AN ACT Relating to business and occupation tax simplification and relief; amending RCW 82.04.250, 82.04.270, 82.04.240, 82.04.240, 82.04.290, 82.04.230, and 82.32.790; adding a new section to chapter 82.04 RCW; repealing RCW 82.04.2404, 82.04.255, 82.04.257, 82.04.260, 82.04.263, 82.04.272, 82.04.280, 82.04.285, 82.04.286, 82.04.2905, 82.04.2906, 82.04.2907, 82.04.2908, 82.04.2909, 82.04.294, and 82.04.298; creating a new section; providing an effective date; and providing a contingent expiration date.

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

Sec. 2. RCW 82.04.250 and 2014 c 97 s 402 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))0.73 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(11) or subsection (3) of this section, as to such persons, the amount of tax with respect to such business is equal to the gross proceeds of sales of the business, multiplied by the rate of 0.484 percent.

(b) A person reporting under the tax rate provided in this subsection (3) must file a complete annual report with the department under RCW 82.32.534.))

Sec. 3. RCW 82.04.270 and 2004 c 24 s 5 are each amended to read as follows:

Upon every person engaging within this state in the business of making sales at wholesale, except persons taxable as wholesalers under other provisions of this chapter; as to such persons the amount of tax with respect to such business shall be equal to the gross proceeds of sales of such business multiplied by the rate of ((0.484))0.73 percent.

Sec. 4. RCW 82.04.240 and 2004 c 24 s 4 are each amended to read as follows:

(1) Upon every person engaging within this state in business as a manufacturer, except persons taxable as manufacturers under other provisions of this chapter; as to such persons the amount of the tax with respect to such business ((shall be))is equal to the value of the products, including byproducts, manufactured, multiplied by the rate of ((0.484))0.73 percent.

(2) The measure of the tax is the value of the products, including byproducts, so manufactured regardless of the place of sale or the fact that deliveries may be made to points outside the state.

Sec. 5. RCW 82.04.240 and 2017 3rd sp.s. c 37 s 518 are each amended to read as follows:

(1) Upon every person engaging within this state in business as a manufacturer, except persons taxable as manufacturers under other provisions of this chapter; as to such persons the amount of the tax with respect to such business is equal to the value of the products, including byproducts, manufactured, multiplied by the rate of ((0.484))0.73 percent.

(2)(((a) Upon every person engaging within this state in the business of manufacturing semiconductor materials, as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured, or, in the case of processors for hire, equal to the gross income of the business, multiplied by the rate of 0.275 percent. For the purposes of this subsection "semiconductor materials" means silicon crystals, silicon ingots, raw polished semiconductor wafers, compound semiconductors, integrated circuits, and microchips.

(4))) This section expires January 1, 2024, unless the contingency in RCW 82.32.790(2) occurs.

Sec. 6. RCW 82.04.290 and 2014 c 97 s 404 are each amended to read as follows:

(1) ((Upon every person engaging within this state in the business of providing international investment management services, as to such persons, the amount of tax with respect to such business is equal to the gross income or gross proceeds of sales of the business multiplied by a rate of 0.275 percent.

(2)(a))) Upon every person engaging within this state in any business activity other than or in addition to an activity taxed explicitly under another section in this chapter ((or subsection (1) or (3) of this section)); as to such persons the amount of tax on account of such activities is equal to the gross income of the business multiplied by the rate of ((1.5))0.73 percent.

(((b) This))(2) Subsection (((2)))(1) of this section includes, among others, and without limiting the scope hereof (whether or not title to materials used in the performance of such business passes to another by accession, confusion or other than by outright sale), persons engaged in the business of rendering any type of service which does not constitute a "sale at retail" or a "sale at wholesale." The value of advertising, demonstration, and promotional supplies and materials furnished to an agent by his or her principal or supplier to be used for informational, educational, and promotional purposes is not considered a part of the agent's remuneration or commission and is not subject to taxation under this section.

(((3)(a) Until July 1, 2040, upon every person engaging within this state in the business of performing aerospace product development for others, as to such persons, the amount of tax with respect to such business is equal to the gross income of the business multiplied by a rate of 0.9 percent.

(c) "Aerospace product development" has the meaning as provided in RCW 82.04.4461.))

Sec. 7. RCW 82.04.230 and 2006 c 300 s 5 are each amended to read as follows:

(1) Upon every person engaging within this state in business as an extractor, except persons taxable as an extractor under any other provision in this chapter; as to such persons the amount of the tax with respect to such business shall be equal to the value of the products, including by-products, extracted for sale or for commercial or industrial use, multiplied by the rate of ((0.484))0.73 percent.

(2) The measure of the tax is the value of the products, including by-products, so extracted, regardless of the place of sale or the fact that deliveries may be made to points outside the state.

NEW SECTION.  Sec. 8. A new section is added to chapter 82.04 RCW to read as follows:

(1) In computing the tax imposed under this chapter for the reporting period, there may be deducted from the measure of tax the maximum sum of twenty thousand eight hundred eighty-three dollars multiplied by the number of months in the reporting period.

(2) The deduction under subsection (1) of this section may be claimed during a reporting period only if the taxpayers total taxable amount, prior to the deduction provided under subsection (1) of this section, is less than four hundred sixteen thousand six hundred sixty-seven dollars multiplied by the number of months in the reporting period.

(3) When the measure of tax is equal to or less than the deduction allowed under subsection (1) of this section, no tax is due. The deduction cannot be carried forward or backward to subsequent or prior reporting periods. No refunds are allowed for the deduction under this section.

(4) For taxpayers subject to taxes imposed under multiple provisions of this chapter, the deduction must be applied to the measure of tax in order of the business activities taxed at the highest to lowest rates and must be applied proportionally to business activities subject to the same tax rate.

(5) This deduction is in addition to any other applicable deductions or exemptions allowed for the taxes due under this chapter and must be claimed after all other deductions are claimed.

(6) The provisions of RCW 82.32.805 and 82.32.808 do not apply to this section.

(1) RCW 82.04.2404 (Manufacturers—Processors for hire—Semiconductor materials) and 2017 3rd sp.s. c 37 s 503, (2017 3rd sp.s. c 37 s 502 expired January 1, 2018), 2017 c 135 s 10, 2010 c 114 s 105, & 2006 c 84 s 2;

(2) RCW 82.04.255 (Tax on real estate brokers) and 2011 c 322 s 2, 1997 c 7 s 1, 1996 c 1 s 1, 1993 sp.s. c 25 s 202, 1985 c 32 s 2, 1983 2nd ex.s. c 3 s 1, 1983 c 9 s 1, & 1970 ex.s. c 65 s 3;

(3) RCW 82.04.257 (Tax on digital products and services) and 2017 c 323 s 515, 2010 c 111 s 301, & 2009 c 535 s 401;

(4) RCW 82.04.260 (Tax on manufacturers and processors of various foods and by-products—Research and development organizations—Travel agents—Certain international activities—Stevedoring and associated activities—Low-level waste disposers—Insurance producers, surplus line brokers, and title insurance agents—Hospitals—Commercial airplane activities—Timber product activities—Canned salmon processors) and 2018 c 164 s 3 & 2017 c 135 s 11;

(5) RCW 82.04.263 (Tax on cleaning up radioactive waste and other by-products of weapons production and nuclear research and development) and 2009 c 469 s 202 & 1996 c 112 s 3;

(6) RCW 82.04.272 (Tax on warehousing and reselling prescription drugs) and 2013 c 19 s 127, 2003 c 168 s 401, & 1998 c 343 s 1;

(7) RCW 82.04.280 (Tax on printers, publishers, highway contractors, extracting or processing for hire, cold storage warehouse or storage warehouse operation, insurance general agents, radio and television broadcasting, government contractors—Cold storage warehouse defined—Storage warehouse defined—Periodical or magazine defined) and 2017 c 323 s 508;

(8) RCW 82.04.285 (Tax on contests of chance) and 2014 c 97 s 303 & 2005 c 369 s 5;

(9) RCW 82.04.286 (Tax on horse races) and 2005 c 369 s 6;

(10) RCW 82.04.2905 (Tax on providing day care) and 1998 c 312 s 7;

(11) RCW 82.04.2906 (Tax on certain chemical dependency services) and 2003 c 343 s 1;

(12) RCW 82.04.2907 (Tax on royalties) and 2015 3rd sp.s. c 5 s 101, 2010 1st sp.s. c 23 s 107, (2010 1st sp.s. c 23 s 106 expired July 1, 2010), 2010 c 111 s 302, 2009 c 535 s 407, 2001 c 320 s 3, & 1998 c 331 s 1;

(13) RCW 82.04.2908 (Tax on provision of room and domiciliary care to assisted living facility residents) and 2012 c 10 s 70, 2005 c 514 s 302, & 2004 c 174 s 1;

(14) RCW 82.04.2909 (Tax on aluminum smelters) and 2017 c 135 s 12, 2015 3rd sp.s. c 6 s 502, & 2011 c 174 s 301;

(15) RCW 82.04.294 (Tax on manufacturers or wholesalers of solar energy systems) and 2017 3rd sp.s. c 37 s 403, 2017 3rd sp.s. c 37 s 402, 2013 2nd sp.s. c 13 s 902, 2011 c 179 s 1, 2010 c 114 s 109, 2009 c 469 s 501, 2007 c 54 s 8, & 2005 c 301 s 2; and

(16) RCW 82.04.298 (Tax on qualified grocery distribution cooperatives) and 2011 c 2 s 204, 2010 1st sp.s. c 23 s 511, 2008 c 49 s 1, & 2001 1st sp.s. c 9 s 1.

Sec. 10. RCW 82.32.790 and 2017 3rd sp.s. c 37 s 526 are each amended to read as follows:

(1)(a) Section 5, chapter . . ., Laws of 2019 (section 5 of this act), sections 510, 512, 514, 516, 518, 520, 522, and 524, chapter 37, Laws of 2017 3rd sp. sess., sections 9, 13, 17, 22, 24, 30, 32, and 45, chapter 135, Laws of 2017, sections 104, 110, 117, 123, 125, 129, 131, and 150, chapter 114, Laws of 2010, and sections 1, 2, 3, and 5 through 10, chapter 149, Laws of 2003 are contingent upon the siting and commercial operation of a significant semiconductor microchip fabrication facility in the state of Washington by January 1, 2024.

(b) For the purposes of this section:

(i) "Commercial operation" means the same as "commencement of commercial production" as used in RCW 82.08.965.

(ii) "Semiconductor microchip fabrication" means "manufacturing semiconductor microchips" as defined in RCW 82.04.426.

(iii) "Significant" means the combined investment of new buildings and new machinery and equipment in the buildings, at the commencement of commercial production, will be at least one billion dollars.

(2) The sections referenced in subsection (1) of this section take effect the first day of the month in which a contract for the construction of a significant semiconductor fabrication facility is signed, if the contract is signed and received by January 1, 2024, as determined by the director of the department of revenue.

(3)(a) The department of revenue must provide notice of the effective date of the sections referenced in subsection (1) of this section to affected taxpayers, the legislature, and others as deemed appropriate by the department.

(b) If, after making a determination that a contract has been signed and the sections referenced in subsection (1) of this section are effective, the department discovers that commencement of commercial production did not take place within three years of the date the contract was signed, the department must make a determination that chapter 149, Laws of 2003 is no longer effective, and all taxes that would have been otherwise due are deemed deferred taxes and are immediately assessed and payable from any person ((reporting tax under RCW 82.04.240(2) or)) claiming an exemption or credit under RCW 82.04.426, 82.04.448, 82.08.965, 82.12.965, 82.08.970, 82.12.970, or 84.36.645. The department is not authorized to make a second determination regarding the effective date of the sections referenced in subsection (1) of this section.

(4)(a) This section expires January 1, 2024, if the contingency in subsection (2) of this section does not occur by January 1, 2024, as determined by the department.

(b) The department must provide written notice of the expiration date of this section and the sections referenced in subsection (1) of this section to affected taxpayers, the legislature, and others as deemed appropriate by the department.

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