Tax and revenue laws

AN ACT Relating to modifying tax and revenue laws in a manner 1
that is not estimated to affect state or local tax collections; 2
amending RCW 36.21.015, 82.08.050, 82.08.986, and 43.06.400; amending 3
2022 c 172 s 3 (uncodified); amending 2017 3rd sp.s. c 37 s 401 4
(uncodified); and creating a new section. 5
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:6
Sec. 1. RCW 36.21.015 and 1991 c 218 s 3 are each amended to 7
read as follows: 8
(1) Any person having the responsibility of valuing real property 9
for purposes of taxation including persons acting as assistants or 10
deputies to a county assessor under RCW 36.21.011 shall have first:11
(a) Had at least one year of experience in transactions involving 12
real property, in appraisal of real property, or in assessment of 13
real property, or at least one year of experience in a combination of 14
the three; 15
(b) Become knowledgeable in repair and remodeling of buildings 16
and improvement of land, and in the significance of locality and area 17
to the value of real property; 18
(c) Become knowledgeable in the standards for appraising property 19
set forth by the department of revenue; and 20
S-0592.2
SENATE BILL 5431
State of Washington 69th Legislature 2025 Regular Session
By Senators Schoesler, Robinson, Dozier, and Nobles
Read first time 01/22/25. Referred to Committee on Ways & Means.
p. 1 SB 5431
(d) Met other minimum requirements specified by department of 1
revenue rule. 2
(2) ((The department of revenue shall prepare and administer an 3
examination on subjects related to the valuation of real property. )) 4
No person shall assess real property for purposes of taxation without 5
having passed ((said)) the international association of assessing 6
officers course 101 examination, or its equivalent as determined by 7
the department of revenue, or having received an examination waiver 8
from the department of revenue upon showing education or experience 9
determined by the department to be equivalent to passing the 10
examination. A person passing said examination or receiving an 11
examination waiver shall be accredited accordingly by the department 12
of revenue. 13
(3) The department of revenue may by rule establish continuing 14
education requirements for persons assessing real property for 15
purposes of taxation. The department shall provide accreditation of 16
completion of requirements imposed under this section. No person 17
shall assess real property for purposes of taxation without complying 18
with requirements imposed under this subsection. 19
(4) To the extent practical, the department of revenue shall 20
coordinate accreditation requirements under this section with the 21
requirements for certified real estate appraisers under chapter 22
18.140 RCW. 23
(5) The examination requirements of subsection (2) of this 24
section shall not apply to any person who shall have either:25
(a) Been certified as a real property appraiser by the department 26
of personnel prior to July 1, 1992; or 27
(b) Attended and satisfactorily completed the assessor's school 28
operated jointly by the department of revenue and the Washington 29
state assessors association prior to August 9, 1971.30
Sec. 2. 2022 c 172 s 3 (uncodified) is amended to read as 31
follows: 32
(1) This section is the tax preference performance statement for 33
the tax preference contained in section 2, chapter 172, Laws of 2022. 34
This performance statement is only intended to be used for subsequent 35
evaluation of the tax preference. It is not intended to create a 36
private right of action by any party or be used to determine 37
eligibility for preferential tax treatment. 38
p. 2 SB 5431
(2) The legislature categorizes this tax preference as one 1
intended to improve industry competitiveness and to create and retain 2
jobs as indicated in RCW 82.32.808(2) (b) and (c). 3
(3) It is the legislature's specific public policy objective to 4
maintain and grow jobs in the solar silicon industry. Trade disputes 5
currently threaten employment in this sector. It is the legislature's 6
intent to extend by five years the preferential tax rates for 7
manufacturers and wholesalers of specific solar energy material and 8
parts in order to maintain and grow jobs in the solar silicon 9
industry. 10
(4) If a review finds that the number of people employed by the 11
solar silicon industry in Washington is the same or more than in 12
2019, and that at least 60 percent of employees earn $60,000 a year 13
or more, then the legislature intends to extend the expiration date 14
of the tax preference. 15
(5) In order to obtain the data necessary to perform the review 16
in subsection (4) of this section, the joint legislative audit and 17
review committee may refer to the department of revenue's annual 18
((survey)) tax performance report data. 19
Sec. 3. 2017 3rd sp.s. c 37 s 401 (uncodified) is amended to 20
read as follows: 21
(1) This section is the tax preference performance statement for 22
the tax preferences contained in sections 402 and 403, chapter 37, 23
Laws of 2017 3rd sp. sess. This performance statement is only 24
intended to be used for subsequent evaluation of the tax preferences. 25
It is not intended to create a private right of action by any party 26
or be used to determine eligibility for preferential tax treatment.27
(2) The legislature categorizes these tax preferences as ones 28
intended to improve industry competitiveness and to create and retain 29
jobs as indicated in RCW 82.32.808(2) (b) and (c).30
(3) It is the legislature's specific public policy objective to 31
maintain and grow jobs in the solar silicon industry. Trade disputes 32
currently threaten employment in this sector. It is the legislature's 33
intent to extend by ((ten)) 10 years the preferential tax rates for 34
manufacturers and wholesalers of specific solar energy material and 35
parts in order to maintain and grow jobs in the solar silicon 36
industry. 37
(4) If a review finds that the number of people employed by the 38
solar silicon industry in Washington is the same or more than in 39
p. 3 SB 5431
2015, and that at least ((sixty)) 60 percent of employees earn 1
((sixty thousand dollars )) $60,000 a year or more, then the 2
legislature intends to extend the expiration date of the tax 3
preference. 4
(5) In order to obtain the data necessary to perform the review 5
in subsection (4) of this section, the joint legislative audit and 6
review committee may refer to the department of revenue's annual 7
((survey)) tax preference report data. 8
Sec. 4. RCW 82.08.050 and 2017 3rd sp.s. c 28 s 211 are each 9
amended to read as follows: 10
(1) The tax imposed in this chapter must be paid by the buyer to 11
the seller. Each seller must collect from the buyer the full amount 12
of the tax payable in respect to each taxable sale in accordance with 13
the schedule of collections adopted by the department under the 14
provisions of RCW 82.08.060. 15
(2) The tax required by this chapter, to be collected by the 16
seller, is deemed to be held in trust by the seller until paid to the 17
department. Any seller who appropriates or converts the tax collected 18
to the seller's own use or to any use other than the payment of the 19
tax to the extent that the money required to be collected is not 20
available for payment on the due date as prescribed in this chapter 21
is guilty of a gross misdemeanor. 22
(3) Except as otherwise provided in this section, if any seller 23
fails to collect the tax imposed in this chapter or, having collected 24
the tax, fails to pay it to the department in the manner prescribed 25
by this chapter, whether such failure is the result of the seller's 26
own acts or the result of acts or conditions beyond the seller's 27
control, the seller is, nevertheless, personally liable to the state 28
for the amount of the tax. 29
(4) Sellers are not relieved from personal liability for the 30
amount of the tax unless they maintain proper records of exempt or 31
nontaxable transactions and provide them to the department when 32
requested. 33
(5) Sellers are not relieved from personal liability for the 34
amount of tax if they fraudulently fail to collect the tax or if they 35
solicit purchasers to participate in an unlawful claim of exemption.36
(6) Sellers are not relieved from personal liability for the 37
amount of tax if they accept an exemption certificate from a 38
purchaser claiming an entity-based exemption if: 39
p. 4 SB 5431
(a) The subject of the transaction sought to be covered by the 1
exemption certificate is actually received by the purchaser at a 2
location operated by the seller in Washington; and 3
(b) Washington provides an exemption certificate that clearly and 4
affirmatively indicates that the claimed exemption is not available 5
in Washington. Graying out exemption reason types on a uniform form 6
and posting it on the department's website is a clear and affirmative 7
indication that the grayed out exemptions are not available.8
(7)(a) Sellers are relieved from personal liability for the 9
amount of tax if they obtain a fully completed exemption certificate 10
or capture the relevant data elements required under the streamlined 11
sales and use tax agreement within ((ninety)) 90 days, or a longer 12
period as may be provided by rule by the department, subsequent to 13
the date of sale. 14
(b) If the seller has not obtained an exemption certificate or 15
all relevant data elements required under the streamlined sales and 16
use tax agreement within the period allowed subsequent to the date of 17
sale, the seller may, within ((one hundred twenty )) 120 days, or a 18
longer period as may be provided by rule by the department, 19
subsequent to a request for substantiation by the department, either 20
prove that the transaction was not subject to tax by other means or 21
obtain a fully completed exemption certificate from the purchaser, 22
taken in good faith. 23
(c) Sellers are relieved from personal liability for the amount 24
of tax if they obtain a blanket exemption certificate for a purchaser 25
with which the seller has a recurring business relationship. The 26
department may not request from a seller renewal of blanket exemption 27
certificates or updates of exemption certificate information or data 28
elements if there is a recurring business relationship between the 29
buyer and seller. For purposes of this subsection (7)(c), a 30
"recurring business relationship" means at least one sale transaction 31
within a period of ((twelve)) 12 consecutive months.32
(d) Sellers are relieved from personal liability for the amount 33
of tax if they obtain a copy of a direct pay permit issued under RCW 34
82.32.087. 35
(8) The amount of tax, until paid by the buyer to the seller or 36
to the department, constitutes a debt from the buyer to the seller. 37
Any seller who fails or refuses to collect the tax as required with 38
intent to violate the provisions of this chapter or to gain some 39
advantage or benefit, either direct or indirect, and any buyer who 40
p. 5 SB 5431
refuses to pay any tax due under this chapter is guilty of a 1
misdemeanor. 2
(9)(a) Except as otherwise provided in this subsection (9), the 3
tax required by this chapter to be collected by the seller must be 4
stated separately from the selling price in any sales invoice or 5
other instrument of sale. ((On all retail sales through vending 6
machines, the tax need not be stated separately from the selling 7
price or collected separately from the buyer. )) Except as otherwise 8
provided in this subsection, for purposes of determining the tax due 9
from the buyer to the seller and from the seller to the department it 10
must be conclusively presumed that the selling price quoted in any 11
price list, sales document, contract or other agreement between the 12
parties does not include the tax imposed by this chapter. But if the 13
seller advertises the price as including the tax or that the seller 14
is paying the tax, the advertised price may not be considered the 15
selling price. 16
(b) The tax required by this chapter to be collected by the 17
seller need not be stated separately from the selling price or 18
collected separately from the buyer on the following:19
(i) All retail sales through vending machines; or20
(ii) Retail sales of medical equipment paid by a health insurance 21
provider, if the following conditions are met:22
(A) The payment for the medical equipment is a fixed amount set 23
by contract between the medical supply vendor and the health 24
insurance provider; and25
(B) The medical supply vendor is not entitled to collect the 26
balance from the covered person, or other persons, after contractual 27
amounts are paid by the health insurance provider.28
(c) The department shall adopt rules as may be necessary to 29
administer the provisions of this section.30
(10) Where a buyer has failed to pay to the seller the tax 31
imposed by this chapter and the seller has not paid the amount of the 32
tax to the department, the department may, in its discretion, proceed 33
directly against the buyer for collection of the tax. If the 34
department proceeds directly against the buyer for collection of the 35
tax as authorized in this subsection, the department may add a 36
penalty of ((ten)) 10 percent of the unpaid tax to the amount of the 37
tax due for failure of the buyer to pay the tax to the seller, 38
regardless of when the tax may be collected by the department. In 39
addition to the penalty authorized in this subsection, all of the 40
p. 6 SB 5431
provisions of chapter 82.32 RCW, including those relative to interest 1
and penalties, apply. For the sole purpose of applying the various 2
provisions of chapter 82.32 RCW, the ((twenty-fifth)) 25th day of the 3
month following the tax period in which the purchase was made will be 4
considered as the due date of the tax. 5
(11) The definitions in this subsection apply throughout this 6
section unless the context clearly requires otherwise.7
(a) "Exemption certificate" means documentation furnished by a 8
buyer to a seller to claim an exemption from sales tax. An exemption 9
certificate includes a reseller permit or other documentation 10
authorized in RCW 82.04.470 furnished by a buyer to a seller to 11
substantiate a wholesale sale. 12
(b) "Health insurance provider" includes, but is not limited to, 13
commercial insurers, the medicaid program, and the medicare program.14
(c) "Seller" includes a certified service provider, as defined in 15
RCW 82.32.020, acting as agent for the seller. 16
Sec. 5. RCW 82.08.986 and 2022 c 267 s 3 are each amended to 17
read as follows: 18
(1)(a) An exemption from the tax imposed by RCW 82.08.020 is 19
provided for sales to qualifying businesses and to qualifying tenants 20
of eligible server equipment to be installed, without intervening 21
use, in an eligible computer data center to which a valid exemption 22
certificate applies, and to charges made for labor and services 23
rendered in respect to installing eligible server equipment.24
(b) This exemption also applies to sales to qualifying businesses 25
and to qualifying tenants of eligible power infrastructure, including 26
labor and services rendered in respect to constructing, installing, 27
repairing, altering, or improving eligible power infrastructure at an 28
eligible computer data center for which an exemption certificate has 29
been issued. 30
(c) No new exemption certificates may be issued on or after July 31
1, 2036. 32
(d) The exemptions provided in this section expire July 1, 2048.33
(e) Each calendar year, the department may issue no more than six 34
certificates for data centers which qualify through refurbishment. 35
Certificates are available for refurbished data centers on a first-36
in-time basis based on the date the application required under this 37
section is received by the department. Each qualifying business may 38
p. 7 SB 5431
apply for only one certificate for a refurbished data center each 1
calendar year. 2
(2)(a) In order to obtain an exemption certificate under this 3
section, a qualifying business or a qualifying tenant must submit an 4
application to the department for an exemption certificate. The 5
application must include the information necessary, as required by 6
the department, to determine that a business or tenant qualifies for 7
the exemption under this section. The department must issue exemption 8
certificates to qualifying businesses and qualifying tenants. The 9
department may assign a unique identification number to each 10
exemption certificate issued under this section. 11
(b) A qualifying business or a qualifying tenant claiming the 12
exemption under this section must present the seller with an 13
exemption certificate in a form and manner prescribed by the 14
department. The seller must retain a copy of the certificate for the 15
seller's files. 16
(c) With respect to computer data centers for which the 17
commencement of construction occurs after July 1, 2015, but before 18
July 1, 2019, the exemption provided in this section is limited to no 19
more than eight computer data centers, with total eligible data 20
centers provided under this section limited to ((twelve)) 12 from 21
July 1, 2015, through June 9, 2022. Tenants of qualified data centers 22
do not constitute additional data centers under the limit. The 23
exemption is available on a first-in-time basis based on the date the 24
application required under this section is received by the 25
department. 26
(d) The exemption certificate is effective on the date the 27
application is received by the department, which is deemed to be the 28
date of issuance. Only purchases on or after the date of issuance 29
qualify for the exemption under this section. No tax refunds are 30
authorized for purchases made before the effective date of the 31
exemption certificate. 32
(e) Exemption certificates expire two years after the date of 33
issuance, unless construction has been commenced. 34
(3)(a)(i) Within six years of the date that the department issued 35
an exemption certificate under this section to a qualifying business 36
or a qualifying tenant with respect to an eligible computer data 37
center, the qualifying business or qualifying tenant must establish 38
that net employment assigned to an eligible computer data center has 39
increased by a minimum of: 40
p. 8 SB 5431
(A) Thirty-five family wage employment positions; or, if lower1
(B) Three family wage employment positions for each ((twenty 2
thousand)) 20,000 square feet of space or less that is newly 3
dedicated to housing working servers at the eligible computer data 4
center. For qualifying tenants, the number of family wage employment 5
positions that must be increased under this subsection (3)(a)(i)(B) 6
is based only on the space occupied by the qualifying tenant in the 7
eligible computer data center. 8
(ii) After the minimum number of family wage employment positions 9
as required under (a)(i) of this subsection (3) is established, a 10
qualifying business or a qualifying tenant must maintain the minimum 11
family wage employment positions required under (a)(i) of this 12
subsection (3) while the exemption certificate is valid.13
(b) In calculating the net increase in family wage employment 14
positions: 15
(i) The owner of an eligible computer data center, in addition to 16
its own net increase in family wage employment positions, may 17
include: 18
(A) The net increase, since the date of issuance of the 19
qualifying business's exemption certificate, in family wage 20
employment positions employed by qualifying tenants; and21
(B) The net increase in family wage employment positions 22
described in (c)(ii)(B) of this subsection (3). 23
(ii)(A) Qualifying tenants, in addition to their own net increase 24
in family wage employment positions, may include: 25
(I) A portion of the net increase in family wage employment 26
positions employed by the owner; and 27
(II) A portion of the net increase in family wage employment 28
positions described in (c)(ii)(B) of this subsection (3).29
(B) The portion of the net increase in family wage employment 30
positions to be counted under this subsection (3)(b)(ii) by each 31
qualifying tenant is equal to the net increase in family wage 32
employment positions assigned to an eligible computer data center as 33
described in (b)(ii)(A)(I) and (II) of this subsection (3), 34
multiplied by the percentage of total space within the eligible 35
computer data center occupied by the qualifying tenant. Any 36
combination of qualifying business and qualifying tenant family wage 37
employment positions may meet this requirement. 38
(C)(I) In the instance of an existing data center facility that 39
was ineligible, regardless of the date of commencement of 40
p. 9 SB 5431
construction, that later obtains an exemption certificate under this 1
section, the data center may count the existing employment positions 2
that are dedicated to the data center toward the new family wage 3
employment position requirements if the employment positions meet the 4
requirements of a family wage employment position , as described in 5
(c)(i)(B) and (C) of this subsection (3), other than the requirement 6
that the position did not exist or had not previously been filled as 7
of the date that the department issued an exemption certificate.8
(II) In the instance of the refurbishment of an existing data 9
center that previously qualified under the data center program, the 10
data center may count the existing employment positions dedicated to 11
the data center toward the new family wage employment position 12
requirements if the employment positions meet the requirements of a 13
family wage employment position , as described in (c)(i)(B) and (C) of 14
this subsection (3), other than the requirement that the position did 15
not exist or had not previously been filled as of the date that the 16
department issued an exemption certificate. 17
(c)(i) For purposes of this subsection: 18
(A) For exemption certificates issued before June 9, 2022, family 19
wage employment positions are new permanent employment positions 20
requiring ((forty)) 40 hours of weekly work, or their equivalent, on 21
a full-time basis assigned to an eligible computer data center and 22
receiving a wage equivalent to or greater than ((one hundred fifty )) 23
150 percent of the per capita personal income of the county in which 24
the qualified project is located as published by the employment 25
security department. The per capita personal income to be used to 26
determine qualification for any year is the amount that was 27
established for the immediate prior year. 28
(B) For exemption certificates issued on or after June 9, 2022, 29
family wage employment positions are new permanent employment 30
positions requiring 40 hours of weekly work, or their equivalent, on 31
a full-time basis assigned to an eligible computer data center and 32
receiving a wage equivalent to or greater than 125 percent of the per 33
capita personal income of the county in which the qualified project 34
is located as published by the employment security department. The 35
per capita personal income to be used to determine qualification for 36
any year is the amount that was established for the immediate prior 37
year. 38
(C) An employment position may not be counted as a family wage 39
employment position unless the employment position is entitled to 40
p. 10 SB 5431
health insurance coverage provided by the employer of the employment 1
position. 2
(D) "New permanent employment position" means an employment 3
position that did not exist or that had not previously been filled as 4
of the date that the department issued an exemption certificate to 5
the qualifying business or qualifying tenant of an eligible computer 6
data center, as the case may be , except as provided in (b)(ii)(C) of 7
this subsection (3). 8
(ii)(A) Family wage employment positions include positions filled 9
by employees of the qualifying business and by employees of 10
qualifying tenants. 11
(B) Family wage employment positions also include individuals 12
performing work at an eligible computer data center as an independent 13
contractor hired by the owner of the eligible computer data center or 14
as an employee of an independent contractor hired by the owner of the 15
eligible computer data center, if the work is necessary for the 16
operation of the computer data center, such as security and building 17
maintenance, and provided that all of the applicable requirements in 18
(c)(i) of this subsection (3) are met. 19
(d)(i) For a qualifying business or qualifying tenant that does 20
not meet the requirements of this subsection (3), previously exempted 21
sales and use taxes are immediately due and payable and any exemption 22
certificate issued to that qualifying business or qualifying tenant 23
under this section is canceled, except as described in (d)(iii) of 24
this subsection (3). 25
(ii) The department of labor and industries must, at the request 26
of the department, assist in determining whether the requirements of 27
this subsection (3) have been met. 28
(iii) If the department, with the assistance of the department of 29
labor and industries, finds that a failure to meet the requirements 30
of this subsection (3) is due to circumstances beyond the control of 31
the qualifying business or qualifying tenant including, but not 32
limited to, a declaration of an economic recession, pandemic, or 33
natural disaster affecting data center operations, the department may 34
provide exceptions or extensions to the requirements of this 35
subsection (3). 36
(iv) Any repayment of taxes triggered by the failure of a 37
qualifying business or qualifying tenant to meet the requirements of 38
this subsection (3) must be calculated in proportion to the duration 39
of time for which any applicable requirement was not met.40
p. 11 SB 5431
(v) If the department is notified that a qualifying business or 1
qualifying tenant fails to meet the requirements of this subsection 2
(3), the department may require a qualifying business or qualifying 3
tenant to submit records necessary to determine whether the 4
requirements have been met. 5
(4) For exemption certificates issued on or after June 9, 2022:6
(a) Within three years after being placed in service, the 7
qualifying business operating a newly constructed data center must 8
certify to the department that it has attained certification under 9
one or more of the following sustainable design or green building 10
standards: 11
(i) BREEAM for new construction or BREEAM in-use;12
(ii) Energy star; 13
(iii) Envision; 14
(iv) ISO 50001-energy management; 15
(v) LEED for building design and construction or LEED for 16
operations and maintenance; 17
(vi) Green globes for new construction or green globes for 18
existing buildings; 19
(vii) UL 3223; or 20
(viii) Other reasonable standards approved by the department.21
(b) The department may require qualifying businesses and 22
qualifying tenants to submit records necessary to verify the 23
requirements under (a) of this subsection have been met.24
(c)(i) For a qualifying business or qualifying tenant that does 25
not meet the requirements of (a) of this subsection (4), all 26
previously exempted sales and use taxes may be immediately due and 27
payable, any exemption certificate issued to that qualifying business 28
or qualifying tenant under this section is canceled, and an 29
additional 10 percent penalty is assessed, except as described in 30
(c)(ii) of this subsection (4). 31
(ii) If the department finds that a failure to meet the 32
requirements of this subsection (4) is due to circumstances beyond 33
the control of the qualifying business or qualifying tenant 34
including, but not limited to, a declaration of an economic 35
recession, pandemic, or natural disaster affecting data center 36
operations, the department may, at its discretion, provide exceptions 37
or extensions to the requirements of this subsection (4). The 38
department may, at its discretion, coordinate with agencies with 39
p. 12 SB 5431
relevant expertise to assist in determining whether the requirements 1
have been met. 2
(5) A qualifying business or a qualifying tenant claiming the 3
exemption under this section is encouraged to take direct steps to 4
adopt practices to mitigate negative environmental impacts resulting 5
from expanded use of data centers, including through:6
(a) Coordinating with the industrial waste coordination program 7
established under RCW 43.31.625 to identify and provide technical 8
assistance in implementing industrial symbiosis projects;9
(b) To the extent possible, procuring or contracting for power 10
from renewable sources; 11
(c) Adopting practices to improve the energy efficiency of 12
existing data centers, including through upgrading and consolidating 13
technology, managing data center airflow, and adjusting and improving 14
heating, ventilation, and air conditioning systems; and15
(d) Taking actions to conserve, reuse, and replace water. This 16
includes using water efficient fixtures and practices; treating, 17
infiltrating, and harvesting rainwater; recycling water before 18
discharging; partnering with local water utilities to use discharged 19
water for irrigation and other water conservation purposes; using 20
reclaimed water where possible for data center operations; and 21
supporting water restoration in local watersheds. 22
(6) A qualifying business or a qualifying tenant claiming an 23
exemption under this section or RCW 82.12.986 must complete an annual 24
tax performance report with the department as required under RCW 25
82.32.534. The report must identify construction firm names and 26
employment levels used for constructing, renovating, refurbishing, or 27
remodeling the data centers. 28
(7)(a) The certificate holder may not at any time assign or 29
transfer a certificate without the prior written consent of the 30
department. The department must allow certificate transfers if the 31
certificate holder meets the following requirements:32
(i) The certificate assignee or transferee is qualified to do 33
business in the state; 34
(ii) The assignee or transferee acknowledges the transfer of the 35
certificate in writing; 36
(iii) The assignee or transferee agrees to keep and perform all 37
the terms of the certificates; and 38
(iv) An assignment or transfer of the certificate is to an entity 39
that: 40
p. 13 SB 5431
(A) Controls, is controlled by, or under common control with, the 1
certificate holder; 2
(B) Acquires all or substantially all of the stock or assets of 3
the certificate holder; or 4
(C) Is the resulting entity of a merger or consolidation with the 5
certificate holder. 6
(b) In the event the assignee or transferee acquires eligible 7
server equipment in a qualifying asset sale under (a)(iv)(B) of this 8
subsection, the purchaser shall be deemed to purchase the eligible 9
server equipment pursuant to the transferred certificate.10
(8) The definitions in this subsection apply throughout this 11
section unless the context clearly requires otherwise.12
(a) "Affiliated" means that one person has a direct or indirect 13
ownership interest of at least ((twenty)) 20 percent in another 14
person. 15
(b) "Building" means a fully enclosed structure with a weather 16
resistant exterior wall envelope or concrete or masonry walls 17
designed in accordance with the requirements for structures under 18
chapter 19.27 RCW. This definition of "building" only applies to 19
computer data centers for which commencement of construction occurs 20
on or after July 1, 2015. 21
(c) "Certificate of occupancy" means: 22
(i) For a newly constructed eligible computer data center, the 23
certificate of occupancy issued by a local governing authority for 24
the structure or structures which comprise the eligible computer data 25
center; or 26
(ii) For renovations of an eligible computer data center, the 27
certificate of occupancy issued by a local governing authority for 28
the renovated structure or structures that comprise the eligible 29
computer data center. 30
(d)(i) "Computer data center" means a facility comprised of one 31
or more buildings, which may be comprised of multiple businesses, 32
constructed or refurbished specifically, and used primarily, to house 33
working servers, where the facility has the following 34
characteristics: (A) Uninterruptible power supplies, generator backup 35
power, or both; (B) sophisticated fire suppression and prevention 36
systems; and (C) enhanced physical security, such as: Restricted 37
access to the facility to selected personnel; permanent security 38
guards; video camera surveillance; an electronic system requiring 39
p. 14 SB 5431
passcodes, keycards, or biometric scans, such as hand scans and 1
retinal or fingerprint recognition; or similar security features.2
(ii) For a computer data center comprised of multiple buildings, 3
each separate building constructed or refurbished specifically, and 4
used primarily, to house working servers is considered a computer 5
data center if it has all of the characteristics listed in (d)(i)(A) 6
through (C) of this subsection (8). 7
(iii) A facility comprised of one building or more than one 8
building must have a combined square footage of at least ((one 9
hundred thousand)) 100,000 square feet. 10
(e) "Electronic data storage and data management services" 11
include, but are not limited to: Providing data storage and backup 12
services, providing computer processing power, hosting enterprise 13
software applications, and hosting websites. The term also includes 14
providing services such as email, web browsing and searching, media 15
applications, and other online services, regardless of whether a 16
charge is made for such services. 17
(f)(i) "Eligible computer data center" means a computer data 18
center: 19
(A) Located in a rural county as defined in RCW 82.14.370 at the 20
time an application for an exemption under this section is received;21
(B) Having at least ((twenty thousand )) 20,000 square feet 22
dedicated to housing working servers; and 23
(C) For which the commencement of construction occurs:24
(I) After March 31, 2010, and before July 1, 2011;25
(II) After March 31, 2012, and before July 1, 2015; or26
(III) After June 30, 2015, and before July 1, 2035.27
(ii) For purposes of this section, "commencement of construction" 28
means the date that a building permit is issued under the building 29
code adopted under RCW 19.27.031 for construction of the computer 30
data center. The construction of a computer data center includes the 31
expansion, renovation, or refurbishment of existing facilities 32
regardless of whether the existing facility was previously ineligible 33
and regardless of whether commencement of construction of the 34
existing facility occurred outside of the dates listed in 35
(f)(i)(C)(I) through (III) of this subsection, including leased or 36
rented space. "Commencement of construction" does not include soil 37
testing, site clearing and grading, site preparation, or any other 38
related activities that are initiated before the issuance of a 39
building permit for the construction of the foundation of a computer 40
p. 15 SB 5431
data center. If no building permit is required for renovation or 1
refurbishment, then the date that renovation or refurbishment begins 2
is the "commencement of construction." 3
(g) "Eligible power infrastructure" means all fixtures and 4
equipment owned by a qualifying business or qualifying tenant and 5
necessary for the transformation, distribution, or management of 6
electricity that is required to operate eligible server equipment 7
within an eligible computer data center. The term includes 8
generators; wiring; cogeneration equipment; and associated fixtures 9
and equipment, such as electrical switches, batteries, and 10
distribution, testing, and monitoring equipment. The term does not 11
include substations. 12
(h) "Eligible server equipment" means: 13
(i) For a qualifying business whose computer data center 14
qualifies as an eligible computer data center under (f)(i)(C)(I) of 15
this subsection (8), the original server equipment installed in an 16
eligible computer data center on or after April 1, 2010, and before 17
January 1, 2026, and replacement server equipment. For purposes of 18
this subsection (8)(h)(i), "replacement server equipment" means 19
server equipment that: 20
(A) Replaces existing server equipment, if the sale or use of the 21
server equipment to be replaced qualified for an exemption under this 22
section or RCW 82.12.986; and 23
(B) Is installed and put into regular use before April 1, 2018.24
(ii) For a qualifying business whose computer data center 25
qualifies as an eligible computer data center under (f)(i)(C)(II) of 26
this subsection (8), "eligible server equipment" means the original 27
server equipment installed in an eligible computer data center on or 28
after April 1, 2012, and before January 1, 2026, and replacement 29
server equipment. For purposes of this subsection (8)(h)(ii), 30
"replacement server equipment" means server equipment that:31
(A) Replaces existing server equipment, if the sale or use of the 32
server equipment to be replaced qualified for an exemption under this 33
section or RCW 82.12.986; and 34
(B) Is installed and put into regular use before April 1, 2024.35
(iii) For a qualifying business whose computer data center 36
qualifies as an eligible computer data center under (f)(i)(C)(III) of 37
this subsection (8), "eligible server equipment" means the original 38
server equipment installed in a building within an eligible computer 39
data center on or after July 1, 2015, and replacement server 40
p. 16 SB 5431
equipment. Server equipment installed in movable or fixed stand-1
alone, prefabricated, or modular units, including intermodal shipping 2
containers, is not "directly installed in a building." For purposes 3
of this subsection (8)(h)(iii), "replacement server equipment" means 4
server equipment that: 5
(A)(I) Replaces existing server equipment, if the sale or use of 6
the server equipment to be replaced qualified for an exemption under 7
this section or RCW 82.12.986; or 8
(II) Replaces existing server equipment in a computer data center 9
that meets the following requirements: Was ineligible before June 9, 10
2022, for the exemptions provided under this section and RCW 11
82.12.986; has been refurbished; and to which a valid exemption 12
certificate applies; and 13
(B) Is installed and put into regular use no later than 14
((twelve)) 12 years after the date of the certificate of occupancy or 15
completion of refurbishment of the computer data center.16
(iv) For a qualifying tenant who leases space within an eligible 17
computer data center, "eligible server equipment" means the original 18
server equipment installed within the space it leases from an 19
eligible computer data center with an exemption certificate on or 20
after April 1, 2010, and replacement server equipment. For purposes 21
of this subsection (8)(h)(iv), "replacement server equipment" means 22
server equipment that: 23
(A)(I) Replaces existing server equipment, if the sale or use of 24
the server equipment to be replaced qualified for an exemption under 25
this section or RCW 82.12.986; or 26
(II) Replaces existing server equipment in a computer data center 27
that meets the following requirements: Was ineligible before June 9, 28
2022, for the exemptions provided under this section and RCW 29
82.12.986; has been refurbished; and to which a valid exemption 30
certificate applies; and 31
(B) Is installed and put into regular use no later than 12 years 32
after the date of the certificate of occupancy or completion of 33
refurbishment of the computer data center. 34
(i) "Qualifying business" means a business entity that exists for 35
the primary purpose of engaging in commercial activity for profit and 36
that is the owner of an eligible computer data center. The term does 37
not include the state or federal government or any of their 38
departments, agencies, and institutions; tribal governments; 39
political subdivisions of this state; or any municipal, quasi-40
p. 17 SB 5431
municipal, public, or other corporation created by the state or 1
federal government, tribal government, municipality, or political 2
subdivision of the state. 3
(j) "Qualifying tenant" means a business entity that exists for 4
the primary purpose of engaging in commercial activity for profit and 5
that leases space from a qualifying business within an eligible 6
computer data center. The term does not include the state or federal 7
government or any of their departments, agencies, and institutions; 8
tribal governments; political subdivisions of this state; or any 9
municipal, quasi-municipal, public, or other corporation created by 10
the state or federal government, tribal government, municipality, or 11
political subdivision of the state. The term also does not include a 12
lessee of space in an eligible computer data center under 13
(f)(i)(C)(I) of this subsection (8), if the lessee and lessor are 14
affiliated and: 15
(i) That space will be used by the lessee to house server 16
equipment that replaces server equipment previously installed and 17
operated in that eligible computer data center by the lessor or 18
another person affiliated with the lessee; or 19
(ii) Prior to May 2, 2012, the primary use of the server 20
equipment installed in that eligible computer data center was to 21
provide electronic data storage and data management services for the 22
business purposes of either the lessor, persons affiliated with the 23
lessor, or both. 24
(k)(i) "Refurbished" or "refurbishment" means a substantial 25
improvement to an eligible computer data center to update or 26
modernize servers, server space, ventilation, or power infrastructure 27
in an eligible computer data center. 28
(ii) For a qualifying computer data center to be considered 29
refurbished, the qualifying business must certify, in a form and 30
manner prescribed by the department, that the refurbishment of an 31
eligible computer data center is complete. The refurbishment is 32
considered complete on the date that the improved portion of the 33
computer data center is operationally complete and able to be used 34
for its intended purpose. 35
(l) "Server equipment" means the computer hardware located in an 36
eligible computer data center and used exclusively to provide 37
electronic data storage and data management services, including cloud 38
services, for internal use by the owner or lessee of the computer 39
data center, for clients of the owner or lessee of the computer data 40
p. 18 SB 5431
center, or both. "Server equipment" also includes computer software 1
necessary to operate the computer hardware. "Server equipment" does 2
not include personal computers, the racks upon which the server 3
equipment is installed, and computer peripherals such as keyboards, 4
monitors, printers, and mice. 5
(9) This section expires July 1, 2048. 6
Sec. 6. RCW 43.06.400 and 2013 c 225 s 605 are each amended to 7
read as follows: 8
(1) Beginning in January ((1984)) 2029, and in January of every 9
fourth year thereafter, the department of revenue must submit to the 10
legislature prior to the regular session a listing of the amount of 11
reduction for the current and next biennium in the revenues of the 12
state or the revenues of local government collected by the state as a 13
result of tax exemptions. The listing must include an estimate of the 14
revenue lost from the tax exemption, the purpose of the tax 15
exemption, the persons, organizations, or parts of the population 16
which benefit from the tax exemption, and whether or not the tax 17
exemption conflicts with another state program. The listing must 18
include but not be limited to the following revenue sources:19
(a) Real and personal property tax exemptions under Title 84 RCW;20
(b) Business and occupation tax exemptions, deductions, and 21
credits under chapter 82.04 RCW; 22
(c) Retail sales and use tax exemptions under chapters 82.08, 23
82.12, and 82.14 RCW; 24
(d) Public utility tax exemptions and deductions under chapter 25
82.16 RCW; 26
(e) Food fish and shellfish tax exemptions under chapter 82.27 27
RCW; 28
(f) Leasehold excise tax exemptions under chapter 82.29A RCW;29
(g) Motor vehicle and special fuel tax exemptions and refunds 30
under chapter 82.38 RCW; 31
(h) Aircraft fuel tax exemptions under chapter 82.42 RCW;32
(i) Motor vehicle excise tax exclusions under chapter 82.44 RCW; 33
and 34
(j) Insurance premiums tax exemptions under chapter 48.14 RCW.35
(2) The department of revenue must prepare the listing required 36
by this section with the assistance of any other agencies or 37
departments as may be required. 38
p. 19 SB 5431
(3) The department of revenue must present the listing to the 1
ways and means committees of each house in public hearings.2
(4) Beginning in January ((1984)) 2029, and every four years 3
thereafter the governor is requested to review the report from the 4
department of revenue and may submit recommendations to the 5
legislature with respect to the repeal or modification of any tax 6
exemption. The ways and means committees of each house and the 7
appropriate standing committee of each house must hold public 8
hearings and take appropriate action on the recommendations submitted 9
by the governor. 10
(5) As used in this section, "tax exemption" means an exemption, 11
exclusion, or deduction from the base of a tax; a credit against a 12
tax; a deferral of a tax; or a preferential tax rate.13
(((6) For purposes of the listing due in January 2012, the 14
department of revenue does not have to prepare or update the listing 15
with respect to any tax exemption that would not be likely to 16
increase state revenue if the exemption was repealed or otherwise 17
eliminated.))18
NEW SECTION. Sec. 7. RCW 82.32.805 and 82.32.808 do not apply 19
to this act.20
--- END ---
p. 20 SB 5431