2024 Regular Session

ByRepresentatives Walen, Christian, Leavitt, Chapman, Jacobsen, Sandlin, and Shavers

Prefiled 12/18/23.Read first time 01/08/24.Referred to Committee on Finance.

AN ACT Relating to exempting manufacturing machinery and equipment from real estate excise tax; amending RCW 82.45.032; creating a new section; and providing an effective date.

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

NEW SECTION. Sec. 1. The legislature finds that manufacturing is a vital part of Washington state's economy, providing family-wage jobs throughout the state, accompanied by a multiplier effect that often makes these employers hubs of their local communities. The legislature finds that manufacturing jobs in Washington state have been in decline, losing over 50,000 jobs since the year 2000. The legislature finds that the enactment in 1995 of a sales and use tax exemption for manufacturing machinery and equipment under RCW 82.08.02565 and 82.12.02565 intended to exempt such property from taxation upon a transfer or sale of a manufacturing facility. The legislature finds that Washington state courts have long characterized manufacturing machinery and equipment installed in various manufacturing facilities as personal property. The legislature finds that the tax treatment of such property varies by county as some county assessors characterize manufacturing machinery and equipment as personal property and some place it on real property rolls, with a tendency to assess real estate excise tax on the latter. The legislature finds that this leads to unequal treatment of manufacturers across Washington state and, particularly as the real estate excise tax increases, places an unintended tax burden on manufacturers. It is the intent of the legislature to enhance taxpayer equity and resolve this source of uncertainty for all manufacturers in Washington state. It is the intent of the legislature to increase the sustainability of the manufacturing industry in Washington state as well as its competitiveness around the world to enable manufacturing to continue to be a critical and growing source of family-wage jobs throughout the state.

Sec. 2. RCW 82.45.032 and 2001 c 282 s 2 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Real estate" or "real property" means any interest, estate, or beneficial interest in land or anything affixed to land, including the ownership interest or beneficial interest in any entity which itself owns land or anything affixed to land. The terms include((s)) used mobile homes, used park model trailers, used floating homes, and improvements constructed upon leased land. The terms do not include machinery and equipment as defined in RCW 82.08.02565.

(2) "Used mobile home" means a mobile home which has been previously sold at retail and has been subjected to tax under chapter 82.08 RCW, or which has been previously used and has been subjected to tax under chapter 82.12 RCW, and which has substantially lost its identity as a mobile unit at the time of sale by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed on a foundation (posts or blocks) with fixed pipe connections with sewer, water, and other utilities.

(3) "Mobile home" means a mobile home as defined by RCW 46.04.302, as now or hereafter amended.

(4) "Park model trailer" means a park model trailer as defined in RCW 46.04.622.

(5) "Used floating home" means a floating home in respect to which tax has been paid under chapter 82.08 or 82.12 RCW.

(6) "Used park model trailer" means a park model trailer that has been previously sold at retail and has been subjected to tax under chapter 82.08 RCW, or that has been previously used and has been subjected to tax under chapter 82.12 RCW, and that has substantially lost its identity as a mobile unit by virtue of its being permanently sited in location and placed on a foundation of either posts or blocks with connections with sewer, water, or other utilities for the operation of installed fixtures and appliances.

(7) "Floating home" means a building on a float used in whole or in part for human habitation as a single-family dwelling, which is not designed for self propulsion by mechanical means or for propulsion by means of wind, and which is on the property tax rolls of the county in which it is located.

NEW SECTION. Sec. 3. This act takes effect July 1, 2025.