Local gov./sales & use tax

AN ACT Relating to improving local government funding by removing 1
certain sales and use tax exemptions; amending RCW 82.04.050, 2
82.08.0205, 82.12.0205, 82.08.0315, 82.12.0315, 82.08.806, 82.08.806, 3
82.12.806, 82.08.807, 82.12.807, 82.08.832, 82.12.832, 82.08.900, 4
82.12.900, 82.08.962, 82.12.962, 82.08.986, 82.12.986, 82.08.975, and 5
82.12.975; creating new sections; providing an effective date; and 6
providing an expiration date. 7
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:8
NEW SECTION. Sec. 1. (1) The legislature finds that local 9
governments, like cities and counties, are a critical component of 10
Washington's governing structure. They deliver essential daily 11
services such as law enforcement, roads, bridges, public health, 12
behavioral health, veterans services, building and permitting, and 13
many more, implement state laws at the community level, and act as 14
the government layer closest to the residents and the most responsive 15
to community issues. They form the foundation for effective state 16
policy.17
(2) For local governments to be successful, they must have 18
adequate funding. Previous reports have highlighted significant local 19
government funding challenges in the state, stemming from state and 20
federal funding cuts, inherent fiscal constraints such as limited 21
H-2805.1
HOUSE BILL 2502
State of Washington 69th Legislature 2026 Regular Session
By Representatives Wylie, Parshley, Scott, Hill, and Macri
Read first time 01/15/26. Referred to Committee on Finance.
p. 1 HB 2502
property tax revenue growth, and rising costs for services, including 1
labor, public safety, insurance, and inflation, among others. A 2
January 1988 study by the Washington state local governance study 3
commission titled "The Quiet Crisis of Local Governance in 4
Washington" found that, for local governments, "revenues are 5
inadequate for the services they are expected or required to 6
perform." A December 2007 study by the department of community, 7
trade, and economic development titled "County Financial Health and 8
Governance Alternatives" reported that "counties' revenue base has 9
become more inelastic over the last decade, significantly 10
contributing to fiscal distress and jeopardizing equal access across 11
the state to basic services provided by counties." In August 2010 the 12
state treasurer report titled "Local Government Financial Health 13
Indicators" claimed "the financial condition of Washington's local 14
governments has generally declined between 2004 and 2008 based on the 15
selected stress indicators." An August 2014 report by the state 16
auditor titled "Progress Report: Local Government Financial Health" 17
found that "local governments continue to face the fiscally 18
challenging combination of rising costs and constrained revenues that 19
could jeopardize their financial stability long after the state and 20
national economies fully recover." 21
(3) The legislature has considered numerous proposals to address 22
the fiscal distress of local governments since these reports have 23
been published, but no significant policy changes to improve the 24
fiscal health of local governments have been adopted.25
(4) The joint legislative audit and review committee has 26
identified 111 sales and use tax preferences in the Revised Code of 27
Washington that impact state and local government revenues.28
(5) It is the intent of the legislature to be careful and prudent 29
when implementing tax preferences. Additionally, the law requires 30
regular review of existing tax preferences to determine if the 31
preference achieves the legislature's objectives, who benefits from 32
the preference, how much the preference costs, and other issues.33
(6) The average combined sales tax rate in the state is 9.4 34
percent. The average combined rate includes the state base rate of 35
6.5 percent and an average local rate of 2.9 percent. While most 36
sales and use tax preferences exempt specific products and services 37
from both state and local taxes, RCW 82.08.985 does not include local 38
sales taxes. Without including an exemption from local sales taxes, 39
payers still receive a significant benefit by saving most of the 40
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sales tax. The legislature finds that maintaining the exemption for 1
the state base sales tax rate and not including an exemption for 2
local sales taxes achieves the legislature's objective with certain 3
sales tax preferences. 4
(7) It is the intent of the legislature to improve the fiscal 5
health of local governments by removing the sales tax exemptions for 6
certain products and services and by following the example in RCW 7
82.08.985 to limit the sales tax exemptions for other specific 8
products and services to only the state portion. 9
Sec. 2. RCW 82.04.050 and 2025 c 422 s 101 are each amended to 10
read as follows: 11
(1)(a) "Sale at retail" or "retail sale" means every sale of 12
tangible personal property (including articles produced, fabricated, 13
or imprinted) to all persons irrespective of the nature of their 14
business and including, among others, without limiting the scope 15
hereof, persons who install, repair, clean, alter, improve, 16
construct, or decorate real or personal property of or for consumers 17
other than a sale to a person who: 18
(i) Purchases for the purpose of resale as tangible personal 19
property in the regular course of business without intervening use by 20
such person, but a purchase for the purpose of resale by a regional 21
transit authority under RCW 81.112.300 is not a sale for resale; or22
(ii) Installs, repairs, cleans, alters, imprints, improves, 23
constructs, or decorates real or personal property of or for 24
consumers, if such tangible personal property becomes an ingredient 25
or component of such real or personal property without intervening 26
use by such person; or 27
(iii) Purchases for the purpose of consuming the property 28
purchased in producing for sale as a new article of tangible personal 29
property or substance, of which such property becomes an ingredient 30
or component or is a chemical used in processing, when the primary 31
purpose of such chemical is to create a chemical reaction directly 32
through contact with an ingredient of a new article being produced 33
for sale; or 34
(iv) Purchases for the purpose of consuming the property 35
purchased in producing ferrosilicon which is subsequently used in 36
producing magnesium for sale, if the primary purpose of such property 37
is to create a chemical reaction directly through contact with an 38
ingredient of ferrosilicon; or 39
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(v) Purchases for the purpose of providing the property to 1
consumers as part of competitive telephone service, as defined in RCW 2
82.04.065; or 3
(vi) Purchases for the purpose of satisfying the person's 4
obligations under an extended warranty as defined in subsection (7) 5
of this section, if such tangible personal property replaces or 6
becomes an ingredient or component of property covered by the 7
extended warranty without intervening use by such person.8
(b) The term includes every sale of tangible personal property 9
that is used or consumed or to be used or consumed in the performance 10
of any activity defined as a "sale at retail" or "retail sale" even 11
though such property is resold or used as provided in (a)(i) through 12
(vi) of this subsection following such use. 13
(c) The term also means every sale of tangible personal property 14
to persons engaged in any business that is taxable under RCW 15
82.04.280(1) (a), (b), and (((g))) (f), 82.04.290, and 82.04.2908.16
(2) The term "sale at retail" or "retail sale" includes the sale 17
of or charge made for tangible personal property consumed and/or for 18
labor and services rendered in respect to the following:19
(a) The installing, repairing, cleaning, altering, imprinting, or 20
improving of tangible personal property of or for consumers, 21
including charges made for the mere use of facilities in respect 22
thereto, but excluding charges made for the use of self-service 23
laundry facilities, and also excluding sales of laundry service to 24
nonprofit health care facilities, and excluding services rendered in 25
respect to live animals, birds and insects; 26
(b) The constructing, repairing, decorating, or improving of new 27
or existing buildings or other structures under, upon, or above real 28
property of or for consumers, including the installing or attaching 29
of any article of tangible personal property therein or thereto, 30
whether or not such personal property becomes a part of the realty by 31
virtue of installation, and also includes the sale of services or 32
charges made for the clearing of land and the moving of earth 33
excepting the mere leveling of land used in commercial farming or 34
agriculture; 35
(c) The constructing, repairing, or improving of any structure 36
upon, above, or under any real property owned by an owner who conveys 37
the property by title, possession, or any other means to the person 38
performing such construction, repair, or improvement for the purpose 39
of performing such construction, repair, or improvement and the 40
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property is then reconveyed by title, possession, or any other means 1
to the original owner; 2
(d) The cleaning, fumigating, razing, or moving of existing 3
buildings or structures, ((but does not include )) including the 4
charge made for janitorial services; and for purposes of this section 5
the term "janitorial services" means those cleaning and caretaking 6
services ordinarily performed by commercial janitor service 7
businesses including, but not limited to, wall and window washing, 8
floor cleaning and waxing, and the cleaning in place of rugs, drapes 9
and upholstery. The term "janitorial services" does not include 10
painting, papering, repairing, furnace or septic tank cleaning, snow 11
removal or sandblasting; 12
(e) Automobile towing and similar automotive transportation 13
services, but not in respect to those required to report and pay 14
taxes under chapter 82.16 RCW; 15
(f) The furnishing of lodging and all other services by a hotel, 16
rooming house, tourist court, motel, trailer camp, and the granting 17
of any similar license to use real property, as distinguished from 18
the renting or leasing of real property, and it is presumed that the 19
occupancy of real property for a continuous period of one month or 20
more constitutes a rental or lease of real property and not a mere 21
license to use or enjoy the same. For the purposes of this 22
subsection, it is presumed that the sale of and charge made for the 23
furnishing of lodging for a continuous period of one month or more to 24
a person is a rental or lease of real property and not a mere license 25
to enjoy the same. For the purposes of this section, it is presumed 26
that the sale of and charge made for the furnishing of lodging 27
offered regularly for public occupancy for periods of less than a 28
month constitutes a license to use or enjoy the property subject to 29
sales and use tax and not a rental or lease of property;30
(g) The installing, repairing, altering, or improving of digital 31
goods for consumers; 32
(h) Persons taxable under (a), (b), (c), (d), (e), (f), and (g) 33
of this subsection when such sales or charges are for property, labor 34
and services which are used or consumed in whole or in part by such 35
persons in the performance of any activity defined as a "sale at 36
retail" or "retail sale" even though such property, labor and 37
services may be resold after such use or consumption. Nothing 38
contained in this subsection may be construed to modify subsection 39
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(1) of this section and nothing contained in subsection (1) of this 1
section may be construed to modify this subsection.2
(3) The term "sale at retail" or "retail sale" includes the sale 3
of or charge made for personal, business, or professional services 4
including amounts designated as interest, rents, fees, admission, and 5
other service emoluments however designated, received by persons 6
engaging in the following business activities: 7
(a) Abstract, title insurance, and escrow services;8
(b) Credit bureau services; 9
(c) Automobile parking and storage garage services;10
(d) Landscape maintenance and horticultural services but 11
excluding (i) horticultural services provided to farmers and (ii) 12
pruning, trimming, repairing, removing, and clearing of trees and 13
brush near electric transmission or distribution lines or equipment, 14
if performed by or at the direction of an electric utility;15
(e) Service charges associated with tickets to professional 16
sporting events; 17
(f) The following personal services: Tanning salon services, 18
tattoo parlor services, steam bath services, turkish bath services, 19
escort services, and dating services; 20
(g) Information technology training services, technical support, 21
and other services including, but not limited to, assisting with 22
network operations and support, help desk services, in-person 23
training related to hardware or software, network system support 24
services, data entry services, and data processing services;25
(h) Custom website development services. For the purposes of this 26
subsection (3), "website development services" means the design, 27
development, and support of a website provided by a website developer 28
to a customer; 29
(i) Investigation, security services, security monitoring 30
services, and armored car services including, but not limited to, 31
background checks, security guard and patrol services, personal and 32
event security, armored car transportation of cash and valuables, and 33
security system services and monitoring. This does not include 34
locksmith services; 35
(j) Temporary staffing services. For the purposes of this 36
subsection (3), "temporary staffing services" means providing workers 37
to other businesses, except for hospitals licensed under chapter 38
70.41 or 71.12 RCW, for limited periods of time to supplement their 39
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workforce and fill employment vacancies on a contract or for fee 1
basis; 2
(k) Advertising services. (i) For the purposes of this subsection 3
(3), "advertising services" means all digital and nondigital services 4
related to the creation, preparation, production, or dissemination of 5
advertisements including, but not limited to: 6
(A) Layout, art direction, graphic design, mechanical 7
preparation, production supervision, placement, referrals, 8
acquisition of advertising space, and rendering advice concerning the 9
best methods of advertising products or services; and10
(B) Online referrals, search engine marketing ((,)) and lead 11
generation optimization, web campaign planning, the acquisition of 12
advertising space in the internet media, and the monitoring and 13
evaluation of website traffic for purposes of determining the 14
effectiveness of an advertising campaign. 15
(ii) "Advertising services" do not include: 16
(A) Web hosting services and domain name registration;17
(B) Services rendered in respect to the following:18
(I) "Newspapers" as defined in RCW 82.04.214; 19
(II) Printing or publishing under RCW 82.04.280; and20
(III) "Radio and television broadcasting" within this state as 21
defined in RCW 82.04.281; and 22
(C) Services rendered in respect to out-of-home advertising, 23
including: Billboard advertising; street furniture advertising; 24
transit advertising; place-based advertising, such as in-store 25
display advertising or point-of-sale advertising; dynamic or static 26
signage at live events; naming rights; and fixed signage advertising. 27
Out-of-home advertising does not include direct mail;28
(l) Live presentations including, but not limited to, lectures, 29
seminars, workshops, or courses where participants attend either in-30
person or via the internet or telecommunications equipment that 31
allows audience members and the presenter or instructor to give, 32
receive, and discuss information with each other in real time; and33
(m)(i) Operating an athletic or fitness facility, including all 34
charges for the use of such a facility or for any associated services 35
and amenities, except as provided in (m)(ii) of this subsection.36
(ii) Notwithstanding anything to the contrary in (m)(i) of this 37
subsection (3), the term "sale at retail" and "retail sale" under 38
this subsection does not include: 39
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(A) Separately stated charges for the use of an athletic or 1
fitness facility where such use is primarily for a purpose other than 2
engaging in or receiving instruction in a physical fitness activity;3
(B) Separately stated charges for the use of a discrete portion 4
of an athletic or fitness facility, other than a pool, where such 5
discrete portion of the facility does not by itself meet the 6
definition of "athletic or fitness facility" in this subsection;7
(C) Separately stated charges for services, such as massage, 8
nutritional consulting, and body composition testing, that do not 9
require the customer to engage in physical fitness activities to 10
receive the service. The exclusion in this subsection (3)(m)(ii)(C) 11
does not apply to personal training services and instruction in a 12
physical fitness activity; 13
(D) Separately stated charges for physical therapy provided by a 14
physical therapist, as those terms are defined in RCW 18.74.010, or 15
occupational therapy provided by an occupational therapy 16
practitioner, as those terms are defined in RCW 18.59.020, when 17
performed pursuant to a referral from an authorized health care 18
practitioner or in consultation with an authorized health care 19
practitioner. For the purposes of this subsection (3)(m)(ii)(D), an 20
authorized health care practitioner means a health care practitioner 21
licensed under chapter 18.83, 18.25, 18.36A, 18.57, 18.71, or 18.71A 22
RCW, or, until July 1, 2022, chapter 18.57A RCW; 23
(E) Rent or association fees charged by a landlord or residential 24
association to a tenant or residential owner with access to an 25
athletic or fitness facility maintained by the landlord or 26
residential association, unless the rent or fee varies depending on 27
whether the tenant or owner has access to the facility;28
(F) Services provided in the regular course of employment by an 29
employee with access to an athletic or fitness facility maintained by 30
the employer for use without charge by its employees or their family 31
members; 32
(G) The provision of access to an athletic or fitness facility by 33
an educational institution to its students and staff. However, 34
charges made by an educational institution to its alumni or other 35
members of the public for the use of any of the educational 36
institution's athletic or fitness facilities are a retail sale under 37
this subsection (3)(m). For purposes of this subsection 38
(3)(m)(ii)(G), "educational institution" has the same meaning as in 39
RCW 82.04.170; 40
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(H) Yoga, chi gong, or martial arts classes, training, or events 1
held at a community center, park, school gymnasium, college or 2
university, hospital or other medical facility, private residence, or 3
any other facility that is not operated within and as part of an 4
athletic or fitness facility. 5
(iii) Nothing in (m)(ii) of this subsection (3) may be construed 6
to affect the taxation of sales made by the operator of an athletic 7
or fitness facility, where such sales are defined as a retail sale 8
under any provision of this section other than this subsection (3).9
(iv) For the purposes of this subsection (3)(m), the following 10
definitions apply: 11
(A) "Athletic or fitness facility" means an indoor or outdoor 12
facility or portion of a facility that is primarily used for: 13
Exercise classes; strength and conditioning programs; personal 14
training services; tennis, racquetball, handball, squash, or 15
pickleball; or other activities requiring the use of exercise or 16
strength training equipment, such as treadmills, elliptical machines, 17
stair climbers, stationary cycles, rowing machines, pilates 18
equipment, balls, climbing ropes, jump ropes, and weightlifting 19
equipment. 20
(B) "Martial arts" means any of the various systems of training 21
for physical combat or self-defense. "Martial arts" includes, but is 22
not limited to, karate, kung fu, tae kwon do, Krav Maga, boxing, 23
kickboxing, jujitsu, shootfighting, wrestling, aikido, judo, hapkido, 24
Kendo, tai chi, and mixed martial arts. 25
(C) "Physical fitness activities" means activities that involve 26
physical exertion for the purpose of improving or maintaining the 27
general fitness, strength, flexibility, conditioning, or health of 28
the participant. "Physical fitness activities" includes participating 29
in yoga, chi gong, or martial arts. 30
For the purposes of (g) through (i) and (k) of this subsection 31
(3), the terms "sale at retail" and "retail sale" do not include a 32
sale between members of an affiliated group as defined in RCW 33
82.04.299(1)(f). 34
(4)(a) The term also includes the renting or leasing of tangible 35
personal property to consumers. 36
(b) The term does not include the renting or leasing of tangible 37
personal property where the lease or rental is for the purpose of 38
sublease or subrent. 39
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(5) The term also includes the providing of "competitive 1
telephone service," "telecommunications service," or "ancillary 2
services," as those terms are defined in RCW 82.04.065, to consumers.3
(6)(a) The term also includes the sale of prewritten computer 4
software, custom software, and customization of prewritten computer 5
software to a consumer, regardless of the method of delivery to the 6
end user. For purposes of this subsection (6)(a), the sale of 7
prewritten computer software includes the sale of or charge made for 8
a key or an enabling or activation code, where the key or code is 9
required to activate prewritten computer software and put the 10
software into use. There is no separate sale of the key or code from 11
the prewritten computer software, regardless of how the sale may be 12
characterized by the vendor or by the purchaser. 13
(b)(i) The term also includes the charge made to consumers for 14
the right to access and use prewritten computer software, custom 15
software, and customization of prewritten computer software, where 16
possession of the software is maintained by the seller or a third 17
party, regardless of whether the charge for the service is on a per 18
use, per user, per license, subscription, or some other basis.19
(ii)(A) The service described in (b)(i) of this subsection (6) 20
includes the right to access and use prewritten computer software, 21
custom software, and customization of prewritten computer software to 22
perform data processing. 23
(B) For purposes of this subsection (6)(b)(ii), "data processing" 24
means the systematic performance of operations on data to extract the 25
required information in an appropriate form or to convert the data to 26
usable information. Data processing includes check processing, image 27
processing, form processing, survey processing, payroll processing, 28
claim processing, and similar activities. 29
(7) The term also includes the sale of or charge made for an 30
extended warranty to a consumer. For purposes of this subsection, 31
"extended warranty" means an agreement for a specified duration to 32
perform the replacement or repair of tangible personal property at no 33
additional charge or a reduced charge for tangible personal property, 34
labor, or both, or to provide indemnification for the replacement or 35
repair of tangible personal property, based on the occurrence of 36
specified events. The term "extended warranty" does not include an 37
agreement, otherwise meeting the definition of extended warranty in 38
this subsection, if no separate charge is made for the agreement and 39
the value of the agreement is included in the sales price of the 40
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tangible personal property covered by the agreement. For purposes of 1
this subsection, "sales price" has the same meaning as in RCW 2
82.08.010. 3
(8)(a) The term also includes the following sales to consumers of 4
digital goods, digital codes, and digital automated services:5
(i) Sales in which the seller has granted the purchaser the right 6
of permanent use; 7
(ii) Sales in which the seller has granted the purchaser a right 8
of use that is less than permanent; 9
(iii) Sales in which the purchaser is not obligated to make 10
continued payment as a condition of the sale; and 11
(iv) Sales in which the purchaser is obligated to make continued 12
payment as a condition of the sale. 13
(b) A retail sale of digital goods, digital codes, or digital 14
automated services under this subsection (8) includes any services 15
provided by the seller exclusively in connection with the digital 16
goods, digital codes, or digital automated services, whether or not a 17
separate charge is made for such services. 18
(c) A retail sale of digital goods, digital codes, or digital 19
automated services does not include the following services if the 20
sale occurs between members of an affiliated group as defined in RCW 21
82.04.299(1)(f): 22
(i) Any service that primarily involves the application of human 23
effort by the seller, and the human effort originated after the 24
customer requested the service; 25
(ii) Live presentations, such as lectures, seminars, workshops, 26
or courses, where participants are connected to other participants 27
via the internet or telecommunications equipment, which allows 28
audience members and the presenter or instructor to give, receive, 29
and discuss information with each other in real time;30
(iii) Advertising services. For purposes of this subsection 31
(8)(c), "advertising services" means all services directly related to 32
the creation, preparation, production, or dissemination of 33
advertisements. Advertising services include layout, art direction, 34
graphic design, mechanical preparation, production supervision, 35
placement, and rendering advice to a client concerning the best 36
methods of advertising that client's products or services. 37
Advertising services also include online referrals, search engine 38
marketing and lead generation optimization, web campaign planning, 39
the acquisition of advertising space in the internet media, and the 40
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monitoring and evaluation of website traffic for purposes of 1
determining the effectiveness of an advertising campaign. Advertising 2
services do not include web hosting services and domain name 3
registration; and 4
(iv) Data processing services. For purposes of this subsection 5
(8)(c), "data processing service" means a primarily automated service 6
provided to a business or other organization where the primary object 7
of the service is the systematic performance of operations by the 8
service provider on data supplied in whole or in part by the customer 9
to extract the required information in an appropriate form or to 10
convert the data to usable information. Data processing services 11
include check processing, image processing, form processing, survey 12
processing, payroll processing, claim processing, and similar 13
activities. Data processing does not include the service described in 14
subsection (6)(b) of this section. 15
(d) For purposes of this subsection, "permanent" means perpetual 16
or for an indefinite or unspecified length of time. A right of 17
permanent use is presumed to have been granted unless the agreement 18
between the seller and the purchaser specifies or the circumstances 19
surrounding the transaction suggest or indicate that the right to use 20
terminates on the occurrence of a condition subsequent.21
(9) The term also includes the charge made for providing tangible 22
personal property along with an operator for a fixed or indeterminate 23
period of time. A consideration of this is that the operator is 24
necessary for the tangible personal property to perform as designed. 25
For the purpose of this subsection (9), an operator must do more than 26
maintain, inspect, or set up the tangible personal property.27
(10) The term does not include the sale of or charge made for 28
labor and services rendered in respect to the building, repairing, or 29
improving of any street, place, road, highway, easement, right-of-30
way, mass public transportation terminal or parking facility, bridge, 31
tunnel, or trestle which is owned by a municipal corporation or 32
political subdivision of the state or by the United States and which 33
is used or to be used primarily for foot or vehicular traffic 34
including mass transportation vehicles of any kind.35
(11) The term also does not include sales of chemical sprays or 36
washes to persons for the purpose of postharvest treatment of fruit 37
for the prevention of scald, fungus, mold, or decay, nor does it 38
include sales of feed, seed, seedlings, fertilizer, agents for 39
enhanced pollination including insects such as bees, and spray 40
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materials to: (a) Persons who participate in the federal conservation 1
reserve program, the environmental quality incentives program, the 2
wetlands reserve program, and the wildlife habitat incentives 3
program, or their successors administered by the United States 4
department of agriculture; (b) farmers for the purpose of producing 5
for sale any agricultural product; (c) farmers for the purpose of 6
providing bee pollination services; and (d) farmers acting under 7
cooperative habitat development or access contracts with an 8
organization exempt from federal income tax under 26 U.S.C. Sec. 9
501(c)(3) of the federal internal revenue code or the Washington 10
state department of fish and wildlife to produce or improve wildlife 11
habitat on land that the farmer owns or leases. 12
(12) The term does not include the sale of or charge made for 13
labor and services rendered in respect to the constructing, 14
repairing, decorating, or improving of new or existing buildings or 15
other structures under, upon, or above real property of or for the 16
United States, any instrumentality thereof, or a county or city 17
housing authority created pursuant to chapter 35.82 RCW, including 18
the installing, or attaching of any article of tangible personal 19
property therein or thereto, whether or not such personal property 20
becomes a part of the realty by virtue of installation. Nor does the 21
term include the sale of services or charges made for the clearing of 22
land and the moving of earth of or for the United States, any 23
instrumentality thereof, or a county or city housing authority. Nor 24
does the term include the sale of services or charges made for 25
cleaning up for the United States, or its instrumentalities, 26
radioactive waste and other by-products of weapons production and 27
nuclear research and development. 28
(13) The term does not include the sale of or charge made for 29
labor, services, or tangible personal property pursuant to agreements 30
providing maintenance services for bus, rail, or rail fixed guideway 31
equipment when a regional transit authority is the recipient of the 32
labor, services, or tangible personal property, and a transit agency, 33
as defined in RCW 81.104.015, performs the labor or services.34
(14) The term does not include the sale for resale of any service 35
described in this section if the sale would otherwise constitute a 36
"sale at retail" and "retail sale" under this section.37
(15)(a) The term "sale at retail" or "retail sale" includes 38
amounts charged, however labeled, to consumers to engage in any of 39
the activities listed in this subsection (15)(a), including the 40
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furnishing of any associated equipment or, except as otherwise 1
provided in this subsection, providing instruction in such 2
activities, where such charges are not otherwise defined as a "sale 3
at retail" or "retail sale" in this section: 4
(i)(A) Golf, including any variant in which either golf balls or 5
golf clubs are used, such as miniature golf, hitting golf balls at a 6
driving range, and golf simulators, and including fees charged by a 7
golf course to a player for using his or her own cart. However, 8
charges for golf instruction are not a retail sale, provided that if 9
the instruction involves the use of a golfing facility that would 10
otherwise require the payment of a fee, such as green fees or driving 11
range fees, such fees, including the applicable retail sales tax, 12
must be separately identified and charged by the golfing facility 13
operator to the instructor or the person receiving the instruction.14
(B) Notwithstanding (a)(i)(A) of this subsection (15) and except 15
as otherwise provided in this subsection (15)(a)(i)(B), the term 16
"sale at retail" or "retail sale" does not include amounts charged to 17
participate in, or conduct, a golf tournament or other competitive 18
event. However, amounts paid by event participants to the golf 19
facility operator are retail sales under this subsection (15)(a)(i). 20
Likewise, amounts paid by the event organizer to the golf facility 21
are retail sales under this subsection (15)(a)(i), if such amounts 22
vary based on the number of event participants; 23
(ii) Ballooning, hang gliding, indoor or outdoor sky diving, 24
paragliding, parasailing, and similar activities; 25
(iii) Air hockey, billiards, pool, foosball, darts, shuffleboard, 26
ping pong, and similar games; 27
(iv) Access to amusement park, theme park, and water park 28
facilities, including but not limited to charges for admission and 29
locker or cabana rentals. Discrete charges for rides or other 30
attractions or entertainment that are in addition to the charge for 31
admission are not a retail sale under this subsection (15)(a)(iv). 32
For the purposes of this subsection, an amusement park or theme park 33
is a location that provides permanently affixed amusement rides, 34
games, and other entertainment, but does not include parks or zoos 35
for which the primary purpose is the exhibition of wildlife, or 36
fairs, carnivals, and festivals as defined in (b)(i) of this 37
subsection; 38
(v) Batting cage activities; 39
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(vi) Bowling, but not including competitive events, except that 1
amounts paid by the event participants to the bowling alley operator 2
are retail sales under this subsection (15)(a)(vi). Likewise, amounts 3
paid by the event organizer to the operator of the bowling alley are 4
retail sales under this subsection (15)(a)(vi), if such amounts vary 5
based on the number of event participants; 6
(vii) Climbing on artificial climbing structures, whether indoors 7
or outdoors; 8
(viii) Day trips for sightseeing purposes; 9
(ix) Bungee jumping, zip lining, and riding inside a ball, 10
whether inflatable or otherwise; 11
(x) Horseback riding offered to the public, where the seller 12
furnishes the horse to the buyer and providing instruction is not the 13
primary focus of the activity, including guided rides, but not 14
including therapeutic horseback riding provided by an instructor 15
certified by a nonprofit organization that offers national or 16
international certification for therapeutic riding instructors;17
(xi) Fishing, including providing access to private fishing areas 18
and charter or guided fishing, except that fishing contests and 19
license fees imposed by a government entity are not a retail sale 20
under this subsection; 21
(xii) Guided hunting and hunting at game farms and shooting 22
preserves, except that hunting contests and license fees imposed by a 23
government entity are not a retail sale under this subsection;24
(xiii) Swimming, but only in respect to (A) recreational or 25
fitness swimming that is open to the public, such as open swim, lap 26
swimming, and special events like kids night out and pool parties 27
during open swim time, and (B) pool parties for private events, such 28
as birthdays, family gatherings, and employee outings. Fees for 29
swimming lessons, to participate in swim meets and other 30
competitions, or to join a swim team, club, or aquatic facility are 31
not retail sales under this subsection (15)(a)(xiii);32
(xiv) Go-karting, bumper cars, and other motorized activities 33
where the seller provides the vehicle and the premises where the 34
buyer will operate the vehicle; 35
(xv) Indoor or outdoor playground activities, such as inflatable 36
bounce structures and other inflatables; mazes; trampolines; slides; 37
ball pits; games of tag, including laser tag and soft-dart tag; and 38
human gyroscope rides, regardless of whether such activities occur at 39
the seller's place of business, but not including playground 40
p. 15 HB 2502
activities provided for children by a licensed child day care center 1
or licensed family day care provider as those terms are defined in 2
RCW 43.216.010; 3
(xvi) Shooting sports and activities, such as target shooting, 4
skeet, trap, sporting clays, "5" stand, and archery, but only in 5
respect to discrete charges to members of the public to engage in 6
these activities, but not including fees to enter a competitive 7
event, instruction that is entirely or predominately classroom based, 8
or to join or renew a membership at a club, range, or other facility;9
(xvii) Paintball and airsoft activities; 10
(xviii) Skating, including ice skating, roller skating, and 11
inline skating, but only in respect to discrete charges to members of 12
the public to engage in skating activities, but not including skating 13
lessons, competitive events, team activities, or fees to join or 14
renew a membership at a skating facility, club, or other 15
organization; 16
(xix) Nonmotorized snow sports and activities, such as downhill 17
and cross-country skiing, snowboarding, ski jumping, sledding, snow 18
tubing, snowshoeing, and similar snow sports and activities, whether 19
engaged in outdoors or in an indoor facility with or without snow, 20
but only in respect to discrete charges to the public for the use of 21
land or facilities to engage in nonmotorized snow sports and 22
activities, such as fees, however labeled, for the use of ski lifts 23
and tows and daily or season passes for access to trails or other 24
areas where nonmotorized snow sports and activities are conducted. 25
However, fees for the following are not retail sales under this 26
subsection (15)(a)(xix): (A) Instructional lessons; (B) permits 27
issued by a governmental entity to park a vehicle on or access public 28
lands; and (C) permits or leases granted by an owner of private 29
timberland for recreational access to areas used primarily for 30
growing and harvesting timber; and 31
(xx) Scuba diving; snorkeling; river rafting; surfing; 32
kiteboarding; flyboarding; water slides; inflatables, such as water 33
pillows, water trampolines, and water rollers; and similar water 34
sports and activities. 35
(b) Notwithstanding anything to the contrary in this subsection 36
(15), the term "sale at retail" or "retail sale" does not include 37
charges: 38
(i) Made for admission to, and rides or attractions at, fairs, 39
carnivals, and festivals. For the purposes of this subsection, fairs, 40
p. 16 HB 2502
carnivals, and festivals are events that do not exceed 21 days and a 1
majority of the amusement rides, if any, are not affixed to real 2
property; 3
(ii) Made by an educational institution to its students and staff 4
for activities defined as retail sales by (a)(i) through (xx) of this 5
subsection. However, charges made by an educational institution to 6
its alumni or other members of the general public for these 7
activities are a retail sale under this subsection (15). For purposes 8
of this subsection (15)(b)(ii), "educational institution" has the 9
same meaning as in RCW 82.04.170; 10
(iii) Made by a vocational school for commercial diver training 11
that is licensed by the workforce training and education coordinating 12
board under chapter 28C.10 RCW; or 13
(iv) Made for day camps offered by a nonprofit organization or 14
state or local governmental entity that provide youth not older than 15
age 18, or that are focused on providing individuals with 16
disabilities or mental illness, the opportunity to participate in a 17
variety of supervised activities. 18
(16)(a) The term "sale at retail" or "retail sale" includes the 19
purchase or acquisition of tangible personal property and specified 20
services by a person who receives either a qualifying grant exempt 21
from tax under RCW 82.04.767 or 82.16.320 or a grant deductible under 22
RCW 82.04.4339, except for transactions excluded from the definition 23
of "sale at retail" or "retail sale" by any other provision of this 24
section. Nothing in this subsection (16) may be construed to limit 25
the application of any other provision of this section to purchases 26
by a recipient of either a qualifying grant exempt from tax under RCW 27
82.04.767 or a grant deductible under RCW 82.04.4339, or by any other 28
person. 29
(b) For purposes of this subsection (16), "specified services" 30
means: 31
(i) The constructing, repairing, decorating, or improving of new 32
or existing buildings or other structures under, upon, or above real 33
property, including the installing or attaching of any article of 34
tangible personal property therein or thereto, whether or not such 35
personal property becomes a part of the realty by virtue of 36
installation; 37
(ii) The clearing of land or the moving of earth, whether or not 38
associated with activities described in (b)(i) of this subsection 39
(16); 40
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(iii) The razing or moving of existing buildings or structures; 1
and 2
(iv) Landscape maintenance and horticultural services.3
Sec. 3. RCW 82.08.0205 and 2008 c 237 s 2 are each amended to 4
read as follows: 5
(1)(a) The tax levied by RCW 82.08.020 does not apply to sales of 6
waste vegetable oil that is used by a person in the production of 7
biodiesel for personal use. 8
(b) The exemption provided in (a) of this subsection does not 9
apply to a sales and use tax imposed by a local government under the 10
authority of chapter 82.14 or 81.104 RCW.11
(2) This exemption is available only if the buyer provides the 12
seller with an exemption certificate in a form and manner prescribed 13
by the department. 14
(3) For the purposes of this section, the following definitions 15
apply: 16
(a) "Waste vegetable oil" means used cooking oil gathered from 17
restaurants or commercial food processors; and 18
(b) "Personal use" means the person does not engage in the 19
business of selling biodiesel at wholesale or retail.20
Sec. 4. RCW 82.12.0205 and 2008 c 237 s 3 are each amended to 21
read as follows: 22
The provisions of this chapter do not apply with respect to the 23
use of waste vegetable oil that is used by a person in the production 24
of biodiesel for personal use. However, the exemption provided in 25
this section does not apply to a sales and use tax imposed by a local 26
government under the authority of chapter 82.14 or 81.104 RCW. The 27
definitions in RCW 82.08.0205 apply to this section.28
Sec. 5. RCW 82.08.0315 and 1997 c 61 s 1 are each amended to 29
read as follows: 30
(1) As used in this section: 31
(a) "Production equipment" means the following when used in 32
motion picture or video production or postproduction: Grip and 33
lighting equipment, cameras, camera mounts including tripods, jib 34
arms, steadicams, and other camera mounts, cranes, dollies, 35
generators, helicopter mounts, helicopters rented for motion picture 36
or video production, walkie talkies, vans, trucks, and other vehicles 37
p. 18 HB 2502
specifically equipped for motion picture or video production or used 1
solely for production activities, wardrobe and makeup trailers, 2
special effects and stunt equipment, video assists, videotape 3
recorders, cables and connectors, ((telepromoters [teleprompters] )) 4
teleprompters, sound recording equipment, and editorial equipment.5
(b) "Production services" means motion picture and video 6
processing, printing, editing, duplicating, animation, graphics, 7
special effects, negative cutting, conversions to other formats or 8
media, stock footage, sound mixing, rerecording, sound sweetening, 9
sound looping, sound effects, and automatic dialog replacement.10
(c) "Motion picture or video production business" means a person 11
engaged in the production of motion pictures and videotapes for 12
exhibition, sale, or for broadcast by a person other than the person 13
producing the motion picture or videotape. 14
(2)(a) The tax levied by RCW 82.08.020 does not apply to the 15
rental of production equipment, or the sale of production services, 16
to a motion picture or video production business. 17
(b) The exemption provided in (a) of this subsection does not 18
apply to a sales and use tax imposed by a local government under the 19
authority of chapter 82.14 or 81.104 RCW.20
(3) The exemption provided for in this section shall not apply to 21
rental of production equipment, or the sale of production services, 22
to a motion picture or video production business that is engaged, to 23
any degree, in the production of erotic material, as defined in RCW 24
9.68.050. 25
(4) In order to claim an exemption under this section, the 26
purchaser must provide the seller with an exemption certificate in a 27
form and manner prescribed by the department. The seller shall retain 28
a copy of the certificate for the seller's files. 29
Sec. 6. RCW 82.12.0315 and 2009 c 535 s 614 are each amended to 30
read as follows: 31
(1) The provisions of this chapter shall not apply in respect to 32
the use of: 33
(a) Production equipment rented to a motion picture or video 34
production business; 35
(b) Production equipment acquired and used by a motion picture or 36
video production business in another state, if the acquisition and 37
use occurred more than ninety days before the time the motion picture 38
or video production business entered this state; and39
p. 19 HB 2502
(c) Production services that are within the scope of RCW 1
82.04.050(2) (a) or (g) and are sold to a motion picture or video 2
production business. 3
(2) The exemption provided in subsection (1)(a) through (c) of 4
this section does not apply to a sales and use tax imposed by a local 5
government under the authority of chapter 82.14 or 81.104 RCW.6
(3) As used in this section, "production equipment," "production 7
services," and "motion picture or video production business" have the 8
meanings given in RCW 82.08.0315. 9
(((3))) (4) The exemption provided for in this section shall not 10
apply to the use of production equipment rented to, or production 11
equipment or production services that are within the scope of RCW 12
82.04.050(2) (a) or (g) acquired and used by, a motion picture or 13
video production business that is engaged, to any degree, in the 14
production of erotic material, as defined in RCW 9.68.050.15
Sec. 7. RCW 82.08.806 and 2023 c 286 s 6 are each amended to 16
read as follows: 17
(1)(a) The tax levied by RCW 82.08.020 does not apply to sales, 18
to a printer or publisher, of computer equipment, including repair 19
parts and replacement parts for such equipment, when the computer 20
equipment is used primarily in the printing or publishing of any 21
printed material, or to sales of or charges made for labor and 22
services rendered in respect to installing, repairing, cleaning, 23
altering, or improving the computer equipment. This exemption applies 24
only to computer equipment not otherwise exempt under RCW 25
82.08.02565. 26
(b) The exemption provided in (a) of this subsection does not 27
apply to a sales and use tax imposed by a local government under the 28
authority of chapter 82.14 or 81.104 RCW.29
(2) A person taking the exemption under this section must keep 30
records necessary for the department to verify eligibility under this 31
section. This exemption is available only when the purchaser provides 32
the seller with an exemption certificate in a form and manner 33
prescribed by the department. The seller must retain a copy of the 34
certificate for the seller's files. 35
(3) The definitions in this subsection (3) apply throughout this 36
section, unless the context clearly requires otherwise.37
(a) "Computer" has the same meaning as in RCW 82.04.215.38
p. 20 HB 2502
(b) "Computer equipment" means a computer and the associated 1
physical components that constitute a computer system, including 2
monitors, keyboards, printers, modems, scanners, pointing devices, 3
and other computer peripheral equipment, cables, servers, and 4
routers. "Computer equipment" also includes digital cameras and 5
computer software. 6
(c) "Computer software" has the same meaning as in RCW 82.04.215.7
(d) "Primarily" means greater than fifty percent as measured by 8
time. 9
(e) "Printer or publisher" means a person, as defined in RCW 10
82.04.030, who is subject to tax under RCW 82.04.280(1)(a) or is 11
eligible for the exemption under RCW 82.04.759. 12
(4) "Computer equipment" does not include computer equipment that 13
is used primarily for administrative purposes including but not 14
limited to payroll processing, accounting, customer service, 15
telemarketing, and collection. If computer equipment is used 16
simultaneously for administrative and nonadministrative purposes, the 17
administrative use must be disregarded during the period of 18
simultaneous use for purposes of determining whether the computer 19
equipment is used primarily for administrative purposes.20
Sec. 8. RCW 82.08.806 and 2020 c 139 s 16 are each amended to 21
read as follows: 22
(1)(a) The tax levied by RCW 82.08.020 does not apply to sales, 23
to a printer or publisher, of computer equipment, including repair 24
parts and replacement parts for such equipment, when the computer 25
equipment is used primarily in the printing or publishing of any 26
printed material, or to sales of or charges made for labor and 27
services rendered in respect to installing, repairing, cleaning, 28
altering, or improving the computer equipment. This exemption applies 29
only to computer equipment not otherwise exempt under RCW 30
82.08.02565. 31
(b) The exemption provided in (a) of this subsection does not 32
apply to a sales and use tax imposed by a local government under the 33
authority of chapter 82.14 or 81.104 RCW.34
(2) A person taking the exemption under this section must keep 35
records necessary for the department to verify eligibility under this 36
section. This exemption is available only when the purchaser provides 37
the seller with an exemption certificate in a form and manner 38
p. 21 HB 2502
prescribed by the department. The seller must retain a copy of the 1
certificate for the seller's files. 2
(3) The definitions in this subsection (3) apply throughout this 3
section, unless the context clearly requires otherwise.4
(a) "Computer" has the same meaning as in RCW 82.04.215.5
(b) "Computer equipment" means a computer and the associated 6
physical components that constitute a computer system, including 7
monitors, keyboards, printers, modems, scanners, pointing devices, 8
and other computer peripheral equipment, cables, servers, and 9
routers. "Computer equipment" also includes digital cameras and 10
computer software. 11
(c) "Computer software" has the same meaning as in RCW 82.04.215.12
(d) "Primarily" means greater than fifty percent as measured by 13
time. 14
(e) "Printer or publisher" means a person, as defined in RCW 15
82.04.030, who is subject to tax under RCW 82.04.260(14) or 16
82.04.280(1)(a). 17
(4) "Computer equipment" does not include computer equipment that 18
is used primarily for administrative purposes including but not 19
limited to payroll processing, accounting, customer service, 20
telemarketing, and collection. If computer equipment is used 21
simultaneously for administrative and nonadministrative purposes, the 22
administrative use must be disregarded during the period of 23
simultaneous use for purposes of determining whether the computer 24
equipment is used primarily for administrative purposes.25
Sec. 9. RCW 82.12.806 and 2004 c 8 s 3 are each amended to read 26
as follows: 27
(1)(a) The provisions of this chapter do not apply in respect to 28
the use, by a printer or publisher, of computer equipment, including 29
repair parts and replacement parts for such equipment, when the 30
computer equipment is used primarily in the printing or publishing of 31
any printed material, or to labor and services rendered in respect to 32
installing, repairing, cleaning, altering, or improving the computer 33
equipment. This exemption applies only to computer equipment not 34
otherwise exempt under RCW 82.12.02565. 35
(b) The exemption provided in (a) of this subsection does not 36
apply to a sales and use tax imposed by a local government under the 37
authority of chapter 82.14 or 81.104 RCW.38
p. 22 HB 2502
(2) For the purposes of this section, the definitions in RCW 1
82.08.806 apply. 2
Sec. 10. RCW 82.08.807 and 2005 c 514 s 115 are each amended to 3
read as follows: 4
The tax levied by RCW 82.08.020 does not apply to delivery 5
charges made for the delivery of direct mail if the charges are 6
separately stated on an invoice or similar billing document given to 7
the purchaser. However, the exemption provided in this section does 8
not apply to a sales and use tax imposed by a local government under 9
the authority of chapter 82.14 or 81.104 RCW.10
Sec. 11. RCW 82.12.807 and 2005 c 514 s 116 are each amended to 11
read as follows: 12
(1)(a) The tax levied by this chapter does not apply to the value 13
of delivery charges made for the delivery of direct mail if the 14
charges are separately stated on an invoice or similar billing 15
document given to the purchaser. 16
(b) The exemption provided in (a) of this subsection does not 17
apply to a sales and use tax imposed by a local government under the 18
authority of chapter 82.14 or 81.104 RCW.19
(2) "Delivery charges" and "direct mail" have the same meanings 20
as in RCW 82.08.010. 21
Sec. 12. RCW 82.08.832 and 1998 c 178 s 1 are each amended to 22
read as follows: 23
(1)(a) The tax levied by RCW 82.08.020 does not apply to sales of 24
gun safes. 25
(b) The exemption provided in (a) of this subsection does not 26
apply to a sales and use tax imposed by a local government under the 27
authority of chapter 82.14 or 81.104 RCW.28
(2) As used in this section and RCW 82.12.832, "gun safe" means 29
an enclosure specifically designed or modified for the purpose of 30
storing a firearm and equipped with a padlock, key lock, combination 31
lock, or similar locking device which, when locked, prevents the 32
unauthorized use of the firearm. 33
Sec. 13. RCW 82.12.832 and 1998 c 178 s 2 are each amended to 34
read as follows: 35
p. 23 HB 2502
The provisions of this chapter do not apply with respect to the 1
use of gun safes as defined in RCW 82.08.832. However, the exemption 2
provided in this section does not apply to a sales and use tax 3
imposed by a local government under the authority of chapter 82.14 or 4
81.104 RCW.5
Sec. 14. RCW 82.08.900 and 2018 c 164 s 4 are each amended to 6
read as follows: 7
(1) The tax levied by RCW 82.08.020 does not apply to sales to an 8
eligible person: 9
(a) In respect to equipment necessary to process biogas from a 10
landfill into marketable coproducts, including but not limited to 11
biogas conditioning, compression, and electrical generation 12
equipment, or to services rendered in respect to installing, 13
constructing, repairing, cleaning, altering, or improving equipment 14
necessary to process biogas from a landfill into marketable 15
coproducts; and 16
(b) Establishing or operating an anaerobic digester or to 17
services rendered in respect to installing, constructing, repairing, 18
cleaning, altering, or improving an anaerobic digester, or to sales 19
of tangible personal property that becomes an ingredient or component 20
of the anaerobic digester. 21
(2) The exemption provided in subsection (1)(a) and (b) of this 22
section does not apply to a sales and use tax imposed by a local 23
government under the authority of chapter 82.14 or 81.104 RCW.24
(3) A person claiming an exemption under this section must keep 25
records necessary for the department to verify eligibility under this 26
section. Sellers may make tax exempt sales under this section only if 27
the buyer provides the seller with an exemption certificate in a form 28
and manner prescribed by the department. The seller must retain a 29
copy of the certificate for the seller's files. 30
(((3))) (4) The definitions in this subsection apply to this 31
section and RCW 82.12.900 unless the context clearly requires 32
otherwise: 33
(a) "Anaerobic digester" means a facility that processes organic 34
material into biogas and digestate using microorganisms in a 35
decomposition process within a closed, oxygen-free container as well 36
as the equipment necessary to process biogas or digestate produced by 37
an anaerobic digester into marketable coproducts, including but not 38
p. 24 HB 2502
limited to biogas conditioning, compression, nutrient recovery, and 1
electrical generation equipment. 2
(b) "Eligible person" means any person establishing or operating 3
an anaerobic digester or landfill or processing biogas from an 4
anaerobic digester or landfill into marketable coproducts.5
Sec. 15. RCW 82.12.900 and 2018 c 164 s 6 are each amended to 6
read as follows: 7
The provisions of this chapter do not apply with respect to:8
(1) Equipment necessary to process biogas from a landfill into 9
marketable coproducts, including but not limited to biogas 10
conditioning, compression, and electrical generation equipment, or to 11
services rendered in respect to installing, constructing, repairing, 12
cleaning, altering, or improving equipment necessary to process 13
biogas from a landfill into marketable coproducts; and14
(2) The use of anaerobic digesters, tangible personal property 15
that becomes an ingredient or component of anaerobic digesters, or 16
the use of services rendered in respect to installing, repairing, 17
cleaning, altering, or improving eligible tangible personal property 18
by an eligible person establishing or operating an anaerobic 19
digester, as defined in RCW 82.08.900. 20
(3) The exemption provided in subsections (1) and (2) of this 21
section do not apply to a sales and use tax imposed by a local 22
government under the authority of chapter 82.14 or 81.104 RCW.23
Sec. 16. RCW 82.08.962 and 2019 c 288 s 18 are each amended to 24
read as follows: 25
(1)(a) Subject to the requirements of this section, the tax 26
imposed by RCW 82.08.020 does not apply to sales of machinery and 27
equipment used directly in generating electricity using fuel cells, 28
wind, sun, biomass energy, tidal or wave energy, geothermal 29
resources, or technology that converts otherwise lost energy from 30
exhaust, as the principal source of power, or to sales of or charges 31
made for labor and services rendered in respect to installing such 32
machinery and equipment, but only if the purchaser develops with such 33
machinery, equipment, and labor a facility capable of generating not 34
less than one thousand watts AC of electricity. Except as otherwise 35
provided in this section, the purchaser must pay the state and local 36
sales tax on such sales and apply to the department for a remittance 37
of the tax paid. 38
p. 25 HB 2502
(b) ((Beginning on July 1, 2011, through December 31, 2019, the 1
amount of the exemption under this subsection (1)(b) is equal to 2
seventy-five percent of the state and local sales tax paid. The 3
purchaser is eligible for an exemption under this subsection (1)(b) 4
in the form of a remittance. )) The exemption provided in (a) of this 5
subsection does not apply to a sales and use tax imposed by a local 6
government under the authority of chapter 82.14 or 81.104 RCW.7
(c) Beginning January 1, 2020, through December 31, 2029, the 8
purchaser is entitled to an exemption, in the form of a remittance, 9
under this subsection (1)(c) in an amount equal to:10
(i) Fifty percent of the state ((and local)) sales tax paid, if:11
(A) The exempt purchase is for machinery and equipment or labor 12
and services rendered in respect to installing such machinery and 13
equipment in (a) of this subsection, excluding qualified purchases 14
under subsection (c)(i)(B) of this subsection, and the department of 15
labor and industries certifies that the project includes: Procurement 16
from and contracts with women, minority, or veteran-owned businesses; 17
procurement from and contracts with entities that have a history of 18
complying with federal and state wage and hour laws and regulations; 19
apprenticeship utilization; and preferred entry for workers living in 20
the area where the project is being constructed. In the event that a 21
project is built without one or more of these standards, and a 22
project developer or its designated principal contractor demonstrates 23
that it has made all good faith efforts to meet the standards but was 24
unable to comply due to lack of availability of qualified businesses 25
or local hires, the department of labor and industries may certify 26
that the developer complied with that standard; or27
(B) The exempt purchase is for machinery and equipment that is 28
used directly in the generation of electricity by a solar energy 29
system capable of generating more than one hundred kilowatts AC but 30
no more than five hundred kilowatts AC of electricity, and labor and 31
services rendered in respect to installing such machinery and 32
equipment, and the department of labor and industries certifies that 33
the project has met the requirements of (c)(i)(A) of this subsection, 34
and the purchaser provides the following documentation to the 35
department as part of the application for a remittance:36
(I) A copy of the contractor's certificate of registration in 37
compliance with chapter 18.27 RCW; 38
(II) The contractor's current state unified business identifier 39
number; 40
p. 26 HB 2502
(III) A copy of the contractor's proof of industrial insurance 1
coverage for the contractor's employees working in Washington as 2
required in Title 51 RCW; employment security department number as 3
required in Title 50 RCW; and a state excise tax registration number 4
as required in ((Title 82 RCW)) this title; and 5
(IV) Documentation of the contractor's history of compliance with 6
federal and state wage and hour laws and regulations, consistent with 7
(e)(ii)(D) of this subsection; 8
(ii) Seventy-five percent of the state ((and local )) sales tax 9
paid, if the department of labor and industries certifies that the 10
project complies with (c)(i)(A) and (B) of this subsection and 11
compensates workers at prevailing wage rates determined by local 12
collective bargaining as determined by the department of labor and 13
industries. This subsection (1)(c)(ii) does not apply with respect to 14
solar energy systems described in (c)(i)(B) of this subsection; or15
(iii) One hundred percent of the state ((and local )) sales tax 16
paid, if the department of labor and industries certifies that the 17
project is developed under a community workforce agreement or project 18
labor agreement. This subsection (1)(c)(iii) does not apply with 19
respect to solar energy systems described in (c)(i)(B) of this 20
subsection. 21
(d) In order to qualify for the remittance under (c) of this 22
subsection, installation of the qualifying machinery and equipment 23
must commence no earlier than January 1, 2020, and be completed by 24
December 31, 2029. 25
(e) Beginning July 1, 2019, and through December 31, 2029, the 26
purchaser is entitled to an exemption under this subsection (1)(e) in 27
an amount equal to one hundred percent of the state ((and local )) 28
sales tax due on: 29
(i) Machinery and equipment that is used directly in the 30
generation of electricity by a solar energy system that is capable of 31
generating no more than one hundred kilowatts AC of electricity; or32
(ii) Labor and services rendered in respect to installing 33
machinery and equipment exempt under (e)(i) of this subsection, and 34
the seller meets the following requirements at the time of the sale 35
for which the exemption is claimed: 36
(A) Has obtained a certificate of registration in compliance with 37
chapter 18.27 RCW; 38
(B) Has obtained a current state unified business identifier 39
number; 40
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(C) Possesses proof of industrial insurance coverage for the 1
contractor's employees working in Washington as required in Title 51 2
RCW; employment security department number as required in Title 50 3
RCW; and a state excise tax registration number as required in 4
((Title 82 RCW)) this title; and 5
(D) Has had no findings of violation of federal or state wage and 6
hour laws and regulations in a final and binding order by an 7
administrative agency or court of competent jurisdiction in the past 8
twenty-four months. 9
(f) Purchasers claiming an exemption under (e) of this subsection 10
must provide the seller with an exemption certificate in a form and 11
manner prescribed by the department. 12
(g) In order to qualify for the exemption under (e)(ii) of this 13
subsection, installation of the qualifying machinery and equipment 14
must commence no earlier than July 1, 2019, and be completed by 15
December 31, 2029. 16
(2)(a) The department of labor and industries must adopt 17
emergency and permanent rules to: 18
(i) Define and set minimum requirements for all labor standards 19
identified in subsection (1)(c) of this section; and20
(ii) Set requirements for all good faith efforts under subsection 21
(1)(c)(i) and (ii) of this section, as well as documentation 22
requirements and a certification process. Requirements for all good 23
faith efforts must be designed to maximize the likelihood that the 24
project is completed with said standards and could include: Proactive 25
outreach to firms that are women, minority, and veteran-owned 26
businesses; advertising in local community publications and 27
publications appropriate to identified firms; participating in 28
community job fairs, conferences, and trade shows; and other 29
measures. The certification process and timeline must be designed to 30
prevent undue delay to project development. 31
(b) Emergency rules must be adopted by December 1, 2019, and take 32
effect January 1, 2020. 33
(3) For purposes of this section and RCW 82.12.962, the following 34
definitions apply: 35
(a) "Biomass energy" includes: (i) By-products of pulping and 36
wood manufacturing process; (ii) animal waste; (iii) solid organic 37
fuels from wood; (iv) forest or field residues; (v) wooden demolition 38
or construction debris; (vi) food waste; (vii) liquors derived from 39
algae and other sources; (viii) dedicated energy crops; (ix) 40
p. 28 HB 2502
biosolids; and (x) yard waste. "Biomass energy" does not include wood 1
pieces that have been treated with chemical preservatives such as 2
creosote, pentachlorophenol, or copper-chrome-arsenic; wood from old 3
growth forests; or municipal solid waste. 4
(b) "Fuel cell" means an electrochemical reaction that generates 5
electricity by combining atoms of hydrogen and oxygen in the presence 6
of a catalyst. 7
(c)(i) "Machinery and equipment" means fixtures, devices, and 8
support facilities that are integral and necessary to the generation 9
of electricity using fuel cells, wind, sun, biomass energy, tidal or 10
wave energy, geothermal resources, or technology that converts 11
otherwise lost energy from exhaust. 12
(ii) "Machinery and equipment" does not include: (A) Hand-powered 13
tools; (B) property with a useful life of less than one year; (C) 14
repair parts required to restore machinery and equipment to normal 15
working order; (D) replacement parts that do not increase 16
productivity, improve efficiency, or extend the useful life of 17
machinery and equipment; (E) buildings; or (F) building fixtures that 18
are not integral and necessary to the generation of electricity that 19
are permanently affixed to and become a physical part of a building.20
(d) "Project labor agreement" and "community workforce agreement" 21
means a prehire collective bargaining agreement with one or more 22
labor organizations that establishes the terms and conditions of 23
employment for a specific construction project and is an agreement 24
described in 29 U.S.C. Sec. 158(f). 25
(4)(a) Machinery and equipment is "used directly" in generating 26
electricity by wind energy, solar energy, biomass energy, tidal or 27
wave energy, geothermal resources, or technology that converts 28
otherwise lost energy from exhaust if it provides any part of the 29
process that captures the energy of the wind, sun, biomass energy, 30
tidal or wave energy, geothermal resources, or technology that 31
converts otherwise lost energy from exhaust, converts that energy to 32
electricity, and stores, transforms, or transmits that electricity 33
for entry into or operation in parallel with electric transmission 34
and distribution systems. 35
(b) Machinery and equipment is "used directly" in generating 36
electricity by fuel cells if it provides any part of the process that 37
captures the energy of the fuel, converts that energy to electricity, 38
and stores, transforms, or transmits that electricity for entry into 39
p. 29 HB 2502
or operation in parallel with electric transmission and distribution 1
systems. 2
(5)(a)(i) A purchaser claiming an exemption in the form of a 3
remittance under subsection (1)(b) or (c) of this section must pay 4
the tax imposed by RCW 82.08.020 and all applicable local sales taxes 5
imposed under the authority of chapters 82.14 and 81.104 RCW. The 6
purchaser may then apply to the department for remittance in a form 7
and manner prescribed by the department. A purchaser may not apply 8
for a remittance under this section more frequently than once per 9
quarter. The purchaser must specify the amount of exempted tax 10
claimed and the qualifying purchases for which the exemption is 11
claimed. The purchaser must retain, in adequate detail, records to 12
enable the department to determine whether the purchaser is entitled 13
to an exemption under this section, including: Invoices; proof of tax 14
paid; and documents describing the machinery and equipment.15
(ii) The application for remittance must include a copy of the 16
certificate issued for the project by the department of labor and 17
industries as prescribed by rule under subsection (2) of this 18
section. 19
(b) The department must determine eligibility under this section 20
based on the information provided by the purchaser, which is subject 21
to audit verification by the department. The department must on a 22
quarterly basis remit exempted amounts to qualifying purchasers who 23
submitted applications during the previous quarter.24
(6)(a) Except as otherwise provided in (c) of this subsection, 25
from October 1, 2017, through December 31, 2019, the exemption 26
provided by this section does not apply to: (i) Machinery and 27
equipment that is used directly in the generation of electricity 28
using solar energy and capable of generating no more than five 29
hundred kilowatts AC of electricity; or (ii) sales of or charges made 30
for labor and services rendered in respect to installing such 31
machinery and equipment. 32
(b) The exemption provided by this section is reinstated for 33
machinery and equipment for solar energy systems capable of 34
generating more than one hundred kilowatts AC but no more than five 35
hundred kilowatts AC of electricity, or sales of or charges made for 36
labor and services rendered in respect to installing such machinery 37
and equipment, if installation of the machinery and equipment 38
commences on or after January 1, 2020. 39
p. 30 HB 2502
(c) The exemption provided by this section is reinstated for 1
machinery and equipment for solar energy systems capable of 2
generating no more than one hundred kilowatts AC of electricity, or 3
sales of or charges made for labor and services rendered in respect 4
to installing such machinery and equipment, if installation of the 5
machinery and equipment commences on or after July 1, 2019.6
(7) This section expires January 1, 2030. 7
Sec. 17. RCW 82.12.962 and 2019 c 288 s 19 are each amended to 8
read as follows: 9
(1)(a) Subject to the requirements of this section, the tax 10
imposed by RCW 82.12.020 does not apply to machinery and equipment 11
used directly in generating electricity using fuel cells, wind, sun, 12
biomass energy, tidal or wave energy, geothermal resources, or 13
technology that converts otherwise lost energy from exhaust, or to 14
labor and services rendered in respect to installing such machinery 15
and equipment, but only if the purchaser develops with such 16
machinery, equipment, and labor a facility capable of generating not 17
less than one thousand watts AC of electricity. Except as otherwise 18
provided in this section, the consumer must pay the state and local 19
use tax on the use of such machinery and equipment and labor and 20
services, and apply to the department for a remittance of the tax 21
paid. 22
(b) ((Beginning on July 1, 2011, through December 31, 2019, the 23
amount of the exemption under this subsection (1) is equal to 24
seventy-five percent of the state and local use tax paid. The 25
consumer is eligible for an exemption under this subsection (1)(b) in 26
the form of a remittance. )) The exemption provided in (a) of this 27
subsection does not apply to a sales and use tax imposed by a local 28
government under the authority of chapter 82.14 or 81.104 RCW.29
(c) Beginning January 1, 2020, through December 31, 2029, the 30
purchaser is entitled to an exemption, in the form of a remittance, 31
under this subsection (1)(c) in an amount equal to:32
(i) Fifty percent of the state ((and local)) use tax paid, if:33
(A) The exempt purchase is for machinery and equipment or labor 34
and services rendered in respect to installing such machinery and 35
equipment in (a) of this subsection, excluding qualified purchases 36
under (c)(i)(B) of this subsection, and the department of labor and 37
industries certifies that the project includes: Procurement from and 38
contracts with women, minority, or veteran-owned businesses; 39
p. 31 HB 2502
procurement from and contracts with entities that have a history of 1
complying with federal and state wage and hour laws and regulations; 2
apprenticeship utilization; and preferred entry for workers living in 3
the area where the project is being constructed. In the event that a 4
project is built without one or more of these standards, and a 5
project developer or its designated principal contractor demonstrates 6
that it has made all good faith efforts to meet the standards but was 7
unable to comply due to lack of availability of qualified businesses 8
or local hires, the department of labor and industries may certify 9
that the developer complied with that standard; or10
(B) The exempt purchase is for machinery and equipment that is 11
used directly in the generation of electricity by a solar energy 12
system capable of generating more than one hundred kilowatts AC but 13
no more than five hundred kilowatts AC of electricity, or labor and 14
services rendered in respect to installing such machinery and 15
equipment, and the department of labor and industries certifies that 16
the project has met the requirements of (c)(i)(A) of this subsection, 17
and the purchaser has provided the following documentation to the 18
department as part of the application for a remittance:19
(I) A copy of the contractor's certificate of registration in 20
compliance with chapter 18.27 RCW; 21
(II) The contractor's current state unified business identifier 22
number; 23
(III) A copy of the contractor's proof of industrial insurance 24
coverage for the contractor's employees working in Washington as 25
required in Title 51 RCW; employment security department number as 26
required in Title 50 RCW; and a state excise tax registration number 27
as required in ((Title 82 RCW)) this title; and 28
(IV) Documentation of the contractor's history of compliance with 29
federal and state wage and hour laws and regulations, consistent with 30
(e)(ii)(D) of this subsection; 31
(ii) Seventy-five percent of the state ((and local )) use tax 32
paid, if the department of labor and industries certifies that the 33
project complies with (c)(i)(A) of this subsection and compensates 34
workers at prevailing wage rates determined by local collective 35
bargaining as determined by the department of labor and industries. 36
This subsection (1)(c)(ii) does not apply with respect to solar 37
energy systems described in (c)(i)(B) of this subsection; or38
(iii) One hundred percent of the state ((and local )) use tax 39
paid, if the department of labor and industries certifies that the 40
p. 32 HB 2502
project is developed under a community workforce agreement or project 1
labor agreement. This subsection (1)(c)(iii) does not apply with 2
respect to solar energy systems described in (c)(i)(B) of this 3
subsection. 4
(d) In order to qualify for the remittance under (c) of this 5
subsection, installation of the qualifying machinery and equipment 6
must commence no earlier than January 1, 2020, and be completed by 7
December 31, 2029. 8
(e) Beginning July 1, 2019, and through December 31, 2029, the 9
consumer is entitled to an exemption under this subsection (1)(e) in 10
an amount equal to one hundred percent of the state ((and local)) use 11
tax due on: 12
(i) Machinery and equipment that is used directly in the 13
generation of electricity by a solar energy system that is capable of 14
generating no more than one hundred kilowatts AC of electricity; or15
(ii) Labor and services rendered in respect to installing 16
machinery and equipment exempt under (e)(i) of this subsection, and 17
the seller meets the following requirements at the time of the 18
purchase for which the exemption is claimed: 19
(A) Has obtained a certificate of registration in compliance with 20
chapter 18.27 RCW; 21
(B) Has obtained a current state unified business identifier 22
number; 23
(C) Possesses proof of industrial insurance coverage for the 24
contractor's employees working in Washington as required in Title 51 25
RCW; employment security department number as required in Title 50 26
RCW; and a state excise tax registration number as required in 27
((Title 82 RCW)) this title; and 28
(D) Has had no findings of violations of federal or state wage 29
and hour laws and regulations in a final and binding order by an 30
administrative agency or court of competent jurisdiction in the past 31
twenty-four months. 32
(f) In order to qualify for the exemption under (e)(ii) of this 33
subsection, installation of the qualifying machinery and equipment 34
must commence no earlier than July 1, 2019, and be completed by 35
December 31, 2029. 36
(2) The department of labor and industries must initiate an 37
emergency rule making on May 7, 2019, to be completed by December 1, 38
2019, to: 39
p. 33 HB 2502
(a) Define and set minimum requirements for all labor standards 1
identified in subsection (1)(c) of this section; and2
(b) Set requirements for all good faith efforts under subsection 3
(1)(c)(i) and (ii) of this section, as well as documentation 4
requirements and a certification process. Requirements for all good 5
faith efforts must be designed to maximize the likelihood that the 6
project is completed with said standards and could include: Proactive 7
outreach to firms that are women, minority, and veteran-owned 8
businesses; advertising in local community publications and 9
publications appropriate to identified firms; participating in 10
community job fairs, conferences, and trade shows; and other 11
measures. The certification process and timeline must be designed to 12
prevent undue delay to project development. 13
(3)(a)(i) A person claiming an exemption in the form of a 14
remittance under subsection (1)(b) and (c) of this section must pay 15
the tax imposed by RCW 82.12.020 and all applicable local use taxes 16
imposed under the authority of chapters 82.14 and 81.104 RCW. The 17
consumer may then apply to the department for remittance in a form 18
and manner prescribed by the department. A consumer may not apply for 19
a remittance under this section more frequently than once per 20
quarter. The consumer must specify the amount of exempted tax claimed 21
and the qualifying purchases or acquisitions for which the exemption 22
is claimed. The consumer must retain, in adequate detail, records to 23
enable the department to determine whether the consumer is entitled 24
to an exemption under this section, including: Invoices; proof of tax 25
paid; and documents describing the machinery and equipment.26
(ii) The application for remittance must include a copy of the 27
certificate issued for the project by the department of labor and 28
industries under subsection (1) of this section. 29
(b) The department must determine eligibility for remittances 30
under this section based on the information provided by the consumer, 31
which is subject to audit verification by the department. The 32
department must on a quarterly basis remit exempted amounts to 33
qualifying consumers who submitted applications during the previous 34
quarter. 35
(4) Purchases exempt under RCW 82.08.962 are also exempt from the 36
tax imposed under RCW 82.12.020. 37
(5) The definitions in RCW 82.08.962 apply to this section.38
(6) The exemption provided in subsection (1) of this section does 39
not apply: 40
p. 34 HB 2502
(a) To machinery and equipment used directly in the generation of 1
electricity using solar energy and capable of generating no more than 2
five hundred kilowatts AC of electricity, or to sales of or charges 3
made for labor and services rendered in respect to installing such 4
machinery and equipment, when first use within this state of such 5
machinery and equipment, or labor and services, occurs after 6
September 30, 2017, and before January 1, 2020, except as otherwise 7
provided in subsection (7) of this section; and 8
(b) To any other machinery and equipment described in subsection 9
(1)(a) of this section, or to sales of or charges made for labor and 10
services rendered in respect to installing such machinery or 11
equipment, when first use within this state of such machinery and 12
equipment, or labor and services, occurs after December 31, 2029.13
(7)(a) The exemption provided by this section is reinstated for 14
machinery and equipment for solar energy systems capable of 15
generating more than one hundred kilowatts AC but no more than five 16
hundred kilowatts AC of electricity, or sales of or charges made for 17
labor and services rendered in respect to installing such machinery 18
and equipment, if first use within the state of the machinery and 19
equipment commences on or after January 1, 2020. 20
(b) The exemption provided by this section is reinstated for 21
machinery and equipment for solar energy systems capable of 22
generating no more than one hundred kilowatts AC of electricity, or 23
sales of or charges made for labor and services rendered in respect 24
to installing such machinery and equipment, if first use within the 25
state of the machinery and equipment commences on or after July 1, 26
2019. 27
(8) This section expires January 1, 2030. 28
Sec. 18. RCW 82.08.986 and 2025 c 411 s 4 are each amended to 29
read as follows: 30
(1)(a) An exemption from the tax imposed by RCW 82.08.020 is 31
provided for sales to qualifying businesses and to qualifying tenants 32
of eligible server equipment to be installed, without intervening 33
use, in an eligible computer data center to which a valid exemption 34
certificate applies, and to charges made for labor and services 35
rendered in respect to installing eligible server equipment.36
(b) This exemption also applies to sales to qualifying businesses 37
and to qualifying tenants of eligible power infrastructure, including 38
labor and services rendered in respect to constructing, installing, 39
p. 35 HB 2502
repairing, altering, or improving eligible power infrastructure at an 1
eligible computer data center for which an exemption certificate has 2
been issued. 3
(c) The exemption provided in (a) of this subsection does not 4
apply to a sales and use tax imposed by a local government under the 5
authority of chapter 82.14 or 81.104 RCW.6
(d) No new exemption certificates may be issued on or after July 7
1, 2036. 8
(((d))) (e) The exemptions provided in this section expire July 9
1, 2048. 10
(((e))) (f) Each calendar year, the department may issue no more 11
than six certificates for data centers which qualify through 12
refurbishment. Certificates are available for refurbished data 13
centers on a first-in-time basis based on the date the application 14
required under this section is received by the department. Each 15
qualifying business may apply for only one certificate for a 16
refurbished data center each calendar year. 17
(2)(a) In order to obtain an exemption certificate under this 18
section, a qualifying business or a qualifying tenant must submit an 19
application to the department for an exemption certificate. The 20
application must include the information necessary, as required by 21
the department, to determine that a business or tenant qualifies for 22
the exemption under this section. The department must issue exemption 23
certificates to qualifying businesses and qualifying tenants. The 24
department may assign a unique identification number to each 25
exemption certificate issued under this section. 26
(b) A qualifying business or a qualifying tenant claiming the 27
exemption under this section must present the seller with an 28
exemption certificate in a form and manner prescribed by the 29
department. The seller must retain a copy of the certificate for the 30
seller's files. 31
(c) With respect to computer data centers for which the 32
commencement of construction occurs after July 1, 2015, but before 33
July 1, 2019, the exemption provided in this section is limited to no 34
more than eight computer data centers, with total eligible data 35
centers provided under this section limited to 12 from July 1, 2015, 36
through June 9, 2022. Tenants of qualified data centers do not 37
constitute additional data centers under the limit. The exemption is 38
available on a first-in-time basis based on the date the application 39
required under this section is received by the department.40
p. 36 HB 2502
(d) The exemption certificate is effective on the date the 1
application is received by the department, which is deemed to be the 2
date of issuance. Only purchases on or after the date of issuance 3
qualify for the exemption under this section. No tax refunds are 4
authorized for purchases made before the effective date of the 5
exemption certificate. 6
(e) Exemption certificates expire two years after the date of 7
issuance, unless construction has been commenced. 8
(3)(a)(i) Within six years of the date that the department issued 9
an exemption certificate under this section to a qualifying business 10
or a qualifying tenant with respect to an eligible computer data 11
center, the qualifying business or qualifying tenant must establish 12
that net employment assigned to an eligible computer data center has 13
increased by a minimum of: 14
(A) Thirty-five family wage employment positions; or, if lower15
(B) Three family wage employment positions for each 20,000 square 16
feet of space or less that is newly dedicated to housing working 17
servers at the eligible computer data center. For qualifying tenants, 18
the number of family wage employment positions that must be increased 19
under this subsection (3)(a)(i)(B) is based only on the space 20
occupied by the qualifying tenant in the eligible computer data 21
center. 22
(ii) After the minimum number of family wage employment positions 23
as required under (a)(i) of this subsection (3) is established, a 24
qualifying business or a qualifying tenant must maintain the minimum 25
family wage employment positions required under (a)(i) of this 26
subsection (3) while the exemption certificate is valid.27
(b) In calculating the net increase in family wage employment 28
positions: 29
(i) The owner of an eligible computer data center, in addition to 30
its own net increase in family wage employment positions, may 31
include: 32
(A) The net increase, since the date of issuance of the 33
qualifying business's exemption certificate, in family wage 34
employment positions employed by qualifying tenants; and35
(B) The net increase in family wage employment positions 36
described in (c)(ii)(B) of this subsection (3). 37
(ii)(A) Qualifying tenants, in addition to their own net increase 38
in family wage employment positions, may include: 39
p. 37 HB 2502
(I) A portion of the net increase in family wage employment 1
positions employed by the owner; and 2
(II) A portion of the net increase in family wage employment 3
positions described in (c)(ii)(B) of this subsection (3).4
(B) The portion of the net increase in family wage employment 5
positions to be counted under this subsection (3)(b)(ii) by each 6
qualifying tenant is equal to the net increase in family wage 7
employment positions assigned to an eligible computer data center as 8
described in (b)(ii)(A)(I) and (II) of this subsection (3), 9
multiplied by the percentage of total space within the eligible 10
computer data center occupied by the qualifying tenant. Any 11
combination of qualifying business and qualifying tenant family wage 12
employment positions may meet this requirement. 13
(C)(I) In the instance of an existing data center facility that 14
was ineligible, regardless of the date of commencement of 15
construction, that later obtains an exemption certificate under this 16
section, the data center may count the existing employment positions 17
that are dedicated to the data center toward the new family wage 18
employment position requirements if the employment positions meet the 19
requirements of a family wage employment position, as described in 20
(c)(i)(B) and (C) of this subsection (3), other than the requirement 21
that the position did not exist or had not previously been filled as 22
of the date that the department issued an exemption certificate.23
(II) In the instance of the refurbishment of an existing data 24
center that previously qualified under the data center program, the 25
data center may count the existing employment positions dedicated to 26
the data center toward the new family wage employment position 27
requirements if the employment positions meet the requirements of a 28
family wage employment position, as described in (c)(i)(B) and (C) of 29
this subsection (3), other than the requirement that the position did 30
not exist or had not previously been filled as of the date that the 31
department issued an exemption certificate. 32
(c)(i) For purposes of this subsection: 33
(A) For exemption certificates issued before June 9, 2022, family 34
wage employment positions are new permanent employment positions 35
requiring 40 hours of weekly work, or their equivalent, on a full-36
time basis assigned to an eligible computer data center and receiving 37
a wage equivalent to or greater than 150 percent of the per capita 38
personal income of the county in which the qualified project is 39
located as published by the employment security department. The per 40
p. 38 HB 2502
capita personal income to be used to determine qualification for any 1
year is the amount that was established for the immediate prior year.2
(B) For exemption certificates issued on or after June 9, 2022, 3
family wage employment positions are new permanent employment 4
positions requiring 40 hours of weekly work, or their equivalent, on 5
a full-time basis assigned to an eligible computer data center and 6
receiving a wage equivalent to or greater than 125 percent of the per 7
capita personal income of the county in which the qualified project 8
is located as published by the employment security department. The 9
per capita personal income to be used to determine qualification for 10
any year is the amount that was established for the immediate prior 11
year. 12
(C) An employment position may not be counted as a family wage 13
employment position unless the employment position is entitled to 14
health insurance coverage provided by the employer of the employment 15
position. 16
(D) "New permanent employment position" means an employment 17
position that did not exist or that had not previously been filled as 18
of the date that the department issued an exemption certificate to 19
the qualifying business or qualifying tenant of an eligible computer 20
data center, as the case may be, except as provided in (b)(ii)(C) of 21
this subsection (3). 22
(ii)(A) Family wage employment positions include positions filled 23
by employees of the qualifying business and by employees of 24
qualifying tenants. 25
(B) Family wage employment positions also include individuals 26
performing work at an eligible computer data center as an independent 27
contractor hired by the owner of the eligible computer data center or 28
as an employee of an independent contractor hired by the owner of the 29
eligible computer data center, if the work is necessary for the 30
operation of the computer data center, such as security and building 31
maintenance, and provided that all of the applicable requirements in 32
(c)(i) of this subsection (3) are met. 33
(d)(i) For a qualifying business or qualifying tenant that does 34
not meet the requirements of this subsection (3), previously exempted 35
sales and use taxes are immediately due and payable and any exemption 36
certificate issued to that qualifying business or qualifying tenant 37
under this section is canceled, except as described in (d)(iii) of 38
this subsection (3). 39
p. 39 HB 2502
(ii) The department of labor and industries must, at the request 1
of the department, assist in determining whether the requirements of 2
this subsection (3) have been met. 3
(iii) If the department, with the assistance of the department of 4
labor and industries, finds that a failure to meet the requirements 5
of this subsection (3) is due to circumstances beyond the control of 6
the qualifying business or qualifying tenant including, but not 7
limited to, a declaration of an economic recession, pandemic, or 8
natural disaster affecting data center operations, the department may 9
provide exceptions or extensions to the requirements of this 10
subsection (3). 11
(iv) Any repayment of taxes triggered by the failure of a 12
qualifying business or qualifying tenant to meet the requirements of 13
this subsection (3) must be calculated in proportion to the duration 14
of time for which any applicable requirement was not met.15
(v) If the department is notified that a qualifying business or 16
qualifying tenant fails to meet the requirements of this subsection 17
(3), the department may require a qualifying business or qualifying 18
tenant to submit records necessary to determine whether the 19
requirements have been met. 20
(4) For exemption certificates issued on or after June 9, 2022:21
(a) Within three years after being placed in service, the 22
qualifying business operating a newly constructed data center must 23
certify to the department that it has attained certification under 24
one or more of the following sustainable design or green building 25
standards: 26
(i) BREEAM for new construction or BREEAM in-use;27
(ii) Energy star; 28
(iii) Envision; 29
(iv) ISO 50001-energy management; 30
(v) LEED for building design and construction or LEED for 31
operations and maintenance; 32
(vi) Green globes for new construction or green globes for 33
existing buildings; 34
(vii) UL 3223; or 35
(viii) Other reasonable standards approved by the department.36
(b) The department may require qualifying businesses and 37
qualifying tenants to submit records necessary to verify the 38
requirements under (a) of this subsection have been met.39
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(c)(i) For a qualifying business or qualifying tenant that does 1
not meet the requirements of (a) of this subsection (4), all 2
previously exempted sales and use taxes may be immediately due and 3
payable, any exemption certificate issued to that qualifying business 4
or qualifying tenant under this section is canceled, and an 5
additional 10 percent penalty is assessed, except as described in 6
(c)(ii) of this subsection (4). 7
(ii) If the department finds that a failure to meet the 8
requirements of this subsection (4) is due to circumstances beyond 9
the control of the qualifying business or qualifying tenant 10
including, but not limited to, a declaration of an economic 11
recession, pandemic, or natural disaster affecting data center 12
operations, the department may, at its discretion, provide exceptions 13
or extensions to the requirements of this subsection (4). The 14
department may, at its discretion, coordinate with agencies with 15
relevant expertise to assist in determining whether the requirements 16
have been met. 17
(5) A qualifying business or a qualifying tenant claiming the 18
exemption under this section is encouraged to take direct steps to 19
adopt practices to mitigate negative environmental impacts resulting 20
from expanded use of data centers, including through:21
(a) Coordinating with the industrial waste coordination program 22
established under RCW 43.31.625 to identify and provide technical 23
assistance in implementing industrial symbiosis projects;24
(b) To the extent possible, procuring or contracting for power 25
from renewable sources; 26
(c) Adopting practices to improve the energy efficiency of 27
existing data centers, including through upgrading and consolidating 28
technology, managing data center airflow, and adjusting and improving 29
heating, ventilation, and air conditioning systems; and30
(d) Taking actions to conserve, reuse, and replace water. This 31
includes using water efficient fixtures and practices; treating, 32
infiltrating, and harvesting rainwater; recycling water before 33
discharging; partnering with local water utilities to use discharged 34
water for irrigation and other water conservation purposes; using 35
reclaimed water where possible for data center operations; and 36
supporting water restoration in local watersheds. 37
(6) A qualifying business or a qualifying tenant claiming an 38
exemption under this section or RCW 82.12.986 must complete an annual 39
tax performance report with the department as required under RCW 40
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82.32.534. The report must identify construction firm names and 1
employment levels used for constructing, renovating, refurbishing, or 2
remodeling the data centers. 3
(7)(a) The certificate holder may not at any time assign or 4
transfer a certificate without the prior written consent of the 5
department. The department must allow certificate transfers if the 6
certificate holder meets the following requirements:7
(i) The certificate assignee or transferee is qualified to do 8
business in the state; 9
(ii) The assignee or transferee acknowledges the transfer of the 10
certificate in writing; 11
(iii) The assignee or transferee agrees to keep and perform all 12
the terms of the certificates; and 13
(iv) An assignment or transfer of the certificate is to an entity 14
that: 15
(A) Controls, is controlled by, or under common control with, the 16
certificate holder; 17
(B) Acquires all or substantially all of the stock or assets of 18
the certificate holder; or 19
(C) Is the resulting entity of a merger or consolidation with the 20
certificate holder. 21
(b) In the event the assignee or transferee acquires eligible 22
server equipment in a qualifying asset sale under (a)(iv)(B) of this 23
subsection, the purchaser shall be deemed to purchase the eligible 24
server equipment pursuant to the transferred certificate.25
(8) The definitions in this subsection apply throughout this 26
section unless the context clearly requires otherwise.27
(a) "Affiliated" means that one person has a direct or indirect 28
ownership interest of at least 20 percent in another person.29
(b) "Building" means a fully enclosed structure with a weather 30
resistant exterior wall envelope or concrete or masonry walls 31
designed in accordance with the requirements for structures under 32
chapter 19.27 RCW. This definition of "building" only applies to 33
computer data centers for which commencement of construction occurs 34
on or after July 1, 2015. 35
(c) "Certificate of occupancy" means: 36
(i) For a newly constructed eligible computer data center, the 37
certificate of occupancy issued by a local governing authority for 38
the structure or structures which comprise the eligible computer data 39
center; or 40
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(ii) For renovations of an eligible computer data center, the 1
certificate of occupancy issued by a local governing authority for 2
the renovated structure or structures that comprise the eligible 3
computer data center. 4
(d)(i) "Computer data center" means a facility comprised of one 5
or more buildings, which may be comprised of multiple businesses, 6
constructed or refurbished specifically, and used primarily, to house 7
working servers, where the facility has the following 8
characteristics: (A) Uninterruptible power supplies, generator backup 9
power, or both; (B) sophisticated fire suppression and prevention 10
systems; and (C) enhanced physical security, such as: Restricted 11
access to the facility to selected personnel; permanent security 12
guards; video camera surveillance; an electronic system requiring 13
passcodes, keycards, or biometric scans, such as hand scans and 14
retinal or fingerprint recognition; or similar security features.15
(ii) For a computer data center comprised of multiple buildings, 16
each separate building constructed or refurbished specifically, and 17
used primarily, to house working servers is considered a computer 18
data center if it has all of the characteristics listed in (d)(i)(A) 19
through (C) of this subsection (8). 20
(iii) A facility comprised of one building or more than one 21
building must have a combined square footage of at least 100,000 22
square feet. 23
(e) "Electronic data storage and data management services" 24
include, but are not limited to: Providing data storage and backup 25
services, providing computer processing power, hosting enterprise 26
software applications, and hosting websites. The term also includes 27
providing services such as email, web browsing and searching, media 28
applications, and other online services, regardless of whether a 29
charge is made for such services. 30
(f)(i) "Eligible computer data center" means a computer data 31
center: 32
(A) Located in a rural county as defined in RCW 82.14.370 at the 33
time an application for an exemption under this section is received;34
(B) Having at least 20,000 square feet dedicated to housing 35
working servers; and 36
(C) For which the commencement of construction occurs:37
(I) After March 31, 2010, and before July 1, 2011;38
(II) After March 31, 2012, and before July 1, 2015; or39
(III) After June 30, 2015, and before July 1, 2035.40
p. 43 HB 2502
(ii) For purposes of this section, "commencement of construction" 1
means the date that a building permit is issued under the building 2
code adopted under RCW 19.27.031 for construction of the computer 3
data center. The construction of a computer data center includes the 4
expansion, renovation, or refurbishment of existing facilities 5
regardless of whether the existing facility was previously ineligible 6
and regardless of whether commencement of construction of the 7
existing facility occurred outside of the dates listed in 8
(f)(i)(C)(I) through (III) of this subsection, including leased or 9
rented space. "Commencement of construction" does not include soil 10
testing, site clearing and grading, site preparation, or any other 11
related activities that are initiated before the issuance of a 12
building permit for the construction of the foundation of a computer 13
data center. If no building permit is required for renovation or 14
refurbishment, then the date that renovation or refurbishment begins 15
is the "commencement of construction." 16
(g) "Eligible power infrastructure" means all fixtures and 17
equipment owned by a qualifying business or qualifying tenant and 18
necessary for the transformation, distribution, or management of 19
electricity that is required to operate eligible server equipment 20
within an eligible computer data center. The term includes 21
generators; wiring; cogeneration equipment; and associated fixtures 22
and equipment, such as electrical switches, batteries, and 23
distribution, testing, and monitoring equipment. The term does not 24
include substations. 25
(h) "Eligible server equipment" means: 26
(i) For a qualifying business whose computer data center 27
qualifies as an eligible computer data center under (f)(i)(C)(I) of 28
this subsection (8), the original server equipment installed in an 29
eligible computer data center on or after April 1, 2010, and before 30
January 1, 2026, and replacement server equipment. For purposes of 31
this subsection (8)(h)(i), "replacement server equipment" means 32
server equipment that: 33
(A) Replaces existing server equipment, if the sale or use of the 34
server equipment to be replaced qualified for an exemption under this 35
section or RCW 82.12.986; and 36
(B) Is installed and put into regular use before April 1, 2018.37
(ii) For a qualifying business whose computer data center 38
qualifies as an eligible computer data center under (f)(i)(C)(II) of 39
this subsection (8), "eligible server equipment" means the original 40
p. 44 HB 2502
server equipment installed in an eligible computer data center on or 1
after April 1, 2012, and before January 1, 2026, and replacement 2
server equipment. For purposes of this subsection (8)(h)(ii), 3
"replacement server equipment" means server equipment that:4
(A) Replaces existing server equipment, if the sale or use of the 5
server equipment to be replaced qualified for an exemption under this 6
section or RCW 82.12.986; and 7
(B) Is installed and put into regular use before April 1, 2024.8
(iii) For a qualifying business whose computer data center 9
qualifies as an eligible computer data center under (f)(i)(C)(III) of 10
this subsection (8), "eligible server equipment" means the original 11
server equipment installed in a building within an eligible computer 12
data center on or after July 1, 2015, and replacement server 13
equipment. Server equipment installed in movable or fixed stand-14
alone, prefabricated, or modular units, including intermodal shipping 15
containers, is not "directly installed in a building." For purposes 16
of this subsection (8)(h)(iii), "replacement server equipment" means 17
server equipment that: 18
(A)(I) Replaces existing server equipment, if the sale or use of 19
the server equipment to be replaced qualified for an exemption under 20
this section or RCW 82.12.986; or 21
(II) Replaces existing server equipment in a computer data center 22
that meets the following requirements: Was ineligible before June 9, 23
2022, for the exemptions provided under this section and RCW 24
82.12.986; has been refurbished; and to which a valid exemption 25
certificate applies; and 26
(B) Is installed and put into regular use no later than 12 years 27
after the date of the certificate of occupancy or completion of 28
refurbishment of the computer data center. 29
(iv) For a qualifying tenant who leases space within an eligible 30
computer data center, "eligible server equipment" means the original 31
server equipment installed within the space it leases from an 32
eligible computer data center with an exemption certificate on or 33
after April 1, 2010, and replacement server equipment. For purposes 34
of this subsection (8)(h)(iv), "replacement server equipment" means 35
server equipment that: 36
(A)(I) Replaces existing server equipment, if the sale or use of 37
the server equipment to be replaced qualified for an exemption under 38
this section or RCW 82.12.986; or 39
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(II) Replaces existing server equipment in a computer data center 1
that meets the following requirements: Was ineligible before June 9, 2
2022, for the exemptions provided under this section and RCW 3
82.12.986; has been refurbished; and to which a valid exemption 4
certificate applies; and 5
(B) Is installed and put into regular use no later than 12 years 6
after the date of the certificate of occupancy or completion of 7
refurbishment of the computer data center. 8
(i) "Qualifying business" means a business entity that exists for 9
the primary purpose of engaging in commercial activity for profit and 10
that is the owner of an eligible computer data center. The term does 11
not include the state or federal government or any of their 12
departments, agencies, and institutions; tribal governments; 13
political subdivisions of this state; or any municipal, quasi-14
municipal, public, or other corporation created by the state or 15
federal government, tribal government, municipality, or political 16
subdivision of the state. 17
(j) "Qualifying tenant" means a business entity that exists for 18
the primary purpose of engaging in commercial activity for profit and 19
that leases space from a qualifying business within an eligible 20
computer data center. The term does not include the state or federal 21
government or any of their departments, agencies, and institutions; 22
tribal governments; political subdivisions of this state; or any 23
municipal, quasi-municipal, public, or other corporation created by 24
the state or federal government, tribal government, municipality, or 25
political subdivision of the state. The term also does not include a 26
lessee of space in an eligible computer data center under 27
(f)(i)(C)(I) of this subsection (8), if the lessee and lessor are 28
affiliated and: 29
(i) That space will be used by the lessee to house server 30
equipment that replaces server equipment previously installed and 31
operated in that eligible computer data center by the lessor or 32
another person affiliated with the lessee; or 33
(ii) Prior to May 2, 2012, the primary use of the server 34
equipment installed in that eligible computer data center was to 35
provide electronic data storage and data management services for the 36
business purposes of either the lessor, persons affiliated with the 37
lessor, or both. 38
(k)(i) "Refurbished" or "refurbishment" means a substantial 39
improvement to an eligible computer data center to update or 40
p. 46 HB 2502
modernize servers, server space, ventilation, or power infrastructure 1
in an eligible computer data center. 2
(ii) For a qualifying computer data center to be considered 3
refurbished, the qualifying business must certify, in a form and 4
manner prescribed by the department, that the refurbishment of an 5
eligible computer data center is complete. The refurbishment is 6
considered complete on the date that the improved portion of the 7
computer data center is operationally complete and able to be used 8
for its intended purpose. 9
(l) "Server equipment" means the computer hardware located in an 10
eligible computer data center and used exclusively to provide 11
electronic data storage and data management services, including cloud 12
services, for internal use by the owner or lessee of the computer 13
data center, for clients of the owner or lessee of the computer data 14
center, or both. "Server equipment" also includes computer software 15
necessary to operate the computer hardware. "Server equipment" does 16
not include personal computers, the racks upon which the server 17
equipment is installed, and computer peripherals such as keyboards, 18
monitors, printers, and mice. 19
(9) This section expires July 1, 2048. 20
Sec. 19. RCW 82.12.986 and 2022 c 267 s 4 are each amended to 21
read as follows: 22
(1)(a) An exemption from the tax imposed by RCW 82.12.020 is 23
provided for the use by qualifying businesses or qualifying tenants 24
of eligible server equipment to be installed, without intervening 25
use, in an eligible computer data center for which an exemption 26
certificate under RCW 82.08.986 has been issued, and to the use of 27
labor and services rendered in respect to installing such server 28
equipment. 29
(b) Until July 1, 2048, this exemption also applies to the use by 30
a qualifying business or qualifying tenant of eligible power 31
infrastructure, including labor and services rendered in respect to 32
installing, repairing, altering, or improving such infrastructure at 33
an eligible computer data center for which an exemption certificate 34
under RCW 82.08.986 has been issued. 35
(c) The exemptions provided in this section expire July 1, 2048.36
(d) The exemption provided in (a) of this subsection does not 37
apply to a sales and use tax imposed by a local government under the 38
authority of chapter 82.14 or 81.104 RCW.39
p. 47 HB 2502
(2) A qualifying business or a qualifying tenant is not eligible 1
for the exemption under this section unless the department issued an 2
exemption certificate to the qualifying business or a qualifying 3
tenant for the exemption provided in RCW 82.08.986.4
(3) The definitions and requirements in RCW 82.08.986 apply to 5
this section. 6
(4) The exemption provided in subsection (1) of this section does 7
not apply to the use of eligible server equipment and eligible power 8
infrastructure, and the labor and services provided in subsection (1) 9
of this section, if first used by qualifying businesses or qualifying 10
tenants on or after July 1, 2048. 11
(5) This section expires July 1, 2053. 12
Sec. 20. RCW 82.08.975 and 2013 3rd sp.s. c 2 s 11 are each 13
amended to read as follows: 14
(1)(a) The tax levied by RCW 82.08.020 does not apply to sales of 15
computer hardware, computer peripherals, or software, not otherwise 16
eligible for exemption under RCW 82.08.02565, used primarily in the 17
development, design, and engineering of aerospace products or in 18
providing aerospace services, or to sales of or charges made for 19
labor and services rendered in respect to installing the computer 20
hardware, computer peripherals, or software. 21
(b) The exemption provided in (a) of this subsection does not 22
apply to a sales and use tax imposed by a local government under the 23
authority of chapter 82.14 or 81.104 RCW.24
(2) The exemption is available only when the buyer provides the 25
seller with an exemption certificate in a form and manner prescribed 26
by the department. The seller must retain a copy of the certificate 27
for the seller's files. 28
(3) The definitions in this subsection apply throughout this 29
section unless the context requires otherwise. 30
(a) "Aerospace products" means: 31
(i) Commercial airplanes and their components;32
(ii) Machinery and equipment that is designed and used primarily 33
for the maintenance, repair, overhaul, or refurbishing of commercial 34
airplanes or their components by federal aviation regulation part 145 35
certificated repair stations; and 36
(iii) Tooling specifically designed for use in manufacturing 37
commercial airplanes or their components. 38
p. 48 HB 2502
(b) "Aerospace services" means the maintenance, repair, overhaul, 1
or refurbishing of commercial airplanes or their components, but only 2
when such services are performed by a FAR part 145 certificated 3
repair station. 4
(c) "Commercial airplane" and "component" have the same meanings 5
provided in RCW 82.32.550. 6
(d) "Peripherals" includes keyboards, monitors, mouse devices, 7
and other accessories that operate outside of the computer, excluding 8
cables, conduit, wiring, and other similar property.9
(4) This section expires July 1, 2040. 10
Sec. 21. RCW 82.12.975 and 2013 3rd sp.s. c 2 s 12 are each 11
amended to read as follows: 12
(1)(a) The provisions of this chapter do not apply in respect to 13
the use of computer hardware, computer peripherals, or software, not 14
otherwise eligible for exemption under RCW 82.12.02565, used 15
primarily in the development, design, and engineering of aerospace 16
products or in providing aerospace services, or to the use of labor 17
and services rendered in respect to installing the computer hardware, 18
computer peripherals, or software. 19
(b) The exemption provided in (a) of this subsection does not 20
apply to a sales and use tax imposed by a local government under the 21
authority of chapter 82.14 or 81.104 RCW.22
(2) As used in this section, "peripherals," "aerospace products," 23
and "aerospace services" have the same meanings as provided in RCW 24
82.08.975. 25
(3) This section expires July 1, 2040. 26
NEW SECTION. Sec. 22. The legislature intends to evaluate the 27
effectiveness of removing the local sales tax exemption on certain 28
products and services on the fiscal health of local governments 29
within three years of the effective date of this section. The 30
legislature also intends to consider the impacts on other stated 31
legislative intent related to each tax preference.32
NEW SECTION. Sec. 23. Section 7 of this act expires January 1, 33
2034.34
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NEW SECTION. Sec. 24. Section 8 of this act takes effect 1
January 1, 2034.2
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