BILL REQ. #: H-2432.1
| State of Washington | 63rd Legislature | 2013 Regular Session |
Read first time 04/17/13. Referred to Committee on Finance.
AN ACT Relating to investing in the education legacy trust account for K-12 basic education and higher education by narrowing or eliminating tax preferences; amending RCW 82.04.260, 82.08.0293, 82.12.0293, 82.08.0273, 82.04.050, 82.04.4452, 82.63.030, 82.16.050, 82.04.610, 82.12.0263, 82.04.250, 82.04.261, 82.04.334, 82.04.4463, 82.04.460, 82.08.806, 82.45.195, 48.14.080, and 35.102.150; reenacting and amending RCW 82.04.260; adding new sections to chapter 82.08 RCW; adding new sections to chapter 82.12 RCW; adding a new section to chapter 82.16 RCW; adding a new section to chapter 82.32 RCW; repealing RCW 82.04.272; providing effective dates; providing expiration dates; and declaring an emergency.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 101 RCW 82.04.260 and 2012 2nd sp.s. c 6 s 602 and 2012 2nd
sp.s. c 6 s 204 are each reenacted and 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, 2015, 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, 2015, 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, 2015, 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.)) 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.
(6)
(((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.)) (6)(a) 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.
(8)
(b) 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.)) (7) 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.
(10)
(((11))) (8)(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))) (8)
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))) (8), "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))) (8) must file a complete annual report with the department
under RCW 82.32.534.
(e) This subsection (((11))) (8) does not apply on and after July
1, 2024.
(((12))) (9)(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))) (9)(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))) (9)(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))) (9) must file a complete annual survey with the department
under RCW 82.32.585.
(((13))) (10) 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))) (11)(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 0.365 percent through June 30, 2013,
and beginning July 1, 2013, multiplied by the rate of 0.35 percent.
(b) A person reporting under the tax rate provided in this
subsection (((14))) (11) must file a complete annual report with the
department under RCW 82.32.534.
Sec. 102 RCW 82.04.260 and 2012 2nd sp.s. c 6 s 204 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, 2015, 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, 2015, 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, 2015, 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.)) 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.
(6)
(((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.)) (6)(a) 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.
(8)
(b) 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.)) (7) 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.
(10)
(((11))) (8)(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))) (8)
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))) (8), "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))) (8) must file a complete annual report with the department
under RCW 82.32.534.
(e) This subsection (((11))) (8) does not apply on and after July
1, 2024.
(((12))) (9)(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))) (9)(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))) (9)(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))) (9) must file a complete annual survey with the department
under RCW 82.32.585.
(((13))) (10) 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))) (11)(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))) (11) must file a complete annual report with the
department under RCW 82.32.534.
Sec. 201 RCW 82.08.0293 and 2011 c 2 s 301 are each amended to
read as follows:
(1) The tax levied by RCW 82.08.020 does not apply to sales of food
and food ingredients. "Food and food ingredients" means substances,
whether in liquid, concentrated, solid, frozen, dried, or dehydrated
form, that are sold for ingestion or chewing by humans and are consumed
for their taste or nutritional value. "Food and food ingredients" does
not include:
(a) "Alcoholic beverages," which means beverages that are suitable
for human consumption and contain one-half of one percent or more of
alcohol by volume; and
(b) "Tobacco," which means cigarettes, cigars, chewing or pipe
tobacco, or any other item that contains tobacco.
(2) The exemption of "food and food ingredients" provided for in
subsection (1) of this section does not apply to prepared food, soft
drinks, bottled water, or dietary supplements. ((For purposes of this
subsection, the following definitions apply:)) The definitions in this
subsection apply throughout this section unless the context clearly
requires otherwise.
(a) "Bottled water" means water that is placed in a sealed
container or package for human consumption. Bottled water is calorie
free and does not contain sweeteners or other additives except that it
may contain: (i) Antimicrobial agents; (ii) fluoride; (iii)
carbonation; (iv) vitamins, minerals, and electrolytes; (v) oxygen;
(vi) preservatives; and (vii) only those flavors, extracts, or essences
derived from a spice or fruit. "Bottled water" includes water that is
delivered to the buyer in a reusable container that is not sold with
the water.
(b) "Dietary supplement" means any product, other than tobacco,
intended to supplement the diet that:
(i) Contains one or more of the following dietary ingredients:
(A) A vitamin;
(B) A mineral;
(C) An herb or other botanical;
(D) An amino acid;
(E) A dietary substance for use by humans to supplement the diet by
increasing the total dietary intake; or
(F) A concentrate, metabolite, constituent, extract, or combination
of any ingredient described in this subsection;
(ii) Is intended for ingestion in tablet, capsule, powder, softgel,
gelcap, or liquid form, or if not intended for ingestion in such form,
is not represented as conventional food and is not represented for use
as a sole item of a meal or of the diet; and
(iii) Is required to be labeled as a dietary supplement,
identifiable by the "supplement facts" box found on the label as
required pursuant to 21 C.F.R. Sec. 101.36, as amended or renumbered as
of January 1, 2003.
(((b))) (c)(i) "Prepared food" means:
(A) Food sold in a heated state or heated by the seller;
(B) Food sold with eating utensils provided by the seller,
including plates, knives, forks, spoons, glasses, cups, napkins, or
straws. A plate does not include a container or packaging used to
transport the food; or
(C) Two or more food ingredients mixed or combined by the seller
for sale as a single item, except:
(I) Food that is only cut, repackaged, or pasteurized by the
seller; or
(II) Raw eggs, fish, meat, poultry, and foods containing these raw
animal foods requiring cooking by the consumer as recommended by the
federal food and drug administration in chapter 3, part 401.11 of The
Food Code, published by the food and drug administration, as amended or
renumbered as of January 1, 2003, so as to prevent foodborne illness.
(ii) "Prepared food" does not include the following food or food
ingredients, if the food or food ingredients are sold without eating
utensils provided by the seller:
(A) Food sold by a seller whose proper primary North American
industry classification system (NAICS) classification is manufacturing
in sector 311, except subsector 3118 (bakeries), as provided in the
"North American industry classification system -- United States, 2002";
(B) Food sold in an unheated state by weight or volume as a single
item; or
(C) Bakery items. The term "bakery items" includes bread, rolls,
buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes,
tortes, pies, tarts, muffins, bars, cookies, or tortillas.
(((c))) (d) "Soft drinks" means nonalcoholic beverages that contain
natural or artificial sweeteners. Soft drinks do not include beverages
that contain: Milk or milk products; soy, rice, or similar milk
substitutes; or greater than fifty percent of vegetable or fruit juice
by volume.
(3) Notwithstanding anything in this section to the contrary, the
exemption of "food and food ingredients" provided in this section
applies to food and food ingredients that are furnished, prepared, or
served as meals:
(a) Under a state administered nutrition program for the aged as
provided for in the older Americans act (P.L. 95-478 Title III) and RCW
74.38.040(6);
(b) That are provided to senior citizens, individuals with
disabilities, or low-income persons by a not-for-profit organization
organized under chapter 24.03 or 24.12 RCW; or
(c) That are provided to residents, sixty-two years of age or
older, of a qualified low-income senior housing facility by the lessor
or operator of the facility. The sale of a meal that is billed to both
spouses of a marital community or both domestic partners of a domestic
partnership meets the age requirement in this subsection (3)(c) if at
least one of the spouses or domestic partners is at least sixty-two
years of age. For purposes of this subsection, "qualified low-income
senior housing facility" means a facility:
(i) That meets the definition of a qualified low-income housing
project under 26 U.S.C. Sec. 42 of the federal internal revenue code,
as existing on August 1, 2009;
(ii) That has been partially funded under 42 U.S.C. Sec. 1485; and
(iii) For which the lessor or operator has at any time been
entitled to claim a federal income tax credit under 26 U.S.C. Sec. 42
of the federal internal revenue code.
(4)(a) Subsection (1) of this section notwithstanding, the retail
sale of food and food ingredients is subject to sales tax under RCW
82.08.020 if the food and food ingredients are sold through a vending
machine. Except as provided in (b) of this subsection, the selling
price of food and food ingredients sold through a vending machine for
purposes of RCW 82.08.020 is fifty-seven percent of the gross receipts.
(b) For soft drinks and hot prepared food and food ingredients,
other than food and food ingredients which are heated after they have
been dispensed from the vending machine, the selling price is the total
gross receipts of such sales divided by the sum of one plus the sales
tax rate expressed as a decimal.
(c) For tax collected under this subsection (4), the requirements
that the tax be collected from the buyer and that the amount of tax be
stated as a separate item are waived.
Sec. 202 RCW 82.12.0293 and 2011 c 2 s 303 are each amended to
read as follows:
(1) The provisions of this chapter do not apply in respect to the
use of food and food ingredients for human consumption. "Food and food
ingredients" has the same meaning as in RCW 82.08.0293.
(2) The exemption of "food and food ingredients" provided for in
subsection (1) of this section does not apply to prepared food, soft
drinks, bottled water, or dietary supplements. "Prepared food," "soft
drinks," "bottled water," and "dietary supplements" have the same
meanings as in RCW 82.08.0293.
(3) Notwithstanding anything in this section to the contrary, the
exemption of "food and food ingredients" provided in this section
applies to food and food ingredients which are furnished, prepared, or
served as meals:
(a) Under a state administered nutrition program for the aged as
provided for in the older Americans act (P.L. 95-478 Title III) and RCW
74.38.040(6);
(b) Which are provided to senior citizens, individuals with
disabilities, or low-income persons by a not-for-profit organization
organized under chapter 24.03 or 24.12 RCW; or
(c) That are provided to residents, sixty-two years of age or
older, of a qualified low-income senior housing facility by the lessor
or operator of the facility. The sale of a meal that is billed to both
spouses of a marital community or both domestic partners of a domestic
partnership meets the age requirement in this subsection (3)(c) if at
least one of the spouses or domestic partners is at least sixty-two
years of age. For purposes of this subsection, "qualified low-income
senior housing facility" has the same meaning as in RCW 82.08.0293.
NEW SECTION. Sec. 203 A new section is added to chapter 82.08
RCW to read as follows:
(1) Subject to the conditions in this section, the tax levied by
RCW 82.08.020 does not apply to sales of bottled water for human use
dispensed or to be dispensed to patients, pursuant to a prescription
for use in the cure, mitigation, treatment, or prevention of disease or
other medical condition.
(2) For purposes of this section, "prescription" means an order,
formula, or recipe issued in any form of oral, written, electronic, or
other means of transmission by a duly licensed practitioner authorized
by the laws of this state to prescribe.
(3) Except for sales of bottled water delivered to the buyer in a
reusable container that is not sold with the water, sellers must
collect tax on sales subject to this exemption. Any buyer that has
paid at least twenty-five dollars in state and local sales taxes on
purchases of bottled water subject to this exemption may apply for a
refund of the taxes directly from the department in a form and manner
prescribed by the department. The department must deny any refund
application if the amount of the refund requested is less than twenty-five dollars. No refund may be made for taxes paid more than four
years after the end of the calendar year in which the tax was paid to
the seller.
(4) The provisions of RCW 82.32.060 apply to refunds authorized
under this section.
(5) With respect to sales of bottled water delivered to the buyer
in a reusable container that is not sold with the water, buyers
claiming the exemption provided in this section must provide 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.
NEW SECTION. Sec. 204 A new section is added to chapter 82.12
RCW to read as follows:
(1) The provisions of this chapter do not apply in respect to the
use of bottled water for human use dispensed or to be dispensed to
patients, pursuant to a prescription for use in the cure, mitigation,
treatment, or prevention of disease or medical condition.
(2) For the purposes of this section, "prescription" has the same
meaning as provided in section 203 of this act.
NEW SECTION. Sec. 205 A new section is added to chapter 82.08
RCW to read as follows:
(1)(a) Subject to the conditions in this section, the tax levied by
RCW 82.08.020 does not apply to sales of bottled water to persons whose
primary source of drinking water is unsafe.
(b) For purposes of this subsection and section 206 of this act, a
person's primary source of drinking water is unsafe if:
(i) The public water system providing the drinking water has issued
a public notification that the drinking water may pose a health risk,
and the notification is still in effect on the date that the bottled
water was purchased;
(ii) Test results on the person's drinking water, which are no more
than twelve months old, from a laboratory certified to perform drinking
water testing show that the person's drinking water does not meet safe
drinking water standards applicable to public water systems; or
(iii) The person otherwise establishes, to the department's
satisfaction, that the person's drinking water does not meet safe
drinking water standards applicable to public water systems.
(2) Except for sales of bottled water delivered to the buyer in a
reusable container that is not sold with the water, sellers must
collect tax on sales subject to this exemption. Any buyer that has
paid at least twenty-five dollars in state and local sales taxes on
purchases of bottled water subject to this exemption may apply for a
refund of the taxes directly from the department in a form and manner
prescribed by the department. The department must deny any refund
application if the amount of the refund requested is less than
twenty-five dollars. No refund may be made for taxes paid more than
four years after the end of the calendar year in which the tax was paid
to the seller.
(3) The provisions of RCW 82.32.060 apply to refunds authorized
under this section.
(4)(a) With respect to sales of bottled water delivered to the
buyer in a reusable container that is not sold with the water, buyers
claiming the exemption provided in this section must provide 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.
(b) The department may waive the requirement for an exemption
certificate in the event of disaster or similar circumstance.
NEW SECTION. Sec. 206 A new section is added to chapter 82.12
RCW to read as follows:
The provisions of this chapter do not apply in respect to the use
of bottled water by persons whose primary source of drinking water is
unsafe as provided in section 205 of this act.
Sec. 301 RCW 82.08.0273 and 2011 c 7 s 1 are each amended to read
as follows:
(1) Until July 1, 2013, the tax levied by RCW 82.08.020 does not
apply to sales to nonresidents of this state of tangible personal
property, digital goods, and digital codes, when:
(a) The property is for use outside this state;
(b) The purchaser is a bona fide resident of a province or
territory of Canada or a state, territory, or possession of the United
States, other than the state of Washington; and
(i) Such state, possession, territory, or province does not impose,
or have imposed on its behalf, a generally applicable retail sales tax,
use tax, value added tax, gross receipts tax on retailing activities,
or similar generally applicable tax, of three percent or more; or
(ii) If imposing a tax described in (b)(i) of this subsection,
provides an exemption for sales to Washington residents by reason of
their residence; and
(c) The purchaser agrees, when requested, to grant the department
of revenue access to such records and other forms of verification at
his or her place of residence to assure that such purchases are not
first used substantially in the state of Washington.
(2) Notwithstanding anything to the contrary in this chapter, if
parts or other tangible personal property are installed by the seller
during the course of repairing, cleaning, altering, or improving motor
vehicles, trailers, or campers and the seller makes a separate charge
for the tangible personal property, the tax levied by RCW 82.08.020
does not apply to the separately stated charge to a nonresident
purchaser for the tangible personal property but only if the separately
stated charge does not exceed either the seller's current publicly
stated retail price for the tangible personal property or, if no
publicly stated retail price is available, the seller's cost for the
tangible personal property. However, the exemption provided by this
section does not apply if tangible personal property is installed by
the seller during the course of repairing, cleaning, altering, or
improving motor vehicles, trailers, or campers and the seller makes a
single nonitemized charge for providing the tangible personal property
and service. All of the requirements in subsections (1) and (3)
through (6) of this section apply to this subsection.
(3)(a) Any person claiming exemption from retail sales tax under
the provisions of this section must display proof of his or her current
nonresident status as provided in this section.
(b) Acceptable proof of a nonresident person's status includes one
piece of identification such as a valid driver's license from the
jurisdiction in which the out-of-state residency is claimed or a valid
identification card which has a photograph of the holder and is issued
by the out-of-state jurisdiction. Identification under this subsection
(3)(b) must show the holder's residential address and have as one of
its legal purposes the establishment of residency in that out-of-state
jurisdiction.
(c) In lieu of furnishing proof of a person's nonresident status
under (b) of this subsection (3), a person claiming exemption from
retail sales tax under the provisions of this section may provide the
seller with an exemption certificate in compliance with subsection
(4)(b) of this section.
(4)(a) Nothing in this section requires the vendor to make tax
exempt retail sales to nonresidents. A vendor may choose to make sales
to nonresidents, collect the sales tax, and remit the amount of sales
tax collected to the state as otherwise provided by law. If the vendor
chooses to make a sale to a nonresident without collecting the sales
tax, the vendor must examine the purchaser's proof of nonresidence,
determine whether the proof is acceptable under subsection (3)(b) of
this section, and maintain records for each nontaxable sale which shall
show the type of proof accepted, including any identification numbers
where appropriate, and the expiration date, if any.
(b) In lieu of using the method provided in (a) of this subsection
to document an exempt sale to a nonresident, a seller may accept from
the purchaser a properly completed uniform exemption certificate
approved by the streamlined sales and use tax agreement governing board
or any other exemption certificate as may be authorized by the
department and properly completed by the purchaser. A nonresident
purchaser who uses an exemption certificate authorized in this
subsection (4)(b) must include the purchaser's driver's license number
or other state-issued identification number and the state of issuance.
(c) In lieu of using the methods provided in (a) and (b) of this
subsection to document an exempt sale to a nonresident, a seller may
capture the relevant data elements as allowed under the streamlined
sales and use tax agreement.
(5)(a) Any person making fraudulent statements, which includes the
offer of fraudulent identification or fraudulently procured
identification to a vendor, in order to purchase goods without paying
retail sales tax is guilty of perjury under chapter 9A.72 RCW.
(b) Any person making tax exempt purchases under this section by
displaying proof of identification not his or her own, or counterfeit
identification, with intent to violate the provisions of this section,
is guilty of a misdemeanor and, in addition, is liable for the tax and
subject to a penalty equal to the greater of one hundred dollars or the
tax due on such purchases.
(6)(a) Any vendor who makes sales without collecting the tax and
who fails to maintain records of sales to nonresidents as provided in
this section is personally liable for the amount of tax due.
(b) Any vendor who makes sales without collecting the retail sales
tax under this section and who has actual knowledge that the
purchaser's proof of identification establishing out-of-state residency
is fraudulent is guilty of a misdemeanor and, in addition, is liable
for the tax and subject to a penalty equal to the greater of one
thousand dollars or the tax due on such sales. In addition, both the
purchaser and the vendor are liable for any penalties and interest
assessable under chapter 82.32 RCW.
Sec. 401 RCW 82.04.050 and 2011 c 174 s 202 are each amended to
read as follows:
(1)(a) "Sale at retail" or "retail sale" means every sale of
tangible personal property (including articles produced, fabricated, or
imprinted) to all persons irrespective of the nature of their business
and including, among others, without limiting the scope hereof, persons
who install, repair, clean, alter, improve, construct, or decorate real
or personal property of or for consumers other than a sale to a person
who:
(i) Purchases for the purpose of resale as tangible personal
property in the regular course of business without intervening use by
such person, but a purchase for the purpose of resale by a regional
transit authority under RCW 81.112.300 is not a sale for resale; or
(ii) Installs, repairs, cleans, alters, imprints, improves,
constructs, or decorates real or personal property of or for consumers,
if such tangible personal property becomes an ingredient or component
of such real or personal property without intervening use by such
person; or
(iii) Purchases for the purpose of consuming the property purchased
in producing for sale as a new article of tangible personal property or
substance, of which such property becomes an ingredient or component or
is a chemical used in processing, when the primary purpose of such
chemical is to create a chemical reaction directly through contact with
an ingredient of a new article being produced for sale; or
(iv) Purchases for the purpose of consuming the property purchased
in producing ferrosilicon which is subsequently used in producing
magnesium for sale, if the primary purpose of such property is to
create a chemical reaction directly through contact with an ingredient
of ferrosilicon; or
(v) Purchases for the purpose of providing the property to
consumers as part of competitive telephone service, as defined in RCW
82.04.065; or
(vi) Purchases for the purpose of satisfying the person's
obligations under an extended warranty as defined in subsection (7) of
this section, if such tangible personal property replaces or becomes an
ingredient or component of property covered by the extended warranty
without intervening use by such person.
(b) The term includes every sale of tangible personal property that
is used or consumed or to be used or consumed in the performance of any
activity defined as a "sale at retail" or "retail sale" even though
such property is resold or used as provided in (a)(i) through (vi) of
this subsection following such use.
(c) The term also means every sale of tangible personal property to
persons engaged in any business that is taxable under RCW 82.04.280(1)
(a), (b), and (g), 82.04.290, and 82.04.2908.
(2) The term "sale at retail" or "retail sale" includes the sale of
or charge made for tangible personal property consumed and/or for labor
and services rendered in respect to the following:
(a) The installing, repairing, cleaning, altering, imprinting, or
improving of tangible personal property of or for consumers, including
charges made for the mere use of facilities in respect thereto, but
excluding charges made for the use of self-service laundry facilities,
and also excluding sales of laundry service to nonprofit health care
facilities, and excluding services rendered in respect to live animals,
birds and insects;
(b) The constructing, repairing, decorating, or improving of new or
existing buildings or other structures under, upon, or above real
property of or for consumers, including the installing or attaching of
any article of tangible personal property therein or thereto, whether
or not such personal property becomes a part of the realty by virtue of
installation, and also includes the sale of services or charges made
for the clearing of land and the moving of earth excepting the mere
leveling of land used in commercial farming or agriculture;
(c) The constructing, repairing, or improving of any structure
upon, above, or under any real property owned by an owner who conveys
the property by title, possession, or any other means to the person
performing such construction, repair, or improvement for the purpose of
performing such construction, repair, or improvement and the property
is then reconveyed by title, possession, or any other means to the
original owner;
(d) The cleaning, fumigating, razing, or moving of existing
buildings or structures((, but does not include the charge made for
janitorial services; and for purposes of this section the term
"janitorial services" means those cleaning and caretaking services
ordinarily performed by commercial janitor service businesses
including, but not limited to, wall and window washing, floor cleaning
and waxing, and the cleaning in place of rugs, drapes and upholstery.
The term "janitorial services" does not include painting, papering,
repairing, furnace or septic tank cleaning, snow removal or
sandblasting));
(e) Automobile towing and similar automotive transportation
services, but not in respect to those required to report and pay taxes
under chapter 82.16 RCW;
(f) The furnishing of lodging and all other services by a hotel,
rooming house, tourist court, motel, trailer camp, and the granting of
any similar license to use real property, as distinguished from the
renting or leasing of real property, and it is presumed that the
occupancy of real property for a continuous period of one month or more
constitutes a rental or lease of real property and not a mere license
to use or enjoy the same. For the purposes of this subsection, it is
presumed that the sale of and charge made for the furnishing of lodging
for a continuous period of one month or more to a person is a rental or
lease of real property and not a mere license to enjoy the same;
(g) The installing, repairing, altering, or improving of digital
goods for consumers;
(h) Persons taxable under (a), (b), (c), (d), (e), (f), and (g) of
this subsection when such sales or charges are for property, labor and
services which are used or consumed in whole or in part by such persons
in the performance of any activity defined as a "sale at retail" or
"retail sale" even though such property, labor and services may be
resold after such use or consumption. Nothing contained in this
subsection may be construed to modify subsection (1) of this section
and nothing contained in subsection (1) of this section may be
construed to modify this subsection.
(3) The term "sale at retail" or "retail sale" includes the sale of
or charge made for personal, business, or professional services
including amounts designated as interest, rents, fees, admission, and
other service emoluments however designated, received by persons
engaging in the following business activities:
(a) Amusement and recreation services including but not limited to
golf, pool, billiards, skating, bowling, ski lifts and tows, day trips
for sightseeing purposes, and others, when provided to consumers;
(b) Abstract, title insurance, and escrow services;
(c) Credit bureau services;
(d) Automobile parking and storage garage services;
(e) Landscape maintenance and horticultural services but excluding
(i) horticultural services provided to farmers and (ii) pruning,
trimming, repairing, removing, and clearing of trees and brush near
electric transmission or distribution lines or equipment, if performed
by or at the direction of an electric utility;
(f) Service charges associated with tickets to professional
sporting events; and
(g) The following personal services: Physical fitness services,
tanning salon services, tattoo parlor services, steam bath services,
turkish bath services, escort services, and dating services.
(4)(a) The term also includes the renting or leasing of tangible
personal property to consumers.
(b) The term does not include the renting or leasing of tangible
personal property where the lease or rental is for the purpose of
sublease or subrent.
(5) The term also includes the providing of "competitive telephone
service," "telecommunications service," or "ancillary services," as
those terms are defined in RCW 82.04.065, to consumers.
(6)(a) The term also includes the sale of prewritten computer
software to a consumer, regardless of the method of delivery to the end
user. For purposes of this subsection (6)(a), the sale of prewritten
computer software includes the sale of or charge made for a key or an
enabling or activation code, where the key or code is required to
activate prewritten computer software and put the software into use.
There is no separate sale of the key or code from the prewritten
computer software, regardless of how the sale may be characterized by
the vendor or by the purchaser.
The term "retail sale" does not include the sale of or charge made
for:
(i) Custom software; or
(ii) The customization of prewritten computer software.
(b)(i) The term also includes the charge made to consumers for the
right to access and use prewritten computer software, where possession
of the software is maintained by the seller or a third party,
regardless of whether the charge for the service is on a per use, per
user, per license, subscription, or some other basis.
(ii)(A) The service described in (b)(i) of this subsection (6)
includes the right to access and use prewritten computer software to
perform data processing.
(B) For purposes of this subsection (6)(b)(ii), "data processing"
means the systematic performance of operations on data to extract the
required information in an appropriate form or to convert the data to
usable information. Data processing includes check processing, image
processing, form processing, survey processing, payroll processing,
claim processing, and similar activities.
(7) The term also includes the sale of or charge made for an
extended warranty to a consumer. For purposes of this subsection,
"extended warranty" means an agreement for a specified duration to
perform the replacement or repair of tangible personal property at no
additional charge or a reduced charge for tangible personal property,
labor, or both, or to provide indemnification for the replacement or
repair of tangible personal property, based on the occurrence of
specified events. The term "extended warranty" does not include an
agreement, otherwise meeting the definition of extended warranty in
this subsection, if no separate charge is made for the agreement and
the value of the agreement is included in the sales price of the
tangible personal property covered by the agreement. For purposes of
this subsection, "sales price" has the same meaning as in RCW
82.08.010.
(8)(a) The term also includes the following sales to consumers of
digital goods, digital codes, and digital automated services:
(i) Sales in which the seller has granted the purchaser the right
of permanent use;
(ii) Sales in which the seller has granted the purchaser a right of
use that is less than permanent;
(iii) Sales in which the purchaser is not obligated to make
continued payment as a condition of the sale; and
(iv) Sales in which the purchaser is obligated to make continued
payment as a condition of the sale.
(b) A retail sale of digital goods, digital codes, or digital
automated services under this subsection (8) includes any services
provided by the seller exclusively in connection with the digital
goods, digital codes, or digital automated services, whether or not a
separate charge is made for such services.
(c) For purposes of this subsection, "permanent" means perpetual or
for an indefinite or unspecified length of time. A right of permanent
use is presumed to have been granted unless the agreement between the
seller and the purchaser specifies or the circumstances surrounding the
transaction suggest or indicate that the right to use terminates on the
occurrence of a condition subsequent.
(9) The term also includes the charge made for providing tangible
personal property along with an operator for a fixed or indeterminate
period of time. A consideration of this is that the operator is
necessary for the tangible personal property to perform as designed.
For the purpose of this subsection (9), an operator must do more than
maintain, inspect, or set up the tangible personal property.
(10) The term does not include the sale of or charge made for labor
and services rendered in respect to the building, repairing, or
improving of any street, place, road, highway, easement, right-of-way,
mass public transportation terminal or parking facility, bridge,
tunnel, or trestle which is owned by a municipal corporation or
political subdivision of the state or by the United States and which is
used or to be used primarily for foot or vehicular traffic including
mass transportation vehicles of any kind.
(11) The term also does not include sales of chemical sprays or
washes to persons for the purpose of postharvest treatment of fruit for
the prevention of scald, fungus, mold, or decay, nor does it include
sales of feed, seed, seedlings, fertilizer, agents for enhanced
pollination including insects such as bees, and spray materials to:
(a) Persons who participate in the federal conservation reserve
program, the environmental quality incentives program, the wetlands
reserve program, and the wildlife habitat incentives program, or their
successors administered by the United States department of agriculture;
(b) farmers for the purpose of producing for sale any agricultural
product; and (c) farmers acting under cooperative habitat development
or access contracts with an organization exempt from federal income tax
under 26 U.S.C. Sec. 501(c)(3) of the federal internal revenue code or
the Washington state department of fish and wildlife to produce or
improve wildlife habitat on land that the farmer owns or leases.
(12) The term does not include the sale of or charge made for labor
and services rendered in respect to the constructing, repairing,
decorating, or improving of new or existing buildings or other
structures under, upon, or above real property of or for the United
States, any instrumentality thereof, or a county or city housing
authority created pursuant to chapter 35.82 RCW, including the
installing, or attaching of any article of tangible personal property
therein or thereto, whether or not such personal property becomes a
part of the realty by virtue of installation. Nor does the term
include the sale of services or charges made for the clearing of land
and the moving of earth of or for the United States, any
instrumentality thereof, or a county or city housing authority. Nor
does the term include the sale of services or charges made for cleaning
up for the United States, or its instrumentalities, radioactive waste
and other by-products of weapons production and nuclear research and
development.
(13) The term does not include the sale of or charge made for
labor, services, or tangible personal property pursuant to agreements
providing maintenance services for bus, rail, or rail fixed guideway
equipment when a regional transit authority is the recipient of the
labor, services, or tangible personal property, and a transit agency,
as defined in RCW 81.104.015, performs the labor or services.
(14) The term does not include the sale for resale of any service
described in this section if the sale would otherwise constitute a
"sale at retail" and "retail sale" under this section.
Sec. 501 RCW 82.04.4452 and 2010 c 114 s 114 are each amended to
read as follows:
(1) In computing the tax imposed under this chapter, a credit is
allowed for each person whose research and development spending during
the year in which the credit is claimed exceeds 0.92 percent of the
person's taxable amount during the same calendar year.
(2)(a) The credit is calculated as follows:
(((a))) (i) Determine the greater of the amount of qualified
research and development expenditures of a person or eighty percent of
amounts received by a person other than a public educational or
research institution in compensation for the conduct of qualified
research and development;
(((b))) (ii) Subtract 0.92 percent of the person's taxable amount
from the amount determined under (a)(i) of this subsection;
(((c))) (iii) Multiply the amount determined under (((b))) (a)(ii)
of this subsection by ((the following:)) 1.50 percent.
(i) For the period June 10, 2004, through December 31, 2006, the
person's average tax rate for the calendar year for which the credit is
claimed;
(ii) For the calendar year ending December 31, 2007, the greater of
the person's average tax rate for that calendar year or 0.75 percent;
(iii) For the calendar year ending December 31, 2008, the greater
of the person's average tax rate for that calendar year or 1.0 percent;
(iv) For the calendar year ending December 31, 2009, the greater of
the person's average tax rate for that calendar year or 1.25 percent;
(v) For the calendar year ending December 31, 2010, and
thereafter,
(b) For purposes of calculating the credit, if a person's reporting
period is less than annual, the person may use an estimated average tax
rate for the calendar year for which the credit is claimed by using the
person's average tax rate for each reporting period. A person who uses
an estimated average tax rate must make an adjustment to the total
credit claimed for the calendar year using the person's actual average
tax rate for the calendar year when the person files its last return
for the calendar year for which the credit is claimed.
(3) Any person entitled to the credit provided in subsection (2) of
this section as a result of qualified research and development
conducted under contract may assign all or any portion of the credit to
the person contracting for the performance of the qualified research
and development.
(4) The credit, including any credit assigned to a person under
subsection (3) of this section, must be claimed against taxes due for
the same calendar year in which the qualified research and development
expenditures are incurred. The credit, including any credit assigned
to a person under subsection (3) of this section, for each calendar
year may not exceed the lesser of two million dollars or the amount of
tax otherwise due under this chapter for the calendar year.
(5) For any person claiming the credit, including any credit
assigned to a person under subsection (3) of this section, whose
research and development spending during the calendar year in which the
credit is claimed fails to exceed 0.92 percent of the person's taxable
amount during the same calendar year or who is otherwise ineligible,
the department must declare the taxes against which the credit was
claimed to be immediately due and payable. The department must assess
interest, but not penalties, on the taxes against which the credit was
claimed. Interest must be assessed at the rate provided for delinquent
excise taxes under chapter 82.32 RCW, retroactively to the date the
credit was claimed, and accrues until the taxes against which the
credit was claimed are repaid. Any credit assigned to a person under
subsection (3) of this section that is disallowed as a result of this
section may be claimed by the person who performed the qualified
research and development subject to the limitations set forth in
subsection (4) of this section.
(6) A person may not claim a credit under this section if the
person reported an annual gross amount of ten million dollars or more
in the prior calendar year. Taxpayers disallowed from claiming the
credit under this subsection (6) are not required to refund any credit
claimed in calendar year 2013 prior to the effective date of this
section.
(7) A person claiming the credit provided in this section must file
a complete annual survey with the department under RCW 82.32.585.
(((7) For the purpose of this section:)) The definitions in this
subsection apply throughout this section unless the context clearly
requires otherwise.
(8)(a) "Average tax rate" means a person's total tax liability
under this chapter for the calendar year for which the credit is
claimed divided by the taxpayer's total taxable amount under this
chapter for the calendar year for which the credit is claimed.
(b) "Qualified research and development expenditures" means
operating expenses, including wages, compensation of a proprietor or a
partner in a partnership as determined under rules adopted by the
department, benefits, supplies, and computer expenses, directly
incurred in qualified research and development by a person claiming the
credit provided in this section. The term does not include amounts
paid to a person other than a public educational or research
institution to conduct qualified research and development. Nor does
the term include capital costs and overhead, such as expenses for land,
structures, or depreciable property.
(c) "Qualified research and development" ((shall have)) has the
same meaning as provided in RCW 82.63.010.
(d) "Research and development spending" means qualified research
and development expenditures plus eighty percent of amounts paid to a
person other than a public educational or research institution to
conduct qualified research and development.
(e) "Taxable amount" means the taxable amount subject to the tax
imposed in this chapter required to be reported on the person's
combined excise tax returns for the calendar year for which the credit
is claimed, less any taxable amount for which a credit is allowed under
RCW 82.04.440.
(((8))) (9) This section expires January 1, 2015.
Sec. 502 RCW 82.63.030 and 2008 c 15 s 4 are each amended to read
as follows:
(1) Except as provided in subsection (2) of this section, the
department ((shall)) must issue a sales and use tax deferral
certificate for state and local sales and use taxes due under chapters
82.08, 82.12, and 82.14 RCW on each eligible investment project.
(2) No certificate may be issued for an investment project that has
already received a deferral under chapter 82.60 RCW or this chapter,
except that an investment project for qualified research and
development that has already received a deferral may also receive an
additional deferral certificate for adapting the investment project for
use in pilot scale manufacturing.
(3) ((This section shall expire January 1, 2015.)) The department
may not issue a certificate under this section on or after July 1,
2013.
Sec. 601 RCW 82.16.050 and 2007 c 330 s 1 are each amended to
read as follows:
In computing tax there may be deducted from the gross income the
following items:
(1) Amounts derived by municipally owned or operated public service
businesses, directly from taxes levied for the support or maintenance
thereof. This subsection may not be construed to exempt service
charges which are spread on the property tax rolls and collected as
taxes;
(2) Amounts derived from the sale of commodities to persons in the
same public service business as the seller, for resale as such within
this state. This deduction is allowed only with respect to water
distribution, gas distribution or other public service businesses which
furnish water, gas or any other commodity in the performance of public
service businesses;
(3) Amounts actually paid by a taxpayer to another person taxable
under this chapter as the latter's portion of the consideration due for
services furnished jointly by both, if the total amount has been
credited to and appears in the gross income reported for tax by the
former;
(4) The amount of cash discount actually taken by the purchaser or
customer;
(5) The amount of bad debts, as that term is used in 26 U.S.C. Sec.
166 of the federal internal revenue code, as amended ((or renumbered))
as of January 1, 2003, on which tax was previously paid under this
chapter;
(6) Amounts derived from business which the state is prohibited
from taxing under the Constitution of this state or the Constitution or
laws of the United States;
(7) Amounts derived from the distribution of water through an
irrigation system, for irrigation purposes;
(8) Until July 1, 2013, amounts derived from the transportation of
commodities from points of origin in this state to final destination
outside this state, or from points of origin outside this state to
final destination in this state, with respect to which the carrier
grants to the shipper the privilege of stopping the shipment in transit
at some point in this state for the purpose of storing, manufacturing,
milling, or other processing, and thereafter forwards the same
commodity, or its equivalent, in the same or converted form, under a
through freight rate from point of origin to final destination;
(9) Amounts derived from the transportation of commodities from
points of origin in the state to an export elevator, wharf, dock or
ship side on tidewater or its navigable tributaries to be forwarded,
without intervening transportation, by vessel, in their original form,
to interstate or foreign destinations. No deduction is allowed under
this subsection when the point of origin and the point of delivery to
the export elevator, wharf, dock, or ship side are located within the
corporate limits of the same city or town;
(10) Amounts derived from the transportation of agricultural
commodities, not including manufactured substances or articles, from
points of origin in the state to interim storage facilities in this
state for transshipment, without intervening transportation, to an
export elevator, wharf, dock, or ship side on tidewater or its
navigable tributaries to be forwarded, without intervening
transportation, by vessel, in their original form, to interstate or
foreign destinations. If agricultural commodities are transshipped
from interim storage facilities in this state to storage facilities at
a port on tidewater or its navigable tributaries, the same agricultural
commodity dealer must operate both the interim storage facilities and
the storage facilities at the port.
(a) The deduction under this subsection is available only when the
person claiming the deduction obtains a certificate from the
agricultural commodity dealer operating the interim storage facilities,
in a form and manner prescribed by the department, certifying that:
(i) More than ninety-six percent of all of the type of agricultural
commodity delivered by the person claiming the deduction under this
subsection and delivered by all other persons to the dealer's interim
storage facilities during the preceding calendar year was shipped by
vessel in original form to interstate or foreign destinations; and
(ii) Any of the agricultural commodity that is transshipped to
ports on tidewater or its navigable tributaries will be received at
storage facilities operated by the same agricultural commodity dealer
and will be shipped from such facilities, without intervening
transportation, by vessel, in their original form, to interstate or
foreign destinations.
(b) As used in this subsection, "agricultural commodity" has the
same meaning as agricultural product in RCW 82.04.213;
(11) Amounts derived from the production, sale, or transfer of
electrical energy for resale within or outside the state or for
consumption outside the state;
(12) Amounts derived from the distribution of water by a nonprofit
water association and used for capital improvements by that nonprofit
water association;
(13) Amounts paid by a sewerage collection business taxable under
RCW 82.16.020(1)(a) to a person taxable under chapter 82.04 RCW for the
treatment or disposal of sewage;
(14) Amounts derived from fees or charges imposed on persons for
transit services provided by a public transportation agency. For the
purposes of this subsection, "public transportation agency" means a
municipality, as defined in RCW 35.58.272, and urban public
transportation systems, as defined in RCW 47.04.082. Public
transportation agencies ((shall)) must spend an amount equal to the
reduction in tax provided by this tax deduction solely to adjust routes
to improve access for citizens using food banks and senior citizen
services or to extend or add new routes to assist low-income citizens
and seniors;
(15) Until July 1, 2013, amounts received from interstate
transportation. For purposes of this subsection, "interstate
transportation" means transporting persons or property between states
or between a state and a foreign country. "State" means a state of the
United States, the District of Columbia, the Commonwealth of Puerto
Rico, and any territory or possession of the United States.
NEW SECTION. Sec. 602 A new section is added to chapter 82.16
RCW to read as follows:
(1) Persons taxable both within and without this state on the
business of transporting persons or property for hire must apportion to
this state that portion of gross income as provided in this section.
(2)(a) Except as otherwise provided in this section, gross income
must be apportioned to this state based on the ratio that revenue miles
of the person in this state during the tax period bear to the revenue
miles of the person everywhere during the tax period.
(b)(i) If both property and passengers are transported, a person
must determine the portion of gross income apportioned to this state by
first computing separate percentages as provided in (a) of this
subsection for property transported and for passengers transported.
(ii) Then separately divide gross income for each activity by the
total gross income from transporting persons and property for hire.
(iii) Then multiply the percentage for property transported as
determined under (a) of this subsection by the percentage of gross
income from transporting property as determined under (b)(ii) of this
subsection, and multiply the percentage for persons transported as
determined under (a) of this subsection by the percentage of gross
income from transporting persons as determined under (b)(ii) of this
subsection.
(iv) Then sum the results of both calculations in (b)(iii) of this
subsection and use this percentage to determine the portion of gross
income apportioned to this state from transporting persons and property
for hire.
(3) For persons that transport gas, oil, petroleum products, or
other products by pipeline, gross income must be apportioned to this
state based on the ratio that the total number of traffic units in this
state during the tax period bear to the total number of traffic units
everywhere during the tax period.
(4) The definitions in this subsection apply throughout this
section unless the context clearly requires otherwise.
(a) "Revenue mile" means the transportation of one net ton of
property or one passenger, for the distance of one mile.
(b)(i) "Traffic unit" means the movement of one unit of product for
a distance of one mile.
(ii) For purposes of this subsection (4)(b), "one unit" means one
barrel consisting of forty-two United States gallons, except that for
natural gas and manufactured gas, "one unit" means one thousand cubic
feet of gas.
Sec. 701 RCW 82.04.610 and 2007 c 477 s 2 are each amended to
read as follows:
(1) This chapter does not apply to the sale of tangible personal
property in ((import or)) export commerce or to the sale of aerospace
products in import commerce.
(2) ((Tangible personal property)) (a) An aerospace product is in
import commerce while the ((property)) product is in the process of
import transportation. Except as provided in (a)(i) through (((c)))
(iii) of this subsection, ((property)) an aerospace product is in the
process of import transportation from the time the ((property)) product
begins its transportation at a point outside of the United States until
the time that the ((property)) product is delivered to the buyer in
this state. ((Property)) An aerospace product is also in the process
of import transportation if it is merely flowing through this state on
its way to a destination in some other state or country. However,
((property)) an aerospace product is no longer in the process of import
transportation when the ((property)) product is:
(((a))) (i) Put to actual use in any state, territory, or
possession of the United States for any purpose;
(((b))) (ii) Resold by the importer or any other person after the
((property)) product has arrived in this state or any other state,
territory, or possession of the United States, regardless of whether
the ((property)) product is in its original unbroken package or
container; or
(((c))) (iii) Processed, handled, or otherwise stopped in transit
for a business purpose other than shipping needs, if the processing,
handling, or other stoppage of transit occurs within the United States,
including any of its possessions or territories, or the territorial
waters of this state or any other state, regardless of whether the
processing, handling, or other stoppage of transit occurs within a
foreign trade zone.
(b) For the purposes of this subsection (2), "aerospace product"
has the same meaning as provided in RCW 82.08.975.
(3)(a) Tangible personal property is in export commerce when the
seller delivers the property to:
(i) The buyer at a destination in a foreign country;
(ii) A carrier consigned to and for transportation to a destination
in a foreign country;
(iii) The buyer at shipside or aboard the buyer's vessel or other
vehicle of transportation under circumstances where it is clear that
the process of exportation of the property has begun; or
(iv) The buyer in this state if the property is capable of being
transported to a foreign destination under its own power, the seller
files a shipper's export declaration with respect to the property
listing the seller as the exporter, and the buyer immediately
transports the property directly to a destination in a foreign country.
This subsection (3)(a)(iv) does not apply to sales of motor vehicles as
defined in RCW 46.04.320.
(b) The exemption under this subsection (3) applies with respect to
property delivered to the buyer in this state if, at the time of
delivery, there is a certainty of export, and the process of export has
begun. The process of exportation will not be deemed to have begun if
the property is merely in storage awaiting shipment, even though there
is reasonable certainty that the property will be exported. The
intention to export, as evidenced for example, by financial and
contractual relationships does not indicate certainty of export. The
process of exportation begins when the property starts its final and
certain continuous movement to a destination in a foreign country.
(4) Persons claiming an exemption under this section must keep and
maintain records for the period required by RCW 82.32.070 establishing
their right to the exemption.
NEW SECTION. Sec. 801 RCW 82.04.272 (Tax on warehousing and
reselling prescription drugs) and 2003 c 168 s 401 & 1998 c 343 s 1 are
each repealed.
Sec. 901 RCW 82.12.0263 and 1980 c 37 s 62 are each amended to
read as follows:
The provisions of this chapter ((shall)) do not apply in respect to
the use of hog fuel by the extractor or manufacturer thereof when used
directly in the operation of the particular extractive operation or
manufacturing plant which produced or manufactured the same. For
purposes of this section, "hog fuel" means wood waste and other wood
residuals, including forest derived biomass, but does not include
firewood or wood pellets. "Hog fuel" also includes organic by-products
of pulp, paper, and wood manufacturing processes.
NEW SECTION. Sec. 902 A new section is added to chapter 82.12
RCW to read as follows:
The value of the article used with respect to refinery fuel gas
under this chapter is the most recent monthly United States natural gas
wellhead price, as published by the federal energy information
administration.
Sec. 1001 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, 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) 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) 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.
Sec. 1002 RCW 82.04.261 and 2010 1st sp.s. c 23 s 510 are each
amended to read as follows:
(1) In addition to the taxes imposed under RCW 82.04.260(((11)))
(9), a surcharge is imposed on those persons who are subject to any of
the taxes imposed under RCW 82.04.260(((11))) (9). Except as otherwise
provided in this section, the surcharge is equal to 0.052 percent. The
surcharge is added to the rates provided in RCW 82.04.260(((11))) (9)
(a), (b), (c), and (d). The surcharge and this section expire July 1,
2024.
(2) All receipts from the surcharge imposed under this section must
be deposited into the forest and fish support account created in RCW
76.09.405.
(3)(a) The surcharge imposed under this section is suspended if:
(i) Receipts from the surcharge total at least eight million
dollars during any fiscal biennium; or
(ii) The office of financial management certifies to the department
that the federal government has appropriated at least two million
dollars for participation in forest and fish report-related activities
by federally recognized Indian tribes located within the geographical
boundaries of the state of Washington for any federal fiscal year.
(b)(i) The suspension of the surcharge under (a)(i) of this
subsection (3) takes effect on the first day of the calendar month that
is at least thirty days after the end of the month during which the
department determines that receipts from the surcharge total at least
eight million dollars during the fiscal biennium. The surcharge is
imposed again at the beginning of the following fiscal biennium.
(ii) The suspension of the surcharge under (a)(ii) of this
subsection (3) takes effect on the later of the first day of October of
any federal fiscal year for which the federal government appropriates
at least two million dollars for participation in forest and fish
report-related activities by federally recognized Indian tribes located
within the geographical boundaries of the state of Washington, or the
first day of a calendar month that is at least thirty days following
the date that the office of financial management makes a certification
to the department under subsection (5) of this section. The surcharge
is imposed again on the first day of the following July.
(4)(a) If, by October 1st of any federal fiscal year, the office of
financial management certifies to the department that the federal
government has appropriated funds for participation in forest and fish
report-related activities by federally recognized Indian tribes located
within the geographical boundaries of the state of Washington but the
amount of the appropriation is less than two million dollars, the
department must adjust the surcharge in accordance with this
subsection.
(b) The department must adjust the surcharge by an amount that the
department estimates will cause the amount of funds deposited into the
forest and fish support account for the state fiscal year that begins
July 1st and that includes the beginning of the federal fiscal year for
which the federal appropriation is made, to be reduced by twice the
amount of the federal appropriation for participation in forest and
fish report-related activities by federally recognized Indian tribes
located within the geographical boundaries of the state of Washington.
(c) Any adjustment in the surcharge takes effect at the beginning
of a calendar month that is at least thirty days after the date that
the office of financial management makes the certification under
subsection (5) of this section.
(d) The surcharge is imposed again at the rate provided in
subsection (1) of this section on the first day of the following state
fiscal year unless the surcharge is suspended under subsection (3) of
this section or adjusted for that fiscal year under this subsection.
(e) Adjustments of the amount of the surcharge by the department
are final and may not be used to challenge the validity of the
surcharge imposed under this section.
(f) The department must provide timely notice to affected taxpayers
of the suspension of the surcharge or an adjustment of the surcharge.
(5) The office of financial management must make the certification
to the department as to the status of federal appropriations for tribal
participation in forest and fish report-related activities.
Sec. 1003 RCW 82.04.334 and 2010 1st sp.s. c 23 s 512 are each
amended to read as follows:
This chapter does not apply to any sale of standing timber excluded
from the definition of "sale" in RCW 82.45.010(3). The definitions in
RCW 82.04.260(((11))) (9) apply to this section.
Sec. 1004 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))) (8)(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))) (8)(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))) (8)(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))) (8)(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))) (8) (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))) (8) 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 with the department under RCW 82.32.534.
(6) This section expires July 1, 2024.
Sec. 1005 RCW 82.04.460 and 2011 c 174 s 203 are each amended to
read as follows:
(1) Except as otherwise provided in this section, any person
earning apportionable income taxable under this chapter and also
taxable in another state must, for the purpose of computing tax
liability under this chapter, apportion to this state, in accordance
with RCW 82.04.462, that portion of the person's apportionable income
derived from business activities performed within this state.
(2) The department must by rule provide a method of apportioning
the apportionable income of financial institutions, where such
apportionable income is taxable under RCW 82.04.290. The rule adopted
by the department must, to the extent feasible, be consistent with the
multistate tax commission's recommended formula for the apportionment
and allocation of net income of financial institutions as existing on
June 1, 2010, or such subsequent date as may be provided by the
department by rule, consistent with the purposes of this section,
except that:
(a) The department's rule must provide for a single factor
apportionment method based on the receipts factor; and
(b) The definition of "financial institution" contained in appendix
A to the multistate tax commission's recommended formula for the
apportionment and allocation of net income of financial institutions is
advisory only.
(3) The department may by rule provide a method or methods of
apportioning or allocating gross income derived from sales of
telecommunications service and competitive telephone service taxed
under this chapter, if the gross proceeds of sales subject to tax under
this chapter do not fairly represent the extent of the taxpayer's
income attributable to this state. The rule must provide for an
equitable and constitutionally permissible division of the tax base.
(4) For purposes of this section, the following definitions apply
unless the context clearly requires otherwise:
(a) "Apportionable income" means gross income of the business
generated from engaging in apportionable activities, including income
received from apportionable activities performed outside this state if
the income would be taxable under this chapter if received from
activities in this state, less the exemptions and deductions allowable
under this chapter. For purposes of this subsection, "apportionable
activities" means only those activities taxed under:
(i) RCW 82.04.255;
(ii) RCW 82.04.260 (3), (((4), (5), (6), (7), (8), (9), and (12)))
(5), (6), and (10);
(iii) RCW 82.04.280(1)(e);
(iv) RCW 82.04.285;
(v) RCW 82.04.286;
(vi) RCW 82.04.290;
(vii) RCW 82.04.2907;
(viii) RCW 82.04.2908;
(ix) RCW 82.04.263, but only to the extent of any activity that
would be taxable under any of the provisions enumerated under (a)(i)
through (viii) of this subsection (4) if the tax classification in RCW
82.04.263 did not exist; and
(x) RCW 82.04.260(((13))) (11) and 82.04.280(1)(a), but only with
respect to advertising.
(b)(i) "Taxable in another state" means that the taxpayer is
subject to a business activities tax by another state on its income
received from engaging in apportionable activities; or the taxpayer is
not subject to a business activities tax by another state on its income
received from engaging in apportionable activities, but any other state
has jurisdiction to subject the taxpayer to a business activities tax
on such income under the substantial nexus standards in RCW
82.04.067(1).
(ii) For purposes of this subsection (4)(b), "business activities
tax" and "state" have the same meaning as in RCW 82.04.462.
Sec. 1006 RCW 82.08.806 and 2011 c 174 s 204 are each amended to
read as follows:
(1) The tax levied by RCW 82.08.020 does not apply to sales, to a
printer or publisher, of computer equipment, including repair parts and
replacement parts for such equipment, when the computer equipment is
used primarily in the printing or publishing of any printed material,
or to sales of or charges made for labor and services rendered in
respect to installing, repairing, cleaning, altering, or improving the
computer equipment. This exemption applies only to computer equipment
not otherwise exempt under RCW 82.08.02565.
(2) A person taking the exemption under this section must keep
records necessary for the department to verify eligibility under this
section. This exemption is available only when the purchaser 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.
(3) The definitions in this subsection (3) apply throughout this
section, unless the context clearly requires otherwise.
(a) "Computer" has the same meaning as in RCW 82.04.215.
(b) "Computer equipment" means a computer and the associated
physical components that constitute a computer system, including
monitors, keyboards, printers, modems, scanners, pointing devices, and
other computer peripheral equipment, cables, servers, and routers.
"Computer equipment" also includes digital cameras and computer
software.
(c) "Computer software" has the same meaning as in RCW 82.04.215.
(d) "Primarily" means greater than fifty percent as measured by
time.
(e) "Printer or publisher" means a person, as defined in RCW
82.04.030, who is subject to tax under RCW 82.04.260(((13))) (11) or
82.04.280(1)(a).
(4) "Computer equipment" does not include computer equipment that
is used primarily for administrative purposes including but not limited
to payroll processing, accounting, customer service, telemarketing, and
collection. If computer equipment is used simultaneously for
administrative and nonadministrative purposes, the administrative use
must be disregarded during the period of simultaneous use for purposes
of determining whether the computer equipment is used primarily for
administrative purposes.
Sec. 1007 RCW 82.45.195 and 2010 1st sp.s. c 23 s 518 are each
amended to read as follows:
A sale of standing timber is exempt from tax under this chapter if
the gross income from such sale is taxable under RCW 82.04.260(((11)))
(9)(d).
Sec. 1008 RCW 48.14.080 and 2010 1st sp.s. c 23 s 520 are each
amended to read as follows:
(1) As to insurers, other than title insurers and taxpayers under
RCW 48.14.0201, the taxes imposed by this title are in lieu of all
other taxes, except as otherwise provided in this section.
(2) Subsection (1) of this section does not apply with respect to:
(a) Taxes on real and tangible personal property;
(b) Excise taxes on the sale, purchase, use, or possession of (i)
real property; (ii) tangible personal property; (iii) extended
warranties; (iv) services, including digital automated services as
defined in RCW 82.04.192; and (v) digital goods and digital codes as
those terms are defined in RCW 82.04.192; and
(c) The tax imposed in RCW 82.04.260(((9))) (7), regarding public
and nonprofit hospitals.
(3) For the purposes of this section, the term "taxes" includes
taxes imposed by the state or any county, city, town, municipal
corporation, quasi-municipal corporation, or other political
subdivision.
Sec. 1009 RCW 35.102.150 and 2011 c 174 s 201 are each amended to
read as follows:
Notwithstanding RCW 35.102.130, a city that imposes a business and
occupation tax must allocate a person's gross income from the
activities of printing, and of publishing newspapers, periodicals, or
magazines, to the principal place in this state from which the
taxpayer's business is directed or managed. As used in this section,
the activities of printing, and of publishing newspapers, periodicals,
or magazines are those activities to which the tax rates in RCW
82.04.260(((13))) (11) and 82.04.280(1)(a) apply.
NEW SECTION. Sec. 1101 A new section is added to chapter 82.32
RCW to read as follows:
(1) By the last workday of the first and third calendar quarters,
the state treasurer must transfer the amount specified in subsection
(2) of this section from the general fund to the education legacy trust
account. The first two transfers under this subsection (1) must occur
by April 30, 2013, and September 30, 2013.
(2) The department must estimate the increase in state general fund
revenues from the changes made under parts I through IX of this act for
the immediately preceding third and fourth calendar quarters for the
April transfer under subsection (1) of this section and the immediately
preceding first and second calendar quarters for the September transfer
under subsection (1) of this section. The department must notify the
state treasurer of this amount at least twenty days prior to the April
or September transfer under subsection (1) of this section.
NEW SECTION. Sec. 1201 (1) Except as otherwise provided in this
section, this act is necessary for the immediate preservation of the
public peace, health, or safety, or support of the state government and
its existing public institutions, and takes effect July 1, 2013.
(2) Section 102 of this act takes effect July 1, 2015.
NEW SECTION. Sec. 1202 Section 101 of this act expires July 1,
2015.
NEW SECTION. Sec. 1203 Sections 501 and 502 of this act expire
January 1, 2015.
NEW SECTION. Sec. 1204 Sections 1002 and 1004 of this act expire
July 1, 2024.