HOUSE BILL REPORT

HB 1814

BYRepresentatives Heavey, Nealey, Jesernig, Grant, Holland, Bristow, Appelwick, Prince, Basich, Silver, Sanders, Moyer, May, P. King and Brough

Exempting from use tax certain property acquired by institutions of higher education.

House Committe on Higher Education

Majority Report:  Do pass.  (12)

      Signed by Representatives Jacobsen, Chair; Heavey, Vice Chair; Barnes, Basich, Fox, Jesernig, Miller, Nelson, Prince, Silver, Unsoeld and K. Wilson.

House Staff:Susan Hosch (786-7120)

AS REPORTED BY COMMITTEE ON HIGHER EDUCATION FEBRUARY 3, 1988

BACKGROUND:

With certain exceptions, institutions of higher education are subject to the use tax for items that are purchased, or acquired by lease, gift, repossession, or bailment. Items exempted from the use tax include: computers, computer components, computer accessories, or computer software irrevocably donated to public or private nonprofit schools and colleges.

According to a memorandum from the Attorney General's office, dated November 21, 1979, items that are loaned to a college or university by the federal government are subject to the use tax.

SUMMARY:

Equipment accepted and acquired by a public or private institution of higher education through intergovernmental transfer or loan is exempt from the use tax if the equipment is intended for direct use in research or instruction.

Fiscal Note:      Requested February 1, 1988.

House Committee ‑ Testified For:    Arlen Davison, Washington State University.

House Committee - Testified Against:      None Presented.

House Committee - Testimony For:    Some institutions have a desperate need to replace worn out equipment used for research, especially equipment used in the scientific and agricultural disciplines.  For example, much of the equipment used at the WSU Research and Extension Center at Puyallup was purchased in the 1950s and 1960s.  The researchers do not have any funds to buy new equipment, so they borrow surplus used equipment from the federal government when this kind of equipment is available.  The title of the equipment remains with the federal government, and the equipment must be returned when the researchers have no further need for it.  This loaned equipment may be subject to the use tax, even though the tax has never been collected on it.

House Committee - Testimony Against:      None Presented.