1)(b) of this section the credit must be claimed against taxes due for the same calendar year in which the qualified aerospace product development expenditures are incurred. Credit earned on or after July 1, 2005, may not be carried over. The credit for each calendar year may not exceed the amount of tax otherwise due under this chapter for the calendar year. Refunds may not be granted in the place of a credit.
     (4) Any person claiming the credit must file a form prescribed by the department that must include the amount of the credit claimed, an estimate of the anticipated aerospace product development expenditures during the calendar year for which the credit is claimed, an estimate of the taxable amount during the calendar year for which the credit is claimed, and such additional information as the department may prescribe.
     (5) The definitions in this subsection apply throughout this section.
     (a) "Aerospace product" has the meaning given in RCW 82.08.975.
     (b) "Aerospace product development" means research, design, and engineering activities performed in relation to the development of an aerospace product or of a product line, model, or model derivative of an aerospace product, including prototype development, testing, and certification. The term includes the discovery of technological information, the translating of technological information into new or improved products, processes, techniques, formulas, or inventions, and the adaptation of existing products and models into new products or new models, or derivatives of products or models. The term does not include manufacturing activities or other production-oriented activities, however the term does include tool design and engineering design for the manufacturing process. The term does not include surveys and studies, social science and humanities research, market research or testing, quality control, sale promotion and service, computer software developed for internal use, and research in areas such as improved style, taste, and seasonal design.
     (c) "Qualified aerospace product development" means aerospace product development performed within this state.
     (d) "Qualified aerospace product development expenditures" means operating expenses, including wages, compensation of a proprietor or a partner in a partnership as determined by the department, benefits, supplies, and computer expenses, directly incurred in qualified aerospace product development by a person claiming the credit provided in this section. The term does not include amounts paid to a person or to the state and any of its departments and institutions, other than a public educational or research institution to conduct qualified aerospace product development. The term does not include capital costs and overhead, such as expenses for land, structures, or depreciable property.
     (e) "Taxable amount" means the taxable amount subject to the tax imposed in this chapter required to be reported on the person's tax returns during the year in which the credit is claimed, less any taxable amount for which a credit is allowed under RCW 82.04.440.
     (6) In addition to all other requirements under this title, a person claiming the credit under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (7) Credit may not be claimed for expenditures for which a credit is claimed under RCW 82.04.4452.
     (8) This section expires July 1, 2024.

Sec. 22   RCW 82.04.4463 and 2010 1st sp.s. c 23 s 515 are each amended to read as follows:
     (1) In computing the tax imposed under this chapter, a credit is allowed for property taxes and leasehold excise taxes paid during the calendar year.
     (2) The credit is equal to:
     (a)(i)(A) Property taxes paid on buildings, and land upon which the buildings are located, constructed after December 1, 2003, and used exclusively in manufacturing commercial airplanes or components of such airplanes; and
     (B) Leasehold excise taxes paid with respect to buildings constructed after January 1, 2006, the land upon which the buildings are located, or both, if the buildings are used exclusively in manufacturing commercial airplanes or components of such airplanes; and
     (C) Property taxes or leasehold excise taxes paid on, or with respect to, buildings constructed after June 30, 2008, the land upon which the buildings are located, or both, and used exclusively for aerospace product development, manufacturing tooling specifically designed for use in manufacturing commercial airplanes or their components, or in providing aerospace services, by persons not within the scope of (a)(i)(A) and (B) of this subsection (2) and are taxable under RCW 82.04.290(3), 82.04.260(((10))) (11)(b), or 82.04.250(3); or
     (ii) Property taxes attributable to an increase in assessed value due to the renovation or expansion, after: (A) December 1, 2003, of a building used exclusively in manufacturing commercial airplanes or components of such airplanes; and (B) June 30, 2008, of buildings used exclusively for aerospace product development, manufacturing tooling specifically designed for use in manufacturing commercial airplanes or their components, or in providing aerospace services, by persons not within the scope of (a)(ii)(A) of this subsection (2) and are taxable under RCW 82.04.290(3), 82.04.260(((10))) (11)(b), or 82.04.250(3); and
     (b) An amount equal to:
     (i)(A) Property taxes paid, by persons taxable under RCW 82.04.260(((10))) (11)(a), on machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 and acquired after December 1, 2003;
     (B) Property taxes paid, by persons taxable under RCW 82.04.260(((10))) (11)(b), on machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 and acquired after June 30, 2008; or
     (C) Property taxes paid, by persons taxable under RCW 82.04.250(3) or 82.04.290(3), on computer hardware, computer peripherals, and software exempt under RCW 82.08.975 or 82.12.975 and acquired after June 30, 2008.
     (ii) For purposes of determining the amount eligible for credit under (i)(A) and (B) of this subsection (2)(b), the amount of property taxes paid is multiplied by a fraction.
     (A) The numerator of the fraction is the total taxable amount subject to the tax imposed under RCW 82.04.260(((10))) (11) (a) or (b) on the applicable business activities of manufacturing commercial airplanes, components of such airplanes, or tooling specifically designed for use in the manufacturing of commercial airplanes or components of such airplanes.
     (B) The denominator of the fraction is the total taxable amount subject to the tax imposed under all manufacturing classifications in chapter 82.04 RCW.
     (C) For purposes of both the numerator and denominator of the fraction, the total taxable amount refers to the total taxable amount required to be reported on the person's returns for the calendar year before the calendar year in which the credit under this section is earned. The department may provide for an alternative method for calculating the numerator in cases where the tax rate provided in RCW 82.04.260(((10))) (11) for manufacturing was not in effect during the full calendar year before the calendar year in which the credit under this section is earned.
     (D) No credit is available under (b)(i)(A) or (B) of this subsection (2) if either the numerator or the denominator of the fraction is zero. If the fraction is greater than or equal to nine-tenths, then the fraction is rounded to one.
     (E) As used in (b)(ii)(C) of this subsection (2), "returns" means the tax returns for which the tax imposed under this chapter is reported to the department.
     (3) The definitions in this subsection apply throughout this section, unless the context clearly indicates otherwise.
     (a) "Aerospace product development" has the same meaning as provided in RCW 82.04.4461.
     (b) "Aerospace services" has the same meaning given in RCW 82.08.975.
     (c) "Commercial airplane" and "component" have the same meanings as provided in RCW 82.32.550.
     (4) A credit earned during one calendar year may be carried over to be credited against taxes incurred in a subsequent calendar year, but may not be carried over a second year. No refunds may be granted for credits under this section.
     (5) In addition to all other requirements under this title, a person claiming the credit under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (6) This section expires July 1, 2024.

Sec. 23   RCW 82.04.448 and 2010 c 114 s 117 are each amended to read as follows:
     (1) Subject to the limits and provisions of this section, a credit is authorized against the tax otherwise due under RCW 82.04.240(2) for persons engaged in the business of manufacturing semiconductor materials. For the purposes of this section "semiconductor materials" has the same meaning as provided in RCW 82.04.240(2).
     (2)(a) The credit under this section equals three thousand dollars for each employment position used in manufacturing production that takes place in a new building exempt from sales and use tax under RCW 82.08.965 and 82.12.965. A credit is earned for the calendar year a person fills a position. Additionally a credit is earned for each year the position is maintained over the subsequent consecutive years, up to eight years. Those positions that are not filled for the entire year are eligible for fifty percent of the credit if filled less than six months, and the entire credit if filled more than six months.
     (b) To qualify for the credit, the manufacturing activity of the person must be conducted at a new building that qualifies for the exemption from sales and use tax under RCW 82.08.965 and 82.12.965.
     (c) In those situations where a production building in existence on the effective date of this section will be phased out of operation, during which time employment at the new building at the same site is increased, the person is eligible for credit for employment at the existing building and new building, with the limitation that the combined eligible employment not exceed full employment at the new building. "Full employment" has the same meaning as in RCW 82.08.965. The credit may not be earned until the commencement of commercial production, as that term is used in RCW 82.08.965.
     (3) No application is necessary for the tax credit. The person is subject to all of the requirements of chapter 82.32 RCW. In no case may a credit earned during one calendar year be carried over to be credited against taxes incurred in a subsequent calendar year. No refunds may be granted for credits under this section.
     (4) If at any time the department finds that a person is not eligible for tax credit under this section, the amount of taxes for which a credit has been claimed is immediately due. The department must assess interest, but not penalties, on the taxes for which the person is not eligible. The interest must be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, is retroactive to the date the tax credit was taken, and accrues until the taxes for which a credit has been used are repaid.
     (5) A person claiming the credit under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (6) Credits may be claimed after twelve years after the effective date of this ((act)) section, for those buildings at which commercial production began before twelve years after the effective date of this ((act)) section, subject to all of the eligibility criteria and limitations of this section.
     (7) This section expires twelve years after the effective date of this ((act)) section.

Sec. 24   RCW 82.04.4481 and 2011 c 174 s 302 are each amended to read as follows:
     (1) In computing the tax imposed under this chapter, a credit is allowed for all property taxes paid during the calendar year on property owned by a direct service industrial customer and reasonably necessary for the purposes of an aluminum smelter.
     (2) A person claiming the credit under this section is subject to all the requirements of chapter 82.32 RCW. A credit earned during one calendar year may be carried over to be credited against taxes incurred in the subsequent calendar year, but may not be carried over a second year. Credits carried over must be applied to tax liability before new credits. No refunds may be granted for credits under this section.
     (3) Credits may not be claimed under this section for property taxes levied for collection in 2017 and thereafter.
     (4) A person claiming the credit provided in this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.

Sec. 25   RCW 82.08.805 and 2011 c 174 s 303 are each amended to read as follows:
     (1) A person who has paid tax under RCW 82.08.020 for personal property used at an aluminum smelter, tangible personal property that will be incorporated as an ingredient or component of buildings or other structures at an aluminum smelter, or for labor and services rendered with respect to such buildings, structures, or personal property, is eligible for an exemption from the state share of the tax in the form of a credit, as provided in this section. A person claiming an exemption must pay the tax and may then take a credit equal to the state share of retail sales tax paid under RCW 82.08.020. The person must submit information, in a form and manner prescribed by the department, specifying the amount of qualifying purchases or acquisitions for which the exemption is claimed and the amount of exempted tax.
     (2) For the purposes of this section, "aluminum smelter" has the same meaning as provided in RCW 82.04.217.
     (3) A person claiming the tax preference provided in this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (4) Credits may not be claimed under this section for taxable events occurring on or after January 1, 2017.

Sec. 26   RCW 82.08.965 and 2010 c 114 s 123 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to charges made for labor and services rendered in respect to the constructing of new buildings used for the manufacturing of semiconductor materials, to sales of tangible personal property that will be incorporated as an ingredient or component of such buildings during the course of the constructing, or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b). The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller must retain a copy of the certificate for the seller's files.
     (2) To be eligible under this section the manufacturer or processor for hire must meet the following requirements for an eight-year period, such period beginning the day the new building commences commercial production, or a portion of tax otherwise due will be immediately due and payable pursuant to subsection (3) of this section:
     (a) The manufacturer or processor for hire must maintain at least seventy-five percent of full employment at the new building for which the exemption under this section is claimed.
     (b) Before commencing commercial production at a new facility the manufacturer or processor for hire must meet with the department to review projected employment levels in the new buildings. The department, using information provided by the taxpayer, must make a determination of the number of positions that would be filled at full employment. This number must be used throughout the eight-year period to determine whether any tax is to be repaid. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (c) In those situations where a production building in existence on the effective date of this section will be phased out of operation during which time employment at the new building at the same site is increased, the manufacturer or processor for hire must maintain seventy-five percent of full employment at the manufacturing site overall.
     (d) No application is necessary for the tax exemption. The person is subject to all the requirements of chapter 82.32 RCW. A person claiming the exemption under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (3) If the employment requirement is not met for any one calendar year, one-eighth of the exempt sales and use taxes will be due and payable by April 1st of the following year. The department must assess interest to the date the tax was imposed, but not penalties, on the taxes for which the person is not eligible.
     (4) The exemption applies to new buildings, or parts of buildings, that are used exclusively in the manufacturing of semiconductor materials, including the storage of raw materials and finished product.
     (5) For the purposes of this section:
     (a) "Commencement of commercial production" is deemed to have occurred when the equipment and process qualifications in the new building are completed and production for sale has begun; and
     (b) "Full employment" is the number of positions required for full capacity production at the new building, for positions such as line workers, engineers, and technicians.
     (c) "Semiconductor materials" has the same meaning as provided in RCW 82.04.240(2).
     (6) No exemption may be taken after twelve years after the effective date of this ((act)) section, however all of the eligibility criteria and limitations are applicable to any exemptions claimed before that date.
     (7) This section expires twelve years after the effective date of this ((act)) section.

Sec. 27   RCW 82.08.9651 and 2010 c 114 s 124 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to sales of gases and chemicals used by a manufacturer or processor for hire in the production of semiconductor materials. This exemption is limited to gases and chemicals used in the production process to grow the product, deposit or grow permanent or sacrificial layers on the product, to etch or remove material from the product, to anneal the product, to immerse the product, to clean the product, and other such uses whereby the gases and chemicals come into direct contact with the product during the production process, or uses of gases and chemicals to clean the chambers and other like equipment in which such processing takes place. For the purposes of this section, "semiconductor materials" has the meaning provided in RCW 82.04.2404 and 82.04.294(3).
     (2) A person claiming the exemption under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585. No application is necessary for the tax exemption. The person is subject to all of the requirements of chapter 82.32 RCW.
     (3) This section expires December 1, 2018.

Sec. 28   RCW 82.08.970 and 2010 c 114 s 125 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to sales of gases and chemicals used by a manufacturer or processor for hire in the manufacturing of semiconductor materials. This exemption is limited to gases and chemicals used in the manufacturing process to grow the product, deposit or grow permanent or sacrificial layers on the product, to etch or remove material from the product, to anneal the product, to immerse the product, to clean the product, and other such uses whereby the gases and chemicals come into direct contact with the product during the manufacturing process, or uses of gases and chemicals to clean the chambers and other like equipment in which such processing takes place. For the purposes of this section, "semiconductor materials" has the same meaning as provided in RCW 82.04.240(2).
     (2) A person claiming the exemption under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585. No application is necessary for the tax exemption. The person is subject to all of the requirements of chapter 82.32 RCW.
     (3) This section expires twelve years after the effective date of this ((act)) section.

Sec. 29   RCW 82.08.980 and 2010 c 114 s 126 are each amended to read as follows:
     (1) The tax levied by RCW 82.08.020 does not apply to charges made for labor and services rendered in respect to the constructing of new buildings by a manufacturer engaged in the manufacturing of superefficient airplanes or by a port district, to be leased to a manufacturer engaged in the manufacturing of superefficient airplanes, to sales of tangible personal property that will be incorporated as an ingredient or component of such buildings during the course of the constructing, or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b). The exemption is available only when the buyer provides the seller with an exemption certificate in a form and manner prescribed by the department. The seller must retain a copy of the certificate for the seller's files.
     (2) No application is necessary for the tax exemption in this section, however in order to qualify under this section before starting construction the port district must have entered into an agreement with the manufacturer to build such a facility. A person claiming the exemption under this section is subject to all the requirements of chapter 82.32 RCW. In addition, the person must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (3) The exemption in this section applies to buildings, or parts of buildings, that are used exclusively in the manufacturing of superefficient airplanes, including buildings used for the storage of raw materials and finished product.
     (4) For the purposes of this section, "superefficient airplane" has the meaning given in RCW 82.32.550.
     (5) This section expires July 1, 2024.

Sec. 30   RCW 82.08.986 and 2010 1st sp.s. c 23 s 1601 are each amended to read as follows:
     (1) An exemption from the tax imposed by RCW 82.08.020 is provided for sales to qualifying businesses of eligible server equipment to be installed, without intervening use, in an eligible computer data center, and to charges made for labor and services rendered in respect to installing eligible server equipment. The exemption also applies to sales to qualifying businesses of eligible power infrastructure, including labor and services rendered in respect to constructing, installing, repairing, altering, or improving eligible power infrastructure.
     (2)(a) In order to claim the exemption under this section, a qualifying business must submit an application to the department for an exemption certificate. The application must include the information necessary, as required by the department, to determine that a business qualifies for the exemption under this section. The department must issue exemption certificates to qualifying businesses. The department may assign a unique identification number to each exemption certificate issued under this section.
     (b) A qualifying business claiming the exemption under this section must present the seller with an exemption certificate in a form and manner prescribed by the department. The seller must retain a copy of the certificate for the seller's files.
     (3)(a) Within six years of the date that the department issued an exemption certificate under this section to a qualifying business with respect to an eligible computer data center, the qualifying business must establish that net employment at the eligible computer data center has increased by a minimum of:
     (i) Thirty-five family wage employment positions; or
     (ii) Three family wage employment positions for each twenty thousand square feet of space or less that is newly dedicated to housing working servers at the eligible computer data center. For qualifying businesses that lease space at an eligible computer data center, the number of family wage employment positions that must be increased under this subsection (3)(a)(ii) is based only on the space occupied by the lessee in the eligible computer data center.
     (b) In calculating the net increase in family wage employment positions:
     (i) The owner of an eligible computer data center, in addition to its own net increase in family wage employment positions, may include:
     (A) The net increase in family wage employment positions employed by qualifying businesses leasing space within the eligible computer data center from the owner; and
     (B) The net increase in family wage employment positions described in (c)(ii)(B) of this subsection (3).
     (ii)(A) Lessees of the owner of an eligible computer data center, in addition to their own net increase in family wage employment positions, may include:
     (I) A portion of the net increase in family wage employment positions employed by the owner; and
     (II) A portion of the net increase in family wage employment positions described in (c)(ii)(B) of this subsection (3).
     (B) The portion of the net increase in family wage employment positions to be counted under this subsection (3)(b)(ii) by each lessee must be in proportion to the amount of space in the eligible computer data center occupied by the lessee compared to the total amount of space in the eligible computer data center occupied by all lessees that are qualifying businesses.
     (c)(i) For purposes of this subsection, family wage employment positions are new permanent employment positions requiring forty hours of weekly work, or their equivalent, on a full-time basis at the eligible computer data center and receiving a wage equivalent to or greater than one hundred fifty percent of the per capita personal income of the county in which the qualified project is located. An employment position may not be counted as a family wage employment position unless the employment position is entitled to health insurance coverage provided by the employer of the employment position. For purposes of this subsection (3)(c), "new permanent employment position" means an employment position that did not exist or that had not previously been filled as of the date that the department issued an exemption certificate to the owner or lessee of an eligible computer data center, as the case may be.
     (ii)(A) Family wage employment positions include positions filled by employees of the owner of the eligible computer data center and by employees of qualifying businesses leasing space from the owner of the eligible computer data center.
     (B) Family wage employment positions also include individuals performing work at an eligible computer data center as an independent contractor hired by the owner of the eligible computer data center or as an employee of an independent contractor hired by the owner of the eligible computer data center, if the work is necessary for the operation of the computer data center, such as security and building maintenance, and provided that all of the requirements in (c)(i) of this subsection (3) are met.
     (d) All previously exempted sales and use taxes are immediately due and payable for a qualifying business that does not meet the requirements of this subsection.
     (4) A qualifying business claiming an exemption under this section or RCW 82.12.986 must complete an annual ((report)) survey with the department as required under RCW ((82.32.534)) 82.32.585.
     (5)(a) The exemption provided in this section does not apply to:
     (i) Any person who has received the benefit of the deferral program under chapter 82.60 RCW on: (A) The construction, renovation, or expansion of a structure or structures used as a computer data center; or (B) machinery or equipment used in a computer data center; and
     (ii) Any person affiliated with a person within the scope of (a)(i) of this subsection (5). For purposes of this subsection, "affiliated" means that one person has a direct or indirect ownership interest of at least twenty percent in another person.
     (b) If a person claims an exemption under this section and subsequently receives the benefit of the deferral program under chapter 82.60 RCW on either the construction, renovation, or expansion of a structure or structures used as a computer data center or machinery or equipment used in a computer data center, the person must repay the amount of taxes exempted under this section. Interest as provided in chapter 82.32 RCW applies to amounts due under this section until paid in full.
     (6) For purposes of this section the following definitions apply unless the context clearly requires otherwise:
     (a)(i) "Computer data center" means a facility comprised of one or more buildings, which may be comprised of multiple businesses, constructed or refurbished specifically, and used primarily, to house working servers, where the facility has the following characteristics: (A) Uninterruptible power supplies, generator backup power, or both; (B) sophisticated fire suppression and prevention systems; and (C) enhanced physical security, such as: Restricted access to the facility to selected personnel; permanent security guards; video camera surveillance; an electronic system requiring passcodes, keycards, or biometric scans, such as hand scans and retinal or fingerprint recognition; or similar security features.
     (ii) For a computer data center comprised of multiple buildings, each separate building constructed or refurbished specifically, and used primarily, to house working servers is considered a computer data center if it has all of the characteristics listed in (a)(i)(A) through (C) of this subsection (6).
     (iii) A facility comprised of one building or more than one building must have a combined square footage of at least one hundred thousand square feet.
     (b) "Electronic data storage and data management services" include, but are not limited to: Providing data storage and backup services, providing computer processing power, hosting enterprise software applications, and hosting web sites. The term also includes providing services such as e-mail, web browsing and searching, media applications, and other online services, regardless of whether a charge is made for such services.
     (c)(i) "Eligible computer data center" means a computer data center:
     (A) Located in a rural county as defined in RCW 82.14.370;
     (B) Having at least twenty thousand square feet dedicated to housing working servers, where the server space has not previously been dedicated to housing working servers; and
     (C) For which the commencement of construction occurs after March 31, 2010, and before July 1, 2011. For purposes of this section, "commencement of construction" means the date that a building permit is issued under the building code adopted under RCW 19.27.031 for construction of the computer data center. The construction of a computer data center includes the expansion, renovation, or other improvements made to existing facilities, including leased or rented space. "Commencement of construction" does not include soil testing, site clearing and grading, site preparation, or any other related activities that are initiated before the issuance of a building permit for the construction of the foundation of a computer data center.
     (ii) With respect to facilities in existence on April 1, 2010, that are expanded, renovated, or otherwise improved after March 31, 2010, an eligible computer data center includes only the portion of the computer data center meeting the requirements in (c)(i)(B) of this subsection (6).
     (d) "Eligible power infrastructure" means all fixtures and equipment necessary for the transformation, distribution, or management of electricity that is required to operate eligible server equipment within an eligible computer data center. The term includes electrical substations, generators, wiring, and cogeneration equipment.
     (e) "Eligible server equipment" means the original server equipment installed in an eligible computer data center on or after April 1, 2010, and replacement server equipment. For purposes of this subsection (6)(e), "replacement server equipment" means server equipment that: (i) Replaces existing server equipment, if the sale or use of the server equipment to be replaced qualified for an exemption under this section or RCW 82.12.986; and (ii) is installed and put into regular use before April 1, 2018.
     (f) "Qualifying business" means a business entity that exists for the primary purpose of engaging in commercial activity for profit and that is the owner of an eligible computer data center or the lessee of at least twenty thousand square feet within an eligible computer data center dedicated to housing working servers, where the server space has not previously been dedicated to housing working servers. The term does not include the state or federal government or any of their departments, agencies, and institutions; tribal governments; political subdivisions of this state; or any municipal, quasi-municipal, public, or other corporation created by the state or federal government, tribal government, municipality, or political subdivision of the state.
     (g) "Server" means blade or rack-mount server computers used in a computer data center exclusively to provide electronic data storage and data management services for internal use by the owner or lessee of the computer data center, for clients of the owner or lessee of the computer data center, or both. "Server" does not include personal computers.
     (h) "Server equipment" means the server chassis and all computer hardware contained within the server chassis. "Server equipment" also includes computer software necessary to operate the server. "Server equipment" does not include the racks upon which the server chassis is installed, and computer peripherals such as keyboards, monitors, printers, mice, and other devices that work outside of the computer.
     (7) This section expires April 1, 2018.

Sec. 31   RCW 82.12.022 and 2011 c 174 s 304 are each amended to read as follows:
     (1) A use tax is levied on every person in this state for the privilege of using natural gas or manufactured gas within this state as a consumer.
     (2) The tax must be levied and collected in an amount equal to the value of the article used by the taxpayer multiplied by the rate in effect for the public utility tax on gas distribution businesses under RCW 82.16.020. The "value of the article used" does not include any amounts that are paid for the hire or use of a gas distribution business as defined in RCW 82.16.010(2) in transporting the gas subject to tax under this subsection if those amounts are subject to tax under that chapter.
     (3) The tax levied in this section does not apply to the use of natural or manufactured gas delivered to the consumer by other means than through a pipeline.
     (4) The tax levied in this section does not apply to the use of natural or manufactured gas if the person who sold the gas to the consumer has paid a tax under RCW 82.16.020 with respect to the gas for which exemption is sought under this subsection.
     (5)(a) The tax levied in this section does not apply to the use of natural or manufactured gas by an aluminum smelter as that term is defined in RCW 82.04.217 before January 1, 2017.
     (b) A person claiming the exemption provided in this subsection (5) must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (6) There is a credit against the tax levied under this section in an amount equal to any tax paid by:
     (a) The person who sold the gas to the consumer when that tax is a gross receipts tax similar to that imposed pursuant to RCW 82.16.020 by another state with respect to the gas for which a credit is sought under this subsection; or
     (b) The person consuming the gas upon which a use tax similar to the tax imposed by this section was paid to another state with respect to the gas for which a credit is sought under this subsection.
     (7) The use tax imposed in this section must be paid by the consumer to the department.
     (8) There is imposed a reporting requirement on the person who delivered the gas to the consumer to make a quarterly report to the department. Such report must contain the volume of gas delivered, name of the consumer to whom delivered, and such other information as the department may require by rule.
     (9) The department may adopt rules under chapter 34.05 RCW for the administration and enforcement of sections 1 through 6, chapter 384, Laws of 1989.

Sec. 32   RCW 82.12.805 and 2011 c 174 s 305 are each amended to read as follows:
     (1) A person who is subject to tax under RCW 82.12.020 for personal property used at an aluminum smelter, or for tangible personal property that will be incorporated as an ingredient or component of buildings or other structures at an aluminum smelter, or for labor and services rendered with respect to such buildings, structures, or personal property, is eligible for an exemption from the state share of the tax in the form of a credit, as provided in this section. The amount of the credit equals the state share of use tax computed to be due under RCW 82.12.020. The person must submit information, in a form and manner prescribed by the department, specifying the amount of qualifying purchases or acquisitions for which the exemption is claimed and the amount of exempted tax.
     (2) For the purposes of this section, "aluminum smelter" has the same meaning as provided in RCW 82.04.217.
     (3) A person reporting under the tax rate provided in this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (4) Credits may not be claimed under this section for taxable events occurring on or after January 1, 2017.

Sec. 33   RCW 82.12.965 and 2010 c 114 s 129 are each amended to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use of tangible personal property that will be incorporated as an ingredient or component of new buildings used for the manufacturing of semiconductor materials during the course of constructing such buildings or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b).
     (2) The eligibility requirements, conditions, and definitions in RCW 82.08.965 apply to this section, including the filing of a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (3) No exemption may be taken twelve years after the effective date of this ((act)) section, however all of the eligibility criteria and limitations are applicable to any exemptions claimed before that date.
     (4) This section expires twelve years after the effective date of this ((act)) section.

Sec. 34   RCW 82.12.9651 and 2010 c 114 s 130 are each amended to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use of gases and chemicals used by a manufacturer or processor for hire in the production of semiconductor materials. This exemption is limited to gases and chemicals used in the production process to grow the product, deposit or grow permanent or sacrificial layers on the product, to etch or remove material from the product, to anneal the product, to immerse the product, to clean the product, and other such uses whereby the gases and chemicals come into direct contact with the product during the production process, or uses of gases and chemicals to clean the chambers and other like equipment in which such processing takes place. For purposes of this section, "semiconductor materials" has the meaning provided in RCW 82.04.2404 and 82.04.294(3).
     (2) A person claiming the exemption under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585. No application is necessary for the tax exemption. The person is subject to all of the requirements of chapter 82.32 RCW.
     (3) This section expires December 1, 2018.

Sec. 35   RCW 82.12.970 and 2010 c 114 s 131 are each amended to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use of gases and chemicals used by a manufacturer or processor for hire in the manufacturing of semiconductor materials. This exemption is limited to gases and chemicals used in the manufacturing process to grow the product, deposit or grow permanent or sacrificial layers on the product, to etch or remove material from the product, to anneal the product, to immerse the product, to clean the product, and other such uses whereby the gases and chemicals come into direct contact with the product during the manufacturing process, or uses of gases and chemicals to clean the chambers and other like equipment in which such processing takes place. For purposes of this section, "semiconductor materials" has the same meaning as provided in RCW 82.04.240(2).
     (2) A person claiming the exemption under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585. No application is necessary for the tax exemption. The person is subject to all of the requirements of chapter 82.32 RCW.
     (3) This section expires twelve years after the effective date of this ((act)) section.

Sec. 36   RCW 82.12.980 and 2010 c 114 s 132 are each amended to read as follows:
     (1) The provisions of this chapter do not apply with respect to the use of tangible personal property that will be incorporated as an ingredient or component of new buildings by a manufacturer engaged in the manufacturing of superefficient airplanes or owned by a port district and to be leased to a manufacturer engaged in the manufacturing of superefficient airplanes, during the course of constructing such buildings, or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b).
     (2) The eligibility requirements, conditions, and definitions in RCW 82.08.980 apply to this section, including the filing of a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (3) This section expires July 1, 2024.

Sec. 37   RCW 82.16.0421 and 2010 c 114 s 133 are each amended to read as follows:
     (1) For the purposes of this section:
     (a) "Chlor-alkali electrolytic processing business" means a person who is engaged in a business that uses more than ten average megawatts of electricity per month in a chlor-alkali electrolytic process to split the electrochemical bonds of sodium chloride and water to make chlorine and sodium hydroxide. A "chlor-alkali electrolytic processing business" does not include direct service industrial customers or their subsidiaries that contract for the purchase of power from the Bonneville power administration as of June 10, 2004.
     (b) "Sodium chlorate electrolytic processing business" means a person who is engaged in a business that uses more than ten average megawatts of electricity per month in a sodium chlorate electrolytic process to split the electrochemical bonds of sodium chloride and water to make sodium chlorate and hydrogen. A "sodium chlorate electrolytic processing business" does not include direct service industrial customers or their subsidiaries that contract for the purchase of power from the Bonneville power administration as of June 10, 2004.
     (2) Effective July 1, 2004, the tax levied under this chapter does not apply to sales of electricity made by a light and power business to a chlor-alkali electrolytic processing business or a sodium chlorate electrolytic processing business for the electrolytic process if the contract for sale of electricity to the business contains the following terms:
     (a) The electricity to be used in the electrolytic process is separately metered from the electricity used for general operations of the business;
     (b) The price charged for the electricity used in the electrolytic process will be reduced by an amount equal to the tax exemption available to the light and power business under this section; and
     (c) Disallowance of all or part of the exemption under this section is a breach of contract and the damages to be paid by the chlor-alkali electrolytic processing business or the sodium chlorate electrolytic processing business are the amount of the tax exemption disallowed.
     (3) The exemption provided for in this section does not apply to amounts received from the remarketing or resale of electricity originally obtained by contract for the electrolytic process.
     (4) In order to claim an exemption under this section, the chlor-alkali electrolytic processing business or the sodium chlorate electrolytic processing business must provide the light and power business with an exemption certificate in a form and manner prescribed by the department.
     (5) A person receiving the benefit of the exemption provided in this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (6)(a) This section does not apply to sales of electricity made after December 31, 2018.
     (b) This section expires June 30, 2019.

Sec. 38   RCW 82.29A.137 and 2010 c 114 s 134 are each amended to read as follows:
     (1) All leasehold interests in port district facilities exempt from tax under RCW 82.08.980 or 82.12.980 and used by a manufacturer engaged in the manufacturing of superefficient airplanes, as defined in RCW 82.32.550, are exempt from tax under this chapter. A person claiming the credit under RCW 82.04.4463 is not eligible for the exemption under this section.
     (2) In addition to all other requirements under this title, a person claiming the exemption under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (3) This section expires July 1, 2024.

Sec. 39   RCW 84.36.645 and 2010 c 114 s 150 are each amended to read as follows:
     (1) Machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 used in manufacturing semiconductor materials at a building exempt from sales and use tax and in compliance with the employment requirement under RCW 82.08.965 and 82.12.965 are exempt from property taxation. "Semiconductor materials" has the same meaning as provided in RCW 82.04.240(2).
     (2) A person seeking this exemption must make application to the county assessor, on forms prescribed by the department.
     (3) A person claiming an exemption under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (4) This section is effective for taxes levied for collection one year after the effective date of this ((act)) section and thereafter.
     (5) This section expires December 31st of the year occurring twelve years after the effective date of this ((act)) section, for taxes levied for collection in the following year.

Sec. 40   RCW 84.36.655 and 2010 c 114 s 151 are each amended to read as follows:
     (1) Effective January 1, 2005, all buildings, machinery, equipment, and other personal property of a lessee of a port district eligible under RCW 82.08.980 and 82.12.980, used exclusively in manufacturing superefficient airplanes, are exempt from property taxation. A person taking the credit under RCW 82.04.4463 is not eligible for the exemption under this section. For the purposes of this section, "superefficient airplane" and "component" have the meanings given in RCW 82.32.550.
     (2) In addition to all other requirements under this title, a person claiming the exemption under this section must file a complete annual ((report)) survey with the department under RCW ((82.32.534)) 82.32.585.
     (3) Claims for exemption authorized by this section must be filed with the county assessor on forms prescribed by the department and furnished by the assessor. The assessor must verify and approve claims as the assessor determines to be justified and in accordance with this section. No claims may be filed after December 31, 2023. The department may adopt rules, under the provisions of chapter 34.05 RCW, as necessary to properly administer this section.
     (4) This section applies to taxes levied for collection in 2006 and thereafter.
     (5) This section expires July 1, 2024.

Sec. 41   RCW 82.04.4277 and 2011 1st sp.s. c 19 s 1 are each amended to read as follows:
     (1) A health or social welfare organization may deduct from the measure of tax amounts received as compensation for providing mental health services under a government-funded program.
     (2) A regional support network may deduct from the measure of tax amounts received from the state of Washington for distribution to a health or social welfare organization that is eligible to deduct the distribution under subsection (1) of this section.
     (3) ((A person claiming a deduction under this section must file a complete annual report with the department under RCW 82.32.534.
     (4))) The definitions in this subsection apply to this section.
     (a) "Health or social welfare organization" has the meaning provided in RCW 82.04.431.
     (b) "Mental health services" and "regional support network" have the meanings provided in RCW 71.24.025.
     (((5))) (4) This section expires August 1, 2016.

NEW SECTION.  Sec. 42   RCW 82.32.534 (Annual report requirement for tax preferences) and 2010 c 114 s 103 are each repealed.

NEW SECTION.  Sec. 43   The repeal in section 42 of this act does not affect any existing right acquired or liability or obligation incurred under that section or under any rule or order adopted under those sections, nor does it affect any proceeding instituted under that section.

Sec. 44   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) Sections 13, 20, 23, 26, 28, 33, 35, and 39, chapter . . ., Laws of 2012 (sections 13, 20, 23, 26, 28, 33, 35, and 39 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) Sections 13, 20, 23, 26, 28, 33, 35, and 39, chapter . . ., Laws of 2012 (sections 13, 20, 23, 26, 28, 33, 35, and 39 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 chapter 149, Laws of 2003 take((s)) 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 13, 20, 23, 26, 28, 33, 35, and 39, chapter . . ., Laws of 2012 (sections 13, 20, 23, 26, 28, 33, 35, and 39 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 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 sections 13, 20, 23, 26, 28, 33, 35, and 39, chapter . . ., Laws of 2012 (sections 13, 20, 23, 26, 28, 33, 35, and 39 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 chapter 149, Laws of 2003 ((is)) are 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)) RCW 82.04.426, 82.04.448, 82.08.965, 82.08.970, 82.12.965, 82.12.970, or 84.36.645. The department is not authorized to make a second determination regarding the effective date of chapter 149, Laws of 2003.

Sec. 45   RCW 82.08.820 and 2011 c 174 s 206 are each amended to read as follows:
     (1) Wholesalers or third-party warehousers who own or operate warehouses or grain elevators and retailers who own or operate distribution centers, and who have paid the tax levied by RCW 82.08.020 on:
     (a) Material-handling and racking equipment, and labor and services rendered in respect to installing, repairing, cleaning, altering, or improving the equipment; or
     (b) Construction of a warehouse or grain elevator, including materials, and including service and labor costs,
are eligible for an exemption in the form of a remittance. The amount of the remittance is computed under subsection (((3))) (4) of this section and is based on the state share of sales tax.
     (2) A person claiming the exemption from state tax under this section or RCW 82.12.820 must file a complete annual survey with the department under RCW 82.32.585. Notwithstanding RCW 82.32.585(1)(b)(i), a survey due under this section in 2012 must be submitted by October 31st.
     (3) For purposes of this section and RCW 82.12.820:
     (a) "Agricultural products" has the meaning given in RCW 82.04.213;
     (b) "Construction" means the actual construction of a warehouse or grain elevator that did not exist before the construction began. "Construction" includes expansion if the expansion adds at least two hundred thousand square feet of additional space to an existing warehouse or additional storage capacity of at least one million bushels to an existing grain elevator. "Construction" does not include renovation, remodeling, or repair;
     (c) "Department" means the department of revenue;
     (d) "Distribution center" means a warehouse that is used exclusively by a retailer solely for the storage and distribution of finished goods to retail outlets of the retailer. "Distribution center" does not include a warehouse at which retail sales occur;
     (e) "Finished goods" means tangible personal property intended for sale by a retailer or wholesaler. "Finished goods" does not include agricultural products stored by wholesalers, third-party warehouses, or retailers if the storage takes place on the land of the person who produced the agricultural product. "Finished goods" does not include logs, minerals, petroleum, gas, or other extracted products stored as raw materials or in bulk;
     (f) "Grain elevator" means a structure used for storage and handling of grain in bulk;
     (g) "Material-handling equipment and racking equipment" means equipment in a warehouse or grain elevator that is primarily used to handle, store, organize, convey, package, or repackage finished goods. The term includes tangible personal property with a useful life of one year or more that becomes an ingredient or component of the equipment, including repair and replacement parts. The term does not include equipment in offices, lunchrooms, restrooms, and other like space, within a warehouse or grain elevator, or equipment used for nonwarehousing purposes. "Material-handling equipment" includes but is not limited to: Conveyers, carousels, lifts, positioners, pick-up-and-place units, cranes, hoists, mechanical arms, and robots; mechanized systems, including containers that are an integral part of the system, whose purpose is to lift or move tangible personal property; and automated handling, storage, and retrieval systems, including computers that control them, whose purpose is to lift or move tangible personal property; and forklifts and other off-the-road vehicles that are used to lift or move tangible personal property and that cannot be operated legally on roads and streets. "Racking equipment" includes, but is not limited to, conveying systems, chutes, shelves, racks, bins, drawers, pallets, and other containers and storage devices that form a necessary part of the storage system;
     (h) "Person" has the meaning given in RCW 82.04.030;
     (i) "Retailer" means a person who makes "sales at retail" as defined in chapter 82.04 RCW of tangible personal property;
     (j) "Square footage" means the product of the two horizontal dimensions of each floor of a specific warehouse. The entire footprint of the warehouse ((shall)) must be measured in calculating the square footage, including space that juts out from the building profile such as loading docks. "Square footage" does not mean the aggregate of the square footage of more than one warehouse at a location or the aggregate of the square footage of warehouses at more than one location;
     (k) "Third-party warehouser" means a person taxable under RCW 82.04.280(1)(d);
     (l) "Warehouse" means an enclosed building or structure in which finished goods are stored. A warehouse building or structure may have more than one storage room and more than one floor. Office space, lunchrooms, restrooms, and other space within the warehouse and necessary for the operation of the warehouse are considered part of the warehouse as are loading docks and other such space attached to the building and used for handling of finished goods. Landscaping and parking lots are not considered part of the warehouse. A storage yard is not a warehouse, nor is a building in which manufacturing takes place; and
     (m) "Wholesaler" means a person who makes "sales at wholesale" as defined in chapter 82.04 RCW of tangible personal property, but "wholesaler" does not include a person who makes sales exempt under RCW 82.04.330.
     (((3))) (4)(a) A person claiming an exemption from state tax in the form of a remittance under this section must pay the tax imposed by RCW 82.08.020. The buyer may then apply to the department for remittance of all or part of the tax paid under RCW 82.08.020. For grain elevators with bushel capacity of one million but less than two million, the remittance is equal to fifty percent of the amount of tax paid. For warehouses with square footage of two hundred thousand or more and for grain elevators with bushel capacity of two million or more, the remittance is equal to one hundred percent of the amount of tax paid for qualifying construction, materials, service, and labor, and fifty percent of the amount of tax paid for qualifying material-handling equipment and racking equipment, and labor and services rendered in respect to installing, repairing, cleaning, altering, or improving the equipment.
     (b) The department ((shall)) must determine eligibility under this section based on information provided by the buyer and through audit and other administrative records. The buyer ((shall)) must on a quarterly basis submit an information sheet, in a form and manner as required by the department by rule, specifying the amount of exempted tax claimed and the qualifying purchases or acquisitions for which the exemption is claimed. The buyer ((shall)) must retain, in adequate detail to enable the department to determine whether the equipment or construction meets the criteria under this section: Invoices; proof of tax paid; documents describing the material-handling equipment and racking equipment; location and size of warehouses and grain elevators; and construction invoices and documents.
     (c) The department ((shall)) must on a quarterly basis remit exempted amounts to qualifying persons who submitted applications during the previous quarter.
     (((4))) (5) Warehouses, grain elevators, and material-handling equipment and racking equipment for which an exemption, credit, or deferral has been or is being received under chapter 82.60, 82.62, or 82.63 RCW or RCW 82.08.02565 or 82.12.02565 are not eligible for any remittance under this section. Warehouses and grain elevators upon which construction was initiated before May 20, 1997, are not eligible for a remittance under this section.
     (((5))) (6) The lessor or owner of a warehouse or grain elevator is not eligible for a remittance under this section unless the underlying ownership of the warehouse or grain elevator and the material-handling equipment and racking equipment vests exclusively in the same person, or unless the lessor by written contract agrees to pass the economic benefit of the remittance to the lessee in the form of reduced rent payments.

Sec. 46   RCW 82.12.820 and 2006 c 354 s 13 are each amended to read as follows:
     (1) Wholesalers or third-party warehousers who own or operate warehouses or grain elevators, and retailers who own or operate distribution centers, and who have paid the tax levied under RCW 82.12.020 on:
     (a) Material-handling equipment and racking equipment and labor and services rendered in respect to installing, repairing, cleaning, altering, or improving the equipment; or
     (b) Materials incorporated in the construction of a warehouse or grain elevator, are eligible for an exemption on tax paid in the form of a remittance or credit against tax owed. The amount of the remittance or credit is computed under subsection (((2))) (3) of this section and is based on the state share of use tax.
     (2) A person claiming the exemption from state tax as provided under this section must file a complete annual survey with the department as required under RCW 82.08.820.
     (3)(a) A person claiming an exemption from state tax in the form of a remittance under this section must pay the tax imposed by RCW 82.12.020 to the department. The person may then apply to the department for remittance of all or part of the tax paid under RCW 82.12.020. For grain elevators with bushel capacity of one million but less than two million, the remittance is equal to fifty percent of the amount of tax paid. For warehouses with square footage of two hundred thousand or more and for grain elevators with bushel capacity of two million or more, the remittance is equal to one hundred percent of the amount of tax paid for qualifying construction materials, and fifty percent of the amount of tax paid for qualifying material-handling equipment and racking equipment.
     (b) The department ((shall)) must determine eligibility under this section based on information provided by the buyer and through audit and other administrative records. The buyer ((shall)) must on a quarterly basis submit an information sheet, in a form and manner as required by the department by rule, specifying the amount of exempted tax claimed and the qualifying purchases or acquisitions for which the exemption is claimed. The buyer ((shall)) must retain, in adequate detail to enable the department to determine whether the equipment or construction meets the criteria under this section: Invoices; proof of tax paid; documents describing the material-handling equipment and racking equipment; location and size of warehouses, if applicable; and construction invoices and documents.
     (c) The department ((shall)) must on a quarterly basis remit or credit exempted amounts to qualifying persons who submitted applications during the previous quarter.
     (((3))) (4) Warehouse, grain elevators, and material-handling equipment and racking equipment for which an exemption, credit, or deferral has been or is being received under chapter 82.60, 82.62, or 82.63 RCW or RCW 82.08.02565 or 82.12.02565 are not eligible for any remittance under this section. Materials incorporated in warehouses and grain elevators upon which construction was initiated prior to May 20, 1997, are not eligible for a remittance under this section.
     (((4))) (5) The lessor or owner of the warehouse or grain elevator is not eligible for a remittance or credit under this section unless the underlying ownership of the warehouse or grain elevator and material-handling equipment and racking equipment vests exclusively in the same person, or unless the lessor by written contract agrees to pass the economic benefit of the exemption to the lessee in the form of reduced rent payments.
     (((5))) (6) The definitions in RCW 82.08.820 apply to this section.

NEW SECTION.  Sec. 47   Sections 45 and 46 of this act apply to annual surveys due in 2012 and thereafter.

NEW SECTION.  Sec. 48   Sections 45 and 46 of this act take effect July 1, 2012.

NEW SECTION.  Sec. 49   Section 7 of this act takes effect January 1, 2013.