2487 AMH PENN TAYT 561

HB 2487 - H AMD TO H AMD(H-3790.2/26) 2518

By Representative Penner

WITHDRAWN 03/06/2026

On page 1, beginning on line 3 of the striking amendment, strike all of section 1 and insert the following:

"NEW SECTION. Sec. (1) The legislature finds that in 1935 the legislature enacted as RCW 82.04.320 a business and occupation tax exemption that applied to "any person in respect to insurance business upon which a tax based on gross premiums is paid to the state."

(2) In 2024, in Envolve Pharmacy Solutions, Inc. v. Department of Revenue, 4 Wn.3d 142 (2024), the Washington supreme court construed the exemption to apply to an affiliate of an insurer. The Court correctly reasoned the affiliate qualified for the business and occupation tax exemption because it was a person performing work in respect to insurance business upon which a premium tax had been paid. While the Court's decision was correct on the facts before it, its interpretation of the business and occupation tax exemption leaves open the possibility an affiliate or other entity may claim the exemption merely on the basis of being paid by an insurer with premium funds subject to premium taxes, even if the affiliate or other entity is not engaged in insurance business.

(3) Therefore, the legislature intends to clarify the scope of the business and occupation tax exemption such that it applies to insurers and their affiliates in respect to insurance business activities, but does not apply to such entities or others for the purpose of conducting other kinds of business."

On page 3, line 7 of the striking amendment, after "(4)))" strike all material through "48.14.0201(6)." on line 14 and insert "This chapter does not apply to:

(a) An insurer or person in respect to insurance business upon which a tax based on gross premiums is paid to the state by an insurer.

(b) Amounts received by any member of an insurer holding company system as defined in RCW 48.31B.005 from an insurer or taxpayer in respect to insurance business that is conducted on behalf of an insurer or taxpayer upon which a tax based on gross premiums is paid to the state.

On page 4, beginning on line 1, strike all of sections 3 and 4

Renumber the remaining sections consecutively and correct any internal references accordingly.

EFFECT: Changes intent language. Provides that the business and occupation tax does not apply to an insurer, amounts received by a member of an insurer holding company or gross premiums received by an health maintenance organization, a health care service contractor or a self-funded multiple employer welfare arrangement. Restores the B&O exemption for health maintenance organizations, health care service contractors, and certified health plans. Removes the section addressing payment of delinquent taxes, penalties and interest.

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