Tax administration

AN ACT Relating to improving the tax law administered by the 1
department of revenue by making technical corrections, clarifying 2
ambiguities, and providing administrative efficiencies in a manner 3
that is not estimated to affect state or local tax; amending RCW 4
70A.205.405, 82.04.050, 82.04.060, 82.04.192, 82.04.4451, 82.08.010, 5
82.08.0208, 82.08.9999, 82.08.0256, 82.12.010, 82.12.0208, 82.32.023, 6
82.32.087, 82.32.730, 82.48A.020, and 83.100.048; reenacting and 7
amending RCW 82.04.299, 82.04.29004, 82.08.020, 82.12.020, and 8
84.34.020; adding a new section to chapter 82.04 RCW; creating new 9
sections; repealing RCW 82.04.29001; and providing an expiration 10
date. 11
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:12
Sec. 1. RCW 70A.205.405 and 2025 c 417 s 301 are each amended to 13
read as follows: 14
(1) There is levied a $5 per tire fee on the retail sale of new 15
replacement vehicle tires. The fee imposed in this section must be 16
paid by the buyer to the seller, and each seller shall collect from 17
the buyer the full amount of the fee. The fee collected from the 18
buyer by the seller less the ((ten percent )) amount retained by the 19
seller as provided in RCW 70A.205.430(1) must be paid to the 20
department of revenue in accordance with RCW 82.32.045.21
Z-0459.6
HOUSE BILL 2257
State of Washington 69th Legislature 2026 Regular Session
By Representatives Berg, Ramel, Reeves, Parshley, Ryu, Peterson,
Wylie, Thai, Leavitt, Scott, Santos, Mena, Zahn, Thomas, Doglio,
Ormsby, Macri, Hill, Pollet, and Salahuddin; by request of Department
of Revenue
Prefiled 01/05/26. Read first time 01/12/26. Referred to Committee
on Finance.
p. 1 HB 2257
(2) The department of revenue shall incorporate into the agency's 1
regular audit cycle a reconciliation of the number of tires sold and 2
the amount of revenue collected by the businesses selling new 3
replacement vehicle tires at retail. The department of revenue shall 4
collect on the business excise tax return from the businesses selling 5
new replacement vehicle tires at retail: 6
(a) The number of tires sold; and 7
(b) The fee levied in this section. 8
(3) All other applicable provisions of chapter 82.32 RCW have 9
full force and application with respect to the fee imposed under this 10
section. The department of revenue shall administer this section.11
(4) For the purposes of this section, "new replacement vehicle 12
tires" means tires that are newly manufactured for vehicle purposes 13
and does not include retreaded vehicle tires. 14
Sec. 2. RCW 82.04.050 and 2025 c 422 s 101 are each amended to 15
read as follows: 16
(1)(a) "Sale at retail" or "retail sale" means every sale of 17
tangible personal property (including articles produced, fabricated, 18
or imprinted) to all persons irrespective of the nature of their 19
business and including, among others, without limiting the scope 20
hereof, persons who install, repair, clean, alter, improve, 21
construct, or decorate real or personal property of or for consumers 22
other than a sale to a person who: 23
(i) Purchases for the purpose of resale as tangible personal 24
property in the regular course of business without intervening use by 25
such person, but a purchase for the purpose of resale by a regional 26
transit authority under RCW 81.112.300 is not a sale for resale; or27
(ii) Installs, repairs, cleans, alters, imprints, improves, 28
constructs, or decorates real or personal property of or for 29
consumers, if such tangible personal property becomes an ingredient 30
or component of such real or personal property without intervening 31
use by such person; or 32
(iii) Purchases for the purpose of consuming the property 33
purchased in producing for sale as a new article of tangible personal 34
property or substance, of which such property becomes an ingredient 35
or component or is a chemical used in processing, when the primary 36
purpose of such chemical is to create a chemical reaction directly 37
through contact with an ingredient of a new article being produced 38
for sale; or 39
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(iv) Purchases for the purpose of consuming the property 1
purchased in producing ferrosilicon which is subsequently used in 2
producing magnesium for sale, if the primary purpose of such property 3
is to create a chemical reaction directly through contact with an 4
ingredient of ferrosilicon; or 5
(v) Purchases for the purpose of providing the property to 6
consumers as part of competitive telephone service, as defined in RCW 7
82.04.065; or 8
(vi) Purchases for the purpose of satisfying the person's 9
obligations under an extended warranty as defined in subsection (7) 10
of this section, if such tangible personal property replaces or 11
becomes an ingredient or component of property covered by the 12
extended warranty without intervening use by such person.13
(b) The term includes every sale of tangible personal property 14
that is used or consumed or to be used or consumed in the performance 15
of any activity defined as a "sale at retail" or "retail sale" even 16
though such property is resold or used as provided in (a)(i) through 17
(vi) of this subsection following such use. 18
(c) The term also means every sale of tangible personal property 19
to persons engaged in any business that is taxable under RCW 20
82.04.280(1) (a), (b), and (((g))) (f), 82.04.290, and 82.04.2908.21
(2) The term "sale at retail" or "retail sale" includes the sale 22
of or charge made for tangible personal property consumed and/or for 23
labor and services rendered in respect to the following:24
(a) The installing, repairing, cleaning, altering, imprinting, or 25
improving of tangible personal property of or for consumers, 26
including charges made for the mere use of facilities in respect 27
thereto, but excluding charges made for the use of self-service 28
laundry facilities, and also excluding sales of laundry service to 29
nonprofit health care facilities, and excluding services rendered in 30
respect to live animals, birds and insects; 31
(b) The constructing, repairing, decorating, or improving of new 32
or existing buildings or other structures under, upon, or above real 33
property of or for consumers, including the installing or attaching 34
of any article of tangible personal property therein or thereto, 35
whether or not such personal property becomes a part of the realty by 36
virtue of installation, and also includes the sale of services or 37
charges made for the clearing of land and the moving of earth 38
excepting the mere leveling of land used in commercial farming or 39
agriculture; 40
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(c) The constructing, repairing, or improving of any structure 1
upon, above, or under any real property owned by an owner who conveys 2
the property by title, possession, or any other means to the person 3
performing such construction, repair, or improvement for the purpose 4
of performing such construction, repair, or improvement and the 5
property is then reconveyed by title, possession, or any other means 6
to the original owner; 7
(d) The cleaning, fumigating, razing, or moving of existing 8
buildings or structures, but does not include the charge made for 9
janitorial services; and for purposes of this section the term 10
"janitorial services" means those cleaning and caretaking services 11
ordinarily performed by commercial janitor service businesses 12
including, but not limited to, wall and window washing, floor 13
cleaning and waxing, and the cleaning in place of rugs, drapes and 14
upholstery. The term "janitorial services" does not include painting, 15
papering, repairing, furnace or septic tank cleaning, snow removal or 16
sandblasting; 17
(e) Automobile towing and similar automotive transportation 18
services, but not in respect to those required to report and pay 19
taxes under chapter 82.16 RCW; 20
(f) The furnishing of lodging and all other services by a hotel, 21
rooming house, tourist court, motel, trailer camp, and the granting 22
of any similar license to use real property, as distinguished from 23
the renting or leasing of real property, and it is presumed that the 24
occupancy of real property for a continuous period of one month or 25
more constitutes a rental or lease of real property and not a mere 26
license to use or enjoy the same. For the purposes of this 27
subsection, it is presumed that the sale of and charge made for the 28
furnishing of lodging for a continuous period of one month or more to 29
a person is a rental or lease of real property and not a mere license 30
to enjoy the same. For the purposes of this section, it is presumed 31
that the sale of and charge made for the furnishing of lodging 32
offered regularly for public occupancy for periods of less than a 33
month constitutes a license to use or enjoy the property subject to 34
sales and use tax and not a rental or lease of property;35
(g) The installing, repairing, altering, or improving of digital 36
goods for consumers; 37
(h) Persons taxable under (a), (b), (c), (d), (e), (f), and (g) 38
of this subsection when such sales or charges are for property, labor 39
and services which are used or consumed in whole or in part by such 40
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persons in the performance of any activity defined as a "sale at 1
retail" or "retail sale" even though such property, labor and 2
services may be resold after such use or consumption. Nothing 3
contained in this subsection may be construed to modify subsection 4
(1) of this section and nothing contained in subsection (1) of this 5
section may be construed to modify this subsection.6
(3) The term "sale at retail" or "retail sale" includes the sale 7
of or charge made for personal, business, or professional services 8
including amounts designated as interest, rents, fees, admission, and 9
other service emoluments however designated, received by persons 10
engaging in the following business activities: 11
(a) Abstract, title insurance, and escrow services;12
(b) Credit bureau services; 13
(c) Automobile parking and storage garage services;14
(d) Landscape maintenance and horticultural services but 15
excluding (i) horticultural services provided to farmers and (ii) 16
pruning, trimming, repairing, removing, and clearing of trees and 17
brush near electric transmission or distribution lines or equipment, 18
if performed by or at the direction of an electric utility;19
(e) Service charges associated with tickets to professional 20
sporting events; 21
(f) The following personal services: Tanning salon services, 22
tattoo parlor services, steam bath services, turkish bath services, 23
escort services, and dating services; 24
(g)(i) Information technology training services, technical 25
support, and other services including, but not limited to, assisting 26
with network operations and support, help desk services, in-person 27
training related to hardware or software, network system support 28
services, data entry services, and data processing services;29
(ii) For purposes of this subsection (3)(g), "data processing 30
service" has the same meaning as in subsection (6)(b)(ii)(B) of this 31
section. Data processing does not include the service described in 32
subsection (6)(b)(ii)(A) of this section;33
(h) Custom website development services. For the purposes of this 34
subsection (3), "website development services" means the design, 35
development, and support of a website provided by a website developer 36
to a customer; 37
(i) Investigation services, security services, security 38
monitoring services, and armored car services including, but not 39
limited to, background checks, security guard and patrol services, 40
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personal and event security, armored car transportation of cash and 1
valuables, and security system services and monitoring. This does not 2
include locksmith services . For the purposes of this subsection 3
(3)(i), "investigation services" means providing investigation, 4
detective, and personal background check services including private 5
detective services, background check services, fingerprint services, 6
bounty hunting services, private investigation services, lie 7
detection and polygraph services, missing person tracing services, 8
and skip tracing services; 9
(j) ((Temporary)) (i) Except as provided in (j)(ii) and (iii) of 10
this subsection (3), temporary staffing services. ((For the purposes 11
of this subsection (3), "temporary staffing services" means providing 12
workers to other businesses, except for hospitals licensed under 13
chapter 70.41 or 71.12 RCW, for limited periods of time to supplement 14
their workforce and fill employment vacancies on a contract or for 15
fee basis))16
(ii) Temporary staffing services do not include staffing services 17
provided to hospitals licensed under chapter 70.41 or 71.12 RCW, for 18
limited periods of time to supplement their workforce and fill 19
employment vacancies on a contract or for a fee basis.20
(iii) Temporary staffing services also do not include paymaster 21
services to the extent amounts received from such services are 22
deductible under RCW 82.04.43393.23
(iv) For the purposes of this subsection (3)(j):24
(A) "Temporary staffing services" has the same meaning as 25
"staffing service" in RCW 82.04.540.26
(B) "Paymaster services" has the same meaning as in RCW 27
82.04.43393; 28
(k) Advertising services. (i) For the purposes of this subsection 29
(3), "advertising services" means all digital and nondigital services 30
related to the creation, preparation, production, or dissemination of 31
advertisements including, but not limited to: 32
(A) Layout, art direction, graphic design, mechanical 33
preparation, production supervision, placement, referrals, 34
acquisition of advertising space, and rendering advice concerning the 35
best methods of advertising products or services; and36
(B) Online referrals, search engine marketing, ((and)) lead 37
generation optimization, web campaign planning, the acquisition of 38
advertising space in the internet media, and the monitoring and 39
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evaluation of website traffic for purposes of determining the 1
effectiveness of an advertising campaign. 2
(ii) "Advertising services" do not include: 3
(A) Web hosting services and domain name registration;4
(B) Services rendered in respect to the following:5
(I) "Newspapers" as defined in RCW 82.04.214; 6
(II) Printing or publishing under RCW 82.04.280; and7
(III) "Radio and television broadcasting" within this state as 8
defined in RCW 82.04.281; and 9
(C) Services rendered in respect to out-of-home advertising, 10
including: Billboard advertising; street furniture advertising; 11
transit advertising; place-based advertising, such as in-store 12
display advertising or point-of-sale advertising; dynamic or static 13
signage at live events; naming rights; and fixed signage advertising. 14
Out-of-home advertising does not include direct mail.15
(iii) In the event a person is unable to source advertising 16
services in accordance with RCW 82.32.730 to the local level due to a 17
lack of information, the person must source the services statewide in 18
a manner prescribed by the department; 19
(l)(i) Live presentations including, but not limited to, 20
lectures, seminars, workshops, or courses where participants attend 21
either in-person or via the internet or telecommunications equipment 22
that allows audience members and the presenter or instructor to give, 23
receive, and discuss information with each other in real time.24
(ii) "Live presentations" do not include:25
(A) Classes provided by preschools;26
(B) Classes provided by elementary schools, secondary schools, 27
and institutions of higher education as part of their accreditation;28
(C) Musical, dramatic, comedic, or similar performances;29
(D) One-on-one instructional activities including tutoring, 30
consulting, and music lessons;31
(E) Presentations given at the physical location of a facility 32
exempt from property tax under RCW 84.36.020(2). For the purposes of 33
this subsection (3)(l)(ii)(E):34
(I) Presentations where participants may join via internet or 35
telecommunications equipment are given at the physical location of 36
the presenter during the real-time presentation; and37
(II) Presentations where all participants, other than the 38
presenter, attend at the physical location of a facility exempt from 39
property tax under RCW 84.36.020(2) are given at the physical 40
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location of the participants regardless of the location of the 1
presenter at the time of the presentation; and 2
(F) Youth camps; and 3
(m)(i) Operating an athletic or fitness facility, including all 4
charges for the use of such a facility or for any associated services 5
and amenities, except as provided in (m)(ii) of this subsection.6
(ii) Notwithstanding anything to the contrary in (m)(i) of this 7
subsection (3), the term "sale at retail" and "retail sale" under 8
this subsection does not include: 9
(A) Separately stated charges for the use of an athletic or 10
fitness facility where such use is primarily for a purpose other than 11
engaging in or receiving instruction in a physical fitness activity;12
(B) Separately stated charges for the use of a discrete portion 13
of an athletic or fitness facility, other than a pool, where such 14
discrete portion of the facility does not by itself meet the 15
definition of "athletic or fitness facility" in this subsection;16
(C) Separately stated charges for services, such as massage, 17
nutritional consulting, and body composition testing, that do not 18
require the customer to engage in physical fitness activities to 19
receive the service. The exclusion in this subsection (3)(m)(ii)(C) 20
does not apply to personal training services and instruction in a 21
physical fitness activity; 22
(D) Separately stated charges for physical therapy provided by a 23
physical therapist, as those terms are defined in RCW 18.74.010, or 24
occupational therapy provided by an occupational therapy 25
practitioner, as those terms are defined in RCW 18.59.020, when 26
performed pursuant to a referral from an authorized health care 27
practitioner or in consultation with an authorized health care 28
practitioner. For the purposes of this subsection (3)(m)(ii)(D), an 29
authorized health care practitioner means a health care practitioner 30
licensed under chapter 18.83, 18.25, 18.36A, 18.57, 18.71, or 18.71A 31
RCW, or, until July 1, 2022, chapter 18.57A RCW; 32
(E) Rent or association fees charged by a landlord or residential 33
association to a tenant or residential owner with access to an 34
athletic or fitness facility maintained by the landlord or 35
residential association, unless the rent or fee varies depending on 36
whether the tenant or owner has access to the facility;37
(F) Services provided in the regular course of employment by an 38
employee with access to an athletic or fitness facility maintained by 39
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the employer for use without charge by its employees or their family 1
members; 2
(G) The provision of access to an athletic or fitness facility by 3
an educational institution to its students and staff. However, 4
charges made by an educational institution to its alumni or other 5
members of the public for the use of any of the educational 6
institution's athletic or fitness facilities are a retail sale under 7
this subsection (3)(m). For purposes of this subsection 8
(3)(m)(ii)(G), "educational institution" has the same meaning as in 9
RCW 82.04.170; 10
(H) Yoga, chi gong, or martial arts classes, training, or events 11
held at a community center, park, school gymnasium, college or 12
university, hospital or other medical facility, private residence, or 13
any other facility that is not operated within and as part of an 14
athletic or fitness facility. 15
(iii) Nothing in (m)(ii) of this subsection (3) may be construed 16
to affect the taxation of sales made by the operator of an athletic 17
or fitness facility, where such sales are defined as a retail sale 18
under any provision of this section other than this subsection (3).19
(iv) For the purposes of this subsection (3)(m), the following 20
definitions apply: 21
(A) "Athletic or fitness facility" means an indoor or outdoor 22
facility or portion of a facility that is primarily used for: 23
Exercise classes; strength and conditioning programs; personal 24
training services; tennis, racquetball, handball, squash, or 25
pickleball; or other activities requiring the use of exercise or 26
strength training equipment, such as treadmills, elliptical machines, 27
stair climbers, stationary cycles, rowing machines, pilates 28
equipment, balls, climbing ropes, jump ropes, and weightlifting 29
equipment. 30
(B) "Martial arts" means any of the various systems of training 31
for physical combat or self-defense. "Martial arts" includes, but is 32
not limited to, karate, kung fu, tae kwon do, Krav Maga, boxing, 33
kickboxing, jujitsu, shootfighting, wrestling, aikido, judo, hapkido, 34
Kendo, tai chi, and mixed martial arts. 35
(C) "Physical fitness activities" means activities that involve 36
physical exertion for the purpose of improving or maintaining the 37
general fitness, strength, flexibility, conditioning, or health of 38
the participant. "Physical fitness activities" includes participating 39
in yoga, chi gong, or martial arts. 40
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((For the purposes of (g) through (i) and (k) of this subsection 1
(3), the terms "sale at retail" and "retail sale" do not include a 2
sale between members of an affiliated group as defined in RCW 3
82.04.299(1)(f).))4
(4)(a) The term also includes the renting or leasing of tangible 5
personal property to consumers. 6
(b) The term does not include the renting or leasing of tangible 7
personal property where the lease or rental is for the purpose of 8
sublease or subrent. 9
(5) The term also includes the providing of "competitive 10
telephone service," "telecommunications service," or "ancillary 11
services," as those terms are defined in RCW 82.04.065, to consumers.12
(6)(a) The term also includes the sale of prewritten computer 13
software, custom software, and customization of prewritten computer 14
software to a consumer, regardless of the method of delivery to the 15
end user. For purposes of this subsection (6)(a), the sale of 16
prewritten computer software includes the sale of or charge made for 17
a key or an enabling or activation code, where the key or code is 18
required to activate prewritten computer software and put the 19
software into use. There is no separate sale of the key or code from 20
the prewritten computer software, regardless of how the sale may be 21
characterized by the vendor or by the purchaser. 22
(b)(i) The term also includes the charge made to consumers for 23
the right to access and use prewritten computer software, custom 24
software, and customization of prewritten computer software, where 25
possession of the software is maintained by the seller or a third 26
party, regardless of whether the charge for the service is on a per 27
use, per user, per license, subscription, or some other basis.28
(ii)(A) The service described in (b)(i) of this subsection (6) 29
includes the right to access and use prewritten computer software, 30
custom software, and customization of prewritten computer software to 31
perform data processing. 32
(B) For purposes of this subsection (6)(b)(ii), "data processing" 33
means the systematic performance of operations on data to extract the 34
required information in an appropriate form or to convert the data to 35
usable information. Data processing includes check processing, image 36
processing, form processing, survey processing, payroll processing, 37
claim processing, and similar activities. 38
(7) The term also includes the sale of or charge made for an 39
extended warranty to a consumer. For purposes of this subsection, 40
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"extended warranty" means an agreement for a specified duration to 1
perform the replacement or repair of tangible personal property at no 2
additional charge or a reduced charge for tangible personal property, 3
labor, or both, or to provide indemnification for the replacement or 4
repair of tangible personal property, based on the occurrence of 5
specified events. The term "extended warranty" does not include an 6
agreement, otherwise meeting the definition of extended warranty in 7
this subsection, if no separate charge is made for the agreement and 8
the value of the agreement is included in the sales price of the 9
tangible personal property covered by the agreement. For purposes of 10
this subsection, "sales price" has the same meaning as in RCW 11
82.08.010. 12
(8)(a) ((The)) Except as provided in subsection (17) of this 13
section, the term also includes the following sales to consumers of 14
digital goods, digital codes, and digital automated services:15
(i) Sales in which the seller has granted the purchaser the right 16
of permanent use; 17
(ii) Sales in which the seller has granted the purchaser a right 18
of use that is less than permanent; 19
(iii) Sales in which the purchaser is not obligated to make 20
continued payment as a condition of the sale; and 21
(iv) Sales in which the purchaser is obligated to make continued 22
payment as a condition of the sale. 23
(b) A retail sale of digital goods, digital codes, or digital 24
automated services under this subsection (8) includes any services 25
provided by the seller exclusively in connection with the digital 26
goods, digital codes, or digital automated services, whether or not a 27
separate charge is made for such services. 28
(c) ((A retail sale of digital goods, digital codes, or digital 29
automated services does not include the following services if the 30
sale occurs between members of an affiliated group as defined in RCW 31
82.04.299(1)(f):32
(i) Any service that primarily involves the application of human 33
effort by the seller, and the human effort originated after the 34
customer requested the service;35
(ii) Live presentations, such as lectures, seminars, workshops, 36
or courses, where participants are connected to other participants 37
via the internet or telecommunications equipment, which allows 38
audience members and the presenter or instructor to give, receive, 39
and discuss information with each other in real time;40
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(iii) Advertising services. For purposes of this subsection 1
(8)(c), "advertising services" means all services directly related to 2
the creation, preparation, production, or dissemination of 3
advertisements. Advertising services include layout, art direction, 4
graphic design, mechanical preparation, production supervision, 5
placement, and rendering advice to a client concerning the best 6
methods of advertising that client's products or services. 7
Advertising services also include online referrals, search engine 8
marketing and lead generation optimization, web campaign planning, 9
the acquisition of advertising space in the internet media, and the 10
monitoring and evaluation of website traffic for purposes of 11
determining the effectiveness of an advertising campaign. Advertising 12
services do not include web hosting services and domain name 13
registration; and14
(iv) Data processing services. For purposes of this subsection 15
(8)(c), "data processing service" means a primarily automated service 16
provided to a business or other organization where the primary object 17
of the service is the systematic performance of operations by the 18
service provider on data supplied in whole or in part by the customer 19
to extract the required information in an appropriate form or to 20
convert the data to usable information. Data processing services 21
include check processing, image processing, form processing, survey 22
processing, payroll processing, claim processing, and similar 23
activities. Data processing does not include the service described in 24
subsection (6)(b) of this section.25
(d))) For purposes of this subsection, "permanent" means 26
perpetual or for an indefinite or unspecified length of time. A right 27
of permanent use is presumed to have been granted unless the 28
agreement between the seller and the purchaser specifies or the 29
circumstances surrounding the transaction suggest or indicate that 30
the right to use terminates on the occurrence of a condition 31
subsequent. 32
(9) The term also includes the charge made for providing tangible 33
personal property along with an operator for a fixed or indeterminate 34
period of time. A consideration of this is that the operator is 35
necessary for the tangible personal property to perform as designed. 36
For the purpose of this subsection (9), an operator must do more than 37
maintain, inspect, or set up the tangible personal property.38
(10) The term does not include the sale of or charge made for 39
labor and services rendered in respect to the building, repairing, or 40
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improving of any street, place, road, highway, easement, right-of-1
way, mass public transportation terminal or parking facility, bridge, 2
tunnel, or trestle which is owned by a municipal corporation or 3
political subdivision of the state or by the United States and which 4
is used or to be used primarily for foot or vehicular traffic 5
including mass transportation vehicles of any kind.6
(11) The term also does not include sales of chemical sprays or 7
washes to persons for the purpose of postharvest treatment of fruit 8
for the prevention of scald, fungus, mold, or decay, nor does it 9
include sales of feed, seed, seedlings, fertilizer, agents for 10
enhanced pollination including insects such as bees, and spray 11
materials to: (a) Persons who participate in the federal conservation 12
reserve program, the environmental quality incentives program, the 13
wetlands reserve program, and the wildlife habitat incentives 14
program, or their successors administered by the United States 15
department of agriculture; (b) farmers for the purpose of producing 16
for sale any agricultural product; (c) farmers for the purpose of 17
providing bee pollination services; and (d) farmers acting under 18
cooperative habitat development or access contracts with an 19
organization exempt from federal income tax under 26 U.S.C. Sec. 20
501(c)(3) of the federal internal revenue code or the Washington 21
state department of fish and wildlife to produce or improve wildlife 22
habitat on land that the farmer owns or leases. 23
(12) The term does not include the sale of or charge made for 24
labor and services rendered in respect to the constructing, 25
repairing, decorating, or improving of new or existing buildings or 26
other structures under, upon, or above real property of or for the 27
United States, any instrumentality thereof, or a county or city 28
housing authority created pursuant to chapter 35.82 RCW, including 29
the installing, or attaching of any article of tangible personal 30
property therein or thereto, whether or not such personal property 31
becomes a part of the realty by virtue of installation. Nor does the 32
term include the sale of services or charges made for the clearing of 33
land and the moving of earth of or for the United States, any 34
instrumentality thereof, or a county or city housing authority. Nor 35
does the term include the sale of services or charges made for 36
cleaning up for the United States, or its instrumentalities, 37
radioactive waste and other by-products of weapons production and 38
nuclear research and development. 39
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(13) The term does not include the sale of or charge made for 1
labor, services, or tangible personal property pursuant to agreements 2
providing maintenance services for bus, rail, or rail fixed guideway 3
equipment when a regional transit authority is the recipient of the 4
labor, services, or tangible personal property, and a transit agency, 5
as defined in RCW 81.104.015, performs the labor or services.6
(14) The term does not include the sale for resale of any service 7
described in this section if the sale would otherwise constitute a 8
"sale at retail" and "retail sale" under this section.9
(15)(a) The term "sale at retail" or "retail sale" includes 10
amounts charged, however labeled, to consumers to engage in any of 11
the activities listed in this subsection (15)(a), including the 12
furnishing of any associated equipment or, except as otherwise 13
provided in this subsection, providing instruction in such 14
activities, where such charges are not otherwise defined as a "sale 15
at retail" or "retail sale" in this section: 16
(i)(A) Golf, including any variant in which either golf balls or 17
golf clubs are used, such as miniature golf, hitting golf balls at a 18
driving range, and golf simulators, and including fees charged by a 19
golf course to a player for using his or her own cart. However, 20
charges for golf instruction are not a retail sale, provided that if 21
the instruction involves the use of a golfing facility that would 22
otherwise require the payment of a fee, such as green fees or driving 23
range fees, such fees, including the applicable retail sales tax, 24
must be separately identified and charged by the golfing facility 25
operator to the instructor or the person receiving the instruction.26
(B) Notwithstanding (a)(i)(A) of this subsection (15) and except 27
as otherwise provided in this subsection (15)(a)(i)(B), the term 28
"sale at retail" or "retail sale" does not include amounts charged to 29
participate in, or conduct, a golf tournament or other competitive 30
event. However, amounts paid by event participants to the golf 31
facility operator are retail sales under this subsection (15)(a)(i). 32
Likewise, amounts paid by the event organizer to the golf facility 33
are retail sales under this subsection (15)(a)(i), if such amounts 34
vary based on the number of event participants; 35
(ii) Ballooning, hang gliding, indoor or outdoor sky diving, 36
paragliding, parasailing, and similar activities; 37
(iii) Air hockey, billiards, pool, foosball, darts, shuffleboard, 38
ping pong, and similar games; 39
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(iv) Access to amusement park, theme park, and water park 1
facilities, including but not limited to charges for admission and 2
locker or cabana rentals. Discrete charges for rides or other 3
attractions or entertainment that are in addition to the charge for 4
admission are not a retail sale under this subsection (15)(a)(iv). 5
For the purposes of this subsection, an amusement park or theme park 6
is a location that provides permanently affixed amusement rides, 7
games, and other entertainment, but does not include parks or zoos 8
for which the primary purpose is the exhibition of wildlife, or 9
fairs, carnivals, and festivals as defined in (b)(i) of this 10
subsection; 11
(v) Batting cage activities; 12
(vi) Bowling, but not including competitive events, except that 13
amounts paid by the event participants to the bowling alley operator 14
are retail sales under this subsection (15)(a)(vi). Likewise, amounts 15
paid by the event organizer to the operator of the bowling alley are 16
retail sales under this subsection (15)(a)(vi), if such amounts vary 17
based on the number of event participants; 18
(vii) Climbing on artificial climbing structures, whether indoors 19
or outdoors; 20
(viii) Day trips for sightseeing purposes; 21
(ix) Bungee jumping, zip lining, and riding inside a ball, 22
whether inflatable or otherwise; 23
(x) Horseback riding offered to the public, where the seller 24
furnishes the horse to the buyer and providing instruction is not the 25
primary focus of the activity, including guided rides, but not 26
including therapeutic horseback riding provided by an instructor 27
certified by a nonprofit organization that offers national or 28
international certification for therapeutic riding instructors;29
(xi) Fishing, including providing access to private fishing areas 30
and charter or guided fishing, except that fishing contests and 31
license fees imposed by a government entity are not a retail sale 32
under this subsection; 33
(xii) Guided hunting and hunting at game farms and shooting 34
preserves, except that hunting contests and license fees imposed by a 35
government entity are not a retail sale under this subsection;36
(xiii) Swimming, but only in respect to (A) recreational or 37
fitness swimming that is open to the public, such as open swim, lap 38
swimming, and special events like kids night out and pool parties 39
during open swim time, and (B) pool parties for private events, such 40
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as birthdays, family gatherings, and employee outings. Fees for 1
swimming lessons, to participate in swim meets and other 2
competitions, or to join a swim team, club, or aquatic facility are 3
not retail sales under this subsection (15)(a)(xiii);4
(xiv) Go-karting, bumper cars, and other motorized activities 5
where the seller provides the vehicle and the premises where the 6
buyer will operate the vehicle; 7
(xv) Indoor or outdoor playground activities, such as inflatable 8
bounce structures and other inflatables; mazes; trampolines; slides; 9
ball pits; games of tag, including laser tag and soft-dart tag; and 10
human gyroscope rides, regardless of whether such activities occur at 11
the seller's place of business, but not including playground 12
activities provided for children by a licensed child day care center 13
or licensed family day care provider as those terms are defined in 14
RCW 43.216.010; 15
(xvi) Shooting sports and activities, such as target shooting, 16
skeet, trap, sporting clays, "5" stand, and archery, but only in 17
respect to discrete charges to members of the public to engage in 18
these activities, but not including fees to enter a competitive 19
event, instruction that is entirely or predominately classroom based, 20
or to join or renew a membership at a club, range, or other facility;21
(xvii) Paintball and airsoft activities; 22
(xviii) Skating, including ice skating, roller skating, and 23
inline skating, but only in respect to discrete charges to members of 24
the public to engage in skating activities, but not including skating 25
lessons, competitive events, team activities, or fees to join or 26
renew a membership at a skating facility, club, or other 27
organization; 28
(xix) Nonmotorized snow sports and activities, such as downhill 29
and cross-country skiing, snowboarding, ski jumping, sledding, snow 30
tubing, snowshoeing, and similar snow sports and activities, whether 31
engaged in outdoors or in an indoor facility with or without snow, 32
but only in respect to discrete charges to the public for the use of 33
land or facilities to engage in nonmotorized snow sports and 34
activities, such as fees, however labeled, for the use of ski lifts 35
and tows and daily or season passes for access to trails or other 36
areas where nonmotorized snow sports and activities are conducted. 37
However, fees for the following are not retail sales under this 38
subsection (15)(a)(xix): (A) Instructional lessons; (B) permits 39
issued by a governmental entity to park a vehicle on or access public 40
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lands; and (C) permits or leases granted by an owner of private 1
timberland for recreational access to areas used primarily for 2
growing and harvesting timber; and 3
(xx) Scuba diving; snorkeling; river rafting; surfing; 4
kiteboarding; flyboarding; water slides; inflatables, such as water 5
pillows, water trampolines, and water rollers; and similar water 6
sports and activities. 7
(b) Notwithstanding anything to the contrary in this subsection 8
(15), the term "sale at retail" or "retail sale" does not include 9
charges: 10
(i) Made for admission to, and rides or attractions at, fairs, 11
carnivals, and festivals. For the purposes of this subsection, fairs, 12
carnivals, and festivals are events that do not exceed 21 days and a 13
majority of the amusement rides, if any, are not affixed to real 14
property; 15
(ii) Made by an educational institution to its students and staff 16
for activities defined as retail sales by (a)(i) through (xx) of this 17
subsection. However, charges made by an educational institution to 18
its alumni or other members of the general public for these 19
activities are a retail sale under this subsection (15). For purposes 20
of this subsection (15)(b)(ii), "educational institution" has the 21
same meaning as in RCW 82.04.170; 22
(iii) Made by a vocational school for commercial diver training 23
that is licensed by the workforce training and education coordinating 24
board under chapter 28C.10 RCW; or 25
(iv) Made for day camps offered by a nonprofit organization or 26
state or local governmental entity that provide youth not older than 27
age 18, or that are focused on providing individuals with 28
disabilities or mental illness, the opportunity to participate in a 29
variety of supervised activities. 30
(16)(a) The term "sale at retail" or "retail sale" includes the 31
purchase or acquisition of tangible personal property and specified 32
services by a person who receives either a qualifying grant exempt 33
from tax under RCW 82.04.767 or 82.16.320 or a grant deductible under 34
RCW 82.04.4339, except for transactions excluded from the definition 35
of "sale at retail" or "retail sale" by any other provision of this 36
section. Nothing in this subsection (16) may be construed to limit 37
the application of any other provision of this section to purchases 38
by a recipient of either a qualifying grant exempt from tax under RCW 39
p. 17 HB 2257
82.04.767 or a grant deductible under RCW 82.04.4339, or by any other 1
person. 2
(b) For purposes of this subsection (16), "specified services" 3
means: 4
(i) The constructing, repairing, decorating, or improving of new 5
or existing buildings or other structures under, upon, or above real 6
property, including the installing or attaching of any article of 7
tangible personal property therein or thereto, whether or not such 8
personal property becomes a part of the realty by virtue of 9
installation; 10
(ii) The clearing of land or the moving of earth, whether or not 11
associated with activities described in (b)(i) of this subsection 12
(16); 13
(iii) The razing or moving of existing buildings or structures; 14
and 15
(iv) Landscape maintenance and horticultural services.16
(17) The terms "sale at retail" and "retail sale" do not include 17
the following services if the sale occurs between members of an 18
affiliated group as defined in RCW 82.04.299(1)(f):19
(a) Services described in subsection (3)(g) through (i), (k), and 20
(l) of this section whether provided in-person or transferred 21
electronically;22
(b) Custom software and customization of prewritten computer 23
software to a consumer, regardless of the method of delivery to the 24
end user;25
(c) Any digital automated services that primarily involves the 26
application of human effort by the seller, and the human effort 27
originated after the customer requested the service; and28
(d) Data processing services. For purposes of this subsection 29
(17), "data processing service" has the same meaning as in subsection 30
(3)(g)(ii) of this section.31
Sec. 3. RCW 82.04.060 and 2017 c 323 s 512 are each amended to 32
read as follows: 33
"Sale at wholesale" or "wholesale sale" means:34
(1) Any sale, which is not a sale at retail, of:35
(a) Tangible personal property; 36
(b) Services defined as a retail sale in RCW 82.04.050(2) (a) or 37
(g) or (3) (g) through (k); 38
(c) Activities defined as a retail sale in RCW 82.04.050(15);39
p. 18 HB 2257
(d) Prewritten computer software; 1
(e) Services described in RCW 82.04.050(6)(((c))) (b);2
(f) Extended warranties as defined in RCW 82.04.050(7);3
(g) Competitive telephone service, ancillary services, or 4
telecommunications service as those terms are defined in RCW 5
82.04.065; or 6
(h) Digital goods, digital codes, or digital automated services;7
(2) Any charge made for labor and services rendered for persons 8
who are not consumers, in respect to real or personal property, if 9
such charge is expressly defined as a retail sale by RCW 82.04.050 10
when rendered to or for consumers. For the purposes of this 11
subsection (2), "real or personal property" does not include any 12
natural products named in RCW 82.04.100; and 13
(3) The sale of any service for resale, if the sale is excluded 14
from the definition of "sale at retail" and "retail sale" in RCW 15
82.04.050(14). 16
Sec. 4. RCW 82.04.192 and 2025 c 422 s 201 are each amended to 17
read as follows: 18
(1) "Digital audio works" means works that result from the 19
fixation of a series of musical, spoken, or other sounds, including 20
ringtones. 21
(2) "Digital audiovisual works" means a series of related images 22
which, when shown in succession, impart an impression of motion, 23
together with accompanying sounds, if any. 24
(3)(a) "Digital automated service," except as provided in (b) of 25
this subsection (3), means any service transferred electronically 26
that uses one or more software applications. 27
(b) "Digital automated service" does not include:28
(i) The loaning or transferring of money or the purchase, sale, 29
or transfer of financial instruments. For purposes of this subsection 30
(3)(b)(i), "financial instruments" include cash, accounts receivable 31
and payable, loans and notes receivable and payable, debt securities, 32
equity securities, as well as derivative contracts such as forward 33
contracts, swap contracts, and options; 34
(ii) Dispensing cash or other physical items from a machine;35
(iii) Payment processing services; 36
(iv) Parimutuel wagering and handicapping contests as authorized 37
by chapter 67.16 RCW; 38
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(v) Telecommunications services and ancillary services as those 1
terms are defined in RCW 82.04.065; 2
(vi) The internet and internet access as those terms are defined 3
in RCW 82.04.297; 4
(vii) The service described in RCW 82.04.050(6)(b);5
(viii) Online educational programs provided by a:6
(A) Public or private elementary or secondary school; or7
(B) An institution of higher education as defined in sections 8
1001 or 1002 of the federal higher education act of 1965 (Title 20 9
U.S.C. Secs. 1001 and 1002), as existing on July 1, 2009. For 10
purposes of this subsection (3)(b)(viii)(B), an online educational 11
program must be encompassed within the institution's accreditation;12
(ix) Travel agent services, including online travel services, and 13
automated systems used by travel agents to book reservations;14
(x)(A) A service that allows the person receiving the service to 15
make online sales of products or services, digital or otherwise, 16
using either: (I) The service provider's website; or (II) the service 17
recipient's website, but only when the service provider's technology 18
is used in creating or hosting the service recipient's website or is 19
used in processing orders from customers using the service 20
recipient's website. 21
(B) The service described in this subsection (3)(b)(x) does not 22
include the underlying sale of the products or services, digital or 23
otherwise, by the person receiving the service; 24
(xi) Telehealth as defined in RCW 18.134.010 or telemedicine as 25
defined in RCW 48.43.735; 26
(xii) The mere storage of digital products, digital codes, 27
computer software, or master copies of software. This exclusion from 28
the definition of digital automated services includes providing space 29
on a server for web hosting or the backing up of data or other 30
information; ((and))31
(xiii) Digital goods;32
(xiv)(A) The use of a digital automated service that is 33
incidental to the underlying service. The department may establish 34
factors that demonstrate the use of the digital automated service is 35
incidental to an underlying service, which must include, at a 36
minimum, but is not limited to, the following:37
(I) The buyer of the underlying service uses the digital 38
automated service provided by the service provider solely for the 39
p. 20 HB 2257
purpose of transmitting or exchanging communications between the 1
service provider and the buyer; and 2
(II) There is no consideration from the buyer of the underlying 3
service for the use of a digital automated service when the use is 4
solely for the purposes of transmitting or exchanging communications 5
between the service provider and the buyer of the underlying service.6
(B) For the purposes of this subsection (3)(b)(xiv):7
(I) "Buyer" has the same meaning as provided in RCW 82.08.010;8
(II) "Service provider" means a person providing an underlying 9
service;10
(III) "Underlying service" means any service provided by a person 11
whose gross income of the business from such service would be subject 12
to business and occupation tax under any business and occupation tax 13
classification other than the retailing service tax classification 14
under RCW 82.04.250, if the exclusion in this subsection (3)(b)(xiv) 15
were to apply. 16
(4) "Digital books" means works that are generally recognized in 17
the ordinary and usual sense as books. 18
(5) "Digital code" means a code that provides a purchaser with 19
the right to obtain one or more digital products, if all of the 20
digital products to be obtained through the use of the code have the 21
same sales and use tax treatment. "Digital code" does not include a 22
code that represents a stored monetary value that is deducted from a 23
total as it is used by the purchaser. "Digital code" also does not 24
include a code that represents a redeemable card, gift card, or gift 25
certificate that entitles the holder to select digital products of an 26
indicated cash value. A digital code may be obtained by any means, 27
including email or by tangible means regardless of its designation as 28
song code, video code, book code, or some other term.29
(6)(a) "Digital goods," except as provided in (b) of this 30
subsection (6), means sounds, images, data, facts, or information, or 31
any combination thereof, transferred electronically, including, but 32
not limited to, specified digital products and other products 33
transferred electronically not included within the definition of 34
specified digital products. 35
(b) The term "digital goods" does not include:36
(i) Telecommunications services and ancillary services as those 37
terms are defined in RCW 82.04.065; 38
(ii) Computer software as defined in RCW 82.04.215;39
p. 21 HB 2257
(iii) The internet and internet access as those terms are defined 1
in RCW 82.04.297; 2
(iv)(A) Except as provided in (b)(iv)(B) of this subsection (6), 3
the representation of a personal or professional service in 4
electronic form, such as an electronic copy of an engineering report 5
prepared by an engineer, where the service primarily involves the 6
application of human effort by the service provider, and the human 7
effort originated after the customer requested the service.8
(B) The exclusion in (b)(iv)(A) of this subsection (6) does not 9
apply to photographers in respect to amounts received for the taking 10
of photographs that are transferred electronically to the customer, 11
but only if the customer is an end user, as defined in RCW 12
82.04.190(11), of the photographs. Such amounts are considered to be 13
for the sale of digital goods; and 14
(v) Services and activities excluded from the definition of 15
digital automated services in subsection (3)(b)(i) through (xii) of 16
this section and not otherwise described in (b)(i) through (iv) of 17
this subsection (6). 18
(7) "Digital products" means digital goods and digital automated 19
services. 20
(8) "Electronically transferred" or "transferred electronically" 21
means obtained by the purchaser by means other than tangible storage 22
media. It is not necessary that a copy of the product be physically 23
transferred to the purchaser. So long as the purchaser may access the 24
product, it will be considered to have been electronically 25
transferred to the purchaser. 26
(9) "Specified digital products" means electronically transferred 27
digital audiovisual works, digital audio works, and digital books.28
(10) "Subscription radio services" means the sale of audio 29
programming by a radio broadcaster as defined in RCW 82.08.0208, 30
except as otherwise provided in this subsection. "Subscription radio 31
services" does not include audio programming that is sold on a pay-32
per-program basis or that allows the buyer to access a library of 33
programs at any time for a specific charge for that service.34
(11) "Subscription television services" means the sale of video 35
programming by a television broadcaster as defined in RCW 82.08.0208, 36
except as otherwise provided in this subsection. "Subscription 37
television services" does not include video programming that is sold 38
on a pay-per-program basis or that allows the buyer to access a 39
library of programs at any time for a specific charge for that 40
p. 22 HB 2257
service, but only if the seller is not subject to a franchise fee in 1
this state under the authority of Title 47 U.S.C. Sec. 542 (a) on the 2
gross revenue derived from the sale. 3
Sec. 5. RCW 82.04.299 and 2025 c 420 s 301 and 2025 c 401 s 5 4
are each reenacted and amended to read as follows: 5
(1)(a) Beginning with business activities occurring on or after 6
April 1, 2020, in addition to the taxes imposed under RCW 82.04.290 7
(2) and (4), a workforce education investment surcharge is imposed on 8
select advanced computing businesses. 9
(i) Beginning April 1, 2020, through December 31, 2025, the 10
surcharge is equal to the gross income of the business subject to the 11
tax under RCW 82.04.290 (2) and (4), multiplied by the rate of 1.22 12
percent. 13
(ii) Beginning January 1, 2026, the surcharge is equal to the 14
gross income of the business subject to the tax under RCW 82.04.290 15
(2) and (4), multiplied by the rate of 7.5 percent.16
(b) Except as provided in (e) of this subsection (1), in no case 17
will the combined surcharge imposed under this subsection (1) paid by 18
all members of an affiliated group be more than $75,000,000 annually.19
(c) For persons subject to the surcharge imposed under this 20
subsection (1) that report under one or more tax classifications, the 21
surcharge applies only to business activities taxed under RCW 22
82.04.290 (2) and (4). 23
(d) The surcharge imposed under this subsection (1) must be 24
reported and paid on a quarterly basis in a manner as required by the 25
department. Returns and amounts payable under this subsection (1) are 26
due by the last day of the month immediately following the end of the 27
reporting period covered by the return. All other taxes must be 28
reported and paid as required under RCW 82.32.045.29
(e)(i) To aid in the effective administration of the surcharge in 30
this subsection (1), the department may require persons believed to 31
be engaging in advanced computing or affiliated with a person 32
believed to be engaging in advanced computing to disclose whether 33
they are a member of an affiliated group and, if so, to identify all 34
other members of the affiliated group subject to the surcharge.35
(ii) If the department establishes, by clear, cogent, and 36
convincing evidence, that one or more members of an affiliated group, 37
with intent to evade the surcharge under this subsection (1), failed 38
to fully comply with this subsection (1)(e), the department must 39
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assess against that person, or those persons collectively, a penalty 1
equal to 50 percent of the amount of the total surcharge payable by 2
all members of that affiliated group for the calendar year during 3
which the person or persons failed to fully comply with this 4
subsection (1)(e). The penalty under this subsection (1)(e) is in 5
lieu of and not in addition to the evasion penalty under RCW 6
82.32.090(7). 7
(f) For the purposes of this subsection (1) the following 8
definitions apply: 9
(i) "Advanced computing" means designing or developing computer 10
software or computer hardware, whether directly or contracting with 11
another person, including: Modifications to computer software or 12
computer hardware; cloud computing services; or operating as a 13
marketplace facilitator as defined by RCW 82.08.0531, an online 14
search engine, or online social networking platform;15
(ii) "Affiliate" and "affiliated" means a person that directly or 16
indirectly, through one or more intermediaries, controls, is 17
controlled by, or is under common control with another person;18
(iii) "Affiliated group" means a group of two or more persons 19
that are affiliated with each other; 20
(iv) "Cloud computing services" means on-demand delivery of 21
computing resources, such as networks, servers, storage, 22
applications, and services, over the internet; 23
(v) "Control" means the possession, directly or indirectly, of 24
more than 50 percent of the power to direct or cause the direction of 25
the management and policies of a person, whether through the 26
ownership of voting shares, by contract, or otherwise; and27
(vi) "Select advanced computing business" means a person who is a 28
member of an affiliated group with at least one member of the 29
affiliated group engaging in the business of advanced computing, and 30
the affiliated group has worldwide gross revenue of more than 31
$25,000,000,000 during the immediately preceding calendar year. A 32
person who is primarily engaged within this state in the provision of 33
commercial mobile service, as that term is defined in 47 U.S.C. Sec. 34
332(d)(1), shall not be considered a select advanced computing 35
business. A person who is primarily engaged in this state in the 36
operation and provision of access to transmission facilities and 37
infrastructure that the person owns or leases for the transmission of 38
voice, data, text, sound, and video using wired telecommunications 39
networks shall not be considered a select advanced computing 40
p. 24 HB 2257
business. A person that is primarily engaged in business as a 1
"financial institution" as defined in RCW 82.04.29004, as that 2
section existed on January 1, 2020, shall not be considered a select 3
advanced computing business. For purposes of this subsection 4
(1)(f)(vi), "primarily" is determined based on gross income of the 5
business. 6
(2)(a) The workforce education investment surcharge under this 7
section does not apply to: 8
(i) Any hospital as defined in RCW 70.41.020, including any 9
hospital that comes within the scope of chapter 71.12 RCW if the 10
hospital is also licensed under chapter 70.41 RCW; or11
(ii) A provider clinic offering primary care, multispecialty and 12
surgical services, including behavioral health services, and any 13
affiliate of the provider clinic if the affiliate is an organization 14
that offers health care services or provides administrative support 15
for a provider clinic, or is an independent practice association or 16
accountable care organization. 17
(b) The exemptions under this subsection (2) do not apply to 18
amounts received by any member of an affiliated group other than the 19
businesses described in (a) of this subsection. 20
(c) For purposes of the exemption in (a)(ii) of this subsection:21
(i) "Health care services" means services offered by health care 22
providers relating to the prevention, cure, or treatment of illness, 23
injury, or disease. 24
(ii) "Primary care" means wellness and prevention services and 25
the diagnosis and treatment of health conditions. 26
(3) Revenues from the surcharge under this section must be 27
deposited directly into the workforce education investment account 28
established in RCW 43.79.195. 29
(4) Beginning in fiscal year 2028, and each year thereafter, when 30
the number of qualified Washington state applicants exceeds the 31
available enrollments by 100 at computer science engineering degree 32
programs in four-year state universities, then a commensurate number 33
of computer science and engineering degree enrollments at those state 34
universities must be automatically added and funded for the surcharge 35
imposed under this section to accommodate the additional demand.36
(5) The department has the authority to determine through an 37
audit or other investigation whether a person is subject to the 38
surcharge imposed in this section. 39
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Sec. 6. RCW 82.04.29004 and 2025 c 423 s 201, 2025 c 420 s 202, 1
and 2025 c 401 s 4 are each reenacted and amended to read as follows:2
(1)(a) From January 1, 2020, through September 30, 2025, in 3
addition to any other taxes imposed under this chapter, an additional 4
tax is imposed on specified financial institutions. The additional 5
tax is equal to the gross income of the business taxable under RCW 6
82.04.290 (2) and (4) multiplied by the rate of 1.2 percent.7
(b) Beginning October 1, 2025, in addition to any other taxes 8
imposed under this chapter, an additional tax is imposed on specified 9
financial institutions. The additional tax is equal to the gross 10
income of the business taxable under RCW 82.04.290 (2) and (4) 11
multiplied by the rate of 1.5 percent. 12
(2) The definitions in this subsection apply throughout this 13
section unless the context clearly requires otherwise.14
(a) "Affiliated" means a person that directly or indirectly, 15
through one or more intermediaries, controls, is controlled by, or is 16
under common control with another person. For purposes of this 17
subsection (2)(a), "control" means the possession, directly or 18
indirectly, of more than 50 percent of the power to direct or cause 19
the direction of the management and policies of a person, whether 20
through the ownership of voting shares, by contract, or otherwise.21
(b) "Consolidated financial institution group" means all 22
financial institutions that are affiliated with each other.23
(c) "Consolidated financial statement" means a consolidated 24
financial institution group's consolidated reports of condition and 25
income filed with the federal financial institutions examination 26
council, or successor agency. 27
(d) "Financial institution" means: 28
(i) Any corporation or other business entity chartered under 29
Titles 30A, 30B, 31, 32, and 33 RCW, or registered under the federal 30
bank holding company act of 1956, as amended, or registered as a 31
savings and loan holding company under the federal national housing 32
act, as amended; 33
(ii) A national bank organized and existing as a national bank 34
association pursuant to the provisions of the national bank act, 12 35
U.S.C. Sec. 21 et seq.; 36
(iii) A savings association or federal savings bank as defined in 37
the federal deposit insurance act, 12 U.S.C. Sec. 1813(b)(1);38
(iv) Any bank or thrift institution incorporated or organized 39
under the laws of any state; 40
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(v) Any corporation organized under the provisions of 12 U.S.C. 1
Sec. 611 through 631; 2
(vi) Any agency or branch of a foreign depository as defined in 3
12 U.S.C. Sec. 3101; 4
(vii) A production credit association organized under the federal 5
farm credit act of 1933, all of whose stock held by the federal 6
production credit corporation has been retired; 7
(viii) Any corporation or other business entity who receives 8
gross income taxable under RCW 82.04.290, and whose voting interests 9
are more than 50 percent owned, directly or indirectly, by any person 10
or business entity described in (d)(i) through (vii) of this 11
subsection other than an insurance company liable for the insurance 12
premiums tax under RCW 48.14.020 or any other company taxable under 13
chapter 48.14 RCW; 14
(ix)(A) A corporation or other business entity that receives more 15
than 50 percent of its total gross income for federal income tax 16
purposes from finance leases. For purposes of this subsection, a 17
"finance lease" means a lease that meets two requirements:18
(I) It is the type of lease permitted to be made by national 19
banks (see 12 U.S.C. Sec. 24 (7) and (10), comptroller of the currency 20
regulations, part 23, leasing (added by 56 C.F.R. Sec. 28314, June 21
20, 1991, effective July 22, 1991), and regulation Y of the federal 22
reserve system 12 C.F.R. Part 225.25, as amended); and23
(II) It is the economic equivalent of an extension of credit, 24
i.e., the lease is treated by the lessor as a loan for federal income 25
tax purposes. In no event does a lease qualify as an extension of 26
credit where the lessor takes depreciation on such property for 27
federal income tax purposes. 28
(B) For this classification to apply, the average of the gross 29
income in the current tax year and immediately preceding two tax 30
years must satisfy the more than 50 percent requirement;31
(x) Any other person or business entity, other than an insurance 32
general agent taxable under RCW 82.04.280(1)(e), an insurance 33
business exempt from the business and occupation tax under RCW 34
82.04.320, a real estate broker taxable under RCW 82.04.255, a 35
securities dealer or international investment management company 36
taxable under RCW 82.04.290(2), that receives more than 50 percent of 37
its gross receipts from activities that a person described in (d)(ii) 38
through (vii) and (ix) of this subsection is authorized to transact.39
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(e)(i) "Specified financial institution" means a financial 1
institution that is a member of a consolidated financial institution 2
group that reported on its consolidated financial statement for the 3
previous calendar year annual net income of at least $1,000,000,000, 4
not including net income attributable to noncontrolling interests, as 5
the terms "net income" and "noncontrolling interest" are used in the 6
consolidated financial statement. 7
(ii) If financial institutions are no longer required to file 8
consolidated financial statements, "specified financial institution" 9
means any person that was subject to the additional tax in this 10
section in at least two of the previous four calendar years.11
(3) The department must notify the fiscal committees of the 12
legislature if financial institutions are no longer required to file 13
consolidated financial statements. 14
(4) To aid in the effective administration of the additional tax 15
imposed in this section, the department may require a person believed 16
to be a specified financial institution to disclose whether it is a 17
member of a consolidated financial institution group and, if so, to 18
identify all other members of its consolidated financial institution 19
group. A person failing to comply with this subsection is deemed to 20
have intended to evade tax payable under this section and is subject 21
to the penalty in RCW 82.32.090(7) on any tax due under this section 22
by the person and any financial institution affiliated with the 23
person. 24
(5) Taxes collected under this section must be deposited into the 25
general fund. 26
Sec. 7. RCW 82.04.4451 and 2022 c 295 s 1 are each amended to 27
read as follows: 28
(1) In computing the tax imposed under this chapter, a credit is 29
allowed against the amount of tax otherwise due under this chapter, 30
as provided in this section. Except for taxpayers that report at 31
least 50 percent of their taxable amount under RCW 82.04.255, 32
82.04.290(2)(a), ((and)) 82.04.285, and 82.04.405, the maximum credit 33
for a taxpayer for a reporting period is $55 multiplied by the number 34
of months in the reporting period, as determined under RCW 82.32.045. 35
For a taxpayer that reports at least 50 percent of its taxable amount 36
under RCW 82.04.255, 82.04.290(2)(a), ((and)) 82.04.285, and 37
82.04.405, the maximum credit for a reporting period is $160 38
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multiplied by the number of months in the reporting period, as 1
determined under RCW 82.32.045. 2
(2) When the amount of tax otherwise due under this chapter is 3
equal to or less than the maximum credit, a credit is allowed equal 4
to the amount of tax otherwise due under this chapter.5
(3) When the amount of tax otherwise due under this chapter 6
exceeds the maximum credit, a reduced credit is allowed equal to 7
twice the maximum credit, minus the tax otherwise due under this 8
chapter, but not less than zero. 9
(4) The department may prepare a tax credit table consisting of 10
tax ranges using increments of no more than five dollars and a 11
corresponding tax credit to be applied to those tax ranges. The table 12
shall be prepared in such a manner that no taxpayer will owe a 13
greater amount of tax by using the table than would be owed by 14
performing the calculation under subsections (1) through (3) of this 15
section. A table prepared by the department under this subsection 16
must be used by all taxpayers in taking the credit provided in this 17
section. 18
Sec. 8. RCW 82.08.010 and 2022 c 16 s 144 are each amended to 19
read as follows: 20
For the purposes of this chapter: 21
(1)(a)(i) "Selling price" includes "sales price." "Sales price" 22
means the total amount of consideration, except separately stated 23
trade-in property of like kind, including cash, credit, property, and 24
services, for which tangible personal property, extended warranties, 25
digital goods, digital codes, digital automated services, or other 26
services or anything else defined as a "retail sale" under RCW 27
82.04.050 are sold, leased, or rented, valued in money, whether 28
received in money or otherwise. Except as otherwise provided in this 29
subsection (1), no deduction from the total amount of consideration 30
is allowed for the following: (A) The seller's cost of the property 31
sold; (B) the cost of materials used, labor or service cost, 32
interest, losses, all costs of transportation to the seller, all 33
taxes imposed on the seller, and any other expense of the seller; (C) 34
charges by the seller for any services necessary to complete the 35
sale, other than delivery and installation charges; (D) delivery 36
charges; and (E) installation charges. 37
(ii) When tangible personal property is rented or leased under 38
circumstances that the consideration paid does not represent a 39
p. 29 HB 2257
reasonable rental for the use of the articles so rented or leased, 1
the "selling price" must be determined as nearly as possible 2
according to the value of such use at the places of use of similar 3
products of like quality and character under such rules as the 4
department may prescribe; 5
(b) "Selling price" or "sales price" does not include: Discounts, 6
including cash, term, or coupons that are not reimbursed by a third 7
party that are allowed by a seller and taken by a purchaser on a 8
sale; interest, financing, and carrying charges from credit extended 9
on the sale of tangible personal property, extended warranties, 10
digital goods, digital codes, digital automated services, or other 11
services or anything else defined as a retail sale in RCW 82.04.050, 12
if the amount is separately stated on the invoice, bill of sale, or 13
similar document given to the purchaser; and any taxes legally 14
imposed directly on the consumer, or collected from the consumer 15
pursuant to RCW 35.87A.010(2)(b), that are separately stated on the 16
invoice, bill of sale, or similar document given to the purchaser;17
(c) "Selling price" or "sales price" includes consideration 18
received by the seller from a third party if: 19
(i) The seller actually receives consideration from a party other 20
than the purchaser, and the consideration is directly related to a 21
price reduction or discount on the sale; 22
(ii) The seller has an obligation to pass the price reduction or 23
discount through to the purchaser; 24
(iii) The amount of the consideration attributable to the sale is 25
fixed and determinable by the seller at the time of the sale of the 26
item to the purchaser; and 27
(iv) One of the criteria in this subsection (1)(c)(iv) is met:28
(A) The purchaser presents a coupon, certificate, or other 29
documentation to the seller to claim a price reduction or discount 30
where the coupon, certificate, or documentation is authorized, 31
distributed, or granted by a third party with the understanding that 32
the third party will reimburse any seller to whom the coupon, 33
certificate, or documentation is presented; 34
(B) The purchaser identifies himself or herself to the seller as 35
a member of a group or organization entitled to a price reduction or 36
discount, however a "preferred customer" card that is available to 37
any patron does not constitute membership in such a group; or38
(C) The price reduction or discount is identified as a third 39
party price reduction or discount on the invoice received by the 40
p. 30 HB 2257
purchaser or on a coupon, certificate, or other documentation 1
presented by the purchaser; 2
(2)(a)(i) "Seller" means every person, including the state and 3
its departments and institutions, making sales at retail or retail 4
sales to a buyer, purchaser, or consumer, whether as agent, broker, 5
or principal, except as otherwise provided in this subsection (2).6
(ii) "Seller" includes marketplace facilitators, whether making 7
sales in their own right or facilitating sales on behalf of 8
marketplace sellers. 9
(b)(i) "Seller" does not include: 10
(A) The state and its departments and institutions when making 11
sales to the state and its departments and institutions; or12
(B) A professional employer organization when a covered employee 13
coemployed with the client under the terms of a professional employer 14
agreement engages in activities that constitute a sale at retail that 15
is subject to the tax imposed by this chapter. In such cases, the 16
client, and not the professional employer organization, is deemed to 17
be the seller and is responsible for collecting and remitting the tax 18
imposed by this chapter. 19
(ii) For the purposes of this subsection (2)(b), the terms 20
"client," "covered employee," "professional employer agreement," and 21
"professional employer organization" have the same meanings as in RCW 22
82.04.540; 23
(3) "Buyer," "purchaser," and "consumer" include, without 24
limiting the scope hereof, every individual, receiver, assignee, 25
trustee in bankruptcy, trust, estate, firm, copartnership, joint 26
venture, club, company, joint stock company, business trust, 27
corporation, association, society, or any group of individuals acting 28
as a unit, whether mutual, cooperative, fraternal, nonprofit, or 29
otherwise, municipal corporation, quasi municipal corporation, and 30
also the state, its departments and institutions and all political 31
subdivisions thereof, irrespective of the nature of the activities 32
engaged in or functions performed, and also the United States or any 33
instrumentality thereof; 34
(4) "Delivery charges" means charges by the seller of personal 35
property or services for preparation and delivery to a location 36
designated by the purchaser of personal property or services 37
including, but not limited to, transportation, shipping, postage, 38
handling, crating, and packing; 39
p. 31 HB 2257
(5) "Direct mail" means printed material delivered or distributed 1
by United States mail or other delivery service to a mass audience or 2
to addressees on a mailing list provided by the purchaser or at the 3
direction of the purchaser when the cost of the items are not billed 4
directly to the recipients. "Direct mail" includes tangible personal 5
property supplied directly or indirectly by the purchaser to the 6
direct mail seller for inclusion in the package containing the 7
printed material. "Direct mail" does not include multiple items of 8
printed material delivered to a single address; 9
(6) The meaning attributed in chapter 82.04 RCW to the terms "tax 10
year," "taxable year," "person," "company," "sale," "sale at 11
wholesale," "wholesale," "business," "engaging in business," "cash 12
discount," "successor," "consumer," "in this state," "within this 13
state," "cannabis," "useable cannabis," and "cannabis-infused 14
products" applies equally to the provisions of this chapter;15
(7) For the purposes of the taxes imposed under this chapter and 16
under chapter 82.12 RCW, "tangible personal property" means personal 17
property that can be seen, weighed, measured, felt, or touched, or 18
that is in any other manner perceptible to the senses. Tangible 19
personal property includes electricity, water, gas, steam, and 20
prewritten computer software; 21
(8) "Extended warranty" has the same meaning as in RCW 22
82.04.050(7); 23
(9) The definitions in RCW 82.04.192 apply to this chapter;24
(10) For the purposes of the taxes imposed under this chapter and 25
chapter 82.12 RCW, whenever the terms "property" or "personal 26
property" are used, those terms must be construed to include digital 27
goods and products sold through the use of digital codes unless:28
(a) It is clear from the context that the term "personal 29
property" is intended only to refer to tangible personal property;30
(b) It is clear from the context that the term "property" is 31
intended only to refer to tangible personal property, real property, 32
or both; or 33
(c) To construe the term "property" or "personal property" as 34
including digital goods and products sold through the use of digital 35
codes would yield unlikely, absurd, or strained consequences; and36
(11) "Retail sale" or "sale at retail" means any sale, lease, or 37
rental for any purpose other than for resale, sublease, or subrent.38
(12) The terms "agriculture," "farming," "horticulture," 39
"horticultural," and "horticultural product" may not be construed to 40
p. 32 HB 2257
include or relate to cannabis, useable cannabis, or cannabis-infused 1
products unless the applicable term is explicitly defined to include 2
cannabis, useable cannabis, or cannabis-infused products.3
(13)(a) "Affiliated person" means a person that, with respect to 4
another person: 5
(i) Has an ownership interest of more than five percent, whether 6
direct or indirect, in the other person; or 7
(ii) Is related to the other person because a third person, or 8
group of third persons who are affiliated persons with respect to 9
each other, holds an ownership interest of more than five percent, 10
whether direct or indirect, in the related persons.11
(b) For purposes of this subsection (13): 12
(i) "Ownership interest" means the possession of equity in the 13
capital, the stock, or the profits of the other person; and14
(ii) An indirect ownership interest in a person is an ownership 15
interest in an entity that has an ownership interest in the person or 16
in an entity that has an indirect ownership interest in the person.17
(14) "Marketplace" means a physical or electronic place, 18
including, but not limited to, a store, a booth, an internet website, 19
a catalog or a dedicated sales software application, where tangible 20
personal property, products sold through the use of digital codes and 21
digital products, or services are offered for sale.22
(15)(a) "Marketplace facilitator" means a person that:23
(i) Contracts with sellers to facilitate for consideration, 24
regardless of whether deducted as fees from the transaction, the sale 25
of the seller's products through a marketplace owned or operated by 26
the person; 27
(ii) Engages directly or indirectly, through one or more 28
affiliated persons, in transmitting or otherwise communicating the 29
offer or acceptance between the buyer and seller. For purposes of 30
this subsection, mere advertising does not constitute transmitting or 31
otherwise communicating the offer or acceptance between the buyer and 32
seller; and 33
(iii) Engages directly or indirectly, through one or more 34
affiliated persons, in any of the following activities with respect 35
to the seller's products: 36
(A) Payment processing services; 37
(B) Fulfillment or storage services; 38
(C) Listing products for sale; 39
(D) Setting prices; 40
p. 33 HB 2257
(E) Branding sales as those of the marketplace facilitator;1
(F) Taking orders; or 2
(G) Providing customer service or accepting or assisting with 3
returns or exchanges. 4
(b)(i) "Marketplace facilitator" does not include:5
(A) A person who provides internet advertising services, 6
including listing products for sale, so long as the person does not 7
also engage in the activity described in (a)(ii) of this subsection 8
(15) in addition to any of the activities described in (a)(iii) of 9
this subsection (15); or 10
(B) A person with respect to the provision of travel agency 11
services or the operation of a marketplace or that portion of a 12
marketplace that enables consumers to purchase transient lodging 13
accommodations in a hotel or other commercial transient lodging 14
facility. 15
(ii) The exclusion in this subsection (15)(b) does not apply to a 16
marketplace or that portion of a marketplace that facilitates the 17
retail sale of transient lodging accommodations in homes, apartments, 18
cabins, or other residential dwelling units. 19
(iii) For purposes of this subsection (15)(b), the following 20
definitions apply: 21
(A) "Hotel" has the same meaning as in RCW 19.48.010.22
(B) "Travel agency services" means arranging or booking, for a 23
commission, fee or other consideration, vacation or travel packages, 24
rental car or other travel reservations or accommodations, tickets 25
for domestic or foreign travel by air, rail, ship, bus, or other 26
medium of transportation, or hotel or other lodging accommodations.27
(16) "Marketplace seller" means a seller that makes retail sales 28
through any marketplace operated by a marketplace facilitator, 29
regardless of whether the seller is required to be registered with 30
the department under RCW 82.32.030. 31
(17) "Remote seller" means any seller, including a marketplace 32
facilitator, who does not have a physical presence in this state and 33
makes retail sales to purchasers or facilitates retail sales on 34
behalf of marketplace sellers. 35
Sec. 9. RCW 82.08.020 and 2025 c 418 s 3 and 2025 c 417 s 201 36
are each reenacted and amended to read as follows:37
p. 34 HB 2257
(1) There is levied and collected a tax equal to six and five-1
tenths percent of the selling price on each retail sale in this state 2
of: 3
(a) Tangible personal property, unless the sale is specifically 4
excluded from the RCW 82.04.050 definition of retail sale;5
(b) Digital goods, digital codes, and digital automated services, 6
if the sale is included within the RCW 82.04.050 definition of retail 7
sale; 8
(c) Services, other than digital automated services, included 9
within the RCW 82.04.050 definition of retail sale;10
(d) Extended warranties to consumers; and 11
(e) Anything else, the sale of which is included within the RCW 12
82.04.050 definition of retail sale. 13
(2)(a) There is levied and collected an additional tax on each 14
retail car rental, regardless of whether the vehicle is licensed in 15
this state, equal to: 16
(i) Eleven and nine-tenths percent of the selling price from 17
January 1, 2026, through December 31, 2026; and 18
(ii)(A) Nine and nine-tenths percent of the selling price 19
beginning January 1, 2027. 20
(B) The revenue collected under (a) of this subsection must be 21
deposited in the multimodal transportation account created in RCW 22
47.66.070. 23
(b)(i) Beginning January 1, 2027, there is levied and collected 24
an additional tax on peer-to-peer car sharing transactions equal to 25
the selling price multiplied by the rate of tax imposed under (a) of 26
this subsection. This subsection (2)(b) applies only to peer-to-peer 27
car sharing transactions where the vehicle owner obtained the shared 28
vehicle as a vehicle for resale using a reseller permit or an 29
approved exemption certificate under RCW 82.04.470. The vehicle owner 30
must submit documentation in a form and manner prescribed by the 31
department to the business facilitating peer-to-peer car sharing 32
transactions indicating whether the shared vehicle owner paid state 33
sales tax or use tax on the shared vehicle at the time the vehicle 34
was obtained. Businesses facilitating peer-to-peer car sharing 35
transactions must retain copies of this documentation for the period 36
required in RCW 82.32.070. The revenue collected under this 37
subsection (2)(b) must be deposited in the multimodal transportation 38
account created in RCW 47.66.070. 39
p. 35 HB 2257
(ii) For purposes of this ((subsection (2)(b))) section, "peer-1
to-peer car sharing" has the same meaning as in RCW 46.74A.010. 2
"Peer-to-peer car sharing" does not mean: 3
(A) "Retail car rental" as defined in RCW 82.08.011; or4
(B) "Rental car" as defined in RCW 46.04.465 or 48.115.005.5
(3) There is levied and collected an additional tax of five-6
tenths of one percent of the selling price on each retail sale of a 7
motor vehicle in this state, other than retail car rentals and peer-8
to-peer car sharing transactions taxed under subsection (2) of this 9
section. The revenue collected under this subsection must be 10
deposited in the multimodal transportation account created in RCW 11
47.66.070. 12
(4)(a) Beginning July 1, 2026, in addition to taxes required 13
under this chapter and chapters 82.12 and 82.49 RCW, there is levied 14
and collected an additional tax of five-tenths of one percent on the 15
selling price, plus trade-in property of like kind, for purchased 16
recreational vessels. 17
(b) In the case of a lease requiring periodic payments, the tax 18
is imposed on the fair market value of the recreational vessel at the 19
inception of the lease. 20
(c) The revenue collected under this subsection must be deposited 21
in the multimodal transportation account created in RCW 47.66.070.22
(d) For purposes of this subsection, "recreational vessel" means 23
a vessel as defined in RCW 88.02.310 that is subject to watercraft 24
excise tax under chapter 82.49 RCW. 25
(5) For purposes of subsection (3) of this section, "motor 26
vehicle" has the meaning provided in RCW 46.04.320, but does not 27
include: 28
(a) Farm tractors or farm vehicles as defined in RCW 46.04.180 29
and 46.04.181, unless the farm tractor or farm vehicle is for use in 30
the production of cannabis; 31
(b) Off-road vehicles as defined in RCW 46.04.365;32
(c) Nonhighway vehicles as defined in RCW 46.09.310; and33
(d) Snowmobiles as defined in RCW 46.04.546. 34
(6) Beginning on December 8, 2005, 0.16 percent of the taxes 35
collected under subsection (1) of this section must be dedicated to 36
funding comprehensive performance audits required under RCW 37
43.09.470. The revenue identified in this subsection must be 38
deposited in the performance audits of government account created in 39
RCW 43.09.475. 40
p. 36 HB 2257
(7) Beginning July 1, 2027, the portion of taxes collected by the 1
state under subsection (1) of this section equal to 0.1 percent of 2
the selling price on each retail sale in this state must be deposited 3
in the multimodal transportation account created in RCW 47.66.070.4
(8) The taxes imposed under this chapter apply to successive 5
retail sales of the same property. 6
(9) The rates provided in this section apply to taxes imposed 7
under chapter 82.12 RCW as provided in RCW 82.12.020.8
Sec. 10. RCW 82.08.0208 and 2020 c 139 s 11 are each amended to 9
read as follows: 10
(1) The tax imposed by RCW 82.08.020 does not apply to the sale 11
of a digital code for one or more digital products if the sale of the 12
digital products to which the digital code relates is exempt from the 13
tax levied by RCW 82.08.020. 14
(2)(a) The tax imposed by RCW 82.08.020 does not apply to a 15
business or other organization for the purpose of making the digital 16
good or digital automated service, including a digital good or 17
digital automated service acquired through the use of a digital code, 18
or service defined as a retail sale in RCW 82.04.050(6)(((c)))(b), 19
available free of charge for the use or enjoyment of the general 20
public. The exemption provided in this subsection (2) does not apply 21
unless the purchaser has the legal right to broadcast, rebroadcast, 22
transmit, retransmit, license, relicense, distribute, redistribute, 23
or exhibit the product, in whole or in part, to the general public.24
(b) For purposes of this subsection (2), "general public" means 25
all persons and not limited or restricted to a particular class of 26
persons, except that the general public includes: 27
(i) A class of persons that is defined as all persons residing or 28
owning property within the boundaries of a state, political 29
subdivision of a state, or a municipal corporation; and30
(ii) With respect to libraries, authorized library patrons.31
(3)(a) The tax imposed by RCW 82.08.020 does not apply to the 32
sale to a business of digital goods, and services rendered in respect 33
to digital goods, if the digital goods and services rendered in 34
respect to digital goods are purchased solely for business purposes. 35
The exemption provided by this subsection (3) also applies to the 36
sale to a business of a digital code if all of the digital goods to 37
be obtained through the use of the code will be used solely for 38
business purposes. 39
p. 37 HB 2257
(b) For purposes of this subsection (3), the following 1
definitions apply: 2
(i) "Business purposes" means any purpose relevant to the 3
business needs of the taxpayer claiming an exemption under this 4
subsection (3). Business purposes do not include any personal, 5
family, or household purpose. The term also does not include any 6
activity conducted by a government entity as that term is defined in 7
RCW 7.25.005; and 8
(ii) "Services rendered in respect to digital goods" means those 9
services defined as a retail sale in RCW 82.04.050(2)(g).10
(4)(a) The tax imposed by RCW 82.08.020 does not apply to the 11
sale of digital goods, digital codes, digital automated services, 12
prewritten computer software, or services defined as a retail sale in 13
RCW 82.04.050(6)(((c))) (b) to a buyer that provides the seller with 14
an exemption certificate claiming multiple points of use. An 15
exemption certificate claiming multiple points of use must be in a 16
form and contain such information as required by the department.17
(b) A buyer is entitled to use an exemption certificate claiming 18
multiple points of use only if the buyer is a business or other 19
organization and the digital goods or digital automated services 20
purchased, or the digital goods or digital automated services to be 21
obtained by the digital code purchased, or the prewritten computer 22
software or services defined as a retail sale in RCW 82.04.050(6)23
(((c))) (b) purchased will be concurrently available for use within 24
and outside this state. A buyer is not entitled to use an exemption 25
certificate claiming multiple points of use for digital goods, 26
digital codes, digital automated services, prewritten computer 27
software, or services defined as a retail sale in RCW 82.04.050(6)28
(((c))) (b) purchased for personal use. 29
(c) A buyer claiming an exemption under this subsection (4) must 30
report and pay the tax imposed in RCW 82.12.020 and any local use 31
taxes imposed under the authority of chapter 82.14 RCW and RCW 32
81.104.170 directly to the department in accordance with RCW 33
82.12.0208 and 82.14.457. 34
(d) For purposes of this subsection (4), "concurrently available 35
for use within and outside this state" means that employees or other 36
agents of the buyer may use the digital goods, digital automated 37
services, prewritten computer software, or services defined as a 38
retail sale in RCW 82.04.050(6)(((c))) (b) simultaneously from one or 39
more locations within this state and one or more locations outside 40
p. 38 HB 2257
this state. A digital code is concurrently available for use within 1
and outside this state if employees or other agents of the buyer may 2
use the digital goods or digital automated services to be obtained by 3
the code simultaneously at one or more locations within this state 4
and one or more locations outside this state. 5
(5)(a) Except as provided in (b) of this subsection (5), the tax 6
imposed by RCW 82.08.020 does not apply to sales of audio or video 7
programming by a radio or television broadcaster. 8
(b)(i) Except as provided in (b)(ii) of this subsection (5), the 9
exemption provided in this subsection (5) does not apply in respect 10
to programming that is sold on a pay-per-program basis or that allows 11
the buyer to access a library of programs at any time for a specific 12
charge for that service. 13
(ii) The exemption provided in this subsection (5) applies to the 14
sale of programming described in (b)(i) of this subsection (5) if the 15
seller is subject to a franchise fee in this state under the 16
authority of Title 47 U.S.C. Sec. 542 (a) on the gross revenue derived 17
from the sale. 18
(c) For purposes of this subsection (5), "radio or television 19
broadcaster" includes satellite radio providers, satellite television 20
providers, cable television providers, and providers of subscription 21
internet television. 22
(6)(a) The tax imposed by RCW 82.08.020 does not apply to the 23
sale of advertising services when the buyer of the advertising 24
service provides the seller with an exemption certificate claiming 25
multiple points of use.26
(b) A buyer may use an exemption certificate claiming multiple 27
points of use only if the buyer is a business or other organization 28
and the buyer purchased advertising services that will be 29
concurrently available for use within and outside this state. A buyer 30
may not use an exemption certificate claiming multiple points of use 31
for advertising services purchased for personal use.32
(c) A buyer claiming an exemption under this section must report 33
and pay the tax imposed in RCW 82.12.020, and any local use taxes 34
imposed under the authority of chapter 82.14 RCW and RCW 81.104.170, 35
directly to the department in accordance with RCW 82.12.0208 and 36
82.14.457.37
(d) For purposes of this subsection, the following definitions 38
apply:39
p. 39 HB 2257
(i) "Advertising services" means "advertising services" that are 1
defined as a "retail sale" or "sale at retail" in RCW 2
82.04.050(3)(k);3
(ii) "Concurrently available for use within and outside this 4
state" has the same meaning as provided in RCW 82.12.0208.5
(7) Sellers making tax-exempt sales under subsection (2) ((or)), 6
(3), or (6) of this section must obtain an exemption certificate from 7
the buyer in a form and manner prescribed by the department. The 8
seller must retain a copy of the exemption certificate for the 9
seller's files. In lieu of an exemption certificate, a seller may 10
capture the relevant data elements as allowed under the streamlined 11
sales and use tax agreement. 12
Sec. 11. RCW 82.08.9999 and 2022 c 182 s 305 are each amended to 13
read as follows: 14
(1) Beginning August 1, 2019, with sales made or lease agreements 15
signed on or after the qualification period start date:16
(a) The tax levied by RCW 82.08.020 does not apply as provided in 17
(b) of this subsection to sales or leases of new or used passenger 18
cars, light duty trucks, and medium duty passenger vehicles that:19
(i) Are exclusively powered by a clean alternative fuel; or20
(ii) Use at least one method of propulsion that is capable of 21
being reenergized by an external source of electricity and are 22
capable of traveling at least 30 miles using only battery power; and23
(iii)(A) Have a vehicle selling price plus trade-in property of 24
like kind for purchased vehicles that: 25
(I) For a vehicle that is a new vehicle at the time of the 26
purchase date or the date the lease agreement was signed, does not 27
exceed $45,000; or 28
(II) For a vehicle that is a used vehicle at the time of the 29
purchase date or the date the lease agreement was signed, does not 30
exceed $30,000; or 31
(B) Have a fair market value at the inception of the lease for 32
leased vehicles that: 33
(I) For a vehicle that is a new vehicle at the time of the 34
purchase date or the date the lease agreement was signed, does not 35
exceed $45,000; or 36
(II) For a vehicle that is a used vehicle at the time of the 37
purchase date or the date the lease agreement was signed, does not 38
exceed $30,000; 39
p. 40 HB 2257
(b)(i) The exemption in this section is applicable for up to the 1
amounts specified in (b)(ii) or (iii) of this subsection of:2
(A) The total amount of the vehicle's selling price, for sales 3
made; or 4
(B) The total lease payments made plus any additional selling 5
price of the leased vehicle if the original lessee purchases the 6
leased vehicle before the qualification period end date, for lease 7
agreements signed. 8
(ii) Based on the purchase date or the date the lease agreement 9
was signed of the vehicle if the vehicle is a new vehicle at the time 10
of the purchase date or the date the lease agreement was signed:11
(A) From the qualification period start date until July 31, 2021, 12
the maximum amount eligible under (b)(i) of this subsection is 13
$25,000; 14
(B) From August 1, 2021, until July 31, 2023, the maximum amount 15
eligible under (b)(i) of this subsection is $20,000;16
(C) From August 1, 2023, until July 31, 2025, the maximum amount 17
eligible under (b)(i) of this subsection is $15,000.18
(iii) If the vehicle is a used vehicle at the time of the 19
purchase date or the date the lease agreement was signed, the maximum 20
amount eligible under (b)(i) of this subsection is $16,000.21
(2) The seller must keep records necessary for the department to 22
verify eligibility under this section. A person claiming the 23
exemption must also submit itemized information to the department for 24
all vehicles for which an exemption is claimed that must include the 25
following: Vehicle make; vehicle model; model year; whether the 26
vehicle has been sold or leased; date of sale or start date of lease; 27
length of lease; sales price for purchased vehicles and fair market 28
value at the inception of the lease for leased vehicles; and the 29
total amount qualifying for the incentive claimed for each vehicle, 30
in addition to the future monthly amount to be claimed for each 31
leased vehicle. This information must be provided in a form and 32
manner prescribed by the department. 33
(3)(a) The department of licensing must maintain and publish a 34
list of all vehicle models qualifying for the tax exemptions under 35
this section or RCW 82.12.9999 until the expiration date of this 36
section, and is authorized to issue final rulings on vehicle model 37
qualification for these criteria. A seller is not responsible for 38
repayment of the tax exemption under this section and RCW 82.12.9999 39
for a vehicle if the department of licensing's published list of 40
p. 41 HB 2257
qualifying vehicle models on the purchase date or the date the lease 1
agreement was signed includes the vehicle model and the department of 2
licensing subsequently removes the vehicle model from the published 3
list, and, if applicable, the vehicle meets the qualifying criterion 4
under subsection (1)(a)(iii)(B) of this section and RCW 5
82.12.9999(1)(a)(iii)(B). 6
(b) The department of revenue retains responsibility for 7
determining whether a vehicle meets the applicable qualifying 8
criterion under subsection (1)(a)(iii)(B) of this section and RCW 9
82.12.9999(1)(a)(iii)(B). 10
(4) By the last day of October 2019, and every six months 11
thereafter until ((this section expires )) October 31, 2025 , based on 12
the best available data, the department must report the following 13
information to the transportation committees of the legislature: The 14
cumulative number of vehicles that qualified for the exemption under 15
this section and RCW 82.12.9999 by month of purchase or lease start 16
and vehicle make and model; the dollar amount of all state retail 17
sales and use taxes exempted on or after the qualification period 18
start date, under this section and RCW 82.12.9999; and estimates of 19
the future costs of leased vehicles that qualified for the exemption 20
under this section and RCW 82.12.9999. 21
(5) The definitions in this subsection apply throughout this 22
section unless the context clearly requires otherwise.23
(a) "Clean alternative fuel" means natural gas, propane, 24
hydrogen, or electricity, when used as a fuel in a motor vehicle that 25
meets the California motor vehicle emission standards in Title 13 of 26
the California Code of Regulations, effective January 1, 2019, and 27
the rules of the Washington state department of ecology.28
(b) "Fair market value" has the same meaning as "value of the 29
article used" in RCW 82.12.010. 30
(c) "New vehicle" has the same meaning as "new motor vehicle" in 31
RCW 46.04.358. 32
(d) "Qualification period end date" means August 1, 2025.33
(e) "Qualification period start date" means August 1, 2019.34
(f) "Used vehicle" has the same meaning as in RCW 46.04.660.35
(6)(a) Sales of vehicles delivered to the buyer or leased 36
vehicles for which the lease agreement was signed after the 37
qualification period end date do not qualify for the exemption under 38
this section. 39
p. 42 HB 2257
(b) All leased vehicles that qualified for the exemption under 1
this section before the qualification period end date must continue 2
to receive the exemption as described under subsection (1)(b) of this 3
section on any lease payments due through the remainder of the lease 4
before August 1, 2028. 5
(7) This section expires August 1, 2028. 6
(8) This section is supported by the revenues generated in RCW 7
46.17.324, and therefore takes effect only if RCW 46.17.324 is 8
enacted by June 30, 2019. 9
Sec. 12. RCW 82.08.0256 and 2010 c 106 s 213 are each amended to 10
read as follows: 11
The tax levied by RCW 82.08.020 does not apply to sales 12
(including transfers of title through decree of appropriation) 13
heretofore or hereafter made of the entire operating property of a 14
publicly or privately owned public utility, or of a complete 15
operating integral section thereof, to the state or a political 16
subdivision thereof for use in conducting any public service business 17
as defined in RCW 82.16.010. For purposes of this section, "operating 18
property" includes digital goods and products sold through the use of 19
digital codes. 20
Sec. 13. RCW 82.12.010 and 2023 c 307 s 2 are each amended to 21
read as follows: 22
For the purposes of this chapter: 23
(1) The meaning ascribed to words and phrases in chapters 82.04 24
and 82.08 RCW, insofar as applicable, has full force and effect with 25
respect to taxes imposed under the provisions of this chapter. 26
"Consumer," in addition to the meaning ascribed to it in chapters 27
82.04 and 82.08 RCW insofar as applicable, also means any person who 28
distributes or displays, or causes to be distributed or displayed, 29
any article of tangible personal property, except newspapers, the 30
primary purpose of which is to promote the sale of products or 31
services. With respect to property distributed to persons within this 32
state by a consumer as defined in this subsection (1), the use of the 33
property is deemed to be by such consumer. 34
(2) "Extended warranty" has the same meaning as in RCW 35
82.04.050(7). 36
(3) "Purchase price" means the same as sales price as defined in 37
RCW 82.08.010. 38
p. 43 HB 2257
(4)(a)(i) Except as provided in (a)(ii) of this subsection (4), 1
"retailer" means every seller as defined in RCW 82.08.010 and every 2
person engaged in the business of selling tangible personal property 3
at retail and every person required to collect from purchasers the 4
tax imposed under this chapter. 5
(ii) "Retailer" does not include a professional employer 6
organization when a covered employee coemployed with the client under 7
the terms of a professional employer agreement engages in activities 8
that constitute a sale of tangible personal property, extended 9
warranty, digital good, ((digital code, )) or a sale of any digital 10
automated service or service defined as a retail sale in RCW 11
82.04.050 (2) (a) or (g) or (6)(((c))) (b) that is subject to the tax 12
imposed by this chapter. In such cases, the client, and not the 13
professional employer organization, is deemed to be the retailer and 14
is responsible for collecting and remitting the tax imposed by this 15
chapter. 16
(b) For the purposes of (a) of this subsection, the terms 17
"client," "covered employee," "professional employer agreement," and 18
"professional employer organization" have the same meanings as in RCW 19
82.04.540. 20
(5) "Taxpayer" and "purchaser" include all persons included 21
within the meaning of the word "buyer" and the word "consumer" as 22
defined in chapters 82.04 and 82.08 RCW. 23
(6) "Use," "used," "using," or "put to use" have their ordinary 24
meaning, and mean: 25
(a) With respect to tangible personal property, except for 26
natural gas and manufactured gas, the first act within this state by 27
which the taxpayer takes or assumes dominion or control over the 28
article of tangible personal property (as a consumer), and include 29
installation, storage, withdrawal from storage, distribution, or any 30
other act preparatory to subsequent actual use or consumption within 31
this state; 32
(b) With respect to a service defined in RCW 82.04.050(2)(a), the 33
first act within this state after the service has been performed by 34
which the taxpayer takes or assumes dominion or control over the 35
article of tangible personal property upon which the service was 36
performed (as a consumer), and includes installation, storage, 37
withdrawal from storage, distribution, or any other act preparatory 38
to subsequent actual use or consumption of the article within this 39
state; 40
p. 44 HB 2257
(c) With respect to an extended warranty, the first act within 1
this state after the extended warranty has been acquired by which the 2
taxpayer takes or assumes dominion or control over the article of 3
tangible personal property to which the extended warranty applies, 4
and includes installation, storage, withdrawal from storage, 5
distribution, or any other act preparatory to subsequent actual use 6
or consumption of the article within this state; 7
(d) With respect to a digital good ((or)), including a digital 8
good obtained through the use of a digital code, the first act within 9
this state by which the taxpayer, as a consumer, views, accesses, 10
downloads, possesses, stores, opens, manipulates, or otherwise uses 11
or enjoys the digital good ((or digital code)); 12
(e) With respect to a digital automated service , including a 13
digital automated service obtained through the use of a digital code , 14
the first act within this state by which the taxpayer, as a consumer, 15
uses, enjoys, or otherwise receives the benefit of the service;16
(f) With respect to a service defined as a retail sale in RCW 17
82.04.050(6)(((c))) (b), the first act within this state by which the 18
taxpayer, as a consumer, accesses the prewritten computer software;19
(g) With respect to a service defined as a retail sale in RCW 20
82.04.050(2)(g), the first act within this state after the service 21
has been performed by which the taxpayer, as a consumer, views, 22
accesses, downloads, possesses, stores, opens, manipulates, or 23
otherwise uses or enjoys the digital good upon which the service was 24
performed; and 25
(h) With respect to natural gas or manufactured gas, the use of 26
which is taxable under RCW 82.12.022, including gas that is also 27
taxable under the authority of RCW 82.14.230, the first act within 28
this state by which the taxpayer consumes the gas by burning the gas 29
or storing the gas in the taxpayer's own facilities for later 30
consumption by the taxpayer. 31
(7)(a) "Value of the article used" is the purchase price for the 32
article of tangible personal property, the use of which is taxable 33
under this chapter. The term also includes, in addition to the 34
purchase price, the amount of any tariff or duty paid with respect to 35
the importation of the article used. In case the article used is 36
acquired by lease or by gift or is extracted, produced, or 37
manufactured by the person using the same or is sold under conditions 38
wherein the purchase price does not represent the true value thereof, 39
the value of the article used is determined as nearly as possible 40
p. 45 HB 2257
according to the retail selling price at place of use of similar 1
products of like quality and character under such rules as the 2
department may prescribe. 3
(b) In case the articles used are acquired by bailment, the value 4
of the use of the articles so used must be in an amount representing 5
a reasonable rental for the use of the articles so bailed, determined 6
as nearly as possible according to the value of such use at the 7
places of use of similar products of like quality and character under 8
such rules as the department of revenue may prescribe. In case any 9
such articles of tangible personal property are used in respect to 10
the construction, repairing, decorating, or improving of, and which 11
become or are to become an ingredient or component of, new or 12
existing buildings or other structures under, upon, or above real 13
property of or for the United States, any instrumentality thereof, or 14
a county or city housing authority created pursuant to chapter 35.82 15
RCW, including the installing or attaching of any such articles 16
therein or thereto, whether or not such personal property becomes a 17
part of the realty by virtue of installation, then the value of the 18
use of such articles so used is determined according to the retail 19
selling price of such articles, or in the absence of such a selling 20
price, as nearly as possible according to the retail selling price at 21
place of use of similar products of like quality and character or, in 22
the absence of either of these selling price measures, such value may 23
be determined upon a cost basis, in any event under such rules as the 24
department of revenue may prescribe. 25
(c) In the case of articles owned by a user engaged in business 26
outside the state which are brought into the state for no more than 27
180 days in any period of 365 consecutive days and which are 28
temporarily used for business purposes by the person in this state, 29
the value of the article used must be an amount representing a 30
reasonable rental for the use of the articles, unless the person has 31
paid tax under this chapter or chapter 82.08 RCW upon the full value 32
of the article used, as defined in (a) of this subsection.33
(d) In the case of articles manufactured or produced by the user 34
and used in the manufacture or production of products sold or to be 35
sold to the department of defense of the United States, the value of 36
the articles used is determined according to the value of the 37
ingredients of such articles. 38
(e) In the case of an article manufactured or produced for 39
purposes of serving as a prototype for the development of a new or 40
p. 46 HB 2257
improved product, the value of the article used is determined by: (i) 1
The retail selling price of such new or improved product when first 2
offered for sale; or (ii) the value of materials incorporated into 3
the prototype in cases in which the new or improved product is not 4
offered for sale. 5
(f) In the case of an article purchased with a direct pay permit 6
under RCW 82.32.087, the value of the article used is determined by 7
the purchase price of such article if, but for the use of the direct 8
pay permit, the transaction would have been subject to sales tax.9
(g) In the case of asphalt or aggregates manufactured or 10
extracted by a person providing services taxable under RCW 11
82.04.280(1)(b) and used by that person in providing those services, 12
the value of the asphalt or aggregates is equal to the sum of all 13
direct and indirect costs attributable to the asphalt or aggregates 14
used, plus a public road construction market adjustment of five 15
percent of those costs. 16
(8) "Value of the digital good ((or digital code )) used" means 17
the purchase price for the digital good ((or digital code )), the use 18
of which is taxable under this chapter. If the digital good ((or 19
digital code )) is acquired other than by purchase, the value of the 20
digital good ((or digital code )) must be determined as nearly as 21
possible according to the retail selling price at place of use of 22
similar digital goods ((or digital codes )) of like quality and 23
character under rules the department may prescribe.24
(9) "Value of the extended warranty used" means the purchase 25
price for the extended warranty, the use of which is taxable under 26
this chapter. If the extended warranty is received by gift or under 27
conditions wherein the purchase price does not represent the true 28
value of the extended warranty, the value of the extended warranty 29
used is determined as nearly as possible according to the retail 30
selling price at place of use of similar extended warranties of like 31
quality and character under rules the department may prescribe.32
(10) "Value of the service used" means the purchase price for the 33
digital automated service or other service, the use of which is 34
taxable under this chapter. If the service is received by gift or 35
under conditions wherein the purchase price does not represent the 36
true value thereof, the value of the service used is determined as 37
nearly as possible according to the retail selling price at place of 38
use of similar services of like quality and character under rules the 39
department may prescribe. 40
p. 47 HB 2257
Sec. 14. RCW 82.12.020 and 2025 c 418 s 4 and 2025 c 417 s 202 1
are each reenacted and amended to read as follows: 2
(1) There is levied and collected from every person in this state 3
a tax or excise for the privilege of using within this state as a 4
consumer any: 5
(a) Article of tangible personal property acquired by the user in 6
any manner, including tangible personal property acquired at a casual 7
or isolated sale, and including by-products used by the manufacturer 8
thereof, except as otherwise provided in this chapter, irrespective 9
of whether the article or similar articles are manufactured or are 10
available for purchase within this state; 11
(b) Prewritten computer software, regardless of the method of 12
delivery, but excluding prewritten computer software that is either 13
provided free of charge or is provided for temporary use in viewing 14
information, or both; 15
(c) ((Services)) (i) Until September 30, 2025, services defined 16
as a retail sale in RCW 82.04.050 (2) (a) or (g) or (6)(((c))) (b), 17
excluding services defined as a retail sale in RCW 82.04.050(6)18
(((c))) (b) that are provided free of charge; 19
(ii) Beginning October 1, 2025, services defined as a retail sale 20
in RCW 82.04.050 (2) (a) or (g), (3) (g), (h), (i), (j), or (k), or 21
(6)(b), excluding services defined as a retail sale in RCW 22
82.04.050(6)(b) that are provided free of charge;23
(d) Extended warranty; or 24
(e)(i) Digital good, digital code, or digital automated service, 25
including the use of any services provided by a seller exclusively in 26
connection with digital goods, digital codes, or digital automated 27
services, whether or not a separate charge is made for such services.28
(ii) With respect to the use of digital goods, digital automated 29
services, and digital codes acquired by purchase, the tax imposed in 30
this subsection (1)(e) applies in respect to: 31
(A) Sales in which the seller has granted the purchaser the right 32
of permanent use; 33
(B) Sales in which the seller has granted the purchaser a right 34
of use that is less than permanent; 35
(C) Sales in which the purchaser is not obligated to make 36
continued payment as a condition of the sale; and 37
(D) Sales in which the purchaser is obligated to make continued 38
payment as a condition of the sale. 39
p. 48 HB 2257
(iii) With respect to digital goods, digital automated services, 1
and digital codes acquired other than by purchase, the tax imposed in 2
this subsection (1)(e) applies regardless of whether or not the 3
consumer has a right of permanent use or is obligated to make 4
continued payment as a condition of use. 5
(2) ((The)) (a) Until September 30, 2025, the provisions of this 6
chapter do not apply in respect to the use of any article of tangible 7
personal property, extended warranty, digital good, digital code, 8
digital automated service, or service taxable under RCW 82.04.050 (2) 9
(a) or (g) or (6)(((c))) (b), if the sale to, or the use by, the 10
present user or the present user's bailor or donor has already been 11
subjected to the tax under chapter 82.08 RCW or this chapter and the 12
tax has been paid by the present user or by the present user's bailor 13
or donor. 14
(b) Beginning October 1, 2025, the provisions of this chapter do 15
not apply in respect to the use of any article of tangible personal 16
property, extended warranty, digital good, digital code, digital 17
automated service, or service taxable under RCW 82.04.050 (2) (a) or 18
(g), (3) (g), (h), (i), (j), or (k), or (6)(b), if the sale to, or 19
the use by, the present user or the present user's bailor or donor 20
has already been subjected to the tax under chapter 82.08 RCW or this 21
chapter and the tax has been paid by the present user or by the 22
present user's bailor or donor.23
(3)(a) Except as provided in this section, payment of the tax 24
imposed by this chapter or chapter 82.08 RCW by one purchaser or user 25
of tangible personal property, extended warranty, digital good, 26
digital code, digital automated service, or other service does not 27
have the effect of exempting any other purchaser or user of the same 28
property, extended warranty, digital good, digital code, digital 29
automated service, or other service from the taxes imposed by such 30
chapters. 31
(b) The tax imposed by this chapter does not apply:32
(i) If the sale to, or the use by, the present user or his or her 33
bailor or donor has already been subjected to the tax under chapter 34
82.08 RCW or this chapter and the tax has been paid by the present 35
user or by his or her bailor or donor; 36
(ii) In respect to the use of any article of tangible personal 37
property acquired by bailment and the tax has once been paid based on 38
reasonable rental as determined by RCW 82.12.060 measured by the 39
value of the article at time of first use multiplied by the tax rate 40
p. 49 HB 2257
imposed by chapter 82.08 RCW or this chapter as of the time of first 1
use; 2
(iii) In respect to the use of any article of tangible personal 3
property acquired by bailment, if the property was acquired by a 4
previous bailee from the same bailor for use in the same general 5
activity and the original bailment was prior to June 9, 1961; or6
(iv) To the use of digital goods or digital automated services, 7
which were obtained through the use of a digital code, if the sale of 8
the digital code to, or the use of the digital code by, the present 9
user or the present user's bailor or donor has already been subjected 10
to the tax under chapter 82.08 RCW or this chapter and the tax has 11
been paid by the present user or by the present user's bailor or 12
donor. 13
(4)(a) Except as provided in (b) of this subsection (4), the tax 14
is levied and must be collected in an amount equal to the value of 15
the article used, value of the digital good or digital code used, 16
value of the extended warranty used, or value of the service used by 17
the taxpayer, multiplied by the applicable rates in effect for the 18
retail sales tax under RCW 82.08.020. 19
(b) In the case of a seller required to collect use tax from the 20
purchaser, the tax must be collected in an amount equal to the 21
purchase price multiplied by the applicable rate in effect for the 22
retail sales tax under RCW 82.08.020. 23
(5) Beginning July 1, 2027, the portion of taxes collected by the 24
state under subsection (1) of this section equal to 0.1 percent of 25
the value of the article used, value of the digital good or digital 26
code used, value of the extended warranty used, or value of the 27
service used by the taxpayer, must be deposited in the multimodal 28
transportation account created in RCW 47.66.070. 29
(6) For purposes of the tax imposed in this section, "person" 30
includes anyone within the definition of "buyer," "purchaser," and 31
"consumer" in RCW 82.08.010. 32
(7)(a) Beginning July 1, 2026, the tax imposed in this section at 33
the rate provided in RCW 82.08.020(4) applies to the use of a 34
recreational vessel at the time that it is first used in this state 35
by the consumer. 36
(b) The revenue collected under this subsection must be deposited 37
in the multimodal transportation account created in RCW 47.66.070.38
p. 50 HB 2257
(c) For purposes of this subsection, "recreational vessel" means 1
a vessel as defined in RCW 88.02.310 that is subject to watercraft 2
excise tax under chapter 82.49 RCW. 3
Sec. 15. RCW 82.12.0208 and 2020 c 139 s 18 are each amended to 4
read as follows: 5
(1) The provisions of this chapter do not apply in respect to the 6
use of a digital code for one or more digital products, if the use of 7
the digital products to which the digital code relates is exempt from 8
the tax levied by RCW 82.12.020. 9
(2) The provisions of this chapter do not apply to the use by a 10
business or other organization of digital goods, digital codes, 11
digital automated services, or services defined as a retail sale in 12
RCW 82.04.050(6)(((c))) (b) for the purpose of making the digital 13
good or digital automated service, including a digital good or 14
digital automated service acquired through the use of a digital code, 15
or service defined as a retail sale in RCW 82.04.050(6)(((c))) (b) 16
available free of charge for the use or enjoyment of the general 17
public. For purposes of this subsection (2), "general public" has the 18
same meaning as in RCW 82.08.0208. The exemption provided in this 19
subsection (2) does not apply unless the user has the legal right to 20
broadcast, rebroadcast, transmit, retransmit, license, relicense, 21
distribute, redistribute, or exhibit the product, in whole or in 22
part, to the general public. 23
(3) The provisions of this chapter do not apply to the use by 24
students of digital goods furnished by a public or private elementary 25
or secondary school, or an institution of higher education as defined 26
in section 1001 or 1002 of the federal higher education act of 1965 27
(Title 20 U.S.C. Secs. 1001 and 1002), as existing on July 1, 2009.28
(4)(a) The provisions of this chapter do not apply in respect to 29
the use of digital goods that are: 30
(i) Of a noncommercial nature, such as personal email 31
communications; 32
(ii) Created solely for an internal audience; or33
(iii) Created solely for the business needs of the person who 34
created the digital good, including business email communications, 35
but not including the type of digital good that is offered for sale.36
(b) This subsection (4) does not apply to the use of any digital 37
goods purchased by the user, the user's donor, or anybody on the 38
user's behalf. 39
p. 51 HB 2257
(5) The provisions of this chapter do not apply in respect to the 1
use of digital products or digital codes obtained by the end user 2
free of charge. 3
(6) The provisions of this chapter do not apply to the use by a 4
business of digital goods, and services rendered in respect to 5
digital goods, where the digital goods and services rendered in 6
respect to digital goods are used solely for business purposes. The 7
exemption provided by this subsection (6) also applies to the use by 8
a business of a digital code if all of the digital goods to be 9
obtained through the use of the code will be used solely for business 10
purposes. For purposes of this subsection (6), the definitions in RCW 11
82.08.0208 apply. 12
(7)(a) A business or other organization subject to the tax 13
imposed in RCW 82.12.020 on the use of digital goods, digital codes, 14
digital automated services, prewritten computer software, or services 15
defined as a retail sale in RCW 82.04.050 (3)(k) and (6)(((c))) (b) 16
that are concurrently available for use within and outside this state 17
is entitled to apportion the amount of tax due this state based on 18
users in this state compared to users everywhere. 19
(b)(i) The department may authorize or require an alternative 20
method of apportionment supported by the taxpayer's records that 21
fairly reflects the proportion of in-state to out-of-state use by the 22
taxpayer of the digital goods, digital automated services, prewritten 23
computer software, or services defined as a retail sale in RCW 24
82.04.050(6)(((c))) (b). 25
(((b))) (ii) For advertising services, as defined in RCW 26
82.04.050(3)(k), the determination of in-state and out-of-state use, 27
for purposes of this subsection (7)(b), is based on the locations 28
where the related advertisements are viewed by a user or otherwise 29
interacted with by a user. If a taxpayer is unable to determine after 30
exercising due diligence the locations where the related 31
advertisements are either viewed by a user, or otherwise interacted 32
with by a user, the department may authorize or require an 33
alternative method that includes, but is not limited to, internet 34
statistics and population.35
(c) No apportionment under this subsection (7) is allowed unless 36
the apportionment method is supported by the taxpayer's records kept 37
in the ordinary course of business. 38
(((c))) (d) For purposes of this subsection (7), the following 39
definitions apply: 40
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(i) "Concurrently available for use within and outside this 1
state" means that the taxpayer, employees, or other agents of the 2
taxpayer may use the digital goods, digital automated services, 3
prewritten computer software, or services defined as a retail sale in 4
RCW 82.04.050(6)(((c))) (b) simultaneously at one or more locations 5
within this state and one or more locations outside this state. A 6
digital code is concurrently available for use within and outside 7
this state if employees or other agents of the taxpayer may use the 8
digital goods or digital automated services to be obtained by the 9
code simultaneously at one or more locations within this state and 10
one or more locations outside this state; and 11
(ii) (("User")) (A) Except as provided otherwise in (d)(ii)(B) of 12
this subsection (7), for the purposes of this subsection (7), "user" 13
means an employee or agent of the taxpayer who is authorized by the 14
taxpayer to use the digital goods, digital automated services, 15
prewritten computer software, or services defined as a retail sale in 16
RCW 82.04.050(6)(((c))) (b) in the performance of his or her duties 17
as an employee or other agent of the taxpayer. 18
(B) With respect to advertising services, if an alternative 19
method of apportionment is used as allowed or required under (a) of 20
this subsection (7), "user" may also mean a person who views or 21
otherwise interacts with the taxpayer's advertisement. For purposes 22
of this subsection (7)(d)(ii), "advertising service" has the same 23
meaning as provided in RCW 82.04.050(3)(k).24
(8)(a) Except as provided in (b) of this subsection (8), the 25
provisions of this chapter do not apply to the use of audio or video 26
programming provided by a radio or television broadcaster.27
(b)(i) Except as provided in (b)(ii) of this subsection (8), the 28
exemption provided in this subsection (8) does not apply in respect 29
to programming that is sold on a pay-per-program basis or that allows 30
the buyer to access a library of programs at any time for a specific 31
charge for that service. 32
(ii) The exemption provided in this subsection (8) applies to the 33
sale of programming described in (b)(i) of this subsection (8) if the 34
seller is subject to a franchise fee in this state under the 35
authority of Title 47 U.S.C. Sec. 542 (a) on the gross revenue derived 36
from the sale. 37
(c) For purposes of this subsection (8), "radio or television 38
broadcaster" includes satellite radio providers, satellite television 39
providers, cable television providers, providers of subscription 40
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internet television, and persons who provide radio or television 1
broadcasting to listeners or viewers for no charge.2
Sec. 16. RCW 82.32.023 and 2009 c 535 s 1112 are each amended to 3
read as follows: 4
For purposes of construing those provisions of the streamlined 5
sales and use tax agreement that have been incorporated into this 6
title, and unless the context requires otherwise, the terms "product" 7
and "products" refer to tangible personal property, digital goods, 8
((digital codes, )) digital automated services, other services, 9
extended warranties, and anything else that can be sold or used.10
Sec. 17. RCW 82.32.087 and 2015 c 169 s 11 are each amended to 11
read as follows: 12
(1) The director may grant a direct pay permit to a taxpayer who 13
demonstrates, to the satisfaction of the director, that the taxpayer 14
meets the requirements of this section. The direct pay permit allows 15
the taxpayer to accrue and remit directly to the department use tax 16
on the acquisition of tangible personal property or sales tax on the 17
sale of or charges made for labor and/or services, in accordance with 18
all of the applicable provisions of this title. Any taxpayer that 19
uses a direct pay permit must remit state and local sales or use tax 20
directly to the department. The agreement by the purchaser to remit 21
tax directly to the department, rather than pay sales or use tax to 22
the seller, relieves the seller of the obligation to collect sales or 23
use tax and requires the buyer to pay use tax on the tangible 24
personal property and sales tax on the sale of or charges made for 25
labor and/or services. 26
(2)(a) A taxpayer may apply for a permit under this section if: 27
(i) The taxpayer's cumulative tax liability is reasonably expected to 28
be two hundred forty thousand dollars or more in the current calendar 29
year; or (ii) the taxpayer makes purchases subject to the taxes 30
imposed under chapter 82.08 or 82.12 RCW in excess of ten million 31
dollars per calendar year. For the purposes of this section, "tax 32
liability" means the amount required to be remitted to the department 33
for taxes administered under this chapter, except for the taxes 34
imposed or authorized by chapters 82.14A, 82.14B, 82.24, 82.27, 35
82.29A, and 84.33 RCW. 36
(b) Application for a permit must be made in writing to the 37
director in a form and manner prescribed by the department. A 38
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taxpayer who transacts business in two or more locations may submit 1
one application to cover the multiple locations. 2
(c) The director must review a direct pay permit application in a 3
timely manner and must notify the applicant, in writing, of the 4
approval or denial of the application. The department must approve or 5
deny an application based on the applicant's ability to comply with 6
local government use tax coding capabilities and responsibilities; 7
requirements for vendor notification; recordkeeping obligations; 8
electronic data capabilities; and tax reporting procedures. 9
Additionally, an application may be denied if the director determines 10
that denial would be in the best interest of collecting taxes due 11
under this title. The department must provide a direct pay permit to 12
an approved applicant with the notice of approval. The direct pay 13
permit must clearly state that the holder is solely responsible for 14
the accrual and payment of the tax imposed under chapters 82.08 and 15
82.12 RCW and that the seller is relieved of liability to collect tax 16
imposed under chapters 82.08 and 82.12 RCW on all sales to the direct 17
pay permit holder. The taxpayer may petition the director for 18
reconsideration of a denial. 19
(d) A taxpayer who uses a direct pay permit must continue to 20
maintain records that are necessary to a determination of the tax 21
liability in accordance with this title. A direct pay permit is not 22
transferable and the use of a direct pay permit may not be assigned 23
to a third party. 24
(3) Taxes for which the direct pay permit is used are due and 25
payable on the tax return for the reporting period in which the 26
taxpayer (a) receives the tangible personal property purchased or in 27
which the labor and/or services are performed or (b) receives an 28
invoice for such property or such labor and/or services, whichever 29
period is earlier. 30
(4) The holder of a direct pay permit must furnish a copy of the 31
direct pay permit to each vendor with whom the taxpayer has opted to 32
use a direct pay permit. Sellers who make sales upon which the sales 33
or use tax is not collected by reason of the provisions of this 34
section, in addition to existing requirements under this title, must 35
maintain a copy of the direct pay permit and any such records or 36
information as the department may specify. 37
(5) A direct pay permit is subject to revocation by the director 38
at any time the department determines that the taxpayer has violated 39
any provision of this section or that revocation would be in the best 40
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interests of collecting the taxes due under this title. The notice of 1
revocation must be in writing and is effective either as of the end 2
of the taxpayer's next normal reporting period or a date deemed 3
appropriate by the director and identified in the revocation notice. 4
The taxpayer may petition the director for reconsideration of a 5
revocation and reinstatement of the permit. 6
(6) Any taxpayer who chooses to no longer use a direct pay permit 7
or whose permit is revoked by the department, must return the permit 8
to the department and immediately make a good faith effort to notify 9
all vendors to whom the permit was given, advising them that the 10
permit is no longer valid. 11
(7) Except as provided in this subsection, the direct pay permit 12
may be used for any purchase of tangible personal property and any 13
retail sale under RCW 82.04.050. The direct pay permit may not be 14
used for: 15
(a) Purchases of meals or beverages; 16
(b) Purchases of motor vehicles, trailers, boats, airplanes, and 17
other property subject to requirements for title transactions by the 18
department of licensing; 19
(c) Purchases for which a reseller permit or other documentation 20
authorized under RCW 82.04.470 may be used; 21
(d) Purchases that meet the definitions of RCW 82.04.050 (2) (e) 22
and (f), (3) (a) through (c), (e), (f), and (((g))) (m), (5), and 23
(15); or 24
(e) Other activities subject to tax under chapter 82.08 or 82.12 25
RCW that the department by rule designates, consistent with the 26
purposes of this section, as activities for which a direct pay permit 27
is not appropriate and may not be used. 28
Sec. 18. RCW 82.32.730 and 2010 c 106 s 229 are each amended to 29
read as follows: 30
(1) Except as provided in subsections (5) through (8) of this 31
section, for purposes of collecting or paying sales or use taxes to 32
the appropriate jurisdictions, all sales at retail shall be sourced 33
in accordance with this subsection and subsections (2) through (4) of 34
this section. 35
(a) When tangible personal property, an extended warranty, a 36
digital good, ((digital code, )) digital automated service, or other 37
service defined as a retail sale under RCW 82.04.050 is received by 38
p. 56 HB 2257
the purchaser at a business location of the seller, the sale is 1
sourced to that business location. 2
(b) When the tangible personal property, extended warranty, 3
digital good, ((digital code, )) digital automated service, or other 4
service defined as a retail sale under RCW 82.04.050 is not received 5
by the purchaser at a business location of the seller, the sale is 6
sourced to the location where receipt by the purchaser or the 7
purchaser's donee, designated as such by the purchaser, occurs, 8
including the location indicated by instructions for delivery to the 9
purchaser or donee, known to the seller. 10
(c) When (a) and (b) of this subsection do not apply, the sale is 11
sourced to the location indicated by an address for the purchaser 12
that is available from the business records of the seller that are 13
maintained in the ordinary course of the seller's business when use 14
of this address does not constitute bad faith. 15
(d) When (a), (b), and (c) of this subsection do not apply, the 16
sale is sourced to the location indicated by an address for the 17
purchaser obtained during the consummation of the sale, including the 18
address of a purchaser's payment instrument, if no other address is 19
available, when use of this address does not constitute bad faith.20
(e) When (a), (b), (c), or (d) of this subsection do not apply, 21
including the circumstance where the seller is without sufficient 22
information to apply those provisions, then the location shall be 23
determined by the address from which tangible personal property was 24
shipped, from which the digital good ((or digital code )) or the 25
computer software delivered electronically was first available for 26
transmission by the seller, or from which the extended warranty or 27
digital automated service or other service defined as a retail sale 28
under RCW 82.04.050 was provided, disregarding for these purposes any 29
location that merely provided the digital transfer of the product 30
sold. 31
(2) The lease or rental of tangible personal property, other than 32
property identified in subsection (3) or (4) of this section, shall 33
be sourced as provided in this subsection. 34
(a) For a lease or rental that requires recurring periodic 35
payments, the first periodic payment is sourced the same as a retail 36
sale in accordance with subsection (1) of this section. Periodic 37
payments made subsequent to the first payment are sourced to the 38
primary property location for each period covered by the payment. The 39
primary property location shall be as indicated by an address for the 40
p. 57 HB 2257
property provided by the lessee that is available to the lessor from 1
its records maintained in the ordinary course of business, when use 2
of this address does not constitute bad faith. The property location 3
is not altered by intermittent use at different locations, such as 4
use of business property that accompanies employees on business trips 5
and service calls. 6
(b) For a lease or rental that does not require recurring 7
periodic payments, the payment is sourced the same as a retail sale 8
in accordance with subsection (1) of this section. 9
(c) This subsection (2) does not affect the imposition or 10
computation of sales or use tax on leases or rentals based on a lump 11
sum or accelerated basis, or on the acquisition of property for 12
lease. 13
(3) The lease or rental of motor vehicles, trailers, 14
semitrailers, or aircraft that do not qualify as transportation 15
equipment shall be sourced as provided in this subsection.16
(a) For a lease or rental that requires recurring periodic 17
payments, each periodic payment is sourced to the primary property 18
location. The primary property location is as indicated by an address 19
for the property provided by the lessee that is available to the 20
lessor from its records maintained in the ordinary course of 21
business, when use of this address does not constitute bad faith. 22
This location is not altered by intermittent use at different 23
locations. 24
(b) For a lease or rental that does not require recurring 25
periodic payments, the payment is sourced the same as a retail sale 26
in accordance with subsection (1) of this section.27
(c) This subsection does not affect the imposition or computation 28
of sales or use tax on leases or rentals based on a lump sum or 29
accelerated basis, or on the acquisition of property for lease.30
(4) The retail sale, including lease or rental, of transportation 31
equipment shall be sourced the same as a retail sale in accordance 32
with subsection (1) of this section. 33
(5) This subsection applies to direct mail transactions not 34
governed by subsection (6) of this section. 35
(a) This subsection (5)(a) applies to sales of advertising and 36
promotional direct mail. 37
(i) A purchaser of advertising and promotional direct mail may 38
provide the seller with either: 39
(A) A direct pay permit; 40
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(B) A streamlined sales and use tax agreement certificate of 1
exemption claiming direct mail (or other written statement approved, 2
authorized, or accepted by the department); or 3
(C) Information showing the jurisdictions to which the 4
advertising and promotional direct mail is to be delivered to 5
recipients. 6
(ii) If the purchaser provides the permit, certificate, or 7
statement referred to in (a)(i)(A) or (B) of this subsection (5), the 8
seller, in the absence of bad faith, is relieved of all obligations 9
to collect, pay, or remit any tax on any transaction involving 10
advertising and promotional direct mail to which the permit, 11
certificate, or statement applies. The purchaser must source the sale 12
to the jurisdictions to which the advertising and promotional direct 13
mail is to be delivered to the recipients and must report and pay any 14
applicable tax due. 15
(iii) If the purchaser provides the seller information showing 16
the jurisdictions to which the advertising and promotional direct 17
mail is to be delivered to recipients, the seller must source the 18
sale to the jurisdictions to which the advertising and promotional 19
direct mail is to be delivered and must collect and remit the 20
applicable tax. In the absence of bad faith, the seller is relieved 21
of any further obligation to collect any additional tax on the sale 22
of advertising and promotional direct mail where the seller has 23
sourced the sale according to the delivery information provided by 24
the purchaser. 25
(iv) If the purchaser does not provide the seller with any of the 26
items listed in (a)(i)(A), (B), or (C) of this subsection (5), the 27
sale must be sourced according to subsection (1)(e) of this section.28
(b) This subsection (5)(b) applies to sales of other direct mail.29
(i) Except as otherwise provided in this subsection (5)(b), sales 30
of other direct mail are sourced in accordance with subsection (1)(c) 31
of this section. 32
(ii) A purchaser of other direct mail may provide the seller with 33
either: 34
(A) A direct pay permit; or 35
(B) A streamlined sales and use tax agreement certificate of 36
exemption claiming direct mail (or other written statement approved, 37
authorized, or accepted by the department). 38
(iii) If the purchaser provides the permit, certificate, or 39
statement referred to in (b)(ii)(A) or (B) of this subsection (5), 40
p. 59 HB 2257
the seller, in the absence of bad faith, is relieved of all 1
obligations to collect, pay, or remit any tax on any transaction 2
involving other direct mail to which the permit, certificate, or 3
statement applies. Notwithstanding (b)(i) of this subsection (5), the 4
sale must be sourced to the jurisdictions to which the other direct 5
mail is to be delivered to the recipients, and the purchaser must 6
report and pay any applicable tax due. 7
(6)(a) This subsection applies only with respect to transactions 8
in which direct mail is delivered or distributed from a location 9
within this state to a location within this state.10
(b) If the purchaser of direct mail provides the seller with a 11
direct pay permit or a streamlined sales and use tax agreement 12
certificate of exemption claiming direct mail (or other written 13
statement approved, authorized, or accepted by the department), the 14
seller, in the absence of bad faith, is relieved of all obligations 15
to collect, pay, or remit the applicable tax on any transaction 16
involving direct mail to which the permit, certificate, or statement 17
applies. The purchaser must report and pay any applicable tax due. A 18
streamlined sales and use tax agreement certificate of exemption 19
claiming direct mail will remain in effect for all future sales of 20
direct mail by the seller to the purchaser until it is revoked in 21
writing. 22
(c)(i) Except as provided in (b), (c)(ii), and (c)(iii) of this 23
subsection (6), the seller must collect the tax according to 24
subsection (1)(e) of this section. 25
(ii) To the extent the seller knows that a portion of the sale of 26
direct mail will be delivered or distributed to locations in another 27
state, the seller must collect the tax on that portion according to 28
subsection (5) of this section. 29
(iii) Notwithstanding (c)(i) and (ii) of this subsection (6), a 30
seller may elect to use the provisions of subsection (5) of this 31
section to source all sales of advertising and promotional direct 32
mail. 33
(7) The following are sourced to the location at or from which 34
delivery is made to the consumer: 35
(a) A retail sale of watercraft; 36
(b) A retail sale of a modular home, manufactured home, or mobile 37
home; 38
p. 60 HB 2257
(c) A retail sale, excluding the lease and rental, of a motor 1
vehicle, trailer, semitrailer, or aircraft, that do not qualify as 2
transportation equipment; and 3
(d) Florist sales. In the case of a sale in which one florist 4
takes an order from a customer and then communicates that order to 5
another florist who delivers the items purchased to the place 6
designated by the customer, the location at or from which the 7
delivery is made to the consumer is deemed to be the location of the 8
florist originally taking the order. 9
(8)(a) A retail sale of the providing of telecommunications 10
services, as that term is defined in RCW 82.04.065, is sourced in 11
accordance with RCW 82.32.520. 12
(b) A retail sale of the providing of ancillary services, as that 13
term is defined in RCW 82.04.065, is sourced to the customer's place 14
of primary use of the telecommunications services in respect to which 15
the ancillary services are associated with or incidental to. The 16
definitions of "customer" and "place of primary use" in RCW 82.32.520 17
apply to this subsection (8)(b). 18
(9) The definitions in this subsection apply throughout this 19
section. 20
(a) "Advertising and promotional direct mail" means printed 21
material that meets the definition of direct mail, the primary 22
purpose of which is to attract public attention to a product, person, 23
business, or organization, or to attempt to sell, popularize, or 24
secure financial support for a product, person, business, or 25
organization. As used in this subsection (9)(a), the word "product" 26
means tangible personal property, a product transferred 27
electronically, or a service. 28
(b) "Delivered electronically" means delivered to the purchaser 29
by means other than tangible storage media. 30
(c) "Direct mail" means printed material delivered or distributed 31
by United States mail or other delivery service to a mass audience or 32
to addressees on a mailing list provided by the purchaser or at the 33
direction of the purchaser when the cost of the items are not billed 34
directly to the recipients. "Direct mail" includes tangible personal 35
property supplied directly or indirectly by the purchaser to the 36
direct mail seller for inclusion in the package containing the 37
printed material. "Direct mail" does not include multiple items of 38
printed material delivered to a single address. 39
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(d)(i) "Other direct mail" means any direct mail that is not 1
advertising and promotional direct mail, regardless of whether 2
advertising and promotional direct mail is included in the same 3
mailing. The term includes, but is not limited to: 4
(A) Transactional direct mail that contains personal information 5
specific to the addressee including, but not limited to, invoices, 6
bills, statements of account, and payroll advices; 7
(B) Any legally required mailings including, but not limited to, 8
privacy notices, tax reports, and stockholder reports; and9
(C) Other nonpromotional direct mail delivered to existing or 10
former shareholders, customers, employees, or agents including, but 11
not limited to, newsletters and informational pieces.12
(ii) Other direct mail does not include the development of 13
billing information or the provision of any data processing service 14
that is more than incidental. 15
(e) "Florist sales" means the retail sale of tangible personal 16
property by a florist. For purposes of this subsection (9)(e), 17
"florist" means a person whose primary business activity is the 18
retail sale of fresh cut flowers, potted ornamental plants, floral 19
arrangements, floral bouquets, wreaths, or any similar products, used 20
for decorative and not landscaping purposes. 21
(f) "Receive" and "receipt" mean taking possession of tangible 22
personal property, making first use of digital automated services or 23
other services, or taking possession or making first use of digital 24
goods ((or digital codes )), whichever comes first. "Receive" and 25
"receipt" do not include possession by a shipping company on behalf 26
of the purchaser. 27
(g) "Transportation equipment" means: 28
(i) Locomotives and railcars that are used for the carriage of 29
persons or property in interstate commerce; 30
(ii) Trucks and truck tractors with a gross vehicle weight rating 31
of ten thousand one pounds or greater, trailers, semitrailers, or 32
passenger buses that are: 33
(A) Registered through the international registration plan; and34
(B) Operated under authority of a carrier authorized and 35
certificated by the United States department of transportation or 36
another federal authority to engage in the carriage of persons or 37
property in interstate commerce; 38
(iii) Aircraft that are operated by air carriers authorized and 39
certificated by the United States department of transportation or 40
p. 62 HB 2257
another federal or foreign authority to engage in the carriage of 1
persons or property in interstate or foreign commerce; or2
(iv) Containers designed for use on and component parts attached 3
or secured on the items described in (g)(i) through (iii) of this 4
subsection. 5
(10) In those instances where there is no obligation on the part 6
of a seller to collect or remit this state's sales or use tax, the 7
use of tangible personal property, digital good, ((digital code,)) or 8
of a digital automated service or other service, subject to use tax, 9
is sourced to the place of first use in this state. The definition of 10
use in RCW 82.12.010 applies to this subsection. 11
Sec. 19. RCW 82.48A.020 and 2025 c 417 s 208 are each amended to 12
read as follows: 13
(1)(a) In addition to taxes required under chapters 82.08, 82.12, 14
and 82.48 RCW, there is levied and collected from every person in 15
this state a tax for the privilege of using within this state as a 16
consumer any noncommercial aircraft if the value of the aircraft 17
exceeds $500,000. 18
(b) The tax is levied and must be collected in an amount equal to 19
the value of the aircraft that exceeds $500,000, multiplied by 10 20
percent. 21
(2) The tax imposed in this section does not apply if the sale 22
to, or the use by, the present user or his or her bailor or donor has 23
already been subjected to the tax under this section or RCW 24
82.48A.010 and the tax has been paid by the present user or by his or 25
her bailor or donor. 26
(3) The tax imposed in this section does not apply in respect to 27
the use by a nonresident of Washington of a noncommercial aircraft, 28
which is registered or licensed under the laws of the state of his or 29
her residence. 30
(4) For the purposes of this section, "value" means the fair 31
market value of the noncommercial aircraft. In the case of a leased 32
noncommercial aircraft in which the consumer is required to make 33
periodic lease payments, "value" of the aircraft means the fair 34
market value of the aircraft at the inception of the lease.35
Sec. 20. RCW 83.100.048 and 2025 c 421 s 203 are each amended to 36
read as follows: 37
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(1) For the purposes of determining the tax due under this 1
chapter, a deduction is allowed for the value of the decedent's 2
qualified family-owned business interests, not to exceed the 3
applicable deduction amount, if: 4
(a) The value of the decedent's qualified family-owned business 5
interests exceed 50 percent of the decedent's Washington taxable 6
estate determined without regard to the deduction for the applicable 7
exclusion amount; 8
(b) During the eight-year period ending on the date of the 9
decedent's death, there have been periods aggregating five years or 10
more during which: 11
(i) Such interests were owned by the decedent or a member of the 12
decedent's family; 13
(ii) There was material participation, within the meaning of 14
section 2032A(e)(6) of the internal revenue code, by the decedent or 15
a member of the decedent's family in the operation of the trade or 16
business to which such interests relate; 17
(c) The qualified family-owned business interests are acquired by 18
any qualified heir from, or passed to any qualified heir from, the 19
decedent, within the meaning of RCW 83.100.046(2), and the decedent 20
was at the time of his or her death a citizen or resident of the 21
United States; and 22
(d) The value of the decedent's qualified family-owned business 23
interests is not more than $6,000,000. 24
(2)(a) Only amounts included in the decedent's federal taxable 25
estate may be deducted under this subsection. 26
(b) Amounts deductible under RCW 83.100.046 may not be deducted 27
under this section. 28
(3)(a) There is imposed an additional estate tax on a qualified 29
heir if, within three years of the decedent's death and before the 30
date of the qualified heir's death: 31
(i) The material participation requirements described in section 32
2032A(c)(6)(b)(ii) of the internal revenue code are not met with 33
respect to the qualified family-owned business interest which was 34
acquired or passed from the decedent; 35
(ii) The qualified heir disposes of any portion of a qualified 36
family-owned business interest, other than by a disposition to a 37
member of the qualified heir's family or a person with an ownership 38
interest in the qualified family-owned business or through a 39
p. 64 HB 2257
qualified conservation contribution under section 170 (h) of the 1
internal revenue code; 2
(iii) The qualified heir loses United States citizenship within 3
the meaning of section 877 of the internal revenue code or with 4
respect to whom section 877 (e)(1) applies, and such heir does not 5
comply with the requirements of section 877 (g) of the internal 6
revenue code; or 7
(iv) The principal place of business of a trade or business of 8
the qualified family-owned business interest ceases to be located in 9
the United States. 10
(b) The amount of the additional estate tax imposed under this 11
subsection is equal to the amount of tax savings under this section 12
with respect to the qualified family-owned business interest acquired 13
or passed from the decedent. 14
(c) Interest applies to the tax due under this subsection for the 15
period beginning on the date that the estate tax liability was due 16
under this chapter and ending on the date the additional estate tax 17
due under this subsection is paid. Interest under this subsection 18
must be computed as provided in RCW 83.100.070(2).19
(d) The tax imposed by this subsection is due the day that is six 20
months after any taxable event described in (a) of this subsection 21
occurred and must be reported on a return as provided by the 22
department. 23
(e) The qualified heir is personally liable for the additional 24
tax imposed by this subsection unless he or she has furnished a bond 25
in favor of the department for such amount and for such time as the 26
department determines necessary to secure the payment of amounts due 27
under this subsection. The qualified heir, on furnishing a bond 28
satisfactory to the department, is discharged from personal liability 29
for any additional tax and interest under this subsection and is 30
entitled to a receipt or writing showing such discharge.31
(f) Amounts due under this subsection attributable to any 32
qualified family-owned business interest are secured by a lien in 33
favor of the state on the property in respect to which such interest 34
relates. The lien under this subsection (3)(f) arises at the time the 35
Washington return is filed on which a deduction under this section is 36
taken and continues in effect until: (i) The tax liability under this 37
subsection has been satisfied or has become unenforceable by reason 38
of lapse of time; or (ii) the department is satisfied that no further 39
tax liability will arise under this subsection. 40
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(g) Security acceptable to the department may be substituted for 1
the lien imposed by (f) of this subsection. 2
(h) For purposes of the assessment or correction of an assessment 3
for additional taxes and interest imposed under this subsection, the 4
limitations period in RCW 83.100.095 begins to run on the due date of 5
the return required under (d) of this subsection. 6
(i) For purposes of this subsection, a qualified heir may not be 7
treated as disposing of an interest described in section 8
2057(e)(1)(A) of the internal revenue code by reason of ceasing to be 9
engaged in a trade or business so long as the property to which such 10
interest relates is used in a trade or business by any member of the 11
qualified heir's family. 12
(4)(a) The department may require a taxpayer claiming a deduction 13
under this section to provide the department with the names and 14
contact information of all qualified heirs. 15
(b) The department may also require any qualified heir to submit 16
to the department on an ongoing basis such information as the 17
department determines necessary or useful in determining whether the 18
qualified heir is subject to the additional tax imposed in subsection 19
(3) of this section. The department may not require such information 20
more frequently than twice per year. The department may impose a 21
penalty on a qualified heir who fails to provide the information 22
requested within 30 days of the date the department's written request 23
for the information was sent to the qualified heir. The amount of the 24
penalty under this subsection is $500 and may be collected in the 25
same manner as the tax imposed under subsection (3) of this section.26
(5) For purposes of this section, references to section 2057 of 27
the internal revenue code refer to section 2057 of the internal 28
revenue code, as existing on December 31, 2003. 29
(6) For purposes of this section, the following definitions 30
apply: 31
(a) "Applicable deduction amount" means: 32
(i) $2,500,000 for estates of decedents dying on or after 33
((July)) January 1, 2014, but before July 1, 2025;34
(ii) $3,000,000 for estates of decedents dying on or after July 35
1, 2025, but before ((July)) January 1, 2026; and 36
(iii) For estates of decedents dying in calendar year 2026 and 37
each calendar year thereafter, the amount in (a)(ii) of this 38
subsection must be adjusted annually, except as otherwise provided in 39
this subsection (6)(a)(iii). The annual adjustment is determined by 40
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multiplying $3,000,000 by the sum of one and the percentage by which 1
the most recent October consumer price index exceeds the consumer 2
price index for October 2024, and rounding the result to the nearest 3
$1,000. No adjustment is made for a calendar year if the adjustment 4
would result in the same or a lesser applicable deduction amount than 5
the applicable deduction amount for the immediately preceding 6
calendar year. 7
(b) "Consumer price index" has the same meaning as in RCW 8
83.100.020. 9
(c) "Member of the decedent's family" and "member of the 10
qualified heir's family" have the same meaning as "member of the 11
family" in RCW 83.100.046. 12
(d) "Qualified family-owned business interest" has the same 13
meaning as provided in section 2057 (e) of the internal revenue code 14
of 1986. 15
(e) "Qualified heir" has the same meaning as provided in section 16
2057(i) of the internal revenue code of 1986. 17
(7) This section applies to the estates of decedents dying on or 18
after January 1, 2014. 19
Sec. 21. RCW 84.34.020 and 2025 c 265 s 4 and 2025 c 138 s 1 are 20
each reenacted and amended to read as follows: 21
The definitions in this section apply throughout this chapter 22
unless the context clearly requires otherwise. 23
(1) "Open space land" means (a) any land area so designated by an 24
official comprehensive land use plan adopted by any city or county 25
and zoned accordingly; or (b) any land area, the preservation of 26
which in its present use would (i) conserve and enhance natural or 27
scenic resources, or (ii) protect streams or water supply, or (iii) 28
promote conservation of soils, wetlands, beaches or tidal marshes, or 29
(iv) enhance the value to the public of abutting or neighboring 30
parks, forests, wildlife preserves, nature reservations or 31
sanctuaries or other open space, or (v) enhance recreation 32
opportunities, or (vi) preserve historic sites, or (vii) preserve 33
visual quality along highway, road, and street corridors or scenic 34
vistas, or (viii) retain in its natural state tracts of land not less 35
than one acre situated in an urban area and open to public use on 36
such conditions as may be reasonably required by the legislative body 37
granting the open space classification; or (c) any land meeting the 38
definition of farm and agricultural conservation land under 39
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subsection (8) of this section. As a condition of granting open space 1
classification, the legislative body may not require public access on 2
land classified under (b)(iii) of this subsection for the purpose of 3
promoting conservation of wetlands. 4
(2) "Farm and agricultural land" means: 5
(a) Any parcel of land that is 20 or more acres or multiple 6
parcels of land that are contiguous and total 20 or more acres:7
(i) Devoted primarily to the production of livestock or 8
agricultural commodities for commercial purposes; 9
(ii) Enrolled in the federal conservation reserve program or its 10
successor administered by the United States department of 11
agriculture; or 12
(iii) Other similar commercial activities as may be established 13
by rule; 14
(b)(i) Any parcel of land that is five acres or more but less 15
than 20 acres devoted primarily to agricultural uses, which has 16
produced a gross income from agricultural uses equivalent to, as of 17
January 1, 1993: 18
(A) $100 or more per acre per year for three of the five calendar 19
years preceding the date of application for classification under this 20
chapter for all parcels of land that are classified under this 21
subsection or all parcels of land for which an application for 22
classification under this subsection is made with the granting 23
authority prior to January 1, 1993; and 24
(B) On or after January 1, 1993, $200 or more per acre per year 25
for three of the five calendar years preceding the date of 26
application for classification under this chapter;27
(ii) For the purposes of (b)(i) of this subsection, "gross income 28
from agricultural uses" includes, but is not limited to:29
(A) The wholesale value of agricultural products donated to 30
nonprofit food banks or feeding programs; and 31
(B) The wholesale value of agricultural products sold to persons 32
allowed to harvest the agricultural products they purchase, if the 33
products harvested are grown on the same land; 34
(c) Any parcel of land of less than five acres devoted primarily 35
to agricultural uses which has produced a gross income as of January 36
1, 1993, of: 37
(i) $1,000 or more per year for three of the five calendar years 38
preceding the date of application for classification under this 39
chapter for all parcels of land that are classified under this 40
p. 68 HB 2257
subsection or all parcels of land for which an application for 1
classification under this subsection is made with the granting 2
authority prior to January 1, 1993; and 3
(ii) On or after January 1, 1993, $1,500 or more per year for 4
three of the five calendar years preceding the date of application 5
for classification under this chapter. Parcels of land described in 6
(b)(i)(A) and (c)(i) of this subsection will, upon any transfer of 7
the property excluding a transfer to a surviving spouse or surviving 8
state registered domestic partner, be subject to the limits of 9
(b)(i)(B) and (c)(ii) of this subsection; 10
(d) Any parcel of land that is five acres or more but less than 11
20 acres devoted primarily to agricultural uses, which meet one of 12
the following criteria: 13
(i) Has produced a gross income from agricultural uses equivalent 14
to $200 or more per acre per year for three of the five calendar 15
years preceding the date of application for classification under this 16
chapter; 17
(ii) Has standing crops with an expectation of harvest within 18
seven years, except as provided in (d)(iii) of this subsection, and a 19
demonstrable investment in the production of those crops equivalent 20
to $100 or more per acre in the current or previous calendar year. 21
For the purposes of this subsection (2)(d)(ii), "standing crop" means 22
Christmas trees, vineyards, fruit trees, or other perennial crops 23
that: (A) Are planted using agricultural methods normally used in the 24
commercial production of that particular crop; and (B) typically do 25
not produce harvestable quantities in the initial years after 26
planting; or 27
(iii) Has a standing crop of short rotation hardwoods with an 28
expectation of harvest within 15 years and a demonstrable investment 29
in the production of those crops equivalent to $100 or more per acre 30
in the current or previous calendar year; 31
(e) Any lands including incidental uses and the land on which 32
appurtenances necessary to the production, preparation, or sale of 33
the agricultural products exist in conjunction with the lands 34
producing such products. Agricultural lands also include any parcel 35
of land of one to five acres, which is not contiguous, but which 36
otherwise constitutes an integral part of farming operations being 37
conducted on land qualifying under this section as "farm and 38
agricultural lands"; 39
p. 69 HB 2257
(f) The land on which housing for employees and the principal 1
place of residence of the farm operator or owner of land classified 2
pursuant to (a) of this subsection is sited if: The housing or 3
residence is on or contiguous to the classified parcel; and the use 4
of the housing or the residence is integral to the use of the 5
classified land for agricultural purposes; 6
(g) Any land that is used primarily for equestrian related 7
activities for which a charge is made, including, but not limited to, 8
stabling, training, riding, clinics, schooling, shows, or grazing for 9
feed and that otherwise meet the requirements of (a), (b), or (c) of 10
this subsection; 11
(h) Any land primarily used for commercial horticultural 12
purposes, including growing seedlings, trees, shrubs, vines, fruits, 13
vegetables, flowers, herbs, and other plants in containers, whether 14
under a structure or not, subject to the following:15
(i) The land is not primarily used for the storage, care, or 16
selling of plants purchased from other growers for retail sale;17
(ii) If the land is less than five acres and used primarily to 18
grow plants in containers, such land does not qualify as "farm and 19
agricultural land" if more than 25 percent of the land used primarily 20
to grow plants in containers is open to the general public for on-21
site retail sales; 22
(iii) If more than 20 percent of the land used for growing plants 23
in containers qualifying under this subsection (2)(h) is covered by 24
pavement, none of the paved area is eligible for classification as 25
"farm and agricultural land" under this subsection (2)(h). The 26
eligibility limitations described in this subsection (2)(h)(iii) do 27
not affect the land's eligibility to qualify under (e) of this 28
subsection; and 29
(iv) If the land classified under this subsection (2)(h), in 30
addition to any contiguous land classified under this subsection, is 31
less than 20 acres, it must meet the applicable income or investment 32
requirements in (b), (c), or (d) of this subsection; or33
(i) Lands identified in (a) through (h) of this subsection on 34
which an agrivoltaic facility is located. 35
(3) "Timberland" means any parcel of land that is five or more 36
acres or multiple parcels of land that are contiguous and total five 37
or more acres which is or are devoted primarily to the growth and 38
harvest of timber for commercial purposes. Timberland means the land 39
only and does not include a residential homesite. The term includes 40
p. 70 HB 2257
land used for incidental uses ((that are compatible with the growing 1
and harvesting of timber but no more than 10 percent of the land may 2
be used for such incidental uses )). It also includes the land on 3
which appurtenances necessary for the production, preparation, or 4
sale of the timber products exist in conjunction with land producing 5
these products. 6
(4) "Current" or "currently" means as of the date on which 7
property is to be listed and valued by the assessor.8
(5) "Owner" means the party or parties having the fee interest in 9
land, except that where land is subject to real estate contract 10
"owner" means the contract vendee. 11
(6)(a) "Contiguous" means land adjoining and touching other 12
property held by the same ownership. Land divided by a public road, 13
but otherwise an integral part of a farming operation, is considered 14
contiguous. 15
(b) For purposes of this subsection (6): 16
(i) "Same ownership" means owned by the same person or persons, 17
except that parcels owned by different persons are deemed held by the 18
same ownership if the parcels are: 19
(A) Managed as part of a single operation; and20
(B) Owned by: 21
(I) Members of the same family; 22
(II) Legal entities that are wholly owned by members of the same 23
family; or 24
(III) An individual who owns at least one of the parcels and a 25
legal entity or entities that own the other parcel or parcels if the 26
entity or entities are wholly owned by that individual, members of 27
his or her family, or that individual and members of his or her 28
family. 29
(ii) "Family" includes only: 30
(A) An individual and his or her spouse or domestic partner, 31
child, stepchild, adopted child, grandchild, parent, stepparent, 32
grandparent, cousin, or sibling; 33
(B) The spouse or domestic partner of an individual's child, 34
stepchild, adopted child, grandchild, parent, stepparent, 35
grandparent, cousin, or sibling; 36
(C) A child, stepchild, adopted child, grandchild, parent, 37
stepparent, grandparent, cousin, or sibling of the individual's 38
spouse or the individual's domestic partner; and 39
p. 71 HB 2257
(D) The spouse or domestic partner of any individual described in 1
(b)(ii)(C) of this subsection (6). 2
(7) "Granting authority" means the appropriate agency or official 3
who acts on an application for classification of land pursuant to 4
this chapter. 5
(8) "Farm and agricultural conservation land" means either:6
(a) Land that was previously classified under subsection (2) of 7
this section, that no longer meets the criteria of subsection (2) of 8
this section, and that is reclassified under subsection (1) of this 9
section; or 10
(b) Land that is traditional farmland that is not classified 11
under chapter 84.33 or 84.34 RCW, that has not been irrevocably 12
devoted to a use inconsistent with agricultural uses, and that has a 13
high potential for returning to commercial agriculture.14
(9) "Appurtenance" means something used with, and related to or 15
dependent upon another thing that is, something that belongs to 16
something else, an adjunct. The thing appurtenant is strictly 17
necessary and essential to the proper use and enjoyment of the land, 18
as well as useful or necessary for carrying out the purposes for 19
which the land is classified under this chapter. 20
(a) In terms of farm and agricultural land, an "appurtenance" is 21
something used for a particular sort of farm and is widely and 22
routinely used in the operation of the commercial agricultural 23
enterprise. 24
(b) An "appurtenance" includes, but is not limited to, portable 25
sanitation equipment, barn, or tool shed, or equipment used for a 26
particular purpose or task, such as tools, instruments, or machinery.27
(10) "Incidental use" means ((a use of land classified as farm 28
and agricultural land or timberland that is compatible with 29
commercial agricultural purposes. "Incidental use" for land 30
classified as farm and agricultural land may not exceed 20 percent of 31
the total classified land, while incidental use for timberland may 32
not exceed 10 percent of the total classified land)) the following:33
(a) In the case of land classified as farm and agricultural land, 34
a use of the classified land that:35
(i) Is compatible with commercial agricultural purposes; and36
(ii) Does not exceed 20 percent of the total classified land.37
(b) In the case of land classified as timberland, a use of the 38
classified land that:39
p. 72 HB 2257
(i) Is compatible with commercial growing and harvesting of 1
timber; and2
(ii) Does not exceed 10 percent of the total classified land.3
(c) An "incidental use" under (a) and (b) of this subsection may 4
include, but is not limited to, wetland preservation, a gravel pit, a 5
farm woodlot, a produce stand, or an unpaved parking area necessary 6
for the safe visiting or viewing of classified land. An "incidental 7
use" under (a) of this subsection may also include, but it is not 8
limited to, a farm woodlot or a produce stand.9
(11) "Agrivoltaic facility" has the same meaning as described in 10
RCW 43.21F.100. 11
NEW SECTION. Sec. 22. A new section is added to chapter 82.04 12
RCW to read as follows: 13
(1) For amounts received during the chapter 422, Laws of 2025 14
transition period, a person with a qualifying existing contract may 15
elect to treat such amounts as gross income of the business subject 16
to the tax under either RCW 82.04.250 or 82.04.290(2).17
(2) If a person with a qualifying existing contract makes no 18
election under subsection (1) of this section during the transition 19
period, amounts received from performing the services of that 20
contract during the transition period, such amounts are gross income 21
of the business subject to the tax under RCW 82.04.250.22
(3) If a person either elects to treat either amounts received as 23
gross income of the business subject to the tax under RCW 82.04.250 24
or amounts are gross income of the business subject to the tax under 25
RCW 82.04.250(2), or both, the amounts are subject to the tax imposed 26
under chapter 82.08 RCW. 27
(4) For the purposes of this section: 28
(a) "Altered" means any of the following: 29
(i) Materially or substantively changed; 30
(ii) Amended; or 31
(iii) Renewed; 32
(b) "Qualifying existing contract" means a contract that meets 33
all the following criteria: 34
(i) The contract was signed and executed before October 1, 2025;35
(ii) The underlying services provided continued after October 1, 36
2025; 37
p. 73 HB 2257
(iii) The underlying services of that contract would be services 1
defined as a retail sale under RCW 82.04.050(3) (g) through (l) 2
beginning October 1, 2025; and 3
(iv) The contract was not altered during the transition period; 4
and 5
(c) "Transition period" and "chapter 422, Laws of 2025 transition 6
period" mean the period of time beginning October 1, 2025, and ending 7
on March 31, 2026. 8
(5) This section expires July 1, 2031. 9
NEW SECTION. Sec. 23. RCW 82.04.29001 (Creation and 10
distribution of custom software — Customization of prewritten computer 11
software— Taxable services) and 2003 c 168 s 602 & 1998 c 332 s 4 are 12
each repealed.13
NEW SECTION. Sec. 24. Sections 2, 3, 4, 8, 10, 12 through 18, 14
and 22 of this act apply both prospectively and retroactively to 15
October 1, 2025.16
NEW SECTION. Sec. 25. Sections 5 and 6 of this act apply both 17
prospectively and retroactively to January 1, 2026.18
NEW SECTION. Sec. 26. If any provision excluding activities 19
from the definition of advertising services under RCW 20
82.04.050(3)(k)(ii) is held invalid, the entirety of RCW 21
82.04.050(3)(k)(ii) is invalid. It is the intent of the legislature 22
to broadly define the sale of advertising services as a retail sale.23
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