Tax preferences

AN ACT Relating to tax preferences; amending RCW 82.04.110, 1
82.04.120, 82.04.260, 82.04.4282, 82.04.43395, 82.12.022, 82.12.022, 2
82.21.040, 82.23A.030, 82.29A.130, 82.29A.130, 82.45.010, 82.45.010, 3
82.45.030, 82.64.030, 84.36.010, and 84.36.030; reenacting and 4
amending RCW 82.04.050 and 82.04.260; repealing RCW 82.16.046, 5
82.29A.132, 82.45.190, 82.08.02566, 82.12.02566, 82.08.02568, 6
82.12.02568, 82.04.4482, 82.16.0498, 82.12.0265, 36.100.090, 7
82.12.024, 82.04.545, 82.16.315, 82.16.0495, 36.102.070, 82.08.02569, 8
82.12.02569, 82.04.421, 82.04.4331, 82.04.4295, 82.04.447, 84.36.047, 9
82.04.367, 82.23B.030, 82.08.965, 82.12.965, 82.08.970, 82.12.970, 10
82.04.448, 82.04.426, 82.04.4332, 82.29A.137, and 82.04.434; 11
providing effective dates; providing a contingent effective date; 12
providing expiration dates; and providing a contingent expiration 13
date. 14
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:15
NEW SECTION. Sec. 1. The following acts or parts of acts are 16
each repealed:17
(1) RCW 82.16.046 (Exemptions— Operation of state route No. 16) 18
and 1998 c 179 s 5; 19
(2) RCW 82.29A.132 (Exemptions— Operation of state route No. 16) 20
and 1998 c 179 s 6; 21
H-1147.3
HOUSE BILL 1995
State of Washington 69th Legislature 2025 Regular Session
By Representative Thomas
Read first time 02/18/25. Referred to Committee on Finance.
p. 1 HB 1995
(3) RCW 82.45.190 (Exemptions— State route No. 16 corridor 1
transportation systems and facilities) and 1998 c 179 s 7;2
(4) RCW 82.08.02566 (Exemptions— Sales of tangible personal 3
property incorporated in prototype for parts, auxiliary equipment, 4
and aircraft modification— Limitations on yearly exemption) and 2003 c 5
168 s 208, 1997 c 302 s 1, & 1996 c 247 s 4; 6
(5) RCW 82.12.02566 (Exemptions— Use of tangible personal property 7
incorporated in prototype for aircraft parts, auxiliary equipment, 8
and aircraft modification— Limitations on yearly exemption) and 2003 c 9
168 s 209, 1997 c 302 s 2, & 1996 c 247 s 5; 10
(6) RCW 82.08.02568 (Exemptions— Sales of carbon and similar 11
substances that become an ingredient or component of anodes or 12
cathodes used in producing aluminum for sale) and 1996 c 170 s 1;13
(7) RCW 82.12.02568 (Exemptions— Use of carbon and similar 14
substances that become an ingredient or component of anodes or 15
cathodes used in producing aluminum for sale) and 1996 c 170 s 2;16
(8) RCW 82.04.4482 (Credit— Sales of electricity or gas to an 17
aluminum smelter) and 2004 c 24 s 9; 18
(9) RCW 82.16.0498 (Credit— Sales of electricity or gas to an 19
aluminum smelter) and 2004 c 24 s 13; 20
(10) RCW 82.12.0265 (Exemptions— Use by bailee of tangible 21
personal property consumed in research, development, etc., 22
activities) and 1980 c 37 s 64; 23
(11) RCW 36.100.090 (Tax deferral— New public facilities) and 1995 24
1st sp.s. c 14 s 6; 25
(12) RCW 82.12.024 (Deferral of use tax on certain users of 26
natural or manufactured gas) and 2001 c 214 s 10; 27
(13) RCW 82.04.545 (Exemptions— Sales of electricity or gas to 28
silicon smelters) and 2017 3rd sp.s. c 37 s 705 & 2017 3rd sp.s. c 37 29
s 704; 30
(14) RCW 82.16.315 (Exemptions— Sales of electricity or gas to 31
silicon smelters) and 2017 3rd sp.s. c 37 s 703 & 2017 3rd sp.s. c 37 32
s 702; 33
(15) RCW 82.16.0495 (Credit— Electricity sold to a direct service 34
industrial customer) and 2001 c 214 s 11; 35
(16) RCW 36.102.070 (Deferral of taxes — Application by public 36
stadium authority — Department of revenue approval — Repayment— 37
Schedules— Interest— Debt for taxes — Information not confidential) and 38
1997 c 220 s 201; 39
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(17) RCW 82.08.02569 (Exemptions— Sales of tangible personal 1
property related to a building or structure that is an integral part 2
of a laser interferometer gravitational wave observatory) and 1996 c 3
113 s 1; 4
(18) RCW 82.12.02569 (Exemptions— Use of tangible personal 5
property related to a building or structure that is an integral part 6
of a laser interferometer gravitational wave observatory) and 1996 c 7
113 s 2; 8
(19) RCW 82.04.421 (Exemptions— Out-of-state membership sales in 9
discount programs) and 1997 c 408 s 1; 10
(20) RCW 82.04.4331 (Deductions— Insurance claims for state health 11
care coverage) and 1988 c 107 s 33; 12
(21) RCW 82.04.4295 (Deductions— Manufacturing activities 13
completed outside the United States) and 1980 c 37 s 15;14
(22) RCW 82.04.447 (Credit— Natural or manufactured gas purchased 15
by direct service industrial customers— Reports) and 2001 c 214 s 9;16
(23) RCW 84.36.047 (Nonprofit organization property used for 17
transmission or reception of radio or television signals originally 18
broadcast by governmental agencies) and 1984 c 220 s 4 & 1977 ex.s. c 19
348 s 1; 20
(24) RCW 82.04.367 (Exemptions— Nonprofit organizations that are 21
guarantee agencies, issue debt, or provide guarantees for student 22
loans) and 1998 c 324 s 1 & 1987 c 433 s 1; 23
(25) RCW 82.23B.030 (Exemption) and 2015 c 274 s 15, 1992 c 73 s 24
9, & 1991 c 200 s 803; 25
(26) RCW 82.08.965 (Exemptions— Semiconductor materials 26
manufacturing) and 2024 c 261 s 5; 27
(27) RCW 82.12.965 (Exemptions— Semiconductor materials 28
manufacturing) and 2024 c 261 s 7; 29
(28) RCW 82.08.970 (Exemptions— Gases and chemicals used to 30
manufacture semiconductor materials) and 2024 c 261 s 6;31
(29) RCW 82.12.970 (Exemptions— Gases and chemicals used to 32
manufacture semiconductor materials) and 2024 c 261 s 8;33
(30) RCW 82.04.448 (Credit— Manufacturing semiconductor materials) 34
and 2024 c 261 s 4; 35
(31) RCW 82.04.426 (Exemptions— Semiconductor microchips) and 2024 36
c 261 s 3; 37
(32) RCW 82.04.4332 (Deductions— Tuition fees of foreign degree-38
granting institutions) and 1993 c 181 s 10; 39
p. 3 HB 1995
(33) RCW 82.29A.137 (Exemptions— Certain leasehold interests 1
related to the manufacture of superefficient airplanes) and 2017 c 2
135 s 35, 2013 3rd sp.s. c 2 s 13, 2010 c 114 s 134, & 2003 2nd sp.s. 3
c 1 s 13; and 4
(34) RCW 82.04.434 (Credit— Public safety standards and testing) 5
and 1991 c 13 s 1. 6
Sec. 2. RCW 82.04.050 and 2021 c 296 s 8 and 2021 c 143 s 2 are 7
each reenacted and amended to read as follows: 8
(1)(a) "Sale at retail" or "retail sale" means every sale of 9
tangible personal property (including articles produced, fabricated, 10
or imprinted) to all persons irrespective of the nature of their 11
business and including, among others, without limiting the scope 12
hereof, persons who install, repair, clean, alter, improve, 13
construct, or decorate real or personal property of or for consumers 14
other than a sale to a person who: 15
(i) Purchases for the purpose of resale as tangible personal 16
property in the regular course of business without intervening use by 17
such person, but a purchase for the purpose of resale by a regional 18
transit authority under RCW 81.112.300 is not a sale for resale; or19
(ii) Installs, repairs, cleans, alters, imprints, improves, 20
constructs, or decorates real or personal property of or for 21
consumers, if such tangible personal property becomes an ingredient 22
or component of such real or personal property without intervening 23
use by such person; or 24
(iii) Purchases for the purpose of consuming the property 25
purchased in producing for sale as a new article of tangible personal 26
property or substance, of which such property becomes an ingredient 27
or component or is a chemical used in processing, when the primary 28
purpose of such chemical is to create a chemical reaction directly 29
through contact with an ingredient of a new article being produced 30
for sale; or 31
(iv) ((Purchases for the purpose of consuming the property 32
purchased in producing ferrosilicon which is subsequently used in 33
producing magnesium for sale, if the primary purpose of such property 34
is to create a chemical reaction directly through contact with an 35
ingredient of ferrosilicon; or36
(v))) Purchases for the purpose of providing the property to 37
consumers as part of competitive telephone service, as defined in RCW 38
82.04.065; or 39
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(((vi))) (v) Purchases for the purpose of satisfying the person's 1
obligations under an extended warranty as defined in subsection (7) 2
of this section, if such tangible personal property replaces or 3
becomes an ingredient or component of property covered by the 4
extended warranty without intervening use by such person.5
(b) The term includes every sale of tangible personal property 6
that is used or consumed or to be used or consumed in the performance 7
of any activity defined as a "sale at retail" or "retail sale" even 8
though such property is resold or used as provided in (a)(i) through 9
(((vi))) (v) of this subsection following such use.10
(c) The term also means every sale of tangible personal property 11
to persons engaged in any business that is taxable under RCW 12
82.04.280(1) (a), (b), and (g), 82.04.290, and 82.04.2908.13
(2) The term "sale at retail" or "retail sale" includes the sale 14
of or charge made for tangible personal property consumed and/or for 15
labor and services rendered in respect to the following:16
(a) The installing, repairing, cleaning, altering, imprinting, or 17
improving of tangible personal property of or for consumers, 18
including charges made for the mere use of facilities in respect 19
thereto, but excluding charges made for the use of self-service 20
laundry facilities, and also excluding sales of laundry service to 21
nonprofit health care facilities, and excluding services rendered in 22
respect to live animals, birds and insects; 23
(b) The constructing, repairing, decorating, or improving of new 24
or existing buildings or other structures under, upon, or above real 25
property of or for consumers, including the installing or attaching 26
of any article of tangible personal property therein or thereto, 27
whether or not such personal property becomes a part of the realty by 28
virtue of installation, and also includes the sale of services or 29
charges made for the clearing of land and the moving of earth 30
excepting the mere leveling of land used in commercial farming or 31
agriculture; 32
(c) The constructing, repairing, or improving of any structure 33
upon, above, or under any real property owned by an owner who conveys 34
the property by title, possession, or any other means to the person 35
performing such construction, repair, or improvement for the purpose 36
of performing such construction, repair, or improvement and the 37
property is then reconveyed by title, possession, or any other means 38
to the original owner; 39
p. 5 HB 1995
(d) The cleaning, fumigating, razing, or moving of existing 1
buildings or structures, but does not include the charge made for 2
janitorial services; and for purposes of this section the term 3
"janitorial services" means those cleaning and caretaking services 4
ordinarily performed by commercial janitor service businesses 5
including, but not limited to, wall and window washing, floor 6
cleaning and waxing, and the cleaning in place of rugs, drapes and 7
upholstery. The term "janitorial services" does not include painting, 8
papering, repairing, furnace or septic tank cleaning, snow removal or 9
sandblasting; 10
(e) Automobile towing and similar automotive transportation 11
services, but not in respect to those required to report and pay 12
taxes under chapter 82.16 RCW; 13
(f) The furnishing of lodging and all other services by a hotel, 14
rooming house, tourist court, motel, trailer camp, and the granting 15
of any similar license to use real property, as distinguished from 16
the renting or leasing of real property, and it is presumed that the 17
occupancy of real property for a continuous period of one month or 18
more constitutes a rental or lease of real property and not a mere 19
license to use or enjoy the same. For the purposes of this 20
subsection, it is presumed that the sale of and charge made for the 21
furnishing of lodging for a continuous period of one month or more to 22
a person is a rental or lease of real property and not a mere license 23
to enjoy the same. For the purposes of this section, it is presumed 24
that the sale of and charge made for the furnishing of lodging 25
offered regularly for public occupancy for periods of less than a 26
month constitutes a license to use or enjoy the property subject to 27
sales and use tax and not a rental or lease of property;28
(g) The installing, repairing, altering, or improving of digital 29
goods for consumers; 30
(h) Persons taxable under (a), (b), (c), (d), (e), (f), and (g) 31
of this subsection when such sales or charges are for property, labor 32
and services which are used or consumed in whole or in part by such 33
persons in the performance of any activity defined as a "sale at 34
retail" or "retail sale" even though such property, labor and 35
services may be resold after such use or consumption. Nothing 36
contained in this subsection may be construed to modify subsection 37
(1) of this section and nothing contained in subsection (1) of this 38
section may be construed to modify this subsection.39
p. 6 HB 1995
(3) The term "sale at retail" or "retail sale" includes the sale 1
of or charge made for personal, business, or professional services 2
including amounts designated as interest, rents, fees, admission, and 3
other service emoluments however designated, received by persons 4
engaging in the following business activities: 5
(a) Abstract, title insurance, and escrow services;6
(b) Credit bureau services; 7
(c) Automobile parking and storage garage services;8
(d) Landscape maintenance and horticultural services but 9
excluding (i) horticultural services provided to farmers and (ii) 10
pruning, trimming, repairing, removing, and clearing of trees and 11
brush near electric transmission or distribution lines or equipment, 12
if performed by or at the direction of an electric utility;13
(e) Service charges associated with tickets to professional 14
sporting events; 15
(f) The following personal services: Tanning salon services, 16
tattoo parlor services, steam bath services, turkish bath services, 17
escort services, and dating services; and 18
(g)(i) Operating an athletic or fitness facility, including all 19
charges for the use of such a facility or for any associated services 20
and amenities, except as provided in (g)(ii) of this subsection.21
(ii) Notwithstanding anything to the contrary in (g)(i) of this 22
subsection (3), the term "sale at retail" and "retail sale" under 23
this subsection does not include: 24
(A) Separately stated charges for the use of an athletic or 25
fitness facility where such use is primarily for a purpose other than 26
engaging in or receiving instruction in a physical fitness activity;27
(B) Separately stated charges for the use of a discrete portion 28
of an athletic or fitness facility, other than a pool, where such 29
discrete portion of the facility does not by itself meet the 30
definition of "athletic or fitness facility" in this subsection;31
(C) Separately stated charges for services, such as advertising, 32
massage, nutritional consulting, and body composition testing, that 33
do not require the customer to engage in physical fitness activities 34
to receive the service. The exclusion in this subsection 35
(3)(g)(ii)(C) does not apply to personal training services and 36
instruction in a physical fitness activity; 37
(D) Separately stated charges for physical therapy provided by a 38
physical therapist, as those terms are defined in RCW 18.74.010, or 39
occupational therapy provided by an occupational therapy 40
p. 7 HB 1995
practitioner, as those terms are defined in RCW 18.59.020, when 1
performed pursuant to a referral from an authorized health care 2
practitioner or in consultation with an authorized health care 3
practitioner. For the purposes of this subsection (3)(g)(ii)(D), an 4
authorized health care practitioner means a health care practitioner 5
licensed under chapter 18.83, 18.25, 18.36A, 18.57, 18.71, or 18.71A 6
RCW, or, until July 1, 2022, chapter 18.57A RCW; 7
(E) Rent or association fees charged by a landlord or residential 8
association to a tenant or residential owner with access to an 9
athletic or fitness facility maintained by the landlord or 10
residential association, unless the rent or fee varies depending on 11
whether the tenant or owner has access to the facility;12
(F) Services provided in the regular course of employment by an 13
employee with access to an athletic or fitness facility maintained by 14
the employer for use without charge by its employees or their family 15
members; 16
(G) The provision of access to an athletic or fitness facility by 17
an educational institution to its students and staff. However, 18
charges made by an educational institution to its alumni or other 19
members of the public for the use of any of the educational 20
institution's athletic or fitness facilities are a retail sale under 21
this subsection (3)(g). For purposes of this subsection 22
(3)(g)(ii)(G), "educational institution" has the same meaning as in 23
RCW 82.04.170; 24
(H) Yoga, chi gong, or martial arts classes, training, or events 25
held at a community center, park, school gymnasium, college or 26
university, hospital or other medical facility, private residence, or 27
any other facility that is not operated within and as part of an 28
athletic or fitness facility. 29
(iii) Nothing in (g)(ii) of this subsection (3) may be construed 30
to affect the taxation of sales made by the operator of an athletic 31
or fitness facility, where such sales are defined as a retail sale 32
under any provision of this section other than this subsection (3).33
(iv) For the purposes of this subsection (3)(g), the following 34
definitions apply: 35
(A) "Athletic or fitness facility" means an indoor or outdoor 36
facility or portion of a facility that is primarily used for: 37
Exercise classes; strength and conditioning programs; personal 38
training services; tennis, racquetball, handball, squash, or 39
pickleball; or other activities requiring the use of exercise or 40
p. 8 HB 1995
strength training equipment, such as treadmills, elliptical machines, 1
stair climbers, stationary cycles, rowing machines, pilates 2
equipment, balls, climbing ropes, jump ropes, and weightlifting 3
equipment. 4
(B) "Martial arts" means any of the various systems of training 5
for physical combat or self-defense. "Martial arts" includes, but is 6
not limited to, karate, kung fu, tae kwon do, Krav Maga, boxing, 7
kickboxing, jujitsu, shootfighting, wrestling, aikido, judo, hapkido, 8
Kendo, tai chi, and mixed martial arts. 9
(C) "Physical fitness activities" means activities that involve 10
physical exertion for the purpose of improving or maintaining the 11
general fitness, strength, flexibility, conditioning, or health of 12
the participant. "Physical fitness activities" includes participating 13
in yoga, chi gong, or martial arts. 14
(4)(a) The term also includes the renting or leasing of tangible 15
personal property to consumers. 16
(b) The term does not include the renting or leasing of tangible 17
personal property where the lease or rental is for the purpose of 18
sublease or subrent. 19
(5) The term also includes the providing of "competitive 20
telephone service," "telecommunications service," or "ancillary 21
services," as those terms are defined in RCW 82.04.065, to consumers.22
(6)(a) The term also includes the sale of prewritten computer 23
software to a consumer, regardless of the method of delivery to the 24
end user. For purposes of (a) and (b) of this subsection, the sale of 25
prewritten computer software includes the sale of or charge made for 26
a key or an enabling or activation code, where the key or code is 27
required to activate prewritten computer software and put the 28
software into use. There is no separate sale of the key or code from 29
the prewritten computer software, regardless of how the sale may be 30
characterized by the vendor or by the purchaser. 31
(b) The term "retail sale" does not include the sale of or charge 32
made for: 33
(i) Custom software; or 34
(ii) The customization of prewritten computer software.35
(c)(i) The term also includes the charge made to consumers for 36
the right to access and use prewritten computer software, where 37
possession of the software is maintained by the seller or a third 38
party, regardless of whether the charge for the service is on a per 39
use, per user, per license, subscription, or some other basis.40
p. 9 HB 1995
(ii)(A) The service described in (c)(i) of this subsection (6) 1
includes the right to access and use prewritten computer software to 2
perform data processing. 3
(B) For purposes of this subsection (6)(c)(ii), "data processing" 4
means the systematic performance of operations on data to extract the 5
required information in an appropriate form or to convert the data to 6
usable information. Data processing includes check processing, image 7
processing, form processing, survey processing, payroll processing, 8
claim processing, and similar activities. 9
(7) The term also includes the sale of or charge made for an 10
extended warranty to a consumer. For purposes of this subsection, 11
"extended warranty" means an agreement for a specified duration to 12
perform the replacement or repair of tangible personal property at no 13
additional charge or a reduced charge for tangible personal property, 14
labor, or both, or to provide indemnification for the replacement or 15
repair of tangible personal property, based on the occurrence of 16
specified events. The term "extended warranty" does not include an 17
agreement, otherwise meeting the definition of extended warranty in 18
this subsection, if no separate charge is made for the agreement and 19
the value of the agreement is included in the sales price of the 20
tangible personal property covered by the agreement. For purposes of 21
this subsection, "sales price" has the same meaning as in RCW 22
82.08.010. 23
(8)(a) The term also includes the following sales to consumers of 24
digital goods, digital codes, and digital automated services:25
(i) Sales in which the seller has granted the purchaser the right 26
of permanent use; 27
(ii) Sales in which the seller has granted the purchaser a right 28
of use that is less than permanent; 29
(iii) Sales in which the purchaser is not obligated to make 30
continued payment as a condition of the sale; and 31
(iv) Sales in which the purchaser is obligated to make continued 32
payment as a condition of the sale. 33
(b) A retail sale of digital goods, digital codes, or digital 34
automated services under this subsection (8) includes any services 35
provided by the seller exclusively in connection with the digital 36
goods, digital codes, or digital automated services, whether or not a 37
separate charge is made for such services. 38
(c) For purposes of this subsection, "permanent" means perpetual 39
or for an indefinite or unspecified length of time. A right of 40
p. 10 HB 1995
permanent use is presumed to have been granted unless the agreement 1
between the seller and the purchaser specifies or the circumstances 2
surrounding the transaction suggest or indicate that the right to use 3
terminates on the occurrence of a condition subsequent.4
(9) The term also includes the charge made for providing tangible 5
personal property along with an operator for a fixed or indeterminate 6
period of time. A consideration of this is that the operator is 7
necessary for the tangible personal property to perform as designed. 8
For the purpose of this subsection (9), an operator must do more than 9
maintain, inspect, or set up the tangible personal property.10
(10) The term does not include the sale of or charge made for 11
labor and services rendered in respect to the building, repairing, or 12
improving of any street, place, road, highway, easement, right-of-13
way, mass public transportation terminal or parking facility, bridge, 14
tunnel, or trestle which is owned by a municipal corporation or 15
political subdivision of the state or by the United States and which 16
is used or to be used primarily for foot or vehicular traffic 17
including mass transportation vehicles of any kind.18
(11) The term also does not include sales of chemical sprays or 19
washes to persons for the purpose of postharvest treatment of fruit 20
for the prevention of scald, fungus, mold, or decay, nor does it 21
include sales of feed, seed, seedlings, fertilizer, agents for 22
enhanced pollination including insects such as bees, and spray 23
materials to: (a) Persons who participate in the federal conservation 24
reserve program, the environmental quality incentives program, the 25
wetlands reserve program, and the wildlife habitat incentives 26
program, or their successors administered by the United States 27
department of agriculture; (b) farmers for the purpose of producing 28
for sale any agricultural product; (c) farmers for the purpose of 29
providing bee pollination services; and (d) farmers acting under 30
cooperative habitat development or access contracts with an 31
organization exempt from federal income tax under 26 U.S.C. Sec. 32
501(c)(3) of the federal internal revenue code or the Washington 33
state department of fish and wildlife to produce or improve wildlife 34
habitat on land that the farmer owns or leases. 35
(12) The term does not include the sale of or charge made for 36
labor and services rendered in respect to the constructing, 37
repairing, decorating, or improving of new or existing buildings or 38
other structures under, upon, or above real property of or for the 39
United States, any instrumentality thereof, or a county or city 40
p. 11 HB 1995
housing authority created pursuant to chapter 35.82 RCW, including 1
the installing, or attaching of any article of tangible personal 2
property therein or thereto, whether or not such personal property 3
becomes a part of the realty by virtue of installation. Nor does the 4
term include the sale of services or charges made for the clearing of 5
land and the moving of earth of or for the United States, any 6
instrumentality thereof, or a county or city housing authority. Nor 7
does the term include the sale of services or charges made for 8
cleaning up for the United States, or its instrumentalities, 9
radioactive waste and other by-products of weapons production and 10
nuclear research and development. 11
(13) The term does not include the sale of or charge made for 12
labor, services, or tangible personal property pursuant to agreements 13
providing maintenance services for bus, rail, or rail fixed guideway 14
equipment when a regional transit authority is the recipient of the 15
labor, services, or tangible personal property, and a transit agency, 16
as defined in RCW 81.104.015, performs the labor or services.17
(14) The term does not include the sale for resale of any service 18
described in this section if the sale would otherwise constitute a 19
"sale at retail" and "retail sale" under this section.20
(15)(a) The term "sale at retail" or "retail sale" includes 21
amounts charged, however labeled, to consumers to engage in any of 22
the activities listed in this subsection (15)(a), including the 23
furnishing of any associated equipment or, except as otherwise 24
provided in this subsection, providing instruction in such 25
activities, where such charges are not otherwise defined as a "sale 26
at retail" or "retail sale" in this section: 27
(i)(A) Golf, including any variant in which either golf balls or 28
golf clubs are used, such as miniature golf, hitting golf balls at a 29
driving range, and golf simulators, and including fees charged by a 30
golf course to a player for using his or her own cart. However, 31
charges for golf instruction are not a retail sale, provided that if 32
the instruction involves the use of a golfing facility that would 33
otherwise require the payment of a fee, such as green fees or driving 34
range fees, such fees, including the applicable retail sales tax, 35
must be separately identified and charged by the golfing facility 36
operator to the instructor or the person receiving the instruction.37
(B) Notwithstanding (a)(i)(A) of this subsection (15) and except 38
as otherwise provided in this subsection (15)(a)(i)(B), the term 39
"sale at retail" or "retail sale" does not include amounts charged to 40
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participate in, or conduct, a golf tournament or other competitive 1
event. However, amounts paid by event participants to the golf 2
facility operator are retail sales under this subsection (15)(a)(i). 3
Likewise, amounts paid by the event organizer to the golf facility 4
are retail sales under this subsection (15)(a)(i), if such amounts 5
vary based on the number of event participants; 6
(ii) Ballooning, hang gliding, indoor or outdoor sky diving, 7
paragliding, parasailing, and similar activities; 8
(iii) Air hockey, billiards, pool, foosball, darts, shuffleboard, 9
ping pong, and similar games; 10
(iv) Access to amusement park, theme park, and water park 11
facilities, including but not limited to charges for admission and 12
locker or cabana rentals. Discrete charges for rides or other 13
attractions or entertainment that are in addition to the charge for 14
admission are not a retail sale under this subsection (15)(a)(iv). 15
For the purposes of this subsection, an amusement park or theme park 16
is a location that provides permanently affixed amusement rides, 17
games, and other entertainment, but does not include parks or zoos 18
for which the primary purpose is the exhibition of wildlife, or 19
fairs, carnivals, and festivals as defined in (b)(i) of this 20
subsection; 21
(v) Batting cage activities; 22
(vi) Bowling, but not including competitive events, except that 23
amounts paid by the event participants to the bowling alley operator 24
are retail sales under this subsection (15)(a)(vi). Likewise, amounts 25
paid by the event organizer to the operator of the bowling alley are 26
retail sales under this subsection (15)(a)(vi), if such amounts vary 27
based on the number of event participants; 28
(vii) Climbing on artificial climbing structures, whether indoors 29
or outdoors; 30
(viii) Day trips for sightseeing purposes; 31
(ix) Bungee jumping, zip lining, and riding inside a ball, 32
whether inflatable or otherwise; 33
(x) Horseback riding offered to the public, where the seller 34
furnishes the horse to the buyer and providing instruction is not the 35
primary focus of the activity, including guided rides, but not 36
including therapeutic horseback riding provided by an instructor 37
certified by a nonprofit organization that offers national or 38
international certification for therapeutic riding instructors;39
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(xi) Fishing, including providing access to private fishing areas 1
and charter or guided fishing, except that fishing contests and 2
license fees imposed by a government entity are not a retail sale 3
under this subsection; 4
(xii) Guided hunting and hunting at game farms and shooting 5
preserves, except that hunting contests and license fees imposed by a 6
government entity are not a retail sale under this subsection;7
(xiii) Swimming, but only in respect to (A) recreational or 8
fitness swimming that is open to the public, such as open swim, lap 9
swimming, and special events like kids night out and pool parties 10
during open swim time, and (B) pool parties for private events, such 11
as birthdays, family gatherings, and employee outings. Fees for 12
swimming lessons, to participate in swim meets and other 13
competitions, or to join a swim team, club, or aquatic facility are 14
not retail sales under this subsection (15)(a)(xiii);15
(xiv) Go-karting, bumper cars, and other motorized activities 16
where the seller provides the vehicle and the premises where the 17
buyer will operate the vehicle; 18
(xv) Indoor or outdoor playground activities, such as inflatable 19
bounce structures and other inflatables; mazes; trampolines; slides; 20
ball pits; games of tag, including laser tag and soft-dart tag; and 21
human gyroscope rides, regardless of whether such activities occur at 22
the seller's place of business, but not including playground 23
activities provided for children by a licensed child day care center 24
or licensed family day care provider as those terms are defined in 25
RCW 43.216.010; 26
(xvi) Shooting sports and activities, such as target shooting, 27
skeet, trap, sporting clays, "5" stand, and archery, but only in 28
respect to discrete charges to members of the public to engage in 29
these activities, but not including fees to enter a competitive 30
event, instruction that is entirely or predominately classroom based, 31
or to join or renew a membership at a club, range, or other facility;32
(xvii) Paintball and airsoft activities; 33
(xviii) Skating, including ice skating, roller skating, and 34
inline skating, but only in respect to discrete charges to members of 35
the public to engage in skating activities, but not including skating 36
lessons, competitive events, team activities, or fees to join or 37
renew a membership at a skating facility, club, or other 38
organization; 39
p. 14 HB 1995
(xix) Nonmotorized snow sports and activities, such as downhill 1
and cross-country skiing, snowboarding, ski jumping, sledding, snow 2
tubing, snowshoeing, and similar snow sports and activities, whether 3
engaged in outdoors or in an indoor facility with or without snow, 4
but only in respect to discrete charges to the public for the use of 5
land or facilities to engage in nonmotorized snow sports and 6
activities, such as fees, however labeled, for the use of ski lifts 7
and tows and daily or season passes for access to trails or other 8
areas where nonmotorized snow sports and activities are conducted. 9
However, fees for the following are not retail sales under this 10
subsection (15)(a)(xix): (A) Instructional lessons; (B) permits 11
issued by a governmental entity to park a vehicle on or access public 12
lands; and (C) permits or leases granted by an owner of private 13
timberland for recreational access to areas used primarily for 14
growing and harvesting timber; and 15
(xx) Scuba diving; snorkeling; river rafting; surfing; 16
kiteboarding; flyboarding; water slides; inflatables, such as water 17
pillows, water trampolines, and water rollers; and similar water 18
sports and activities. 19
(b) Notwithstanding anything to the contrary in this subsection 20
(15), the term "sale at retail" or "retail sale" does not include 21
charges: 22
(i) Made for admission to, and rides or attractions at, fairs, 23
carnivals, and festivals. For the purposes of this subsection, fairs, 24
carnivals, and festivals are events that do not exceed 21 days and a 25
majority of the amusement rides, if any, are not affixed to real 26
property; 27
(ii) Made by an educational institution to its students and staff 28
for activities defined as retail sales by (a)(i) through (xx) of this 29
subsection. However, charges made by an educational institution to 30
its alumni or other members of the general public for these 31
activities are a retail sale under this subsection (15). For purposes 32
of this subsection (15)(b)(ii), "educational institution" has the 33
same meaning as in RCW 82.04.170; 34
(iii) Made by a vocational school for commercial diver training 35
that is licensed by the workforce training and education coordinating 36
board under chapter 28C.10 RCW; or 37
(iv) Made for day camps offered by a nonprofit organization or 38
state or local governmental entity that provide youth not older than 39
age 18, or that are focused on providing individuals with 40
p. 15 HB 1995
disabilities or mental illness, the opportunity to participate in a 1
variety of supervised activities. 2
(16)(a) The term "sale at retail" or "retail sale" includes the 3
purchase or acquisition of tangible personal property and specified 4
services by a person who receives either a qualifying grant exempt 5
from tax under RCW 82.04.767 or 82.16.320 or a grant deductible under 6
RCW 82.04.4339, except for transactions excluded from the definition 7
of "sale at retail" or "retail sale" by any other provision of this 8
section. Nothing in this subsection (16) may be construed to limit 9
the application of any other provision of this section to purchases 10
by a recipient of either a qualifying grant exempt from tax under RCW 11
82.04.767 or a grant deductible under RCW 82.04.4339, or by any other 12
person. 13
(b) For purposes of this subsection (16), "specified services" 14
means: 15
(i) The constructing, repairing, decorating, or improving of new 16
or existing buildings or other structures under, upon, or above real 17
property, including the installing or attaching of any article of 18
tangible personal property therein or thereto, whether or not such 19
personal property becomes a part of the realty by virtue of 20
installation; 21
(ii) The clearing of land or the moving of earth, whether or not 22
associated with activities described in (b)(i) of this subsection 23
(16); 24
(iii) The razing or moving of existing buildings or structures; 25
and 26
(iv) Landscape maintenance and horticultural services.27
Sec. 3. RCW 82.04.110 and 2009 c 535 s 405 are each amended to 28
read as follows: 29
(1) Except as otherwise provided in this section, "manufacturer" 30
means every person who, either directly or by contracting with others 31
for the necessary labor or mechanical services, manufactures for sale 32
or for commercial or industrial use from his or her own materials or 33
ingredients any articles, substances, or commodities.34
(2)(((a))) When the owner of equipment or facilities furnishes, 35
or sells to the customer prior to manufacture, all or a portion of 36
the materials that become a part or whole of the manufactured 37
article, the department shall prescribe equitable rules for 38
determining tax liability. 39
p. 16 HB 1995
(((b) A person who produces aluminum master alloys is a processor 1
for hire rather than a manufacturer, regardless of the portion of the 2
aluminum provided by that person's customer. For the purposes of this 3
subsection (2)(b), "aluminum master alloy" means an alloy registered 4
with the aluminum association as a grain refiner or a hardener alloy 5
using the American national standards institute designating system 6
H35.3.))7
(3) A nonresident of this state who is the owner of materials 8
processed for it in this state by a processor for hire shall not be 9
deemed to be engaged in business in this state as a manufacturer 10
because of the performance of such processing work for it in this 11
state. 12
(4) The owner of materials from which a nuclear fuel assembly is 13
made for it by a processor for hire shall not be subject to tax under 14
this chapter as a manufacturer of the fuel assembly.15
(5) For purposes of this section, the terms "articles," 16
"substances," "materials," "ingredients," and "commodities" do not 17
include digital goods. 18
Sec. 4. RCW 82.04.120 and 2019 c 202 s 3 are each amended to 19
read as follows: 20
(1) "To manufacture" embraces all activities of a commercial or 21
industrial nature wherein labor or skill is applied, by hand or 22
machinery, to materials so that as a result thereof a new, different 23
or useful substance or article of tangible personal property is 24
produced for sale or commercial or industrial use, and includes:25
(a) The production or fabrication of special made or custom made 26
articles; 27
(b) The production or fabrication of dental appliances, devices, 28
restorations, substitutes, or other dental laboratory products by a 29
dental laboratory or dental technician; 30
(c) Cutting, delimbing, and measuring of felled, cut, or taken 31
trees; 32
(d) Crushing and/or blending of rock, sand, stone, gravel, or 33
ore; 34
(e) The production of compressed natural gas or liquefied natural 35
gas for use as a transportation fuel as defined in RCW 82.16.310; and36
(f) The production or processing of renewable natural gas.37
(2) "To manufacture" does not include: 38
p. 17 HB 1995
(a) Conditioning of seed for use in planting; cubing hay or 1
alfalfa; 2
(b) Activities which consist of cutting, grading, or ice glazing 3
seafood which has been cooked, frozen, or canned outside this state;4
(c) The growing, harvesting, or producing of agricultural 5
products; 6
(d) ((Packing of agricultural products, including sorting, 7
washing, rinsing, grading, waxing, treating with fungicide, 8
packaging, chilling, or placing in controlled atmospheric storage;9
(e))) The production of digital goods; 10
(((f))) (e) The production of computer software if the computer 11
software is delivered from the seller to the purchaser by means other 12
than tangible storage media, including the delivery by use of a 13
tangible storage media where the tangible storage media is not 14
physically transferred to the purchaser; and 15
(((g))) (f) Except as provided in subsection (1)(((e))) (d) of 16
this section, any activity that is integral to any public service 17
business as defined in RCW 82.16.010 and with respect to which the 18
gross income associated with such activity: (i) Is subject to tax 19
under chapter 82.16 RCW; or (ii) would be subject to tax under 20
chapter 82.16 RCW if such activity were conducted in this state or if 21
not for an exemption or deduction. 22
(3) With respect to wastewater treatment facilities:23
(a) "To manufacture" does not include the treatment of 24
wastewater, the production of reclaimed water, and the production of 25
class B biosolids; and 26
(b) "To manufacture" does include the production of class A or 27
exceptional quality biosolids, but only with respect to the 28
processing activities that occur after the biosolids have reached 29
class B standards. 30
Sec. 5. RCW 82.04.260 and 2023 c 422 s 5 and 2023 c 286 s 3 are 31
each reenacted and amended to read as follows: 32
(1) Upon every person engaging within this state in the business 33
of manufacturing: 34
(a) Wheat into flour, barley into pearl barley, soybeans into 35
soybean oil, canola into canola oil, canola meal, or canola by-36
products, or sunflower seeds into sunflower oil; as to such persons 37
the amount of tax with respect to such business is equal to the value 38
p. 18 HB 1995
of the flour, pearl barley, oil, canola meal, or canola by-product 1
manufactured, multiplied by the rate of 0.138 percent;2
(b) ((Beginning July 1, 2035, seafood products that remain in a 3
raw, raw frozen, or raw salted state at the completion of the 4
manufacturing by that person; or selling manufactured seafood 5
products that remain in a raw, raw frozen, or raw salted state at the 6
completion of the manufacturing, to purchasers who transport in the 7
ordinary course of business the goods out of this state; as to such 8
persons the amount of tax with respect to such business is equal to 9
the value of the products manufactured or the gross proceeds derived 10
from such sales, multiplied by the rate of 0.138 percent. Sellers 11
must keep and preserve records for the period required by RCW 12
82.32.070 establishing that the goods were transported by the 13
purchaser in the ordinary course of business out of this state;14
(c)))(i) Except as provided otherwise in (((c))) (b)(iii) of this 15
subsection, beginning July 1, 2035, until January 1, 2046, dairy 16
products; or selling dairy products that the person has manufactured 17
to purchasers who either transport in the ordinary course of business 18
the goods out of state or purchasers who use such dairy products as 19
an ingredient or component in the manufacturing of a dairy product; 20
as to such persons the tax imposed is equal to the value of the 21
products manufactured or the gross proceeds derived from such sales 22
multiplied by the rate of 0.138 percent. Sellers must keep and 23
preserve records for the period required by RCW 82.32.070 24
establishing that the goods were transported by the purchaser in the 25
ordinary course of business out of this state or sold to a 26
manufacturer for use as an ingredient or component in the 27
manufacturing of a dairy product. 28
(ii) For the purposes of this subsection (1)(((c))) (b), "dairy 29
products" means: 30
(A) Products, not including any cannabis-infused product, that as 31
of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 32
131, 133, and 135, including by-products from the manufacturing of 33
the dairy products, such as whey and casein; and 34
(B) Products comprised of not less than 70 percent dairy products 35
that qualify under (((c))) (b)(ii)(A) of this subsection, measured by 36
weight or volume. 37
(iii) The preferential tax rate provided to taxpayers under this 38
subsection (1)(((c))) (b) does not apply to sales of dairy products 39
on or after July 1, 2023, where a dairy product is used by the 40
p. 19 HB 1995
purchaser as an ingredient or component in the manufacturing in 1
Washington of a dairy product; 2
(((d))) (c)(i) Beginning July 1, 2035, fruits or vegetables by 3
canning, preserving, freezing, processing, or dehydrating fresh 4
fruits or vegetables, or selling at wholesale fruits or vegetables 5
manufactured by the seller by canning, preserving, freezing, 6
processing, or dehydrating fresh fruits or vegetables and sold to 7
purchasers who transport in the ordinary course of business the goods 8
out of this state; as to such persons the amount of tax with respect 9
to such business is equal to the value of the products manufactured 10
or the gross proceeds derived from such sales multiplied by the rate 11
of 0.138 percent. Sellers must keep and preserve records for the 12
period required by RCW 82.32.070 establishing that the goods were 13
transported by the purchaser in the ordinary course of business out 14
of this state. 15
(ii) For purposes of this subsection (1)(((d))) (c), "fruits" and 16
"vegetables" do not include cannabis, useable cannabis, or cannabis-17
infused products; and 18
(((e))) (d) Wood biomass fuel; as to such persons the amount of 19
tax with respect to the business is equal to the value of wood 20
biomass fuel manufactured, multiplied by the rate of 0.138 percent. 21
For the purposes of this section, "wood biomass fuel" means a liquid 22
or gaseous fuel that is produced from lignocellulosic feedstocks, 23
including wood, forest, or field residue and dedicated energy crops, 24
and that does not include wood treated with chemical preservations 25
such as creosote, pentachlorophenol, or copper-chrome-arsenic.26
(2) Upon every person engaging within this state in the business 27
of splitting or processing dried peas; as to such persons the amount 28
of tax with respect to such business is equal to the value of the 29
peas split or processed, multiplied by the rate of 0.138 percent.30
(3) ((Upon every nonprofit corporation and nonprofit association 31
engaging within this state in research and development, as to such 32
corporations and associations, the amount of tax with respect to such 33
activities is equal to the gross income derived from such activities 34
multiplied by the rate of 0.484 percent.35
(4))) Upon every person engaging within this state in the 36
business of slaughtering, breaking and/or processing perishable meat 37
products and/or selling the same at wholesale only and not at retail; 38
as to such persons the tax imposed is equal to the gross proceeds 39
derived from such sales multiplied by the rate of 0.138 percent.40
p. 20 HB 1995
(((5))) (4)(a) Upon every person engaging within this state in 1
the business of acting as a travel agent or tour operator and whose 2
annual taxable amount for the prior calendar year from such business 3
was $250,000 or less; as to such persons the amount of the tax with 4
respect to such activities is equal to the gross income derived from 5
such activities multiplied by the rate of 0.275 percent.6
(b) Upon every person engaging within this state in the business 7
of acting as a travel agent or tour operator and whose annual taxable 8
amount for the prior calendar year from such business was more than 9
$250,000; as to such persons the amount of the tax with respect to 10
such activities is equal to the gross income derived from such 11
activities multiplied by the rate of 0.275 percent through June 30, 12
2019, and 0.9 percent beginning July 1, 2019. 13
(((6))) (5) Upon every person engaging within this state in 14
business as an international steamship agent, international customs 15
house broker, international freight forwarder, vessel and/or cargo 16
charter broker in foreign commerce, and/or international air cargo 17
agent; as to such persons the amount of the tax with respect to only 18
international activities is equal to the gross income derived from 19
such activities multiplied by the rate of 0.275 percent.20
(((7))) (6) Upon every person engaging within this state in the 21
business of stevedoring and associated activities pertinent to the 22
movement of goods and commodities in waterborne interstate or foreign 23
commerce; as to such persons the amount of tax with respect to such 24
business is equal to the gross proceeds derived from such activities 25
multiplied by the rate of 0.275 percent. Persons subject to taxation 26
under this subsection are exempt from payment of taxes imposed by 27
chapter 82.16 RCW for that portion of their business subject to 28
taxation under this subsection. Stevedoring and associated activities 29
pertinent to the conduct of goods and commodities in waterborne 30
interstate or foreign commerce are defined as all activities of a 31
labor, service or transportation nature whereby cargo may be loaded 32
or unloaded to or from vessels or barges, passing over, onto or under 33
a wharf, pier, or similar structure; cargo may be moved to a 34
warehouse or similar holding or storage yard or area to await further 35
movement in import or export or may move to a consolidation freight 36
station and be stuffed, unstuffed, containerized, separated or 37
otherwise segregated or aggregated for delivery or loaded on any mode 38
of transportation for delivery to its consignee. Specific activities 39
included in this definition are: Wharfage, handling, loading, 40
p. 21 HB 1995
unloading, moving of cargo to a convenient place of delivery to the 1
consignee or a convenient place for further movement to export mode; 2
documentation services in connection with the receipt, delivery, 3
checking, care, custody and control of cargo required in the transfer 4
of cargo; imported automobile handling prior to delivery to 5
consignee; terminal stevedoring and incidental vessel services, 6
including but not limited to plugging and unplugging refrigerator 7
service to containers, trailers, and other refrigerated cargo 8
receptacles, and securing ship hatch covers. 9
(((8))) (7)(a) Upon every person engaging within this state in 10
the business of disposing of low-level waste, as defined in RCW 11
70A.380.010; as to such persons the amount of the tax with respect to 12
such business is equal to the gross income of the business, excluding 13
any fees imposed under chapter 70A.384 RCW, multiplied by the rate of 14
3.3 percent. 15
(b) If the gross income of the taxpayer is attributable to 16
activities both within and without this state, the gross income 17
attributable to this state must be determined in accordance with the 18
methods of apportionment required under RCW 82.04.460.19
(((9))) (8) Upon every person engaging within this state as an 20
insurance producer or title insurance agent licensed under chapter 21
48.17 RCW or a surplus line broker licensed under chapter 48.15 RCW; 22
as to such persons, the amount of the tax with respect to such 23
licensed activities is equal to the gross income of such business 24
multiplied by the rate of 0.484 percent. 25
(((10))) (9) Upon every person engaging within this state in 26
business as a hospital, as defined in chapter 70.41 RCW, that is 27
operated as a nonprofit corporation or by the state or any of its 28
political subdivisions, as to such persons, the amount of tax with 29
respect to such activities is equal to the gross income of the 30
business multiplied by the rate of 0.75 percent through June 30, 31
1995, and 1.5 percent thereafter. 32
(((11))) (10)(a) Beginning October 1, 2005, upon every person 33
engaging within this state in the business of manufacturing 34
commercial airplanes, or components of such airplanes, or making 35
sales, at retail or wholesale, of commercial airplanes or components 36
of such airplanes, manufactured by the seller, as to such persons the 37
amount of tax with respect to such business is, in the case of 38
manufacturers, equal to the value of the product manufactured and the 39
gross proceeds of sales of the product manufactured, or in the case 40
p. 22 HB 1995
of processors for hire, equal to the gross income of the business, 1
multiplied by the rate of: 2
(i) 0.4235 percent from October 1, 2005, through June 30, 2007;3
(ii) 0.2904 percent beginning July 1, 2007, through March 31, 4
2020; and 5
(iii) Beginning April 1, 2020, 0.484 percent, subject to any 6
reduction required under (e) of this subsection (((11))) (10). The 7
tax rate in this subsection (((11))) (10)(a)(iii) applies to all 8
business activities described in this subsection (((11))) (10)(a).9
(b) Beginning July 1, 2008, upon every person who is not eligible 10
to report under the provisions of (a) of this subsection (((11))) 11
(10) and is engaging within this state in the business of 12
manufacturing tooling specifically designed for use in manufacturing 13
commercial airplanes or components of such airplanes, or making 14
sales, at retail or wholesale, of such tooling manufactured by the 15
seller, as to such persons the amount of tax with respect to such 16
business is, in the case of manufacturers, equal to the value of the 17
product manufactured and the gross proceeds of sales of the product 18
manufactured, or in the case of processors for hire, be equal to the 19
gross income of the business, multiplied by the rate of:20
(i) 0.2904 percent through March 31, 2020; and21
(ii) Beginning April 1, 2020, the following rates, which are 22
subject to any reduction required under (e) of this subsection 23
(((11))) (10): 24
(A) The rate under RCW 82.04.250(1) on the business of making 25
retail sales of tooling specifically designed for use in 26
manufacturing commercial airplanes or components of such airplanes; 27
and 28
(B) 0.484 percent on all other business activities described in 29
this subsection (((11))) (10)(b). 30
(c) For the purposes of this subsection (((11))) (10), 31
"commercial airplane" and "component" have the same meanings as 32
provided in RCW 82.32.550. 33
(d)(i) In addition to all other requirements under this title, a 34
person reporting under the tax rate provided in this subsection 35
(((11))) (10) must file a complete annual tax performance report with 36
the department under RCW 82.32.534. However, this requirement does 37
not apply to persons reporting under the tax rate in (a)(iii) of this 38
subsection (((11))) (10), so long as that rate remains 0.484 percent, 39
or under any of the tax rates in (b)(ii)(A) and (B) of this 40
p. 23 HB 1995
subsection (((11))) (10), so long as those tax rates remain the rate 1
imposed pursuant to RCW 82.04.250(1) and 0.484 percent, respectively.2
(ii) Nothing in (d)(i) of this subsection (((11))) (10) may be 3
construed as affecting the obligation of a person reporting under a 4
tax rate provided in this subsection (((11))) (10) to file a complete 5
annual tax performance report with the department under RCW 6
82.32.534: (A) Pursuant to another provision of this title as a 7
result of claiming a tax credit or exemption; or (B) pursuant to 8
(d)(i) of this subsection (((11))) (10) as a result of claiming the 9
tax rates in (a)(ii) or (b)(i) of this subsection (((11))) (10) for 10
periods ending before April 1, 2020. 11
(e)(i) After March 31, 2021, the tax rates under (a)(iii) and 12
(b)(ii) of this subsection (((11))) (10) must be reduced to 0.357 13
percent provided the conditions in RCW 82.04.2602 are met. The 14
effective date of the rates authorized under this subsection (((11))) 15
(10)(e) must occur on the first day of the next calendar quarter that 16
is at least 60 days after the department receives the last of the two 17
written notices pursuant to RCW 82.04.2602 (3) and (4).18
(ii) Both a significant commercial airplane manufacturer 19
separately and the rest of the aerospace industry as a whole, 20
receiving the rate of 0.357 percent under this subsection (((11))) 21
(10)(e) are subject to the aerospace apprenticeship utilization rates 22
required under RCW 49.04.220 by April 1, 2026, or five years after 23
the effective date of the 0.357 percent rate authorized under this 24
subsection (((11))) (10)(e), whichever is later, as determined by the 25
department of labor and industries. 26
(iii) The provisions of RCW 82.32.805 and 82.32.808 do not apply 27
to this subsection (((11))) (10)(e). 28
(f)(i) Except as provided in (f)(ii) of this subsection (((11))) 29
(10), this subsection (((11))) (10) does not apply on and after July 30
1, 2040. 31
(ii) With respect to the manufacturing of commercial airplanes or 32
making sales, at retail or wholesale, of commercial airplanes, this 33
subsection (((11))) (10) does not apply on and after July 1st of the 34
year in which the department makes a determination that any final 35
assembly or wing assembly of any version or variant of a commercial 36
airplane that is the basis of a siting of a significant commercial 37
airplane manufacturing program in the state under RCW 82.32.850 has 38
been sited outside the state of Washington. This subsection (((11))) 39
(10)(f)(ii) only applies to the manufacturing or sale of commercial 40
p. 24 HB 1995
airplanes that are the basis of a siting of a significant commercial 1
airplane manufacturing program in the state under RCW 82.32.850. This 2
subsection (((11))) (10)(f)(ii) continues to apply during the time 3
that a person is subject to the tax rate in (a)(iii) of this 4
subsection (((11))) (10). 5
(g) For the purposes of this subsection, "a significant 6
commercial airplane manufacturer" means a manufacturer of commercial 7
airplanes with at least 50,000 full-time employees in Washington as 8
of January 1, 2021. 9
(((12))) (11)(a) Until July 1, 2045, upon every person engaging 10
within this state in the business of extracting timber or extracting 11
for hire timber; as to such persons the amount of tax with respect to 12
the business is, in the case of extractors, equal to the value of 13
products, including by-products, extracted, or in the case of 14
extractors for hire, equal to the gross income of the business, 15
multiplied by the rate of 0.4235 percent from July 1, 2006, through 16
June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 17
2045. 18
(b) Until July 1, 2045, upon every person engaging within this 19
state in the business of manufacturing or processing for hire: (i) 20
Timber into timber products or wood products; (ii) timber products 21
into other timber products or wood products; or (iii) products 22
defined in RCW 19.27.570(1); as to such persons the amount of the tax 23
with respect to the business is, in the case of manufacturers, equal 24
to the value of products, including by-products, manufactured, or in 25
the case of processors for hire, equal to the gross income of the 26
business, multiplied by the rate of 0.4235 percent from July 1, 2006, 27
through June 30, 2007, and 0.2904 percent from July 1, 2007, through 28
June 30, 2045. 29
(c) Until July 1, 2045, upon every person engaging within this 30
state in the business of selling at wholesale: (i) Timber extracted 31
by that person; (ii) timber products manufactured by that person from 32
timber or other timber products; (iii) wood products manufactured by 33
that person from timber or timber products; or (iv) products defined 34
in RCW 19.27.570(1) manufactured by that person; as to such persons 35
the amount of the tax with respect to the business is equal to the 36
gross proceeds of sales of the timber, timber products, wood 37
products, or products defined in RCW 19.27.570(1) multiplied by the 38
rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 39
0.2904 percent from July 1, 2007, through June 30, 2045.40
p. 25 HB 1995
(d) Until July 1, 2045, upon every person engaging within this 1
state in the business of selling standing timber; as to such persons 2
the amount of the tax with respect to the business is equal to the 3
gross income of the business multiplied by the rate of 0.2904 4
percent. For purposes of this subsection (((12))) (11)(d), "selling 5
standing timber" means the sale of timber apart from the land, where 6
the buyer is required to sever the timber within 30 months from the 7
date of the original contract, regardless of the method of payment 8
for the timber and whether title to the timber transfers before, 9
upon, or after severance. 10
(e) For purposes of this subsection, the following definitions 11
apply: 12
(i) "Biocomposite surface products" means surface material 13
products containing, by weight or volume, more than 50 percent 14
recycled paper and that also use nonpetroleum -based phenolic resin as 15
a bonding agent. 16
(ii) "Paper and paper products" means products made of interwoven 17
cellulosic fibers held together largely by hydrogen bonding. "Paper 18
and paper products" includes newsprint; office, printing, fine, and 19
pressure-sensitive papers; paper napkins, towels, and toilet tissue; 20
kraft bag, construction, and other kraft industrial papers; 21
paperboard, liquid packaging containers, containerboard, corrugated, 22
and solid-fiber containers including linerboard and corrugated 23
medium; and related types of cellulosic products containing 24
primarily, by weight or volume, cellulosic materials. "Paper and 25
paper products" does not include books, newspapers, magazines, 26
periodicals, and other printed publications, advertising materials, 27
calendars, and similar types of printed materials.28
(iii) "Recycled paper" means paper and paper products having 50 29
percent or more of their fiber content that comes from postconsumer 30
waste. For purposes of this subsection (((12))) (11)(e)(iii), 31
"postconsumer waste" means a finished material that would normally be 32
disposed of as solid waste, having completed its life cycle as a 33
consumer item. 34
(iv) "Timber" means forest trees, standing or down, on privately 35
or publicly owned land. "Timber" does not include Christmas trees 36
that are cultivated by agricultural methods or short-rotation 37
hardwoods as defined in RCW 84.33.035. 38
(v) "Timber products" means: 39
p. 26 HB 1995
(A) Logs, wood chips, sawdust, wood waste, and similar products 1
obtained wholly from the processing of timber, short-rotation 2
hardwoods as defined in RCW 84.33.035, or both; 3
(B) Pulp, including market pulp and pulp derived from recovered 4
paper or paper products; and 5
(C) Recycled paper, but only when used in the manufacture of 6
biocomposite surface products. 7
(vi) "Wood products" means paper and paper products; dimensional 8
lumber; engineered wood products such as particleboard, oriented 9
strand board, medium density fiberboard, and plywood; wood doors; 10
wood windows; and biocomposite surface products. 11
(f) Except for small harvesters as defined in RCW 84.33.035, a 12
person reporting under the tax rate provided in this subsection 13
(((12))) (11) must file a complete annual tax performance report with 14
the department under RCW 82.32.534. 15
(g) Nothing in this subsection (((12))) (11) may be construed to 16
affect the taxation of any activity defined as a retail sale in RCW 17
82.04.050(2) (b) or (c), defined as a wholesale sale in RCW 18
82.04.060(2), or taxed under RCW 82.04.280(1)(g). 19
(((13))) (12) Upon every person engaging within this state in 20
inspecting, testing, labeling, and storing canned salmon owned by 21
another person, as to such persons, the amount of tax with respect to 22
such activities is equal to the gross income derived from such 23
activities multiplied by the rate of 0.484 percent.24
Sec. 6. RCW 82.04.260 and 2023 c 422 s 5 are each amended to 25
read as follows: 26
(1) Upon every person engaging within this state in the business 27
of manufacturing: 28
(a) Wheat into flour, barley into pearl barley, soybeans into 29
soybean oil, canola into canola oil, canola meal, or canola by-30
products, or sunflower seeds into sunflower oil; as to such persons 31
the amount of tax with respect to such business is equal to the value 32
of the flour, pearl barley, oil, canola meal, or canola by-product 33
manufactured, multiplied by the rate of 0.138 percent;34
(b) ((Beginning July 1, 2035, seafood products that remain in a 35
raw, raw frozen, or raw salted state at the completion of the 36
manufacturing by that person; or selling manufactured seafood 37
products that remain in a raw, raw frozen, or raw salted state at the 38
completion of the manufacturing, to purchasers who transport in the 39
p. 27 HB 1995
ordinary course of business the goods out of this state; as to such 1
persons the amount of tax with respect to such business is equal to 2
the value of the products manufactured or the gross proceeds derived 3
from such sales, multiplied by the rate of 0.138 percent. Sellers 4
must keep and preserve records for the period required by RCW 5
82.32.070 establishing that the goods were transported by the 6
purchaser in the ordinary course of business out of this state;7
(c)))(i) Except as provided otherwise in (((c))) (b)(iii) of this 8
subsection, beginning July 1, 2035, until January 1, 2046, dairy 9
products; or selling dairy products that the person has manufactured 10
to purchasers who either transport in the ordinary course of business 11
the goods out of state or purchasers who use such dairy products as 12
an ingredient or component in the manufacturing of a dairy product; 13
as to such persons the tax imposed is equal to the value of the 14
products manufactured or the gross proceeds derived from such sales 15
multiplied by the rate of 0.138 percent. Sellers must keep and 16
preserve records for the period required by RCW 82.32.070 17
establishing that the goods were transported by the purchaser in the 18
ordinary course of business out of this state or sold to a 19
manufacturer for use as an ingredient or component in the 20
manufacturing of a dairy product. 21
(ii) For the purposes of this subsection (1)(((c))) (b), "dairy 22
products" means: 23
(A) Products, not including any cannabis-infused product, that as 24
of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 25
131, 133, and 135, including by-products from the manufacturing of 26
the dairy products, such as whey and casein; and 27
(B) Products comprised of not less than 70 percent dairy products 28
that qualify under (((c))) (b)(ii)(A) of this subsection, measured by 29
weight or volume. 30
(iii) The preferential tax rate provided to taxpayers under this 31
subsection (1)(((c))) (b) does not apply to sales of dairy products 32
on or after July 1, 2023, where a dairy product is used by the 33
purchaser as an ingredient or component in the manufacturing in 34
Washington of a dairy product; 35
(((d))) (c)(i) Beginning July 1, 2035, fruits or vegetables by 36
canning, preserving, freezing, processing, or dehydrating fresh 37
fruits or vegetables, or selling at wholesale fruits or vegetables 38
manufactured by the seller by canning, preserving, freezing, 39
processing, or dehydrating fresh fruits or vegetables and sold to 40
p. 28 HB 1995
purchasers who transport in the ordinary course of business the goods 1
out of this state; as to such persons the amount of tax with respect 2
to such business is equal to the value of the products manufactured 3
or the gross proceeds derived from such sales multiplied by the rate 4
of 0.138 percent. Sellers must keep and preserve records for the 5
period required by RCW 82.32.070 establishing that the goods were 6
transported by the purchaser in the ordinary course of business out 7
of this state. 8
(ii) For purposes of this subsection (1)(((d))) (c), "fruits" and 9
"vegetables" do not include cannabis, useable cannabis, or cannabis-10
infused products; and 11
(((e))) (d) Wood biomass fuel; as to such persons the amount of 12
tax with respect to the business is equal to the value of wood 13
biomass fuel manufactured, multiplied by the rate of 0.138 percent. 14
For the purposes of this section, "wood biomass fuel" means a liquid 15
or gaseous fuel that is produced from lignocellulosic feedstocks, 16
including wood, forest, or field residue and dedicated energy crops, 17
and that does not include wood treated with chemical preservations 18
such as creosote, pentachlorophenol, or copper-chrome-arsenic.19
(2) Upon every person engaging within this state in the business 20
of splitting or processing dried peas; as to such persons the amount 21
of tax with respect to such business is equal to the value of the 22
peas split or processed, multiplied by the rate of 0.138 percent.23
(3) ((Upon every nonprofit corporation and nonprofit association 24
engaging within this state in research and development, as to such 25
corporations and associations, the amount of tax with respect to such 26
activities is equal to the gross income derived from such activities 27
multiplied by the rate of 0.484 percent.28
(4))) Upon every person engaging within this state in the 29
business of slaughtering, breaking and/or processing perishable meat 30
products and/or selling the same at wholesale only and not at retail; 31
as to such persons the tax imposed is equal to the gross proceeds 32
derived from such sales multiplied by the rate of 0.138 percent.33
(((5))) (4)(a) Upon every person engaging within this state in 34
the business of acting as a travel agent or tour operator and whose 35
annual taxable amount for the prior calendar year from such business 36
was $250,000 or less; as to such persons the amount of the tax with 37
respect to such activities is equal to the gross income derived from 38
such activities multiplied by the rate of 0.275 percent.39
p. 29 HB 1995
(b) Upon every person engaging within this state in the business 1
of acting as a travel agent or tour operator and whose annual taxable 2
amount for the prior calendar year from such business was more than 3
$250,000; as to such persons the amount of the tax with respect to 4
such activities is equal to the gross income derived from such 5
activities multiplied by the rate of 0.275 percent through June 30, 6
2019, and 0.9 percent beginning July 1, 2019. 7
(((6))) (5) Upon every person engaging within this state in 8
business as an international steamship agent, international customs 9
house broker, international freight forwarder, vessel and/or cargo 10
charter broker in foreign commerce, and/or international air cargo 11
agent; as to such persons the amount of the tax with respect to only 12
international activities is equal to the gross income derived from 13
such activities multiplied by the rate of 0.275 percent.14
(((7))) (6) Upon every person engaging within this state in the 15
business of stevedoring and associated activities pertinent to the 16
movement of goods and commodities in waterborne interstate or foreign 17
commerce; as to such persons the amount of tax with respect to such 18
business is equal to the gross proceeds derived from such activities 19
multiplied by the rate of 0.275 percent. Persons subject to taxation 20
under this subsection are exempt from payment of taxes imposed by 21
chapter 82.16 RCW for that portion of their business subject to 22
taxation under this subsection. Stevedoring and associated activities 23
pertinent to the conduct of goods and commodities in waterborne 24
interstate or foreign commerce are defined as all activities of a 25
labor, service or transportation nature whereby cargo may be loaded 26
or unloaded to or from vessels or barges, passing over, onto or under 27
a wharf, pier, or similar structure; cargo may be moved to a 28
warehouse or similar holding or storage yard or area to await further 29
movement in import or export or may move to a consolidation freight 30
station and be stuffed, unstuffed, containerized, separated or 31
otherwise segregated or aggregated for delivery or loaded on any mode 32
of transportation for delivery to its consignee. Specific activities 33
included in this definition are: Wharfage, handling, loading, 34
unloading, moving of cargo to a convenient place of delivery to the 35
consignee or a convenient place for further movement to export mode; 36
documentation services in connection with the receipt, delivery, 37
checking, care, custody and control of cargo required in the transfer 38
of cargo; imported automobile handling prior to delivery to 39
consignee; terminal stevedoring and incidental vessel services, 40
p. 30 HB 1995
including but not limited to plugging and unplugging refrigerator 1
service to containers, trailers, and other refrigerated cargo 2
receptacles, and securing ship hatch covers. 3
(((8))) (7)(a) Upon every person engaging within this state in 4
the business of disposing of low-level waste, as defined in RCW 5
70A.380.010; as to such persons the amount of the tax with respect to 6
such business is equal to the gross income of the business, excluding 7
any fees imposed under chapter 70A.384 RCW, multiplied by the rate of 8
3.3 percent. 9
(b) If the gross income of the taxpayer is attributable to 10
activities both within and without this state, the gross income 11
attributable to this state must be determined in accordance with the 12
methods of apportionment required under RCW 82.04.460.13
(((9))) (8) Upon every person engaging within this state as an 14
insurance producer or title insurance agent licensed under chapter 15
48.17 RCW or a surplus line broker licensed under chapter 48.15 RCW; 16
as to such persons, the amount of the tax with respect to such 17
licensed activities is equal to the gross income of such business 18
multiplied by the rate of 0.484 percent. 19
(((10))) (9) Upon every person engaging within this state in 20
business as a hospital, as defined in chapter 70.41 RCW, that is 21
operated as a nonprofit corporation or by the state or any of its 22
political subdivisions, as to such persons, the amount of tax with 23
respect to such activities is equal to the gross income of the 24
business multiplied by the rate of 0.75 percent through June 30, 25
1995, and 1.5 percent thereafter. 26
(((11))) (10)(a) Beginning October 1, 2005, upon every person 27
engaging within this state in the business of manufacturing 28
commercial airplanes, or components of such airplanes, or making 29
sales, at retail or wholesale, of commercial airplanes or components 30
of such airplanes, manufactured by the seller, as to such persons the 31
amount of tax with respect to such business is, in the case of 32
manufacturers, equal to the value of the product manufactured and the 33
gross proceeds of sales of the product manufactured, or in the case 34
of processors for hire, equal to the gross income of the business, 35
multiplied by the rate of: 36
(i) 0.4235 percent from October 1, 2005, through June 30, 2007;37
(ii) 0.2904 percent beginning July 1, 2007, through March 31, 38
2020; and 39
p. 31 HB 1995
(iii) Beginning April 1, 2020, 0.484 percent, subject to any 1
reduction required under (e) of this subsection (((11))) (10). The 2
tax rate in this subsection (((11))) (10)(a)(iii) applies to all 3
business activities described in this subsection (((11))) (10)(a).4
(b) Beginning July 1, 2008, upon every person who is not eligible 5
to report under the provisions of (a) of this subsection (((11))) 6
(10) and is engaging within this state in the business of 7
manufacturing tooling specifically designed for use in manufacturing 8
commercial airplanes or components of such airplanes, or making 9
sales, at retail or wholesale, of such tooling manufactured by the 10
seller, as to such persons the amount of tax with respect to such 11
business is, in the case of manufacturers, equal to the value of the 12
product manufactured and the gross proceeds of sales of the product 13
manufactured, or in the case of processors for hire, be equal to the 14
gross income of the business, multiplied by the rate of:15
(i) 0.2904 percent through March 31, 2020; and16
(ii) Beginning April 1, 2020, the following rates, which are 17
subject to any reduction required under (e) of this subsection 18
(((11))) (10): 19
(A) The rate under RCW 82.04.250(1) on the business of making 20
retail sales of tooling specifically designed for use in 21
manufacturing commercial airplanes or components of such airplanes; 22
and 23
(B) 0.484 percent on all other business activities described in 24
this subsection (((11))) (10)(b). 25
(c) For the purposes of this subsection (((11))) (10), 26
"commercial airplane" and "component" have the same meanings as 27
provided in RCW 82.32.550. 28
(d)(i) In addition to all other requirements under this title, a 29
person reporting under the tax rate provided in this subsection 30
(((11))) (10) must file a complete annual tax performance report with 31
the department under RCW 82.32.534. However, this requirement does 32
not apply to persons reporting under the tax rate in (a)(iii) of this 33
subsection (((11))) (10), so long as that rate remains 0.484 percent, 34
or under any of the tax rates in (b)(ii)(A) and (B) of this 35
subsection (((11))) (10), so long as those tax rates remain the rate 36
imposed pursuant to RCW 82.04.250(1) and 0.484 percent, respectively.37
(ii) Nothing in (d)(i) of this subsection (((11))) (10) may be 38
construed as affecting the obligation of a person reporting under a 39
tax rate provided in this subsection (((11))) (10) to file a complete 40
p. 32 HB 1995
annual tax performance report with the department under RCW 1
82.32.534: (A) Pursuant to another provision of this title as a 2
result of claiming a tax credit or exemption; or (B) pursuant to 3
(d)(i) of this subsection (((11))) (10) as a result of claiming the 4
tax rates in (a)(ii) or (b)(i) of this subsection (((11))) (10) for 5
periods ending before April 1, 2020. 6
(e)(i) After March 31, 2021, the tax rates under (a)(iii) and 7
(b)(ii) of this subsection (((11))) (10) must be reduced to 0.357 8
percent provided the conditions in RCW 82.04.2602 are met. The 9
effective date of the rates authorized under this subsection (((11))) 10
(10)(e) must occur on the first day of the next calendar quarter that 11
is at least 60 days after the department receives the last of the two 12
written notices pursuant to RCW 82.04.2602 (3) and (4).13
(ii) Both a significant commercial airplane manufacturer 14
separately and the rest of the aerospace industry as a whole, 15
receiving the rate of 0.357 percent under this subsection (((11))) 16
(10)(e) are subject to the aerospace apprenticeship utilization rates 17
required under RCW 49.04.220 by April 1, 2026, or five years after 18
the effective date of the 0.357 percent rate authorized under this 19
subsection (((11))) (10)(e), whichever is later, as determined by the 20
department of labor and industries. 21
(iii) The provisions of RCW 82.32.805 and 82.32.808 do not apply 22
to this subsection (((11))) (10)(e). 23
(f)(i) Except as provided in (f)(ii) of this subsection (((11))) 24
(10), this subsection (((11))) (10) does not apply on and after July 25
1, 2040. 26
(ii) With respect to the manufacturing of commercial airplanes or 27
making sales, at retail or wholesale, of commercial airplanes, this 28
subsection (((11))) (10) does not apply on and after July 1st of the 29
year in which the department makes a determination that any final 30
assembly or wing assembly of any version or variant of a commercial 31
airplane that is the basis of a siting of a significant commercial 32
airplane manufacturing program in the state under RCW 82.32.850 has 33
been sited outside the state of Washington. This subsection (((11))) 34
(10)(f)(ii) only applies to the manufacturing or sale of commercial 35
airplanes that are the basis of a siting of a significant commercial 36
airplane manufacturing program in the state under RCW 82.32.850. This 37
subsection (((11))) (10)(f)(ii) continues to apply during the time 38
that a person is subject to the tax rate in (a)(iii) of this 39
subsection (((11))) (10). 40
p. 33 HB 1995
(g) For the purposes of this subsection, "a significant 1
commercial airplane manufacturer" means a manufacturer of commercial 2
airplanes with at least 50,000 full-time employees in Washington as 3
of January 1, 2021. 4
(((12))) (11)(a) Until July 1, 2045, upon every person engaging 5
within this state in the business of extracting timber or extracting 6
for hire timber; as to such persons the amount of tax with respect to 7
the business is, in the case of extractors, equal to the value of 8
products, including by-products, extracted, or in the case of 9
extractors for hire, equal to the gross income of the business, 10
multiplied by the rate of 0.4235 percent from July 1, 2006, through 11
June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 12
2045. 13
(b) Until July 1, 2045, upon every person engaging within this 14
state in the business of manufacturing or processing for hire: (i) 15
Timber into timber products or wood products; (ii) timber products 16
into other timber products or wood products; or (iii) products 17
defined in RCW 19.27.570(1); as to such persons the amount of the tax 18
with respect to the business is, in the case of manufacturers, equal 19
to the value of products, including by-products, manufactured, or in 20
the case of processors for hire, equal to the gross income of the 21
business, multiplied by the rate of 0.4235 percent from July 1, 2006, 22
through June 30, 2007, and 0.2904 percent from July 1, 2007, through 23
June 30, 2045. 24
(c) Until July 1, 2045, upon every person engaging within this 25
state in the business of selling at wholesale: (i) Timber extracted 26
by that person; (ii) timber products manufactured by that person from 27
timber or other timber products; (iii) wood products manufactured by 28
that person from timber or timber products; or (iv) products defined 29
in RCW 19.27.570(1) manufactured by that person; as to such persons 30
the amount of the tax with respect to the business is equal to the 31
gross proceeds of sales of the timber, timber products, wood 32
products, or products defined in RCW 19.27.570(1) multiplied by the 33
rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 34
0.2904 percent from July 1, 2007, through June 30, 2045.35
(d) Until July 1, 2045, upon every person engaging within this 36
state in the business of selling standing timber; as to such persons 37
the amount of the tax with respect to the business is equal to the 38
gross income of the business multiplied by the rate of 0.2904 39
percent. For purposes of this subsection (((12))) (11)(d), "selling 40
p. 34 HB 1995
standing timber" means the sale of timber apart from the land, where 1
the buyer is required to sever the timber within 30 months from the 2
date of the original contract, regardless of the method of payment 3
for the timber and whether title to the timber transfers before, 4
upon, or after severance. 5
(e) For purposes of this subsection, the following definitions 6
apply: 7
(i) "Biocomposite surface products" means surface material 8
products containing, by weight or volume, more than 50 percent 9
recycled paper and that also use nonpetroleum -based phenolic resin as 10
a bonding agent. 11
(ii) "Paper and paper products" means products made of interwoven 12
cellulosic fibers held together largely by hydrogen bonding. "Paper 13
and paper products" includes newsprint; office, printing, fine, and 14
pressure-sensitive papers; paper napkins, towels, and toilet tissue; 15
kraft bag, construction, and other kraft industrial papers; 16
paperboard, liquid packaging containers, containerboard, corrugated, 17
and solid-fiber containers including linerboard and corrugated 18
medium; and related types of cellulosic products containing 19
primarily, by weight or volume, cellulosic materials. "Paper and 20
paper products" does not include books, newspapers, magazines, 21
periodicals, and other printed publications, advertising materials, 22
calendars, and similar types of printed materials.23
(iii) "Recycled paper" means paper and paper products having 50 24
percent or more of their fiber content that comes from postconsumer 25
waste. For purposes of this subsection (((12))) (11)(e)(iii), 26
"postconsumer waste" means a finished material that would normally be 27
disposed of as solid waste, having completed its life cycle as a 28
consumer item. 29
(iv) "Timber" means forest trees, standing or down, on privately 30
or publicly owned land. "Timber" does not include Christmas trees 31
that are cultivated by agricultural methods or short-rotation 32
hardwoods as defined in RCW 84.33.035. 33
(v) "Timber products" means: 34
(A) Logs, wood chips, sawdust, wood waste, and similar products 35
obtained wholly from the processing of timber, short-rotation 36
hardwoods as defined in RCW 84.33.035, or both; 37
(B) Pulp, including market pulp and pulp derived from recovered 38
paper or paper products; and 39
p. 35 HB 1995
(C) Recycled paper, but only when used in the manufacture of 1
biocomposite surface products. 2
(vi) "Wood products" means paper and paper products; dimensional 3
lumber; engineered wood products such as particleboard, oriented 4
strand board, medium density fiberboard, and plywood; wood doors; 5
wood windows; and biocomposite surface products. 6
(f) Except for small harvesters as defined in RCW 84.33.035, a 7
person reporting under the tax rate provided in this subsection 8
(((12))) (11) must file a complete annual tax performance report with 9
the department under RCW 82.32.534. 10
(g) Nothing in this subsection (((12))) (11) may be construed to 11
affect the taxation of any activity defined as a retail sale in RCW 12
82.04.050(2) (b) or (c), defined as a wholesale sale in RCW 13
82.04.060(2), or taxed under RCW 82.04.280(1)(g). 14
(((13))) (12) Upon every person engaging within this state in 15
inspecting, testing, labeling, and storing canned salmon owned by 16
another person, as to such persons, the amount of tax with respect to 17
such activities is equal to the gross income derived from such 18
activities multiplied by the rate of 0.484 percent.19
(((14))) (13)(a) Upon every person engaging within this state in 20
the business of printing a newspaper, publishing a newspaper, or 21
both, the amount of tax on such business is equal to the gross income 22
of the business multiplied by the rate of 0.35 percent until July 1, 23
2024, and 0.484 percent thereafter. 24
(b) A person reporting under the tax rate provided in this 25
subsection (((14))) (13) must file a complete annual tax performance 26
report with the department under RCW 82.32.534. 27
Sec. 7. RCW 82.04.4282 and 2009 c 535 s 410 are each amended to 28
read as follows: 29
In computing tax there may be deducted from the measure of tax 30
amounts derived from bona fide (1) initiation fees, (2) dues, (3) 31
contributions, (4) donations, (5) tuition fees, (6) charges made by a 32
nonprofit trade or professional organization for attending or 33
occupying space at a trade show, convention, or educational seminar 34
sponsored by the nonprofit trade or professional organization, which 35
trade show, convention, or educational seminar is not open to the 36
general public, and (7) charges made for operation of privately 37
operated kindergartens((, and (8) endowment funds)). This section may 38
not be construed to exempt any person, association, or society from 39
p. 36 HB 1995
tax liability upon selling tangible personal property, digital goods, 1
digital codes, or digital automated services, or upon providing 2
facilities or other services for which a special charge is made to 3
members or others. If dues are in exchange for any significant amount 4
of goods or services rendered by the recipient thereof to members 5
without any additional charge to the member, or if the dues are 6
graduated upon the amount of goods or services rendered, the value of 7
such goods or services shall not be considered as a deduction under 8
this section. 9
Sec. 8. RCW 82.04.43395 and 2023 c 313 s 1 are each amended to 10
read as follows: 11
(1) An accountable community of health may deduct from the 12
measure of tax delivery system reform incentive payments, medicaid 13
transformation project funding, or both, distributed by the 14
Washington state health care authority, as described in Sec. 1115 15
medicaid demonstration project number 11-W-00304/0, as approved by 16
the centers for medicare and medicaid services in accordance with 17
Sec. 1115(a) of the social security act. 18
(2) A hospital that is owned by a municipal corporation or 19
political subdivision, or a hospital that is affiliated with a state 20
institution, may deduct from the measure of tax ((either or both of 21
the following:22
(a) Incentive)) incentive payments received through the medicaid 23
quality improvement program established through 42 C.F.R. 438.6 (b)(2)24
((;25
(b) Delivery system reform incentive payments, medicaid 26
transformation project funding, or both, received through the project 27
described in Sec. 1115 medicaid demonstration project number 11-28
W-00304/0, approved by the centers for medicare and medicaid services 29
in accordance with Sec. 1115(a) of the social security act)).30
(3) Managed care organizations may deduct from the measure of tax 31
the incentive payments received for achieving quality performance 32
standards established through 42 C.F.R. 438.6 (b)(2), as existing on 33
July 28, 2019. 34
(4) The definitions in this subsection apply throughout this 35
section unless the context clearly requires otherwise.36
(a) "Accountable community of health" means a regional nonprofit 37
designated by the health care authority to work together with the 38
health care delivery system, health plans, public health, social 39
p. 37 HB 1995
services, community-based organizations, the justice system, schools, 1
tribal partners, and local government leaders to improve the health 2
equity of their communities as part of Sec. 1115 medicaid 3
demonstration project number 11-W-00304/0. 4
(b) "Managed care organization" has the same meaning as provided 5
in RCW 74.60.010. 6
Sec. 9. RCW 82.12.022 and 2017 3rd sp.s. c 37 s 707 are each 7
amended to read as follows: 8
(1) A use tax is levied on every person in this state for the 9
privilege of using natural gas or manufactured gas, including 10
compressed natural gas and liquefied natural gas, within this state 11
as a consumer. 12
(2) The tax must be levied and collected in an amount equal to 13
the value of the article used by the taxpayer multiplied by the rate 14
in effect for the public utility tax on gas distribution businesses 15
under RCW 82.16.020. The "value of the article used" does not include 16
any amounts that are paid for the hire or use of a gas distribution 17
business as defined in RCW 82.16.010(2) in transporting the gas 18
subject to tax under this subsection if those amounts are subject to 19
tax under that chapter. 20
(3) ((The tax levied in this section does not apply to the use of 21
natural or manufactured gas delivered to the consumer by other means 22
than through a pipeline.23
(4))) The tax levied in this section does not apply to the use of 24
natural or manufactured gas if the person who sold the gas to the 25
consumer has paid a tax under RCW 82.16.020 with respect to the gas 26
for which exemption is sought under this subsection.27
(((5)(a) The tax levied in this section does not apply to the use 28
of natural or manufactured gas by an aluminum smelter as that term is 29
defined in RCW 82.04.217 before January 1, 2027.30
(b) A person claiming the exemption provided in this subsection 31
(5) must file a complete annual tax performance report with the 32
department under RCW 82.32.534.33
(6))) (4) The tax imposed by this section does not apply to the 34
use of natural gas, compressed natural gas, or liquefied natural gas, 35
if the consumer uses the gas for transportation fuel as defined in 36
RCW 82.16.310. 37
p. 38 HB 1995
(((7) The tax levied in this section does not apply to the use of 1
natural or manufactured gas by a silicon smelter as that term is 2
defined in RCW 82.16.315.3
(8))) (5) There is a credit against the tax levied under this 4
section in an amount equal to any tax paid by: 5
(a) The person who sold the gas to the consumer when that tax is 6
a gross receipts tax similar to that imposed pursuant to RCW 7
82.16.020 by another state with respect to the gas for which a credit 8
is sought under this subsection; or 9
(b) The person consuming the gas upon which a use tax similar to 10
the tax imposed by this section was paid to another state with 11
respect to the gas for which a credit is sought under this 12
subsection. 13
(((9))) (6) The use tax imposed in this section must be paid by 14
the consumer to the department. 15
(((10))) (7) There is imposed a reporting requirement on the 16
person who delivered the gas to the consumer to make a quarterly 17
report to the department. Such report must contain the volume of gas 18
delivered, name of the consumer to whom delivered, and such other 19
information as the department may require by rule.20
(((11))) (8) The department may adopt rules under chapter 34.05 21
RCW for the administration and enforcement of sections 1 through 6, 22
chapter 384, Laws of 1989. 23
Sec. 10. RCW 82.12.022 and 2017 c 135 s 27 are each amended to 24
read as follows: 25
(1) A use tax is levied on every person in this state for the 26
privilege of using natural gas or manufactured gas, including 27
compressed natural gas and liquefied natural gas, within this state 28
as a consumer. 29
(2) The tax must be levied and collected in an amount equal to 30
the value of the article used by the taxpayer multiplied by the rate 31
in effect for the public utility tax on gas distribution businesses 32
under RCW 82.16.020. The "value of the article used" does not include 33
any amounts that are paid for the hire or use of a gas distribution 34
business as defined in RCW 82.16.010(2) in transporting the gas 35
subject to tax under this subsection if those amounts are subject to 36
tax under that chapter. 37
p. 39 HB 1995
(3) ((The tax levied in this section does not apply to the use of 1
natural or manufactured gas delivered to the consumer by other means 2
than through a pipeline.3
(4))) The tax levied in this section does not apply to the use of 4
natural or manufactured gas if the person who sold the gas to the 5
consumer has paid a tax under RCW 82.16.020 with respect to the gas 6
for which exemption is sought under this subsection.7
(((5)(a) The tax levied in this section does not apply to the use 8
of natural or manufactured gas by an aluminum smelter as that term is 9
defined in RCW 82.04.217 before January 1, 2027.10
(b) A person claiming the exemption provided in this subsection 11
(5) must file a complete annual tax performance report with the 12
department under RCW 82.32.534.13
(6))) (4) The tax imposed by this section does not apply to the 14
use of natural gas, compressed natural gas, or liquefied natural gas, 15
if the consumer uses the gas for transportation fuel as defined in 16
RCW 82.16.310. 17
(((7))) (5) There is a credit against the tax levied under this 18
section in an amount equal to any tax paid by: 19
(a) The person who sold the gas to the consumer when that tax is 20
a gross receipts tax similar to that imposed pursuant to RCW 21
82.16.020 by another state with respect to the gas for which a credit 22
is sought under this subsection; or 23
(b) The person consuming the gas upon which a use tax similar to 24
the tax imposed by this section was paid to another state with 25
respect to the gas for which a credit is sought under this 26
subsection. 27
(((8))) (6) The use tax imposed in this section must be paid by 28
the consumer to the department. 29
(((9))) (7) There is imposed a reporting requirement on the 30
person who delivered the gas to the consumer to make a quarterly 31
report to the department. Such report must contain the volume of gas 32
delivered, name of the consumer to whom delivered, and such other 33
information as the department may require by rule.34
(((10))) (8) The department may adopt rules under chapter 34.05 35
RCW for the administration and enforcement of sections 1 through 6, 36
chapter 384, Laws of 1989. 37
Sec. 11. RCW 82.21.040 and 2024 c 241 s 1 are each amended to 38
read as follows: 39
p. 40 HB 1995
The following are exempt from the tax imposed in this chapter:1
(1) Any successive possession of a previously taxed hazardous 2
substance. If tax due under this chapter has not been paid with 3
respect to a hazardous substance, the department may collect the tax 4
from any person who has had possession of the hazardous substance. If 5
the tax is paid by any person other than the first person having 6
taxable possession of a hazardous substance, the amount of tax paid 7
shall constitute a debt owed by the first person having taxable 8
possession to the person who paid the tax. 9
(2) Any possession of a hazardous substance by a natural person 10
under circumstances where the substance is used, or is to be used, 11
for a personal or domestic purpose (and not for any business purpose) 12
by that person or a relative of, or person residing in the same 13
dwelling as, that person. 14
(3) Any possession of a hazardous substance amount which is 15
determined as minimal by the department of ecology and which is 16
possessed by a retailer for the purpose of making sales to ultimate 17
consumers. This exemption does not apply to pesticide or petroleum 18
products. 19
(4) ((Any possession of alumina or natural gas.20
(5)))(a) Until January 1, 2028, any possession of a hazardous 21
substance as defined in RCW 82.21.020(1)(c) that is solely for use by 22
a farmer or certified applicator as an agricultural crop protection 23
product and warehoused in this state or transported to or from this 24
state, provided that the person possessing the substance does not 25
otherwise use, manufacture, package for sale, or sell the substance 26
in this state. 27
(b) The definitions in this subsection apply throughout this 28
section unless the context clearly requires otherwise.29
(i) "Agricultural crop protection product" means a chemical 30
regulated under the federal insecticide, fungicide, and rodenticide 31
act, 7 U.S.C. Sec. 136 as amended as of September 1, 2015, when used 32
to prevent, destroy, repel, mitigate, or control predators, diseases, 33
weeds, or other pests. 34
(ii) "Certified applicator" has the same meaning as provided in 35
RCW 17.21.020. 36
(iii) "Farmer" has the same meaning as in RCW 82.04.213.37
(iv) "Manufacturing" includes mixing or combining agricultural 38
crop protection products with other chemicals or other agricultural 39
crop protection products. 40
p. 41 HB 1995
(v) "Package for sale" includes transferring agricultural crop 1
protection products from one container to another, including the 2
transfer of fumigants and other liquid or gaseous chemicals from one 3
tank to another. 4
(vi) "Use" has the same meaning as in RCW 82.12.010.5
(((6))) (5) Persons or activities which the state is prohibited 6
from taxing under the United States Constitution. 7
Sec. 12. RCW 82.23A.030 and 1989 c 383 s 17 are each amended to 8
read as follows: 9
The following are exempt from the tax imposed in this chapter:10
(1) Any successive possession of a previously taxed petroleum 11
product. If tax due under this chapter has not been paid with respect 12
to a petroleum product, the department may collect the tax from any 13
person who has had possession of the petroleum product. If the tax is 14
paid by any person other than the first person having taxable 15
possession of a petroleum product, the amount of tax paid shall 16
constitute a debt owed by the first person having taxable possession 17
to the person who paid the tax. 18
(2) Any possession of a petroleum product by a natural person 19
under circumstances where the substance is used, or is to be used, 20
for a personal or domestic purpose (and not for any business purpose) 21
by that person or a relative of, or person residing in the same 22
dwelling as, that person. 23
(3) Persons or activities which the state is prohibited from 24
taxing under the United States Constitution. 25
(4) ((Any persons possessing a petroleum product where such 26
possession first occurred before July 1, 1989.27
(5))) Any possession of (a) natural gas, (b) petroleum coke, or 28
(c) liquid fuel or fuel gas used in petroleum processing.29
(((6))) (5) Any possession of petroleum products that are 30
exported for use or sale outside this state as fuel.31
(((7))) (6) Any possession of petroleum products packaged for 32
sale to ultimate consumers. 33
Sec. 13. RCW 82.29A.130 and 2023 c 343 s 2 are each amended to 34
read as follows: 35
The following leasehold interests are exempt from taxes imposed 36
pursuant to RCW 82.29A.030 and 82.29A.040: 37
p. 42 HB 1995
(1) All leasehold interests constituting a part of the operating 1
properties of any public utility that is assessed and taxed as a 2
public utility pursuant to chapter 84.12 RCW. 3
(2) All leasehold interests in facilities owned or used by a 4
school, college or university which leasehold provides housing for 5
students and which is otherwise exempt from taxation under provisions 6
of RCW 84.36.010 and 84.36.050. 7
(3) All leasehold interests of subsidized housing where the fee 8
ownership of such property is vested in the government of the United 9
States, or the state of Washington or any political subdivision 10
thereof but only if income qualification exists for such housing.11
(4) All leasehold interests used for fair purposes of a nonprofit 12
fair association that sponsors or conducts a fair or fairs which 13
receive support from revenues collected pursuant to RCW 67.16.100 and 14
allocated by the director of the department of agriculture where the 15
fee ownership of such property is vested in the government of the 16
United States, the state of Washington or any of its political 17
subdivisions. However, this exemption does not apply to the leasehold 18
interest of any sublessee of such nonprofit fair association if such 19
leasehold interest would be taxable if it were the primary lease.20
(5) All leasehold interests in any property of any public entity 21
used as a residence by an employee of that public entity who is 22
required as a condition of employment to live in the publicly owned 23
property. 24
(6) All leasehold interests held by enrolled Indians of lands 25
owned or held by any Indian or Indian tribe where the fee ownership 26
of such property is vested in or held in trust by the United States 27
and which are not subleased to other than to a lessee which would 28
qualify pursuant to this chapter, RCW 84.36.451 and 84.40.175.29
(7) All leasehold interests in any real property of any Indian or 30
Indian tribe, band, or community that is held in trust by the United 31
States or is subject to a restriction against alienation imposed by 32
the United States. However, this exemption applies only where it is 33
determined that contract rent paid is greater than or equal to 90 34
percent of fair market rental, to be determined by the department of 35
revenue using the same criteria used to establish taxable rent in RCW 36
82.29A.020(2)(g). 37
(8) All leasehold interests for which annual taxable rent is less 38
than $250 per year. For purposes of this subsection leasehold 39
p. 43 HB 1995
interests held by the same lessee in contiguous properties owned by 1
the same lessor are deemed a single leasehold interest.2
(9) All leasehold interests which give use or possession of the 3
leased property for a continuous period of less than 30 days: 4
PROVIDED, That for purposes of this subsection, successive leases or 5
lease renewals giving substantially continuous use of possession of 6
the same property to the same lessee are deemed a single leasehold 7
interest: PROVIDED FURTHER, That no leasehold interest is deemed to 8
give use or possession for a period of less than 30 days solely by 9
virtue of the reservation by the public lessor of the right to use 10
the property or to allow third parties to use the property on an 11
occasional, temporary basis. 12
(10) All leasehold interests under month-to-month leases in 13
residential units rented for residential purposes of the lessee 14
pending destruction or removal for the purpose of constructing a 15
public highway or building. 16
(11) All leasehold interests in any publicly owned real or 17
personal property to the extent such leasehold interests arises 18
solely by virtue of a contract for public improvements or work 19
executed under the public works statutes of this state or of the 20
United States between the public owner of the property and a 21
contractor. 22
(12) ((All leasehold interests that give use or possession of 23
state adult correctional facilities for the purposes of operating 24
correctional industries under RCW 72.09.100.25
(13))) All leasehold interests used to provide organized and 26
supervised recreational activities for persons with disabilities of 27
all ages in a camp facility and for public recreational purposes by a 28
nonprofit organization, association, or corporation that would be 29
exempt from property tax under RCW 84.36.030(1) if it owned the 30
property. If the publicly owned property is used for any taxable 31
purpose, the leasehold excise taxes set forth in RCW 82.29A.030 and 32
82.29A.040 must be imposed and must be apportioned accordingly.33
(((14))) (13) All leasehold interests in the public or 34
entertainment areas of a baseball stadium with natural turf and a 35
retractable roof or canopy that is in a county with a population of 36
over 1,000,000, that has a seating capacity of over 40,000, and that 37
is constructed on or after January 1, 1995. "Public or entertainment 38
areas" include ticket sales areas, ramps and stairs, lobbies and 39
concourses, parking areas, concession areas, restaurants, hospitality 40
p. 44 HB 1995
and stadium club areas, kitchens or other work areas primarily 1
servicing other public or entertainment areas, public rest room 2
areas, press and media areas, control booths, broadcast and 3
production areas, retail sales areas, museum and exhibit areas, 4
scoreboards or other public displays, storage areas, loading, 5
staging, and servicing areas, seating areas and suites, the playing 6
field, and any other areas to which the public has access or which 7
are used for the production of the entertainment event or other 8
public usage, and any other personal property used for these 9
purposes. "Public or entertainment areas" does not include locker 10
rooms or private offices exclusively used by the lessee.11
(((15))) (14) All leasehold interests in the public or 12
entertainment areas of a stadium and exhibition center, as defined in 13
RCW 36.102.010, that is constructed on or after January 1, 1998. For 14
the purposes of this subsection, "public or entertainment areas" has 15
the same meaning as in subsection (((14))) (13) of this section, and 16
includes exhibition areas. 17
(((16))) (15) All leasehold interests in public facilities 18
districts, as provided in chapter 36.100 or 35.57 RCW.19
(((17))) (16) All leasehold interests in property that is: (a) 20
Owned by the United States government or a municipal corporation; (b) 21
listed on any federal or state register of historical sites; and (c) 22
wholly contained within a designated national historic reserve under 23
16 U.S.C. Sec. 461. 24
(((18))) (17) All leasehold interests in the public or 25
entertainment areas of an amphitheater if a private entity is 26
responsible for 100 percent of the cost of constructing the 27
amphitheater which is not reimbursed by the public owner, both the 28
public owner and the private lessee sponsor events at the facility on 29
a regular basis, the lessee is responsible under the lease or 30
agreement to operate and maintain the facility, and the amphitheater 31
has a seating capacity of over 17,000 reserved and general admission 32
seats and is in a county that had a population of over 350,000, but 33
less than 425,000 when the amphitheater first opened to the public.34
For the purposes of this subsection, "public or entertainment 35
areas" include box offices or other ticket sales areas, entrance 36
gates, ramps and stairs, lobbies and concourses, parking areas, 37
concession areas, restaurants, hospitality areas, kitchens or other 38
work areas primarily servicing other public or entertainment areas, 39
public rest room areas, press and media areas, control booths, 40
p. 45 HB 1995
broadcast and production areas, retail sales areas, museum and 1
exhibit areas, scoreboards or other public displays, storage areas, 2
loading, staging, and servicing areas, seating areas including lawn 3
seating areas and suites, stages, and any other areas to which the 4
public has access or which are used for the production of the 5
entertainment event or other public usage, and any other personal 6
property used for these purposes. "Public or entertainment areas" 7
does not include office areas used predominately by the lessee.8
(((19))) (18) All leasehold interests in real property used for 9
the placement of military housing meeting the requirements of RCW 10
84.36.665. 11
(((20))) (19) All leasehold interests in facilities owned or used 12
by a community college or technical college, which leasehold interest 13
provides: 14
(a) Food services for students, faculty, and staff;15
(b) The operation of a bookstore on campus; or16
(c) Maintenance, operational, or administrative services to the 17
community college or technical college. 18
(((21))) (20)(a) All leasehold interests in the public or 19
entertainment areas of an arena if it: 20
(i) Has a seating capacity of more than 2,000;21
(ii) Is located on city-owned land; and 22
(iii) Is owned by a city with a population over 200,000 within a 23
county with a population of less than 1,500,000. 24
(b) For the purposes of this subsection (((21))) (20), "public or 25
entertainment areas" has the same meaning as provided in subsection 26
(((18))) (17) of this section. 27
(((22))) (21) All leasehold interests in facilities owned by the 28
state parks and recreation commission that are listed on the national 29
register of historic places or the Washington heritage register.30
(((23))) (22)(a) All leasehold interests in the public or 31
entertainment areas of an arena if: 32
(i) The arena has a seating capacity of more than 4,000;33
(ii) The arena is located on city-owned land; 34
(iii) The arena is located within a city with a population over 35
100,000; and 36
(iv) Private entities were responsible for 100 percent of the 37
cost of constructing improvements to the arena, which were not 38
reimbursed by the public owner. 39
p. 46 HB 1995
(b) For the purposes of this subsection (((23))) (22), "public or 1
entertainment areas" has the same meaning as provided in subsection 2
(((18))) (17) of this section, except that it also includes office 3
areas used predominately by the lessee. 4
(c) A taxpayer claiming an exemption under this subsection 5
(((23))) (22) must file a complete annual tax performance report as 6
provided in RCW 82.32.534. 7
(d) This subsection (((23))) (22) does not apply to leasehold 8
interests on or after October 1, 2033. 9
Sec. 14. RCW 82.29A.130 and 2019 c 335 s 1 are each amended to 10
read as follows: 11
The following leasehold interests are exempt from taxes imposed 12
pursuant to RCW 82.29A.030 and 82.29A.040: 13
(1) All leasehold interests constituting a part of the operating 14
properties of any public utility that is assessed and taxed as a 15
public utility pursuant to chapter 84.12 RCW. 16
(2) All leasehold interests in facilities owned or used by a 17
school, college or university which leasehold provides housing for 18
students and which is otherwise exempt from taxation under provisions 19
of RCW 84.36.010 and 84.36.050. 20
(3) All leasehold interests of subsidized housing where the fee 21
ownership of such property is vested in the government of the United 22
States, or the state of Washington or any political subdivision 23
thereof but only if income qualification exists for such housing.24
(4) All leasehold interests used for fair purposes of a nonprofit 25
fair association that sponsors or conducts a fair or fairs which 26
receive support from revenues collected pursuant to RCW 67.16.100 and 27
allocated by the director of the department of agriculture where the 28
fee ownership of such property is vested in the government of the 29
United States, the state of Washington or any of its political 30
subdivisions. However, this exemption does not apply to the leasehold 31
interest of any sublessee of such nonprofit fair association if such 32
leasehold interest would be taxable if it were the primary lease.33
(5) All leasehold interests in any property of any public entity 34
used as a residence by an employee of that public entity who is 35
required as a condition of employment to live in the publicly owned 36
property. 37
(6) All leasehold interests held by enrolled Indians of lands 38
owned or held by any Indian or Indian tribe where the fee ownership 39
p. 47 HB 1995
of such property is vested in or held in trust by the United States 1
and which are not subleased to other than to a lessee which would 2
qualify pursuant to this chapter, RCW 84.36.451 and 84.40.175.3
(7) All leasehold interests in any real property of any Indian or 4
Indian tribe, band, or community that is held in trust by the United 5
States or is subject to a restriction against alienation imposed by 6
the United States. However, this exemption applies only where it is 7
determined that contract rent paid is greater than or equal to ninety 8
percent of fair market rental, to be determined by the department of 9
revenue using the same criteria used to establish taxable rent in RCW 10
82.29A.020(2)(g). 11
(8) All leasehold interests for which annual taxable rent is less 12
than two hundred fifty dollars per year. For purposes of this 13
subsection leasehold interests held by the same lessee in contiguous 14
properties owned by the same lessor are deemed a single leasehold 15
interest. 16
(9) All leasehold interests which give use or possession of the 17
leased property for a continuous period of less than thirty days: 18
PROVIDED, That for purposes of this subsection, successive leases or 19
lease renewals giving substantially continuous use of possession of 20
the same property to the same lessee are deemed a single leasehold 21
interest: PROVIDED FURTHER, That no leasehold interest is deemed to 22
give use or possession for a period of less than thirty days solely 23
by virtue of the reservation by the public lessor of the right to use 24
the property or to allow third parties to use the property on an 25
occasional, temporary basis. 26
(10) All leasehold interests under month-to-month leases in 27
residential units rented for residential purposes of the lessee 28
pending destruction or removal for the purpose of constructing a 29
public highway or building. 30
(11) All leasehold interests in any publicly owned real or 31
personal property to the extent such leasehold interests arises 32
solely by virtue of a contract for public improvements or work 33
executed under the public works statutes of this state or of the 34
United States between the public owner of the property and a 35
contractor. 36
(12) ((All leasehold interests that give use or possession of 37
state adult correctional facilities for the purposes of operating 38
correctional industries under RCW 72.09.100.39
p. 48 HB 1995
(13))) All leasehold interests used to provide organized and 1
supervised recreational activities for persons with disabilities of 2
all ages in a camp facility and for public recreational purposes by a 3
nonprofit organization, association, or corporation that would be 4
exempt from property tax under RCW 84.36.030(1) if it owned the 5
property. If the publicly owned property is used for any taxable 6
purpose, the leasehold excise taxes set forth in RCW 82.29A.030 and 7
82.29A.040 must be imposed and must be apportioned accordingly.8
(((14))) (13) All leasehold interests in the public or 9
entertainment areas of a baseball stadium with natural turf and a 10
retractable roof or canopy that is in a county with a population of 11
over one million, that has a seating capacity of over forty thousand, 12
and that is constructed on or after January 1, 1995. "Public or 13
entertainment areas" include ticket sales areas, ramps and stairs, 14
lobbies and concourses, parking areas, concession areas, restaurants, 15
hospitality and stadium club areas, kitchens or other work areas 16
primarily servicing other public or entertainment areas, public rest 17
room areas, press and media areas, control booths, broadcast and 18
production areas, retail sales areas, museum and exhibit areas, 19
scoreboards or other public displays, storage areas, loading, 20
staging, and servicing areas, seating areas and suites, the playing 21
field, and any other areas to which the public has access or which 22
are used for the production of the entertainment event or other 23
public usage, and any other personal property used for these 24
purposes. "Public or entertainment areas" does not include locker 25
rooms or private offices exclusively used by the lessee.26
(((15))) (14) All leasehold interests in the public or 27
entertainment areas of a stadium and exhibition center, as defined in 28
RCW 36.102.010, that is constructed on or after January 1, 1998. For 29
the purposes of this subsection, "public or entertainment areas" has 30
the same meaning as in subsection (((14))) (13) of this section, and 31
includes exhibition areas. 32
(((16))) (15) All leasehold interests in public facilities 33
districts, as provided in chapter 36.100 or 35.57 RCW.34
(((17))) (16) All leasehold interests in property that is: (a) 35
Owned by the United States government or a municipal corporation; (b) 36
listed on any federal or state register of historical sites; and (c) 37
wholly contained within a designated national historic reserve under 38
16 U.S.C. Sec. 461. 39
p. 49 HB 1995
(((18))) (17) All leasehold interests in the public or 1
entertainment areas of an amphitheater if a private entity is 2
responsible for one hundred percent of the cost of constructing the 3
amphitheater which is not reimbursed by the public owner, both the 4
public owner and the private lessee sponsor events at the facility on 5
a regular basis, the lessee is responsible under the lease or 6
agreement to operate and maintain the facility, and the amphitheater 7
has a seating capacity of over seventeen thousand reserved and 8
general admission seats and is in a county that had a population of 9
over three hundred fifty thousand, but less than four hundred twenty-10
five thousand when the amphitheater first opened to the public.11
For the purposes of this subsection, "public or entertainment 12
areas" include box offices or other ticket sales areas, entrance 13
gates, ramps and stairs, lobbies and concourses, parking areas, 14
concession areas, restaurants, hospitality areas, kitchens or other 15
work areas primarily servicing other public or entertainment areas, 16
public rest room areas, press and media areas, control booths, 17
broadcast and production areas, retail sales areas, museum and 18
exhibit areas, scoreboards or other public displays, storage areas, 19
loading, staging, and servicing areas, seating areas including lawn 20
seating areas and suites, stages, and any other areas to which the 21
public has access or which are used for the production of the 22
entertainment event or other public usage, and any other personal 23
property used for these purposes. "Public or entertainment areas" 24
does not include office areas used predominately by the lessee.25
(((19))) (18) All leasehold interests in real property used for 26
the placement of military housing meeting the requirements of RCW 27
84.36.665. 28
(((20))) (19) All leasehold interests in facilities owned or used 29
by a community college or technical college, which leasehold interest 30
provides: 31
(a) Food services for students, faculty, and staff;32
(b) The operation of a bookstore on campus; or33
(c) Maintenance, operational, or administrative services to the 34
community college or technical college. 35
(((21))) (20)(a) All leasehold interests in the public or 36
entertainment areas of an arena if it: 37
(i) Has a seating capacity of more than two thousand;38
(ii) Is located on city-owned land; and 39
p. 50 HB 1995
(iii) Is owned by a city with a population over two hundred 1
thousand within a county with a population of less than one million 2
five hundred thousand. 3
(b) For the purposes of this subsection (((21))) (20), "public or 4
entertainment areas" has the same meaning as provided in subsection 5
(((18))) (17) of this section. 6
Sec. 15. RCW 82.45.010 and 2022 c 199 s 3 are each amended to 7
read as follows: 8
(1) As used in this chapter, the term "sale" has its ordinary 9
meaning and includes any conveyance, grant, assignment, quitclaim, or 10
transfer of the ownership of or title to real property, including 11
standing timber, or any estate or interest therein for a valuable 12
consideration, and any contract for such conveyance, grant, 13
assignment, quitclaim, or transfer, and any lease with an option to 14
purchase real property, including standing timber, or any estate or 15
interest therein or other contract under which possession of the 16
property is given to the purchaser, or any other person at the 17
purchaser's direction, and title to the property is retained by the 18
vendor as security for the payment of the purchase price. The term 19
also includes the grant, assignment, quitclaim, sale, or transfer of 20
improvements constructed upon leased land. 21
(2)(a) The term "sale" also includes the transfer or acquisition 22
within any thirty-six month period of a controlling interest in any 23
entity with an interest in real property located in this state for a 24
valuable consideration. 25
(b) For the sole purpose of determining whether, pursuant to the 26
exercise of an option, a controlling interest was transferred or 27
acquired within a thirty-six month period, the date that the option 28
agreement was executed is the date on which the transfer or 29
acquisition of the controlling interest is deemed to occur. For all 30
other purposes under this chapter, the date upon which the option is 31
exercised is the date of the transfer or acquisition of the 32
controlling interest. 33
(c) For purposes of this subsection, all acquisitions of persons 34
acting in concert must be aggregated for purposes of determining 35
whether a transfer or acquisition of a controlling interest has taken 36
place. The department must adopt standards by rule to determine when 37
persons are acting in concert. In adopting a rule for this purpose, 38
the department must consider the following: 39
p. 51 HB 1995
(i) Persons must be treated as acting in concert when they have a 1
relationship with each other such that one person influences or 2
controls the actions of another through common ownership; and3
(ii) When persons are not commonly owned or controlled, they must 4
be treated as acting in concert only when the unity with which the 5
purchasers have negotiated and will consummate the transfer of 6
ownership interests supports a finding that they are acting as a 7
single entity. If the acquisitions are completely independent, with 8
each purchaser buying without regard to the identity of the other 9
purchasers, then the acquisitions are considered separate 10
acquisitions. 11
(3) The term "sale" does not include: 12
(a) A transfer by gift, devise, or inheritance.13
(b) A transfer by transfer on death deed, to the extent that it 14
is not in satisfaction of a contractual obligation of the decedent 15
owed to the recipient of the property. 16
(c) A transfer of any leasehold interest other than of the type 17
mentioned above. 18
(d) A cancellation or forfeiture of a vendee's interest in a 19
contract for the sale of real property, whether or not such contract 20
contains a forfeiture clause, or deed in lieu of foreclosure of a 21
mortgage. 22
(e) The partition of property by tenants in common by agreement 23
or as the result of a court decree. 24
(f) The assignment of property or interest in property from one 25
spouse or one domestic partner to the other spouse or other domestic 26
partner in accordance with the terms of a decree of dissolution of 27
marriage or state registered domestic partnership or in fulfillment 28
of a property settlement agreement. 29
(g) The assignment or other transfer of a vendor's interest in a 30
contract for the sale of real property, even though accompanied by a 31
conveyance of the vendor's interest in the real property involved.32
(h) Transfers by appropriation or decree in condemnation 33
proceedings brought by the United States, the state or any political 34
subdivision thereof, or a municipal corporation. 35
(i) A mortgage or other transfer of an interest in real property 36
merely to secure a debt, or the assignment thereof.37
(j) Any transfer or conveyance made pursuant to a deed of trust 38
or an order of sale by the court in any mortgage, deed of trust, or 39
p. 52 HB 1995
lien foreclosure proceeding or upon execution of a judgment, or deed 1
in lieu of foreclosure to satisfy a mortgage or deed of trust.2
(k) A conveyance to the federal housing administration or 3
veterans administration by an authorized mortgagee made pursuant to a 4
contract of insurance or guaranty with the federal housing 5
administration or veterans administration. 6
(l) ((A transfer in compliance with the terms of any lease or 7
contract upon which the tax as imposed by this chapter has been paid 8
or where the lease or contract was entered into prior to the date 9
this tax was first imposed.10
(m))) The sale of any grave or lot in an established cemetery.11
(((n))) (m) A sale by the United States, this state or any 12
political subdivision thereof, or a municipal corporation of this 13
state. 14
(((o))) (n) A sale to a regional transit authority or public 15
corporation under RCW 81.112.320 under a sale/leaseback agreement 16
under RCW 81.112.300. 17
(((p))) (o) A transfer of real property, however effected, if it 18
consists of a mere change in identity or form of ownership of an 19
entity where there is no change in the beneficial ownership. These 20
include transfers to a corporation or partnership which is wholly 21
owned by the transferor and/or the transferor's spouse or domestic 22
partner or children of the transferor or the transferor's spouse or 23
domestic partner. However, if thereafter such transferee corporation 24
or partnership voluntarily transfers such real property, or such 25
transferor, spouse or domestic partner, or children of the transferor 26
or the transferor's spouse or domestic partner voluntarily transfer 27
stock in the transferee corporation or interest in the transferee 28
partnership capital, as the case may be, to other than (i) the 29
transferor and/or the transferor's spouse or domestic partner or 30
children of the transferor or the transferor's spouse or domestic 31
partner, (ii) a trust having the transferor and/or the transferor's 32
spouse or domestic partner or children of the transferor or the 33
transferor's spouse or domestic partner as the only beneficiaries at 34
the time of the transfer to the trust, or (iii) a corporation or 35
partnership wholly owned by the original transferor and/or the 36
transferor's spouse or domestic partner or children of the transferor 37
or the transferor's spouse or domestic partner, within three years of 38
the original transfer to which this exemption applies, and the tax on 39
the subsequent transfer has not been paid within sixty days of 40
p. 53 HB 1995
becoming due, excise taxes become due and payable on the original 1
transfer as otherwise provided by law. 2
(((q))) (p)(i) A transfer that for federal income tax purposes 3
does not involve the recognition of gain or loss for entity 4
formation, liquidation or dissolution, and reorganization, including 5
but not limited to nonrecognition of gain or loss because of 6
application of 26 U.S.C. Sec. 332, 337, 351, 368 (a)(1), 721, or 731 7
of the internal revenue code of 1986, as amended. 8
(ii) However, the transfer described in (((q))) (p)(i) of this 9
subsection cannot be preceded or followed within a thirty-six month 10
period by another transfer or series of transfers, that, when 11
combined with the otherwise exempt transfer or transfers described in 12
(((q))) (p)(i) of this subsection, results in the transfer of a 13
controlling interest in the entity for valuable consideration, and in 14
which one or more persons previously holding a controlling interest 15
in the entity receive cash or property in exchange for any interest 16
the person or persons acting in concert hold in the entity. This 17
subsection (3)(((q))) (p)(ii) does not apply to that part of the 18
transfer involving property received that is the real property 19
interest that the person or persons originally contributed to the 20
entity or when one or more persons who did not contribute real 21
property or belong to the entity at a time when real property was 22
purchased receive cash or personal property in exchange for that 23
person or persons' interest in the entity. The real estate excise tax 24
under this subsection (3)(((q))) (p)(ii) is imposed upon the person 25
or persons who previously held a controlling interest in the entity.26
(((r))) (q) A qualified sale of a manufactured/mobile home 27
community, as defined in RCW 59.20.030. 28
(((s))) (r)(i) A transfer of a qualified low-income housing 29
development or controlling interest in a qualified low-income housing 30
development, unless, due to noncompliance with federal statutory 31
requirements, the seller is subject to recapture, in whole or in 32
part, of its allocated federal low-income housing tax credits within 33
the four years prior to the date of transfer. 34
(ii) For purposes of this subsection (3)(((s))) (r), "qualified 35
low-income housing development" means real property and improvements 36
in respect to which the seller or, in the case of a transfer of a 37
controlling interest, the owner or beneficial owner, was allocated 38
federal low-income housing tax credits authorized under 26 U.S.C. 39
Sec. 42 or successor statute, by the Washington state housing finance 40
p. 54 HB 1995
commission or successor state-authorized tax credit allocating 1
agency. 2
(iii) This subsection (3)(((s))) (r) does not apply to transfers 3
of a qualified low-income housing development or controlling interest 4
in a qualified low-income housing development occurring on or after 5
July 1, 2035. 6
(iv) The Washington state housing finance commission, in 7
consultation with the department, must gather data on: (A) The fiscal 8
savings, if any, accruing to transferees as a result of the exemption 9
provided in this subsection (3)(((s))) (r); (B) the extent to which 10
transferors of qualified low-income housing developments receive 11
consideration, including any assumption of debt, as part of a 12
transfer subject to the exemption provided in this subsection (3)13
(((s))) (r); and (C) the continued use of the property for low-income 14
housing. The Washington state housing finance commission must provide 15
this information to the joint legislative audit and review committee. 16
The committee must conduct a review of the tax preference created 17
under this subsection (3)(((s))) (r) in calendar year 2033, as 18
required under chapter 43.136 RCW. 19
(((t))) (s)(i) A qualified transfer of residential property by a 20
legal representative of a person with developmental disabilities to a 21
qualified entity subject to the following conditions:22
(A) The adult child with developmental disabilities of the 23
transferor of the residential property must be allowed to reside in 24
the residence or successor property so long as the placement is safe 25
and appropriate as determined by the department of social and health 26
services; 27
(B) The title to the residential property is conveyed without the 28
receipt of consideration by the legal representative of a person with 29
developmental disabilities to a qualified entity; 30
(C) The residential property must have no more than four living 31
units located on it; and 32
(D) The residential property transferred must remain in continued 33
use for fifty years by the qualified entity as supported living for 34
persons with developmental disabilities by the qualified entity or 35
successor entity. If the qualified entity sells or otherwise conveys 36
ownership of the residential property the proceeds of the sale or 37
conveyance must be used to acquire similar residential property and 38
such similar residential property must be considered the successor 39
for continued use. The property will not be considered in continued 40
p. 55 HB 1995
use if the department of social and health services finds that the 1
property has failed, after a reasonable time to remedy, to meet any 2
health and safety statutory or regulatory requirements. If the 3
department of social and health services determines that the property 4
fails to meet the requirements for continued use, the department of 5
social and health services must notify the department and the real 6
estate excise tax based on the value of the property at the time of 7
the transfer into use as residential property for persons with 8
developmental disabilities becomes immediately due and payable by the 9
qualified entity. The tax due is not subject to penalties, fees, or 10
interest under this title. 11
(ii) For the purposes of this subsection (3)(((t))) (s) the 12
definitions in RCW 71A.10.020 apply. 13
(iii) A "qualified entity" is: 14
(A) A nonprofit organization under Title 26 U.S.C. Sec. 501 (c)(3) 15
of the federal internal revenue code of 1986, as amended, as of June 16
7, 2018, or a subsidiary under the same taxpayer identification 17
number that provides residential supported living for persons with 18
developmental disabilities; or 19
(B) A nonprofit adult family home, as defined in RCW 70.128.010, 20
that exclusively serves persons with developmental disabilities.21
(iv) In order to receive an exemption under this subsection (3)22
(((t))) (s) an affidavit must be submitted by the transferor of the 23
residential property and must include a copy of the transfer 24
agreement and any other documentation as required by the department.25
(((u))) (t)(i) The sale by an affordable homeownership 26
facilitator of self-help housing to a low-income household.27
(ii) The definitions in this subsection (3)(((u))) (t) apply to 28
this subsection (3)(((u))) (t) unless the context clearly requires 29
otherwise. 30
(A) "Affordable homeownership facilitator" means a nonprofit 31
community or neighborhood-based organization that is exempt from 32
income tax under Title 26 U.S.C. Sec. 501 (c) of the internal revenue 33
code of 1986, as amended, as of October 1, 2019, and that is the 34
developer of self-help housing. 35
(B) "Low-income" means household income as defined by the 36
department, provided that the definition may not exceed eighty 37
percent of median household income, adjusted for household size, for 38
the county in which the dwelling is located. 39
p. 56 HB 1995
(C) "Self-help housing" means dwelling residences provided for 1
ownership by low-income individuals and families whose ownership 2
requirement includes labor participation. "Self-help housing" does 3
not include residential rental housing provided on a commercial basis 4
to the general public. 5
(((v))) (u)(i) A sale or transfer of real property to a 6
qualifying grantee that uses the property for housing for low-income 7
persons and receives or otherwise qualifies the property for an 8
exemption from real and personal property taxes under RCW 84.36.560, 9
84.36.049, 35.82.210, 35.21.755, or 84.36.010. For purposes of this 10
subsection (3)(((v))) (u), "qualifying grantee" means a nonprofit 11
entity as defined in RCW 84.36.560, a nonprofit entity or qualified 12
cooperative association as defined in RCW 84.36.049, a housing 13
authority created under RCW 35.82.030 or 35.82.300, a public 14
corporation established under RCW 35.21.660 or 35.21.730, or a county 15
or municipal corporation. A qualifying grantee that is a county or 16
municipal corporation must record a covenant at the time of transfer 17
that prohibits using the property for any purpose other than for low-18
income housing for a period of at least 10 years. At a minimum, the 19
covenant must address price restrictions and household income limits 20
for the low-income housing. A qualifying grantee must comply with the 21
requirements described in (((v))) (u)(i)(A), (B), or (C) of this 22
subsection and must also certify, by affidavit at the time of sale or 23
transfer, that it intends to comply with those requirements.24
(A) If the qualifying grantee intends to operate existing housing 25
on the property, within one year of the sale or transfer:26
(I) The qualifying grantee must receive or qualify the property 27
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 28
35.21.755, or 84.36.010; and 29
(II) The property must be used as housing for low-income persons.30
(B) If the qualifying grantee intends to develop new housing on 31
the site, within five years of the sale or transfer:32
(I) The qualifying grantee must receive or qualify the property 33
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 34
35.21.755, or 84.36.010; and 35
(II) The property must be used as housing for low-income persons.36
(C) If the qualifying grantee intends to substantially 37
rehabilitate the premises as defined in RCW 59.18.200, within three 38
years: 39
p. 57 HB 1995
(I) The qualifying grantee must receive or qualify the property 1
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 2
35.21.755, or 84.36.010; and 3
(II) The property must be used as housing for low-income persons.4
(ii) If the qualifying grantee fails to satisfy the requirements 5
described in (((v))) (u)(i)(A), (B), or (C) of this subsection, 6
within the timelines described in (((v))) (u)(i)(A), (B), or (C) of 7
this subsection, the qualifying grantee must pay the tax that would 8
have otherwise been due at the time of initial transfer, plus 9
interest calculated from the date of initial transfer pursuant to RCW 10
82.32.050. 11
(iii) If a qualifying grantee transfers the property to a 12
different qualifying grantee within the original timelines described 13
in (((v))) (u)(i)(A), (B), or (C) of this subsection, neither the 14
original qualifying grantee nor the new qualifying grantee is 15
required to pay the tax, so long as the new qualifying grantee 16
satisfies the requirements as described in (((v))) (u)(i)(A), (B), or 17
(C) of this subsection within the exemption period of the initial 18
transfer. If the new qualifying grantee fails to satisfy the 19
requirements described in (((v))) (u)(i)(A), (B), or (C) of this 20
subsection, only the new qualifying grantee is liable for the payment 21
of taxes required by (((v))) (u)(ii) of this subsection. There is no 22
limit on the number of transfers between qualifying grantees within 23
the original timelines. 24
(iv) Each affidavit must be filed with the department upon 25
completion of the sale or transfer of property, including transfers 26
from a qualifying grantee to a different qualifying grantee. The 27
qualifying grantee must provide proof to the department as required 28
by the department once the requirements as described in (((v))) (u)29
(i)(A), (B), or (C) of this subsection have been satisfied.30
(v) For the purposes of this subsection (3)(((v))) (u), "low-31
income" has the same meaning as in (((u))) (t) of this subsection.32
Sec. 16. RCW 82.45.010 and 2022 c 199 s 4 are each amended to 33
read as follows: 34
(1) As used in this chapter, the term "sale" has its ordinary 35
meaning and includes any conveyance, grant, assignment, quitclaim, or 36
transfer of the ownership of or title to real property, including 37
standing timber, or any estate or interest therein for a valuable 38
consideration, and any contract for such conveyance, grant, 39
p. 58 HB 1995
assignment, quitclaim, or transfer, and any lease with an option to 1
purchase real property, including standing timber, or any estate or 2
interest therein or other contract under which possession of the 3
property is given to the purchaser, or any other person at the 4
purchaser's direction, and title to the property is retained by the 5
vendor as security for the payment of the purchase price. The term 6
also includes the grant, assignment, quitclaim, sale, or transfer of 7
improvements constructed upon leased land. 8
(2)(a) The term "sale" also includes the transfer or acquisition 9
within any thirty-six month period of a controlling interest in any 10
entity with an interest in real property located in this state for a 11
valuable consideration. 12
(b) For the sole purpose of determining whether, pursuant to the 13
exercise of an option, a controlling interest was transferred or 14
acquired within a thirty-six month period, the date that the option 15
agreement was executed is the date on which the transfer or 16
acquisition of the controlling interest is deemed to occur. For all 17
other purposes under this chapter, the date upon which the option is 18
exercised is the date of the transfer or acquisition of the 19
controlling interest. 20
(c) For purposes of this subsection, all acquisitions of persons 21
acting in concert must be aggregated for purposes of determining 22
whether a transfer or acquisition of a controlling interest has taken 23
place. The department must adopt standards by rule to determine when 24
persons are acting in concert. In adopting a rule for this purpose, 25
the department must consider the following: 26
(i) Persons must be treated as acting in concert when they have a 27
relationship with each other such that one person influences or 28
controls the actions of another through common ownership; and29
(ii) When persons are not commonly owned or controlled, they must 30
be treated as acting in concert only when the unity with which the 31
purchasers have negotiated and will consummate the transfer of 32
ownership interests supports a finding that they are acting as a 33
single entity. If the acquisitions are completely independent, with 34
each purchaser buying without regard to the identity of the other 35
purchasers, then the acquisitions are considered separate 36
acquisitions. 37
(3) The term "sale" does not include: 38
(a) A transfer by gift, devise, or inheritance.39
p. 59 HB 1995
(b) A transfer by transfer on death deed, to the extent that it 1
is not in satisfaction of a contractual obligation of the decedent 2
owed to the recipient of the property. 3
(c) A transfer of any leasehold interest other than of the type 4
mentioned above. 5
(d) A cancellation or forfeiture of a vendee's interest in a 6
contract for the sale of real property, whether or not such contract 7
contains a forfeiture clause, or deed in lieu of foreclosure of a 8
mortgage. 9
(e) The partition of property by tenants in common by agreement 10
or as the result of a court decree. 11
(f) The assignment of property or interest in property from one 12
spouse or one domestic partner to the other spouse or other domestic 13
partner in accordance with the terms of a decree of dissolution of 14
marriage or state registered domestic partnership or in fulfillment 15
of a property settlement agreement. 16
(g) The assignment or other transfer of a vendor's interest in a 17
contract for the sale of real property, even though accompanied by a 18
conveyance of the vendor's interest in the real property involved.19
(h) Transfers by appropriation or decree in condemnation 20
proceedings brought by the United States, the state or any political 21
subdivision thereof, or a municipal corporation. 22
(i) A mortgage or other transfer of an interest in real property 23
merely to secure a debt, or the assignment thereof.24
(j) Any transfer or conveyance made pursuant to a deed of trust 25
or an order of sale by the court in any mortgage, deed of trust, or 26
lien foreclosure proceeding or upon execution of a judgment, or deed 27
in lieu of foreclosure to satisfy a mortgage or deed of trust.28
(k) A conveyance to the federal housing administration or 29
veterans administration by an authorized mortgagee made pursuant to a 30
contract of insurance or guaranty with the federal housing 31
administration or veterans administration. 32
(l) ((A transfer in compliance with the terms of any lease or 33
contract upon which the tax as imposed by this chapter has been paid 34
or where the lease or contract was entered into prior to the date 35
this tax was first imposed.36
(m))) The sale of any grave or lot in an established cemetery.37
(((n))) (m) A sale by the United States, this state or any 38
political subdivision thereof, or a municipal corporation of this 39
state. 40
p. 60 HB 1995
(((o))) (n) A sale to a regional transit authority or public 1
corporation under RCW 81.112.320 under a sale/leaseback agreement 2
under RCW 81.112.300. 3
(((p))) (o) A transfer of real property, however effected, if it 4
consists of a mere change in identity or form of ownership of an 5
entity where there is no change in the beneficial ownership. These 6
include transfers to a corporation or partnership which is wholly 7
owned by the transferor and/or the transferor's spouse or domestic 8
partner or children of the transferor or the transferor's spouse or 9
domestic partner. However, if thereafter such transferee corporation 10
or partnership voluntarily transfers such real property, or such 11
transferor, spouse or domestic partner, or children of the transferor 12
or the transferor's spouse or domestic partner voluntarily transfer 13
stock in the transferee corporation or interest in the transferee 14
partnership capital, as the case may be, to other than (i) the 15
transferor and/or the transferor's spouse or domestic partner or 16
children of the transferor or the transferor's spouse or domestic 17
partner, (ii) a trust having the transferor and/or the transferor's 18
spouse or domestic partner or children of the transferor or the 19
transferor's spouse or domestic partner as the only beneficiaries at 20
the time of the transfer to the trust, or (iii) a corporation or 21
partnership wholly owned by the original transferor and/or the 22
transferor's spouse or domestic partner or children of the transferor 23
or the transferor's spouse or domestic partner, within three years of 24
the original transfer to which this exemption applies, and the tax on 25
the subsequent transfer has not been paid within sixty days of 26
becoming due, excise taxes become due and payable on the original 27
transfer as otherwise provided by law. 28
(((q))) (p)(i) A transfer that for federal income tax purposes 29
does not involve the recognition of gain or loss for entity 30
formation, liquidation or dissolution, and reorganization, including 31
but not limited to nonrecognition of gain or loss because of 32
application of 26 U.S.C. Sec. 332, 337, 351, 368 (a)(1), 721, or 731 33
of the internal revenue code of 1986, as amended. 34
(ii) However, the transfer described in (((q))) (p)(i) of this 35
subsection cannot be preceded or followed within a thirty-six month 36
period by another transfer or series of transfers, that, when 37
combined with the otherwise exempt transfer or transfers described in 38
(((q))) (p)(i) of this subsection, results in the transfer of a 39
controlling interest in the entity for valuable consideration, and in 40
p. 61 HB 1995
which one or more persons previously holding a controlling interest 1
in the entity receive cash or property in exchange for any interest 2
the person or persons acting in concert hold in the entity. This 3
subsection (3)(((q))) (p)(ii) does not apply to that part of the 4
transfer involving property received that is the real property 5
interest that the person or persons originally contributed to the 6
entity or when one or more persons who did not contribute real 7
property or belong to the entity at a time when real property was 8
purchased receive cash or personal property in exchange for that 9
person or persons' interest in the entity. The real estate excise tax 10
under this subsection (3)(((q))) (p)(ii) is imposed upon the person 11
or persons who previously held a controlling interest in the entity.12
(((r))) (q) A qualified sale of a manufactured/mobile home 13
community, as defined in RCW 59.20.030, that takes place on or after 14
June 12, 2008, but before December 31, 2018. 15
(((s))) (r)(i) A transfer of a qualified low-income housing 16
development or controlling interest in a qualified low-income housing 17
development, unless, due to noncompliance with federal statutory 18
requirements, the seller is subject to recapture, in whole or in 19
part, of its allocated federal low-income housing tax credits within 20
the four years prior to the date of transfer. 21
(ii) For purposes of this subsection (3)(((s))) (r), "qualified 22
low-income housing development" means real property and improvements 23
in respect to which the seller or, in the case of a transfer of a 24
controlling interest, the owner or beneficial owner, was allocated 25
federal low-income housing tax credits authorized under 26 U.S.C. 26
Sec. 42 or successor statute, by the Washington state housing finance 27
commission or successor state-authorized tax credit allocating 28
agency. 29
(iii) This subsection (3)(((s))) (r) does not apply to transfers 30
of a qualified low-income housing development or controlling interest 31
in a qualified low-income housing development occurring on or after 32
July 1, 2035. 33
(iv) The Washington state housing finance commission, in 34
consultation with the department, must gather data on: (A) The fiscal 35
savings, if any, accruing to transferees as a result of the exemption 36
provided in this subsection (3)(((s))) (r); (B) the extent to which 37
transferors of qualified low-income housing developments receive 38
consideration, including any assumption of debt, as part of a 39
transfer subject to the exemption provided in this subsection (3)40
p. 62 HB 1995
(((s))) (r); and (C) the continued use of the property for low-income 1
housing. The Washington state housing finance commission must provide 2
this information to the joint legislative audit and review committee. 3
The committee must conduct a review of the tax preference created 4
under this subsection (3)(((s))) (r) in calendar year 2033, as 5
required under chapter 43.136 RCW. 6
(((t))) (s)(i) A qualified transfer of residential property by a 7
legal representative of a person with developmental disabilities to a 8
qualified entity subject to the following conditions:9
(A) The adult child with developmental disabilities of the 10
transferor of the residential property must be allowed to reside in 11
the residence or successor property so long as the placement is safe 12
and appropriate as determined by the department of social and health 13
services; 14
(B) The title to the residential property is conveyed without the 15
receipt of consideration by the legal representative of a person with 16
developmental disabilities to a qualified entity; 17
(C) The residential property must have no more than four living 18
units located on it; and 19
(D) The residential property transferred must remain in continued 20
use for fifty years by the qualified entity as supported living for 21
persons with developmental disabilities by the qualified entity or 22
successor entity. If the qualified entity sells or otherwise conveys 23
ownership of the residential property the proceeds of the sale or 24
conveyance must be used to acquire similar residential property and 25
such similar residential property must be considered the successor 26
for continued use. The property will not be considered in continued 27
use if the department of social and health services finds that the 28
property has failed, after a reasonable time to remedy, to meet any 29
health and safety statutory or regulatory requirements. If the 30
department of social and health services determines that the property 31
fails to meet the requirements for continued use, the department of 32
social and health services must notify the department and the real 33
estate excise tax based on the value of the property at the time of 34
the transfer into use as residential property for persons with 35
developmental disabilities becomes immediately due and payable by the 36
qualified entity. The tax due is not subject to penalties, fees, or 37
interest under this title. 38
(ii) For the purposes of this subsection (3)(((t))) (s) the 39
definitions in RCW 71A.10.020 apply. 40
p. 63 HB 1995
(iii) A "qualified entity" is: 1
(A) A nonprofit organization under Title 26 U.S.C. Sec. 501 (c)(3) 2
of the federal internal revenue code of 1986, as amended, as of June 3
7, 2018, or a subsidiary under the same taxpayer identification 4
number that provides residential supported living for persons with 5
developmental disabilities; or 6
(B) A nonprofit adult family home, as defined in RCW 70.128.010, 7
that exclusively serves persons with developmental disabilities.8
(iv) In order to receive an exemption under this subsection (3)9
(((t))) (s) an affidavit must be submitted by the transferor of the 10
residential property and must include a copy of the transfer 11
agreement and any other documentation as required by the department.12
(((u))) (t)(i) A sale or transfer of real property to a 13
qualifying grantee that uses the property for housing for low-income 14
persons and receives or otherwise qualifies the property for an 15
exemption from real and personal property taxes under RCW 84.36.560, 16
84.36.049, 35.82.210, 35.21.755, or 84.36.010. For purposes of this 17
subsection (3)(((u))) (t), "qualifying grantee" means a nonprofit 18
entity as defined in RCW 84.36.560, a nonprofit entity or qualified 19
cooperative association as defined in RCW 84.36.049, a housing 20
authority created under RCW 35.82.030 or 35.82.300, a public 21
corporation established under RCW 35.21.660 or 35.21.730, or a county 22
or municipal corporation. A qualifying grantee that is a county or 23
municipal corporation must record a covenant at the time of transfer 24
that prohibits using the property for any purpose other than for low-25
income housing for a period of at least 10 years. At a minimum, the 26
covenant must address price restrictions and household income limits 27
for the low-income housing. A qualifying grantee must comply with the 28
requirements described in (((u))) (t)(i)(A), (B), or (C) of this 29
subsection and must also certify, by affidavit at the time of sale or 30
transfer, that it intends to comply with those requirements.31
(A) If the qualifying grantee intends to operate existing housing 32
on the property, within one year of the sale or transfer:33
(I) The qualifying grantee must receive or qualify the property 34
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 35
35.21.755, or 84.36.010; and 36
(II) The property must be used as housing for low-income persons.37
(B) If the qualifying grantee intends to develop new housing on 38
the site, within five years of the sale or transfer:39
p. 64 HB 1995
(I) The qualifying grantee must receive or qualify the property 1
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 2
35.21.755, or 84.36.010; and 3
(II) The property must be used as housing for low-income persons.4
(C) If the qualifying grantee intends to substantially 5
rehabilitate the premises as defined in RCW 59.18.200, within three 6
years: 7
(I) The qualifying grantee must receive or qualify the property 8
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 9
35.21.755, or 84.36.010; and 10
(II) The property must be used as housing for low-income persons.11
(ii) If the qualifying grantee fails to satisfy the requirements 12
described in (((u))) (t)(i)(A), (B), or (C) of this subsection, 13
within the timelines described in (((u))) (t)(i)(A), (B), or (C) of 14
this subsection, the qualifying grantee must pay the tax that would 15
have otherwise been due at the time of initial transfer, plus 16
interest calculated from the date of initial transfer pursuant to RCW 17
82.32.050. 18
(iii) If a qualifying grantee transfers the property to a 19
different qualifying grantee within the original timelines described 20
in (((u))) (t)(i)(A), (B), or (C) of this subsection, neither the 21
original qualifying grantee nor the new qualifying grantee is 22
required to pay the tax, so long as the new qualifying grantee 23
satisfies the requirements as described in (((u))) (t)(i)(A), (B), or 24
(C) of this subsection within the exemption period of the initial 25
transfer. If the new qualifying grantee fails to satisfy the 26
requirements described in (((u))) (t)(i)(A), (B), or (C) of this 27
subsection, only the new qualifying grantee is liable for the payment 28
of taxes required by (((u))) (t)(ii) of this subsection. There is no 29
limit on the number of transfers between qualifying grantees within 30
the original timelines. 31
(iv) Each affidavit must be filed with the department upon 32
completion of the sale or transfer of property, including transfers 33
from a qualifying grantee to a different qualifying grantee. The 34
qualifying grantee must provide proof to the department as required 35
by the department once the requirements as described in (((u))) (t)36
(i)(A), (B), or (C) of this subsection have been satisfied.37
(v) For the purposes of this subsection (3)(((u))) (t), "low-38
income" means household income as defined by the department, provided 39
that the definition may not exceed 80 percent of median household 40
p. 65 HB 1995
income, adjusted for household size, for the county in which the 1
dwelling is located. 2
Sec. 17. RCW 82.45.030 and 2011 c 58 s 15 are each amended to 3
read as follows: 4
(1) As used in this chapter, the term "selling price" means the 5
true and fair value of the property conveyed. If property has been 6
conveyed in an arm's length transaction between unrelated persons for 7
a valuable consideration, a rebuttable presumption exists that the 8
selling price is equal to the total consideration paid or contracted 9
to be paid to the transferor, or to another for the transferor's 10
benefit. 11
(2) If the sale is a transfer of a controlling interest in an 12
entity with an interest in real property located in this state, the 13
selling price shall be the true and fair value of the real property 14
owned by the entity and located in this state. If the true and fair 15
value of the real property located in this state cannot reasonably be 16
determined, the selling price shall be determined according to 17
subsection (4) of this section. 18
(3) As used in this section, "total consideration paid or 19
contracted to be paid" includes money or anything of value, paid or 20
delivered or contracted to be paid or delivered in return for the 21
sale, and shall include the amount of any lien, mortgage, contract 22
indebtedness, or other incumbrance, either given to secure the 23
purchase price, or any part thereof, or remaining unpaid on such 24
property at the time of sale. 25
Total consideration shall not include the amount of any 26
outstanding lien or incumbrance in favor of the United States, the 27
state, or a municipal corporation for taxes, special benefits, or 28
improvements. 29
((When a transfer or conveyance is made by deed in lieu of 30
foreclosure to satisfy a deed of trust, total consideration shall not 31
include the amount of any relocation assistance provided to the 32
transferor.))33
(4) If the total consideration for the sale cannot be ascertained 34
or the true and fair value of the property to be valued at the time 35
of the sale cannot reasonably be determined, the market value 36
assessment for the property maintained on the county property tax 37
rolls at the time of the sale shall be used as the selling price.38
p. 66 HB 1995
Sec. 18. RCW 82.64.030 and 1994 sp.s. c 7 s 907 are each amended 1
to read as follows: 2
The following are exempt from the taxes imposed in this chapter:3
(1) Any successive sale of a previously taxed syrup.4
(2) Any syrup that is transferred to a point outside the state 5
for use outside the state. The department shall provide by rule 6
appropriate procedures and exemption certificates for the 7
administration of this exemption. 8
(((3) Any sale at wholesale of a trademarked syrup by any person 9
to a person commonly known as a bottler who is appointed by the owner 10
of the trademark to manufacture, distribute, and sell such 11
trademarked syrup within a specified geographic territory.12
(4) Any sale of syrup in respect to which a tax on the privilege 13
of possession was paid under this chapter before June 1, 1991.))14
Sec. 19. RCW 84.36.010 and 2020 c 272 s 1 are each amended to 15
read as follows: 16
(1) All property belonging exclusively to the United States, the 17
state, or any county or municipal corporation; all property belonging 18
exclusively to any federally recognized Indian tribe, if (a) the 19
tribe is located in the state, and (b) the property is used 20
exclusively for essential government services; ((all state route 21
number 16 corridor transportation systems and facilities constructed 22
under chapter 47.46 RCW;)) all property under a financing contract 23
pursuant to chapter 39.94 RCW or recorded agreement granting 24
immediate possession and use to the public bodies listed in this 25
section or under an order of immediate possession and use pursuant to 26
RCW 8.04.090; and, for a period of forty years from acquisition, all 27
property of a community center; is exempt from taxation. All property 28
belonging exclusively to a foreign national government is exempt from 29
taxation if that property is used exclusively as an office or 30
residence for a consul or other official representative of the 31
foreign national government, and if the consul or other official 32
representative is a citizen of that foreign nation.33
(2) For the purposes of this section the following definitions 34
apply unless the context clearly requires otherwise.35
(a) "Community center" means property, including a building or 36
buildings, determined to be surplus to the needs of a district by a 37
local school board, and purchased or acquired by a nonprofit 38
organization for the purposes of converting them into community 39
p. 67 HB 1995
facilities for the delivery of nonresidential coordinated services 1
for community members. The community center may make space available 2
to businesses, individuals, or other parties through the loan or 3
rental of space in or on the property. 4
(b) "Essential government services" means services such as tribal 5
administration, public facilities, fire, police, public health, 6
education, sewer, water, environmental and land use, transportation, 7
utility services, and economic development. 8
(c) "Economic development" means commercial activities, including 9
those that facilitate the creation or retention of businesses or 10
jobs, or that improve the standard of living or economic health of 11
tribal communities. 12
Sec. 20. RCW 84.36.030 and 2014 c 99 s 4 are each amended to 13
read as follows: 14
The following real and personal property is exempt from taxation:15
(1)(a) Property owned by nonprofit organizations or associations, 16
organized and conducted for nonsectarian purposes, which shall be 17
used for character-building, benevolent, protective or rehabilitative 18
social services directed at persons of all ages. 19
(b) The sale of donated merchandise is not considered a nonexempt 20
use of the property under this section if the proceeds are devoted to 21
the furtherance of the purposes of the selling organization or 22
association as specified in this subsection (1). 23
(2) Property owned by any nonprofit church, denomination, group 24
of churches, or an organization or association, the membership of 25
which is comprised solely of churches or their qualified 26
representatives, which is utilized as a camp facility if used for 27
organized and supervised recreational activities and church purposes 28
as related to such camp facilities. The exemption provided by this 29
((paragraph)) subsection shall apply to a maximum of two hundred 30
acres of any such camp as selected by the church, including buildings 31
and other improvements thereon. 32
(3) Property, including buildings and improvements required for 33
the maintenance and safeguarding of such property, owned by nonprofit 34
organizations or associations engaged in character building of boys 35
and girls under eighteen years of age, and used for such purposes and 36
uses, provided such purposes and uses are for the general public 37
good: PROVIDED, That if existing charters provide that organizations 38
or associations, which would otherwise qualify under the provisions 39
p. 68 HB 1995
of this ((paragraph)) subsection, serve boys and girls up to the age 1
of twenty-one years, then such organizations or associations shall be 2
deemed qualified pursuant to this section. 3
(4) Property owned by all organizations and societies of veterans 4
of any war of the United States, recognized as such by the department 5
of defense, which shall have national charters, and which shall have 6
for their general purposes and objects the preservation of the 7
memories and associations incident to their war service and the 8
consecration of the efforts of their members to mutual helpfulness 9
and to patriotic and community service to state and nation. To be 10
exempt such property must be used in such manner as may be reasonably 11
necessary to carry out the purposes and objects of such societies.12
(5) Property owned by all corporations, incorporated under any 13
act of congress, whose principal purposes are to furnish volunteer 14
aid to members of the armed forces of the United States and also to 15
carry on a system of national and international relief and to apply 16
the same in mitigating the sufferings caused by pestilence, famine, 17
fire, floods, and other national calamities and to devise and carry 18
on measures for preventing the same. 19
(6) ((Property owned by nonprofit organizations exempt from 20
federal income tax under section 501 (c)(3) of the internal revenue 21
code of 1954, as amended, that are guarantee agencies under the 22
federal guaranteed student loan program or that issue debt to provide 23
or acquire student loans.24
(7))) To be exempt under this section, the property must be used 25
exclusively for the purposes for which exemption is granted, except 26
as otherwise provided in this section or RCW 84.36.805.27
(((8))) (7) For the purposes of this section, "general public 28
good" means members of the community derive a benefit from the rental 29
or use of the property by the nonprofit community group or 30
organization. 31
NEW SECTION. Sec. 21. Section 5 of this act expires January 1, 32
2034.33
NEW SECTION. Sec. 22. Section 6 of this act takes effect 34
January 1, 2034.35
p. 69 HB 1995
NEW SECTION. Sec. 23. The contingent expiration date in section 1
1407, chapter 37, Laws of 2017 3rd sp. sess. applies to section 9 of 2
this act.3
NEW SECTION. Sec. 24. Section 10 of this act takes effect when 4
section 9 of this act expires.5
NEW SECTION. Sec. 25. Section 13 of this act expires January 1, 6
2034.7
NEW SECTION. Sec. 26. Section 14 of this act takes effect 8
January 1, 2034.9
NEW SECTION. Sec. 27. Section 15 of this act expires January 1, 10
2030.11
NEW SECTION. Sec. 28. Section 16 of this act takes effect 12
January 1, 2030.13
NEW SECTION. Sec. 29. Except for sections 6, 10, 14, and 16 of 14
this act, this act takes effect January 1, 2026.15
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p. 70 HB 1995