BILL REQ. #: Z-0741.2
| State of Washington | 63rd Legislature | 2014 Regular Session |
Read first time 01/20/14. Referred to Committee on Finance.
AN ACT Relating to simplifying the taxation of amusement, recreation, and physical fitness services; amending RCW 82.04.050, 82.04.060, 82.08.0291, 82.12.020, 82.12.02595, 82.12.035, 82.12.040, 82.12.860, and 82.32.087; reenacting and amending RCW 82.04.190 and 82.12.010; creating a new section; repealing RCW 82.12.02917; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 82.04.050 and 2013 2nd sp.s. c 13 s 802 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)(((i) 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.)) Abstract, title insurance, and escrow services;
(ii) Until July 1, 2017, amusement and recreation services do not
include the opportunity to dance provided by an establishment in
exchange for a cover charge.
(iii) For purposes of this subsection (3)(a):
(A) "Cover charge" means a charge, regardless of its label, to
enter an establishment or added to the purchaser's bill by an
establishment or otherwise collected after entrance to the
establishment, and the purchaser is provided the opportunity to dance
in exchange for payment of the charge.
(B) "Opportunity to dance" means that an establishment provides a
designated physical space, on either a temporary or permanent basis,
where customers are allowed to dance and the establishment either
advertises or otherwise makes customers aware that it has an area for
dancing;
(b)
(((c))) (b) Credit bureau services;
(((d))) (c) Automobile parking and storage garage services;
(((e))) (d) 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))) (e) Service charges associated with tickets to professional
sporting events; ((and)) (f) The following personal services: ((
(g)Physical fitness
services,)) Tanning salon services, tattoo parlor services, steam bath
services, turkish bath services, escort services, and dating services;
and
(g)(i) Operating an athletic or fitness facility, including all
charges for the use of such a facility or for any associated services
and amenities, except as provided in (g)(ii) of this subsection.
(ii) Notwithstanding anything to the contrary in (g)(i) of this
subsection (3), the term "sale at retail" and "retail sale" under this
subsection does not include:
(A) Separately stated charges for the use of an athletic or fitness
facility where such use is primarily for a purpose other than engaging
in or receiving instruction in a physical fitness activity;
(B) Separately stated charges for the use of a discrete portion of
an athletic or fitness facility, other than a pool, where such discrete
portion of the facility does not by itself meet the definition of
"athletic or fitness facility" in this subsection;
(C) Separately stated charges for services, such as advertising,
massage, nutritional consulting, and body composition testing, that do
not require the customer to engage in physical fitness activities to
receive the service. The exclusion in this subsection (3)(g)(ii)(C)
does not apply to personal training services and instruction in a
physical fitness activity;
(D) Separately stated charges for physical therapy provided by a
physical therapist, as those terms are defined in RCW 18.74.010, or
occupational therapy provided by an occupational therapy practitioner,
as those terms are defined in RCW 18.59.020, when performed pursuant to
a referral from an authorized health care practitioner or in
consultation with an authorized health care practitioner. For the
purposes of this subsection (3)(g)(ii)(D), an authorized health care
practitioner means a health care practitioner licensed under chapter
18.83, 18.25, 18.36A, 18.57, 18.57A, 18.71, or 18.71A RCW;
(E) Rent or association fees charged by a landlord or residential
association to a tenant or residential owner with access to an athletic
or fitness facility maintained by the landlord or residential
association, unless the rent or fee varies depending on whether the
tenant or owner has access to the facility;
(F) Services provided in the regular course of employment by an
employee with access to an athletic or fitness facility maintained by
the employer for use without charge by its employees or their family
members;
(G) The provision of access to an athletic or fitness facility by
an educational institution to its students and staff. However, charges
made by an educational institution to its alumni or other members of
the public for the use of any of the educational institution's athletic
or fitness facilities are a retail sale under this subsection (3)(g).
For purposes of this subsection (3)(g)(ii)(G), "educational
institution" has the same meaning as in RCW 82.04.170; and
(H) Yoga, tai chi, or chi gong classes held at a community center,
park, gymnasium, college or university, hospital or other medical
facility, private residence, or any facility that is not primarily used
for physical fitness activities other than yoga, tai chi, or chi gong
classes.
(iii) Nothing in (g)(ii) of this subsection (3) may be construed to
affect the taxation of sales made by the operator of an athletic or
fitness facility, where such sales are defined as a retail sale under
any provision of this section other than this subsection (3).
(iv) For the purposes of this subsection (3)(g), the following
definitions apply:
(A) "Athletic or fitness facility" means an indoor or outdoor
facility or portion of a facility that is primarily used for: Exercise
classes; strength and conditioning programs; personal training
services; tennis, racquetball, handball, squash, or pickleball; yoga;
boxing, kickboxing, wrestling, martial arts, or mixed martial arts
training; or other activities requiring the use of exercise or strength
training equipment, such as treadmills, elliptical machines, stair
climbers, stationary cycles, rowing machines, pilates equipment, balls,
climbing ropes, jump ropes, and weightlifting equipment.
(B) "Physical fitness activities" means activities that involve
physical exertion for the purpose of improving or maintaining the
general fitness, strength, flexibility, conditioning, or health of the
participant.
(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.
(15)(a) The term "sale at retail" or "retail sale" includes amounts
charged, however labeled, to consumers to engage in any of the
activities listed in this subsection (15)(a), including the furnishing
of any associated equipment or, except as otherwise provided in this
subsection, providing instruction in such activities, where such
charges are not otherwise defined as a "sale at retail" or "retail
sale" in this section:
(i)(A) Golf, including any variant in which either golf balls or
golf clubs are used, such as miniature golf, hitting golf balls at a
driving range, and golf simulators, and including fees charged by a
golf course to a player for using his or her own cart.
(B) Notwithstanding (a)(i)(A) of this subsection (15) and except as
otherwise provided in this subsection (15)(a)(i)(B), the term "sale at
retail" or "retail sale" does not include amounts charged to
participate in, or conduct, a golf tournament or other competitive
event. However, amounts paid by event participants to the golf
facility operator are retail sales under this subsection (15)(a)(i).
Likewise, amounts paid by the event organizer to the golf facility are
retail sales under this subsection (15)(a)(i), if such amounts vary
based on the number of event participants;
(ii) Ballooning, hang gliding, indoor or outdoor sky diving,
paragliding, parasailing, and similar activities;
(iii) Air hockey, billiards, pool, foosball, darts, shuffleboard,
ping pong, and similar games;
(iv) Access to amusement park, theme park, and water park
facilities, including but not limited to charges for admission and
locker or cabana rentals. Discrete charges for rides or other
attractions or entertainment that are in addition to the charge for
admission are not a retail sale under this subsection (15)(a)(iv). For
the purposes of this subsection, an amusement park or theme park is a
location that provides permanently affixed amusement rides, games, and
other entertainment, but does not include parks or zoos for which the
primary purpose is the exhibition of wildlife, or fairs, carnivals, and
festivals as defined in (b)(i) of this subsection;
(v) Batting cage activities;
(vi) Bowling, but not including competitive events, except that
amounts paid by the event participants to the bowling alley operator
are retail sales under this subsection (15)(a)(vi). Likewise, amounts
paid by the event organizer to the operator of the bowling alley are
retail sales under this subsection (15)(a)(vi), if such amounts vary
based on the number of event participants;
(vii) Climbing on artificial climbing structures, whether indoors
or outdoors;
(viii) Day trips for sightseeing purposes;
(ix) Bungee jumping, zip lining, and riding inside a ball, whether
inflatable or otherwise;
(x) Horseback riding offered to the public, where the seller
furnishes the horse to the buyer and providing instruction is not the
primary focus of the activity, including guided rides, but not
including therapeutic horseback riding provided by an instructor
certified by a nonprofit organization that offers national or
international certification for therapeutic riding instructors;
(xi) Fishing, including providing access to private fishing areas
and charter or guided fishing, except that fishing contests and license
fees imposed by a government entity are not a retail sale under this
subsection;
(xii) Guided hunting and hunting at game farms and shooting
preserves, except that hunting contests and license fees imposed by a
government entity are not a retail sale under this subsection;
(xiii) Swimming, but only in respect to (A) recreational or fitness
swimming that is open to the public, such as open swim, lap swimming,
and special events like kids night out and pool parties during open
swim time, and (B) pool parties for private events, such as birthdays,
family gatherings, and employee outings. Fees for swimming lessons, to
participate in swim meets and other competitions, or to join a swim
team, club, or aquatic facility are not retail sales under this
subsection (15)(a)(xiii);
(xiv) Go-karting, bumper cars, and other motorized activities where
the seller provides the vehicle and the premises where the buyer will
operate the vehicle;
(xv) Indoor or outdoor playground activities, such as inflatable
bounce structures and other inflatables; mazes; trampolines; slides;
ball pits; games of tag, including lazer tag and soft-dart tag; and
human gyroscope rides, regardless of whether such activities occur at
the seller's place of business, but not including playground activities
provided for children by a licensed child day care center or licensed
family day care provider as those terms are defined in RCW 43.215.010;
(xvi) Shooting sports and activities, such as target shooting,
skeet, trap, sporting clays, "5" stand, and archery, but only in
respect to discrete charges to members of the public to engage in these
activities, but not including fees to enter a competitive event,
instruction that is entirely or predominately classroom based, or to
join or renew a membership at a club, range, or other facility;
(xvii) Paintball and airsoft activities;
(xviii) Skating, including ice skating, roller skating, and inline
skating, but only in respect to discrete charges to members of the
public to engage in skating activities, but not including skating
lessons, competitive events, team activities, or fees to join or renew
a membership at a skating facility, club, or other organization;
(xix) Nonmotorized snow sports and activities, such as downhill and
cross-country skiing, snowboarding, ski jumping, sledding, snow tubing,
snowshoeing, and similar snow sports and activities, whether engaged in
outdoors or in an indoor facility with or without snow, but only in
respect to discrete charges to the public for the use of land or
facilities to engage in nonmotorized snow sports and activities, such
as fees, however labeled, for the use of ski lifts and tows and daily
or season passes for access to trails or other areas where nonmotorized
snow sports and activities are conducted. However, fees for permits
issued by a governmental entity to park a vehicle on or access public
lands, or permits or leases granted by an owner of private timberland
for recreational access to areas used primarily for growing and
harvesting timber, are not retail sales under this subsection
(15)(a)(xix); and
(xx) Scuba diving; snorkeling; river rafting; surfing;
kiteboarding; flyboarding; water slides; inflatables, such as water
pillows, water trampolines, and water rollers; and similar water sports
and activities.
(b) Notwithstanding anything to the contrary in this subsection
(15), the term "sale at retail" or "retail sale" does not include
charges:
(i) Made for admission to, and rides or attractions at, fairs,
carnivals, and festivals. For the purposes of this subsection, fairs,
carnivals, and festivals are events that do not exceed twenty-one days
and a majority of the amusement rides, if any, are not affixed to real
property;
(ii) Made by an educational institution to its students and staff
for activities defined as retail sales by (a)(i) through (xx) of this
subsection. However, charges made by an educational institution to its
alumni or other members of the general public for these activities are
a retail sale under this subsection (15). For purposes of this
subsection (15)(b)(ii), "educational institution" has the same meaning
as in RCW 82.04.170;
(iii) Made by a vocational school for commercial diver training
that is licensed by the workforce training and education coordinating
board under chapter 28C.10 RCW; or
(iv) Made for day camps offered by a nonprofit organization or
state or local governmental entity that provide youth not older than
age eighteen, or that are focused on providing individuals with
disabilities or mental illness, the opportunity to participate in a
variety of supervised activities.
Sec. 2 RCW 82.04.060 and 2010 c 106 s 203 are each amended to
read as follows:
"Sale at wholesale" or "wholesale sale" means:
(1) Any sale, which is not a sale at retail, of:
(a) Tangible personal property;
(b) Services defined as a retail sale in RCW 82.04.050(2) (a) or
(g);
(c) ((Amusement or recreation services as defined)) Activities
defined as a retail sale in RCW 82.04.050(((3)(a))) (15);
(d) Prewritten computer software;
(e) Services described in RCW 82.04.050(6)(b);
(f) Extended warranties as defined in RCW 82.04.050(7);
(g) Competitive telephone service, ancillary services, or
telecommunications service as those terms are defined in RCW 82.04.065;
or
(h) Digital goods, digital codes, or digital automated services;
(2) Any charge made for labor and services rendered for persons who
are not consumers, in respect to real or personal property, if such
charge is expressly defined as a retail sale by RCW 82.04.050 when
rendered to or for consumers. For the purposes of this subsection (2),
"real or personal property" does not include any natural products named
in RCW 82.04.100; and
(3) The sale of any service for resale, if the sale is excluded
from the definition of "sale at retail" and "retail sale" in RCW
82.04.050(14).
Sec. 3 RCW 82.04.190 and 2010 c 111 s 202 and 2010 c 106 s 204
are each reenacted and amended to read as follows:
"Consumer" means the following:
(1) Any person who purchases, acquires, owns, holds, or uses any
article of tangible personal property irrespective of the nature of the
person's 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 for the purpose of:
(a) Resale as tangible personal property in the regular course of
business;
(b) Incorporating such property as an ingredient or component of
real or personal property when installing, repairing, cleaning,
altering, imprinting, improving, constructing, or decorating such real
or personal property of or for consumers;
(c) Consuming such property in producing for sale as a new article
of tangible personal property or a new substance, of which such
property becomes an ingredient or component or as 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;
(d) 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
(e) Satisfying the person's obligations under an extended warranty
as defined in RCW 82.04.050(7), 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;
(2)(a) Any person engaged in any business activity taxable under
RCW 82.04.290 or 82.04.2908; (b) any person who purchases, acquires, or
uses any competitive telephone service, ancillary services, or
telecommunications service as those terms are defined in RCW 82.04.065,
other than for resale in the regular course of business; (c) any person
who purchases, acquires, or uses any service defined in RCW
82.04.050(2) (a) or (g), other than for resale in the regular course of
business or for the purpose of satisfying the person's obligations
under an extended warranty as defined in RCW 82.04.050(7); (d) any
person who ((purchases, acquires, or uses any amusement and recreation
service defined in RCW 82.04.050(3)(a))) makes a purchase meeting the
definition of "sale at retail" and "retail sale" under RCW
82.04.050(15), other than for resale in the regular course of business;
(e) any person who purchases or acquires an extended warranty as
defined in RCW 82.04.050(7) other than for resale in the regular course
of business; and (f) any person who is an end user of software. For
purposes of this subsection (2)(f) and RCW 82.04.050(6), a person who
purchases or otherwise acquires prewritten computer software, who
provides services described in RCW 82.04.050(6)(b) and who will charge
consumers for the right to access and use the prewritten computer
software, is not an end user of the prewritten computer software;
(3) Any person engaged in the business of contracting for 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 of Washington 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 as
defined in RCW 82.04.280, in respect to tangible personal property when
such person incorporates such property as an ingredient or component of
such publicly owned street, place, road, highway, easement,
right-of-way, mass public transportation terminal or parking facility,
bridge, tunnel, or trestle by installing, placing or spreading the
property in or upon the right-of-way of such street, place, road,
highway, easement, bridge, tunnel, or trestle or in or upon the site of
such mass public transportation terminal or parking facility;
(4) Any person who is an owner, lessee or has the right of
possession to or an easement in real property which is being
constructed, repaired, decorated, improved, or otherwise altered by a
person engaged in business, excluding only (a) municipal corporations
or political subdivisions of the state in respect to labor and services
rendered to their real property which is used or held for public road
purposes, and (b) the United States, instrumentalities thereof, and
county and city housing authorities created pursuant to chapter 35.82
RCW in respect to labor and services rendered to their real property.
Nothing contained in this or any other subsection of this definition
shall be construed to modify any other definition of "consumer";
(5) Any person who is an owner, lessee, or has the right of
possession to personal property which is being constructed, repaired,
improved, cleaned, imprinted, or otherwise altered by a person engaged
in business;
(6) Any person engaged in the business of constructing, repairing,
decorating, or improving 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; also, any person engaged in the business of clearing land
and moving earth of or for the United States, any instrumentality
thereof, or a county or city housing authority created pursuant to
chapter 35.82 RCW. Any such person is a consumer within the meaning of
this subsection in respect to tangible personal property incorporated
into, installed in, or attached to such building or other structure by
such person, except that consumer does not include any person engaged
in the business of constructing, repairing, decorating, or improving
new or existing buildings or other structures under, upon, or above
real property of or for the United States, or any instrumentality
thereof, if the investment project would qualify for sales and use tax
deferral under chapter 82.63 RCW if undertaken by a private entity;
(7) Any person who is a lessor of machinery and equipment, the
rental of which is exempt from the tax imposed by RCW 82.08.020 under
RCW 82.08.02565, with respect to the sale of or charge made for
tangible personal property consumed in respect to repairing the
machinery and equipment, if the tangible personal property has a useful
life of less than one year. Nothing contained in this or any other
subsection of this section may be construed to modify any other
definition of "consumer";
(8) Any person engaged in the business of cleaning up for the
United States, or its instrumentalities, radioactive waste and other
by-products of weapons production and nuclear research and development;
(9) Any person who is an owner, lessee, or has the right of
possession of tangible personal property that, under the terms of an
extended warranty as defined in RCW 82.04.050(7), has been repaired or
is replacement property, but only with respect to the sale of or charge
made for the repairing of the tangible personal property or the
replacement property;
(10) Any person who purchases, acquires, or uses services described
in RCW 82.04.050(6)(b) other than:
(a) For resale in the regular course of business; or
(b) For purposes of consuming the service described in RCW
82.04.050(6)(b) in producing for sale a new product, but only if such
service becomes a component of the new product. For purposes of this
subsection (10), "product" means a digital product, an article of
tangible personal property, or the service described in RCW
82.04.050(6)(b);
(11)(a) Any end user of a digital product or digital code.
"Consumer" does not include any person who is not an end user of a
digital product or a digital code and purchases, acquires, owns, holds,
or uses any digital product or digital code for purposes of consuming
the digital product or digital code in producing for sale a new
product, but only if the digital product or digital code becomes a
component of the new product. A digital code becomes a component of a
new product if the digital good or digital automated service acquired
through the use of the digital code becomes incorporated into a new
product. For purposes of this subsection, "product" has the same
meaning as in subsection (10) of this section.
(b)(i) For purposes of this subsection, "end user" means any
taxpayer as defined in RCW 82.12.010 other than a taxpayer who receives
by contract a digital product for further commercial broadcast,
rebroadcast, transmission, retransmission, licensing, relicensing,
distribution, redistribution or exhibition of the product, in whole or
in part, to others. A person that purchases digital products or
digital codes for the purpose of giving away such products or codes
will not be considered to have engaged in the distribution or
redistribution of such products or codes and will be treated as an end
user;
(ii) If a purchaser of a digital code does not receive the
contractual right to further redistribute, after the digital code is
redeemed, the underlying digital product to which the digital code
relates, then the purchaser of the digital code is an end user. If the
purchaser of the digital code receives the contractual right to further
redistribute, after the digital code is redeemed, the underlying
digital product to which the digital code relates, then the purchaser
of the digital code is not an end user. A purchaser of a digital code
who has the contractual right to further redistribute the digital code
is an end user if that purchaser does not have the right to further
redistribute, after the digital code is redeemed, the underlying
digital product to which the digital code relates; and
(12) Any person who provides services described in RCW
82.04.050(9). Any such person is a consumer with respect to the
purchase, acquisition, or use of the tangible personal property that
the person provides along with an operator in rendering services
defined as a retail sale in RCW 82.04.050(9). Any such person may also
be a consumer under other provisions of this section.
Sec. 4 RCW 82.08.0291 and 2000 c 103 s 8 are each amended to read
as follows:
The tax imposed by RCW 82.08.020 ((shall)) does not apply to ((the
sale of amusement and recreation services, or personal services
specified in RCW 82.04.050(3)(g))) sales defined as a sale at retail
and retail sale under RCW 82.04.050 (3)(g) or (15), by a nonprofit
youth organization, as defined in RCW 82.04.4271, to members of the
organization; nor shall the tax apply to physical fitness classes
provided by a local government.
Sec. 5 RCW 82.12.010 and 2010 c 127 s 4 are each reenacted and
amended to read as follows:
For the purposes of this chapter:
(1) The meaning ascribed to words and phrases in chapters 82.04 and
82.08 RCW, insofar as applicable, has full force and effect with
respect to taxes imposed under the provisions of this chapter.
"Consumer," in addition to the meaning ascribed to it in chapters 82.04
and 82.08 RCW insofar as applicable, also means any person who
distributes or displays, or causes to be distributed or displayed, any
article of tangible personal property, except newspapers, the primary
purpose of which is to promote the sale of products or services. With
respect to property distributed to persons within this state by a
consumer as defined in this subsection (1), the use of the property is
deemed to be by such consumer.
(2) "Extended warranty" has the same meaning as in RCW
82.04.050(7).
(3) "Purchase price" means the same as sales price as defined in
RCW 82.08.010.
(4)(a)(i) Except as provided in (a)(ii) of this subsection (4),
"retailer" means every seller as defined in RCW 82.08.010 and every
person engaged in the business of selling tangible personal property at
retail and every person required to collect from purchasers the tax
imposed under this chapter.
(ii) "Retailer" does not include a professional employer
organization when a covered employee coemployed with the client under
the terms of a professional employer agreement engages in activities
that constitute a sale of tangible personal property, extended
warranty, digital good, digital code, or a sale of any digital
automated service or service defined as a retail sale in RCW 82.04.050
(2) (a) or (g)((, (3)(a),)) or (6)(b) that is subject to the tax
imposed by this chapter. In such cases, the client, and not the
professional employer organization, is deemed to be the retailer and is
responsible for collecting and remitting the tax imposed by this
chapter.
(b) For the purposes of (a) of this subsection, the terms "client,"
"covered employee," "professional employer agreement," and
"professional employer organization" have the same meanings as in RCW
82.04.540.
(5) "Taxpayer" and "purchaser" include all persons included within
the meaning of the word "buyer" and the word "consumer" as defined in
chapters 82.04 and 82.08 RCW.
(6) "Use," "used," "using," or "put to use" have their ordinary
meaning, and mean:
(a) With respect to tangible personal property, except for natural
gas and manufactured gas, the first act within this state by which the
taxpayer takes or assumes dominion or control over the article of
tangible personal property (as a consumer), and include installation,
storage, withdrawal from storage, distribution, or any other act
preparatory to subsequent actual use or consumption within this state;
(b) With respect to a service defined in RCW 82.04.050(2)(a), the
first act within this state after the service has been performed by
which the taxpayer takes or assumes dominion or control over the
article of tangible personal property upon which the service was
performed (as a consumer), and includes installation, storage,
withdrawal from storage, distribution, or any other act preparatory to
subsequent actual use or consumption of the article within this state;
(c) With respect to an extended warranty, the first act within this
state after the extended warranty has been acquired by which the
taxpayer takes or assumes dominion or control over the article of
tangible personal property to which the extended warranty applies, and
includes installation, storage, withdrawal from storage, distribution,
or any other act preparatory to subsequent actual use or consumption of
the article within this state;
(d) With respect to a digital good or digital code, the first act
within this state by which the taxpayer, as a consumer, views,
accesses, downloads, possesses, stores, opens, manipulates, or
otherwise uses or enjoys the digital good or digital code;
(e) With respect to a digital automated service, the first act
within this state by which the taxpayer, as a consumer, uses, enjoys,
or otherwise receives the benefit of the service;
(f) With respect to a service defined as a retail sale in RCW
82.04.050(6)(b), the first act within this state by which the taxpayer,
as a consumer, accesses the prewritten computer software;
(g) With respect to a service defined as a retail sale in RCW
82.04.050(2)(g), the first act within this state after the service has
been performed by which the taxpayer, as a consumer, views, accesses,
downloads, possesses, stores, opens, manipulates, or otherwise uses or
enjoys the digital good upon which the service was performed; and
(h) With respect to natural gas or manufactured gas, the use of
which is taxable under RCW 82.12.022, including gas that is also
taxable under the authority of RCW 82.14.230, the first act within this
state by which the taxpayer consumes the gas by burning the gas or
storing the gas in the taxpayer's own facilities for later consumption
by the taxpayer.
(7)(a) "Value of the article used" is the purchase price for the
article of tangible personal property, the use of which is taxable
under this chapter. The term also includes, in addition to the
purchase price, the amount of any tariff or duty paid with respect to
the importation of the article used. In case the article used is
acquired by lease or by gift or is extracted, produced, or manufactured
by the person using the same or is sold under conditions wherein the
purchase price does not represent the true value thereof, the value of
the article used is determined as nearly as possible according to the
retail selling price at place of use of similar products of like
quality and character under such rules as the department may prescribe.
(b) In case the articles used are acquired by bailment, the value
of the use of the articles so used must be in an amount representing a
reasonable rental for the use of the articles so bailed, determined as
nearly as possible according to the value of such use at the places of
use of similar products of like quality and character under such rules
as the department of revenue may prescribe. In case any such articles
of tangible personal property are used in respect to the construction,
repairing, decorating, or improving of, and which become or are to
become an ingredient or component 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 such articles therein or thereto,
whether or not such personal property becomes a part of the realty by
virtue of installation, then the value of the use of such articles so
used is determined according to the retail selling price of such
articles, or in the absence of such a selling price, as nearly as
possible according to the retail selling price at place of use of
similar products of like quality and character or, in the absence of
either of these selling price measures, such value may be determined
upon a cost basis, in any event under such rules as the department of
revenue may prescribe.
(c) In the case of articles owned by a user engaged in business
outside the state which are brought into the state for no more than one
hundred eighty days in any period of three hundred sixty-five
consecutive days and which are temporarily used for business purposes
by the person in this state, the value of the article used must be an
amount representing a reasonable rental for the use of the articles,
unless the person has paid tax under this chapter or chapter 82.08 RCW
upon the full value of the article used, as defined in (a) of this
subsection.
(d) In the case of articles manufactured or produced by the user
and used in the manufacture or production of products sold or to be
sold to the department of defense of the United States, the value of
the articles used is determined according to the value of the
ingredients of such articles.
(e) In the case of an article manufactured or produced for purposes
of serving as a prototype for the development of a new or improved
product, the value of the article used is determined by: (i) The
retail selling price of such new or improved product when first offered
for sale; or (ii) the value of materials incorporated into the
prototype in cases in which the new or improved product is not offered
for sale.
(f) In the case of an article purchased with a direct pay permit
under RCW 82.32.087, the value of the article used is determined by the
purchase price of such article if, but for the use of the direct pay
permit, the transaction would have been subject to sales tax.
(8) "Value of the digital good or digital code used" means the
purchase price for the digital good or digital code, the use of which
is taxable under this chapter. If the digital good or digital code is
acquired other than by purchase, the value of the digital good or
digital code must be determined as nearly as possible according to the
retail selling price at place of use of similar digital goods or
digital codes of like quality and character under rules the department
may prescribe.
(9) "Value of the extended warranty used" means the purchase price
for the extended warranty, the use of which is taxable under this
chapter. If the extended warranty is received by gift or under
conditions wherein the purchase price does not represent the true value
of the extended warranty, the value of the extended warranty used is
determined as nearly as possible according to the retail selling price
at place of use of similar extended warranties of like quality and
character under rules the department may prescribe.
(10) "Value of the service used" means the purchase price for the
digital automated service or other service, the use of which is taxable
under this chapter. If the service is received by gift or under
conditions wherein the purchase price does not represent the true value
thereof, the value of the service used is determined as nearly as
possible according to the retail selling price at place of use of
similar services of like quality and character under rules the
department may prescribe.
Sec. 6 RCW 82.12.020 and 2010 1st sp.s. c 23 s 206 are each
amended to read as follows:
(1) There is levied and collected from every person in this state
a tax or excise for the privilege of using within this state as a
consumer any:
(a) Article of tangible personal property acquired by the user in
any manner, including tangible personal property acquired at a casual
or isolated sale, and including by-products used by the manufacturer
thereof, except as otherwise provided in this chapter, irrespective of
whether the article or similar articles are manufactured or are
available for purchase within this state;
(b) Prewritten computer software, regardless of the method of
delivery, but excluding prewritten computer software that is either
provided free of charge or is provided for temporary use in viewing
information, or both;
(c) Services defined as a retail sale in RCW 82.04.050 (2) (a) or
(g)((, (3)(a),)) or (6)(b), excluding services defined as a retail sale
in RCW 82.04.050(6)(b) that are provided free of charge;
(d) Extended warranty; or
(e)(i) Digital good, digital code, or digital automated service,
including the use of any services provided by a seller exclusively in
connection with digital goods, digital codes, or digital automated
services, whether or not a separate charge is made for such services.
(ii) With respect to the use of digital goods, digital automated
services, and digital codes acquired by purchase, the tax imposed in
this subsection (1)(e) applies in respect to:
(A) Sales in which the seller has granted the purchaser the right
of permanent use;
(B) Sales in which the seller has granted the purchaser a right of
use that is less than permanent;
(C) Sales in which the purchaser is not obligated to make continued
payment as a condition of the sale; and
(D) Sales in which the purchaser is obligated to make continued
payment as a condition of the sale.
(iii) With respect to digital goods, digital automated services,
and digital codes acquired other than by purchase, the tax imposed in
this subsection (1)(e) applies regardless of whether or not the
consumer has a right of permanent use or is obligated to make continued
payment as a condition of use.
(2) The provisions of this chapter do not apply in respect to the
use of any article of tangible personal property, extended warranty,
digital good, digital code, digital automated service, or service
taxable under RCW 82.04.050 (2) (a) or (g)((, (3)(a),)) or (6)(b), if
the sale to, or the use by, the present user or the present user's
bailor or donor has already been subjected to the tax under chapter
82.08 RCW or this chapter and the tax has been paid by the present user
or by the present user's bailor or donor.
(3)(a) Except as provided in this section, payment of the tax
imposed by this chapter or chapter 82.08 RCW by one purchaser or user
of tangible personal property, extended warranty, digital good, digital
code, digital automated service, or other service does not have the
effect of exempting any other purchaser or user of the same property,
extended warranty, digital good, digital code, digital automated
service, or other service from the taxes imposed by such chapters.
(b) The tax imposed by this chapter does not apply:
(i) If the sale to, or the use by, the present user or his or her
bailor or donor has already been subjected to the tax under chapter
82.08 RCW or this chapter and the tax has been paid by the present user
or by his or her bailor or donor;
(ii) In respect to the use of any article of tangible personal
property acquired by bailment and the tax has once been paid based on
reasonable rental as determined by RCW 82.12.060 measured by the value
of the article at time of first use multiplied by the tax rate imposed
by chapter 82.08 RCW or this chapter as of the time of first use;
(iii) In respect to the use of any article of tangible personal
property acquired by bailment, if the property was acquired by a
previous bailee from the same bailor for use in the same general
activity and the original bailment was prior to June 9, 1961; or
(iv) To the use of digital goods or digital automated services,
which were obtained through the use of a digital code, if the sale of
the digital code to, or the use of the digital code by, the present
user or the present user's bailor or donor has already been subjected
to the tax under chapter 82.08 RCW or this chapter and the tax has been
paid by the present user or by the present user's bailor or donor.
(4)(a) Except as provided in (b) of this subsection (4), the tax is
levied and must be collected in an amount equal to the value of the
article used, value of the digital good or digital code used, value of
the extended warranty used, or value of the service used by the
taxpayer, multiplied by the applicable rates in effect for the retail
sales tax under RCW 82.08.020.
(b) In the case of a seller required to collect use tax from the
purchaser, the tax must be collected in an amount equal to the purchase
price multiplied by the applicable rate in effect for the retail sales
tax under RCW 82.08.020.
(5) For purposes of the tax imposed in this section, "person"
includes anyone within the definition of "buyer," "purchaser," and
"consumer" in RCW 82.08.010.
Sec. 7 RCW 82.12.02595 and 2009 c 535 s 615 are each amended to
read as follows:
(1) This chapter does not apply to the use by a nonprofit
charitable organization or state or local governmental entity of
personal property that has been donated to the nonprofit charitable
organization or state or local governmental entity, or to the
subsequent use of the property by a person to whom the property is
donated or bailed in furtherance of the purpose for which the property
was originally donated.
(2) This chapter does not apply to the donation of personal
property without intervening use to a nonprofit charitable
organization, or to the incorporation of tangible personal property
without intervening use into real or personal property of or for a
nonprofit charitable organization in the course of installing,
repairing, cleaning, altering, imprinting, improving, constructing, or
decorating the real or personal property for no charge.
(3) This chapter does not apply to the use by a nonprofit
charitable organization of labor and services rendered in respect to
installing, repairing, cleaning, altering, imprinting, or improving
personal property provided to the charitable organization at no charge,
or to the donation of such services.
(((4) This chapter does not apply to the donation of amusement and
recreation services without intervening use to a nonprofit organization
or state or local governmental entity, to the use by a nonprofit
organization or state or local governmental entity of amusement and
recreation services, or to the subsequent use of the services by a
person to whom the services are donated or bailed in furtherance of the
purpose for which the services were originally donated. As used in
this subsection, "amusement and recreation services" has the meaning in
RCW 82.04.050(3)(a).))
Sec. 8 RCW 82.12.035 and 2009 c 535 s 1107 are each amended to
read as follows:
A credit is allowed against the taxes imposed by this chapter upon
the use in this state of tangible personal property, extended warranty,
digital good, digital code, digital automated service, or services
defined as a retail sale in RCW 82.04.050 (2) (a) or (g)((, (3)(a),))
or (6)(b), in the amount that the present user thereof or his or her
bailor or donor has paid a legally imposed retail sales or use tax with
respect to such property, extended warranty, digital good, digital
code, digital automated service, or service defined as a retail sale in
RCW 82.04.050 (2) (a) or (g)((, (3)(a),)) or (6)(b) to any other state,
possession, territory, or commonwealth of the United States, any
political subdivision thereof, the District of Columbia, and any
foreign country or political subdivision thereof.
Sec. 9 RCW 82.12.040 and 2011 1st sp.s. c 20 s 103 are each
amended to read as follows:
(1) Every person who maintains in this state a place of business or
a stock of goods, or engages in business activities within this state,
shall obtain from the department a certificate of registration, and
shall, at the time of making sales of tangible personal property,
digital goods, digital codes, digital automated services, extended
warranties, or sales of any service defined as a retail sale in RCW
82.04.050 (2) (a) or (g)((, (3)(a),)) or (6)(b), or making transfers of
either possession or title, or both, of tangible personal property for
use in this state, collect from the purchasers or transferees the tax
imposed under this chapter. The tax to be collected under this section
must be in an amount equal to the purchase price multiplied by the rate
in effect for the retail sales tax under RCW 82.08.020. For the
purposes of this chapter, the phrase "maintains in this state a place
of business" ((shall)) includes the solicitation of sales and/or taking
of orders by sales agents or traveling representatives. For the
purposes of this chapter, "engages in business activity within this
state" includes every activity which is sufficient under the
Constitution of the United States for this state to require collection
of tax under this chapter. The department must in rules specify
activities which constitute engaging in business activity within this
state, and must keep the rules current with future court
interpretations of the Constitution of the United States.
(2) Every person who engages in this state in the business of
acting as an independent selling agent for persons who do not hold a
valid certificate of registration, and who receives compensation by
reason of sales of tangible personal property, digital goods, digital
codes, digital automated services, extended warranties, or sales of any
service defined as a retail sale in RCW 82.04.050 (2) (a) or (g)((,
(3)(a),)) or (6)(b), of his or her principals for use in this state,
must, at the time such sales are made, collect from the purchasers the
tax imposed on the purchase price under this chapter, and for that
purpose is deemed a retailer as defined in this chapter.
(3) The tax required to be collected by this chapter is deemed to
be held in trust by the retailer until paid to the department, and any
retailer who appropriates or converts the tax collected to the
retailer's own use or to any use other than the payment of the tax
provided herein to the extent that the money required to be collected
is not available for payment on the due date as prescribed is guilty of
a misdemeanor. In case any seller fails to collect the tax herein
imposed or having collected the tax, fails to pay the same to the
department in the manner prescribed, whether such failure is the result
of the seller's own acts or the result of acts or conditions beyond the
seller's control, the seller is nevertheless personally liable to the
state for the amount of such tax, unless the seller has taken from the
buyer a copy of a direct pay permit issued under RCW 82.32.087.
(4) Any retailer who refunds, remits, or rebates to a purchaser, or
transferee, either directly or indirectly, and by whatever means, all
or any part of the tax levied by this chapter is guilty of a
misdemeanor.
(5) Notwithstanding subsections (1) through (4) of this section,
any person making sales is not obligated to collect the tax imposed by
this chapter if:
(a) The person's activities in this state, whether conducted
directly or through another person, are limited to:
(i) The storage, dissemination, or display of advertising;
(ii) The taking of orders; or
(iii) The processing of payments; and
(b) The activities are conducted electronically via a web site on
a server or other computer equipment located in Washington that is not
owned or operated by the person making sales into this state nor owned
or operated by an affiliated person. "Affiliated persons" has the same
meaning as provided in RCW 82.04.424.
(6) Subsection (5) of this section expires when: (a) The United
States congress grants individual states the authority to impose sales
and use tax collection duties on remote sellers; or (b) it is
determined by a court of competent jurisdiction, in a judgment not
subject to review, that a state can impose sales and use tax collection
duties on remote sellers.
(7) Notwithstanding subsections (1) through (4) of this section,
any person making sales is not obligated to collect the tax imposed by
this chapter if the person would have been obligated to collect retail
sales tax on the sale absent a specific exemption provided in chapter
82.08 RCW, and there is no corresponding use tax exemption in this
chapter. Nothing in this subsection (7) may be construed as relieving
purchasers from liability for reporting and remitting the tax due under
this chapter directly to the department.
(8) Notwithstanding subsections (1) through (4) of this section,
any person making sales is not obligated to collect the tax imposed by
this chapter if the state is prohibited under the Constitution or laws
of the United States from requiring the person to collect the tax
imposed by this chapter.
Sec. 10 RCW 82.12.860 and 2009 c 535 s 621 are each amended to
read as follows:
(1) This chapter does not apply to state credit unions with respect
to the use of any article of tangible personal property, digital good,
digital code, digital automated service, service defined as a retail
sale in RCW 82.04.050 (2) (a) or (g)((, (3)(a),)) or (6)(b), or
extended warranty, acquired from a federal credit union, foreign credit
union, or out-of-state credit union as a result of a merger or
conversion.
(2) For purposes of this section, the following definitions apply:
(a) "Federal credit union" means a credit union organized and
operating under the laws of the United States.
(b) "Foreign credit union" means a credit union organized and
operating under the laws of another country or other foreign
jurisdiction.
(c) "Out-of-state credit union" means a credit union organized and
operating under the laws of another state or United States territory or
possession.
(d) "State credit union" means a credit union organized and
operating under the laws of this state.
Sec. 11 RCW 82.32.087 and 2010 c 112 s 10 are each amended to
read as follows:
(1) The director may grant a direct pay permit to a taxpayer who
demonstrates, to the satisfaction of the director, that the taxpayer
meets the requirements of this section. The direct pay permit allows
the taxpayer to accrue and remit directly to the department use tax on
the acquisition of tangible personal property or sales tax on the sale
of or charges made for labor and/or services, in accordance with all of
the applicable provisions of this title. Any taxpayer that uses a
direct pay permit shall remit state and local sales or use tax directly
to the department. The agreement by the purchaser to remit tax
directly to the department, rather than pay sales or use tax to the
seller, relieves the seller of the obligation to collect sales or use
tax and requires the buyer to pay use tax on the tangible personal
property and sales tax on the sale of or charges made for labor and/or
services.
(2)(a) A taxpayer may apply for a permit under this section if:
(i) The taxpayer's cumulative tax liability is reasonably expected to
be two hundred forty thousand dollars or more in the current calendar
year; or (ii) the taxpayer makes purchases subject to the taxes imposed
under chapter 82.08 or 82.12 RCW in excess of ten million dollars per
calendar year. For the purposes of this section, "tax liability" means
the amount required to be remitted to the department for taxes
administered under this chapter, except for the taxes imposed or
authorized by chapters 82.14A, 82.14B, 82.24, 82.27, 82.29A, and 84.33
RCW.
(b) Application for a permit must be made in writing to the
director in a form and manner prescribed by the department. A taxpayer
who transacts business in two or more locations may submit one
application to cover the multiple locations.
(c) The director must review a direct pay permit application in a
timely manner and ((shall)) must notify the applicant, in writing, of
the approval or denial of the application. The department must approve
or deny an application based on the applicant's ability to comply with
local government use tax coding capabilities and responsibilities;
requirements for vendor notification; recordkeeping obligations;
electronic data capabilities; and tax reporting procedures.
Additionally, an application may be denied if the director determines
that denial would be in the best interest of collecting taxes due under
this title. The department must provide a direct pay permit to an
approved applicant with the notice of approval. The direct pay permit
shall clearly state that the holder is solely responsible for the
accrual and payment of the tax imposed under chapters 82.08 and 82.12
RCW and that the seller is relieved of liability to collect tax imposed
under chapters 82.08 and 82.12 RCW on all sales to the direct pay
permit holder. The taxpayer may petition the director for
reconsideration of a denial.
(d) A taxpayer who uses a direct pay permit must continue to
maintain records that are necessary to a determination of the tax
liability in accordance with this title. A direct pay permit is not
transferable and the use of a direct pay permit may not be assigned to
a third party.
(3) Taxes for which the direct pay permit is used are due and
payable on the tax return for the reporting period in which the
taxpayer (a) receives the tangible personal property purchased or in
which the labor and/or services are performed or (b) receives an
invoice for such property or such labor and/or services, whichever
period is earlier.
(4) The holder of a direct pay permit must furnish a copy of the
direct pay permit to each vendor with whom the taxpayer has opted to
use a direct pay permit. Sellers who make sales upon which the sales
or use tax is not collected by reason of the provisions of this
section, in addition to existing requirements under this title, must
maintain a copy of the direct pay permit and any such records or
information as the department may specify.
(5) A direct pay permit is subject to revocation by the director at
any time the department determines that the taxpayer has violated any
provision of this section or that revocation would be in the best
interests of collecting the taxes due under this title. The notice of
revocation must be in writing and is effective either as of the end of
the taxpayer's next normal reporting period or a date deemed
appropriate by the director and identified in the revocation notice.
The taxpayer may petition the director for reconsideration of a
revocation and reinstatement of the permit.
(6) Any taxpayer who chooses to no longer use a direct pay permit
or whose permit is revoked by the department, must return the permit to
the department and immediately make a good faith effort to notify all
vendors to whom the permit was given, advising them that the permit is
no longer valid.
(7) Except as provided in this subsection, the direct pay permit
may be used for any purchase of tangible personal property and any
retail sale under RCW 82.04.050. The direct pay permit may not be used
for:
(a) Purchases of meals or beverages;
(b) Purchases of motor vehicles, trailers, boats, airplanes, and
other property subject to requirements for title transactions by the
department of licensing;
(c) Purchases for which a reseller permit or other documentation
authorized under RCW 82.04.470 may be used;
(d) Purchases that meet the definitions of RCW 82.04.050 (2) (e)
and (f), (3) (a) through (((d))) (c), (e), (f), and (g), ((and)) (5),
and (15); or
(e) Other activities subject to tax under chapter 82.08 or 82.12
RCW that the department by rule designates, consistent with the
purposes of this section, as activities for which a direct pay permit
is not appropriate and may not be used.
NEW SECTION. Sec. 12 RCW 82.12.02917 (Exemptions -- Use of
amusement and recreation services by nonprofit youth organization) and
1999 c 358 s 7 are each repealed.
NEW SECTION. Sec. 13 The repeal in section 12 of this act does
not affect any existing right acquired or liability or obligation
incurred under the statute repealed or under any rule or order adopted
under that statute nor does it affect any proceedings instituted under
the statute repealed.
NEW SECTION. Sec. 14 This act takes effect January 1, 2015.