Tax preferences

AN ACT Relating to improving the administration of tax 1
preferences by adopting recommendations from the tax preference 2
performance review process, eliminating obsolete tax preferences, 3
clarifying legislative intent, and addressing changes in 4
constitutional law; amending RCW 82.16.050, 82.04.260, 82.04.290, 5
48.14.0201, 82.04.110, 82.04.120, 82.04.43395, 82.12.022, 82.12.022, 6
82.21.040, 82.23A.030, 82.29A.130, 82.29A.130, 82.45.010, 82.45.010, 7
82.45.030, 82.64.030, 84.36.010, 84.36.030, 82.04.29004, 82.04.4451, 8
82.04.540, 82.04.620, 82.04.051, 82.04.257, 82.04.29001, 82.04.29002, 9
82.04.297, 82.04.360, 82.04.43396, 82.04.280, 82.48.030, 82.62.030, 10
82.85.010, 82.85.020, 82.85.040, 82.04.43391, 82.08.0262, 82.12.0254, 11
82.04.627, and 82.16.020; reenacting and amending RCW 82.04.260, 12
82.04.050, and 82.04.299; creating new sections; repealing RCW 13
82.04.4496, 82.16.0496, 82.08.9999, 82.12.9999, 82.08.809, 82.12.809, 14
82.04.062, 82.16.0497, 82.04.44525, 82.08.02566, 82.12.02566, 15
82.04.272, 82.04.315, 82.04.4292, 82.04.293, 82.04.29005, 82.16.046, 16
82.29A.132, 82.45.190, 82.08.02568, 82.12.02568, 82.04.4482, 17
82.16.0498, 82.12.0265, 36.100.090, 82.12.024, 82.04.545, 82.16.315, 18
82.16.0495, 36.102.070, 82.08.02569, 82.12.02569, 82.04.421, 19
82.04.4331, 82.04.4295, 82.04.447, 82.04.4332, 82.29A.137, and 20
82.04.434; providing effective dates; providing a contingent 21
effective date; providing expiration dates; and providing a 22
contingent expiration date. 23
S-2310.3
SENATE BILL 5794
State of Washington 69th Legislature 2025 Regular Session
By Senators Salomon, Lovelett, Alvarado, Bateman, Dhingra, Frame,
Hasegawa, Nobles, Ramos, Riccelli, Trudeau, and Wellman
Read first time 03/21/25. Referred to Committee on Ways & Means.
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:1
NEW SECTION. Sec. 1. (1) The legislature finds that, according 2
to the most recent tax exemption study published by the department of 3
revenue, there are currently 786 tax exemptions for the major state 4
and local tax sources in Washington. The exemptions result in nearly 5
$200,000,000,000 of taxpayer savings for the current biennium. The 6
legislature acknowledges that certain tax preferences, such as the 7
sales and use tax exemption for food and the working families tax 8
credit, are intended to rebalance Washington's tax code for working 9
people. However, the legislature further acknowledges that many 10
existing tax preferences are the result of private interests securing 11
preferential tax treatment.12
(2) For that reason, the legislature enacted robust tax 13
preference performance measures to create greater tax preference 14
transparency and accountability and provide a framework for 15
legislators to make informed decisions on the most efficient use of 16
taxpayer dollars. To ensure tax exemptions meet certain public policy 17
objectives, the joint legislative audit and review committee, a 18
nonpartisan legislative agency, routinely evaluates tax preferences 19
based on specific criteria provided in law and reports that 20
information to the legislature each year. The reports provide 21
accurate, comprehensive, unbiased data that policymakers may use to 22
determine if a tax preference should be continued, modified, or 23
repealed. Additionally, the citizen commission for performance 24
measurement of tax preferences is responsible for selecting which tax 25
preferences are reviewed each year and provides comment on the 26
legislative auditor's reports. Both entities provide recommendations 27
to the legislature on the effectiveness of a tax preference in 28
meeting certain performance measures. 29
(3) Furthermore, the department of revenue assists in the tax 30
preference evaluation process by collecting data from taxpayer 31
beneficiaries and regularly reviewing changes in state and federal 32
law. The analysis by the department and legislative auditor often 33
reveals that a tax exemption is legally obsolete, meaning the 34
specific legal conditions that existed when the exemption was enacted 35
have since changed and the original legislative intent is no longer 36
applicable. Additionally, some tax exemptions are simply not used and 37
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should be removed from the tax code to create better clarity for 1
taxpayers. 2
(4) The legislature recognizes that more progress is needed for 3
the state to have a fair and balanced tax system that provides 4
sustainable and ample funding for public schools, health care, and 5
other programs that protect the safety and well-being of the public, 6
as well as social services that provide critical, basic-needs 7
assistance for our state's most vulnerable residents. The legislature 8
further recognizes that the tax preference performance review process 9
provides an opportunity for policymakers to evaluate the tax code to 10
ensure the state is not losing essential revenue due to inefficient 11
or no longer applicable tax exemptions. 12
(5) Thus, the legislature intends to enact recommendations from 13
the joint legislative audit and review committee, the citizen 14
commission for performance measurement of tax preferences, and the 15
department of revenue, including eliminating several obsolete tax 16
preferences, clarifying legislative intent to better inform future 17
tax preference performance reviews, adding expiration dates, and 18
other actions aimed at creating a fair and balanced tax system.19
PART I20
ELIMINATING OBSOLETE TAX PREFERENCES21
Sec. 101. RCW 82.16.050 and 2022 c 16 s 162 are each amended to 22
read as follows: 23
In computing tax there may be deducted from the gross income the 24
following items: 25
(1) Amounts derived by municipally owned or operated public 26
service businesses, directly from taxes levied for the support or 27
maintenance thereof. This subsection may not be construed to exempt 28
service charges which are spread on the property tax rolls and 29
collected as taxes; 30
(2) Amounts derived from the sale of commodities to persons in 31
the same public service business as the seller, for resale as such 32
within this state. This deduction is allowed only with respect to 33
water distribution, gas distribution or other public service 34
businesses which furnish water, gas or any other commodity in the 35
performance of public service businesses; 36
(3) Amounts actually paid by a taxpayer to another person taxable 37
under this chapter as the latter's portion of the consideration due 38
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for services furnished jointly by both, if the total amount has been 1
credited to and appears in the gross income reported for tax by the 2
former; 3
(4) The amount of cash discount actually taken by the purchaser 4
or customer; 5
(5) The amount of bad debts, as that term is used in 26 U.S.C. 6
Sec. 166, as amended or renumbered as of January 1, 2003, on which 7
tax was previously paid under this chapter; 8
(6) Amounts derived from business which the state is prohibited 9
from taxing under the Constitution of this state or the Constitution 10
or laws of the United States; 11
(7) Amounts derived from the distribution of water through an 12
irrigation system, for irrigation purposes other than the irrigation 13
of cannabis as defined ((under)) in RCW 69.50.101;14
(((8) Amounts derived from the transportation of commodities from 15
points of origin in this state to final destination outside this 16
state, or from points of origin outside this state to final 17
destination in this state, with respect to which the carrier grants 18
to the shipper the privilege of stopping the shipment in transit at 19
some point in this state for the purpose of storing, manufacturing, 20
milling, or other processing, and thereafter forwards the same 21
commodity, or its equivalent, in the same or converted form, under a 22
through freight rate from point of origin to final destination;23
(9) Amounts derived from the transportation of commodities from 24
points of origin in the state to an export elevator, wharf, dock or 25
ship side on tidewater or its navigable tributaries to be forwarded, 26
without intervening transportation, by vessel, in their original 27
form, to interstate or foreign destinations. No deduction is allowed 28
under this subsection when the point of origin and the point of 29
delivery to the export elevator, wharf, dock, or ship side are 30
located within the corporate limits of the same city or town;31
(10) Amounts derived from the transportation of agricultural 32
commodities, not including manufactured substances or articles, from 33
points of origin in the state to interim storage facilities in this 34
state for transshipment, without intervening transportation, to an 35
export elevator, wharf, dock, or ship side on tidewater or its 36
navigable tributaries to be forwarded, without intervening 37
transportation, by vessel, in their original form, to interstate or 38
foreign destinations. If agricultural commodities are transshipped 39
from interim storage facilities in this state to storage facilities 40
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at a port on tidewater or its navigable tributaries, the same 1
agricultural commodity dealer must operate both the interim storage 2
facilities and the storage facilities at the port. 3
(a) The deduction under this subsection is available only when 4
the person claiming the deduction obtains a certificate from the 5
agricultural commodity dealer operating the interim storage 6
facilities, in a form and manner prescribed by the department, 7
certifying that:8
(i) More than ninety -six percent of all of the type of 9
agricultural commodity delivered by the person claiming the deduction 10
under this subsection and delivered by all other persons to the 11
dealer's interim storage facilities during the preceding calendar 12
year was shipped by vessel in original form to interstate or foreign 13
destinations; and14
(ii) Any of the agricultural commodity that is transshipped to 15
ports on tidewater or its navigable tributaries will be received at 16
storage facilities operated by the same agricultural commodity dealer 17
and will be shipped from such facilities, without intervening 18
transportation, by vessel, in their original form, to interstate or 19
foreign destinations.20
(b) As used in this subsection, "agricultural commodity" has the 21
same meaning as agricultural product in RCW 82.04.213;22
(11))) (8) Amounts derived from the production, sale, or transfer 23
of electrical energy for resale within or outside the state or for 24
consumption outside the state; 25
(((12))) (9) Amounts derived from the distribution of water by a 26
nonprofit water association and used for capital improvements by that 27
nonprofit water association; 28
(((13))) (10) Amounts paid by a sewerage collection business 29
taxable under RCW 82.16.020(1)(a) to a person taxable under chapter 30
82.04 RCW for the treatment or disposal of sewage;31
(((14))) (11) Amounts derived from fees or charges imposed on 32
persons for transit services provided by a public transportation 33
agency. For the purposes of this subsection, "public transportation 34
agency" means a municipality, as defined in RCW 35.58.272, and urban 35
public transportation systems, as defined in RCW 47.04.082. Public 36
transportation agencies must spend an amount equal to the reduction 37
in tax provided by this tax deduction solely to adjust routes to 38
improve access for citizens using food banks and senior citizen 39
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services or to extend or add new routes to assist low-income citizens 1
and seniors. 2
Sec. 102. RCW 82.04.260 and 2023 c 422 s 5 and 2023 c 286 s 3 3
are each reenacted and amended to read as follows: 4
(1) Upon every person engaging within this state in the business 5
of manufacturing: 6
(a) Wheat into flour, barley into pearl barley, soybeans into 7
soybean oil, canola into canola oil, canola meal, or canola by-8
products, or sunflower seeds into sunflower oil; as to such persons 9
the amount of tax with respect to such business is equal to the value 10
of the flour, pearl barley, oil, canola meal, or canola by-product 11
manufactured, multiplied by the rate of 0.138 percent;12
(b) Beginning July 1, 2035, seafood products that remain in a 13
raw, raw frozen, or raw salted state at the completion of the 14
manufacturing by that person; or selling manufactured seafood 15
products that remain in a raw, raw frozen, or raw salted state at the 16
completion of the manufacturing, to purchasers who transport in the 17
ordinary course of business the goods out of this state; as to such 18
persons the amount of tax with respect to such business is equal to 19
the value of the products manufactured or the gross proceeds derived 20
from such sales, multiplied by the rate of 0.138 percent. Sellers 21
must keep and preserve records for the period required by RCW 22
82.32.070 establishing that the goods were transported by the 23
purchaser in the ordinary course of business out of this state;24
(c)(i) Except as provided otherwise in (c)(iii) of this 25
subsection, beginning July 1, 2035, until January 1, 2046, dairy 26
products; or selling dairy products that the person has manufactured 27
to purchasers who either transport in the ordinary course of business 28
the goods out of state or purchasers who use such dairy products as 29
an ingredient or component in the manufacturing of a dairy product; 30
as to such persons the tax imposed is equal to the value of the 31
products manufactured or the gross proceeds derived from such sales 32
multiplied by the rate of 0.138 percent. Sellers must keep and 33
preserve records for the period required by RCW 82.32.070 34
establishing that the goods were transported by the purchaser in the 35
ordinary course of business out of this state or sold to a 36
manufacturer for use as an ingredient or component in the 37
manufacturing of a dairy product. 38
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(ii) For the purposes of this subsection (1)(c), "dairy products" 1
means: 2
(A) Products, not including any cannabis-infused product, that as 3
of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 4
131, 133, and 135, including by-products from the manufacturing of 5
the dairy products, such as whey and casein; and 6
(B) Products comprised of not less than 70 percent dairy products 7
that qualify under (c)(ii)(A) of this subsection, measured by weight 8
or volume. 9
(iii) The preferential tax rate provided to taxpayers under this 10
subsection (1)(c) does not apply to sales of dairy products on or 11
after July 1, 2023, where a dairy product is used by the purchaser as 12
an ingredient or component in the manufacturing in Washington of a 13
dairy product; 14
(d)(i) Beginning July 1, 2035, fruits or vegetables by canning, 15
preserving, freezing, processing, or dehydrating fresh fruits or 16
vegetables, or selling at wholesale fruits or vegetables manufactured 17
by the seller by canning, preserving, freezing, processing, or 18
dehydrating fresh fruits or vegetables and sold to purchasers who 19
transport in the ordinary course of business the goods out of this 20
state; as to such persons the amount of tax with respect to such 21
business is equal to the value of the products manufactured or the 22
gross proceeds derived from such sales multiplied by the rate of 23
0.138 percent. Sellers must keep and preserve records for the period 24
required by RCW 82.32.070 establishing that the goods were 25
transported by the purchaser in the ordinary course of business out 26
of this state. 27
(ii) For purposes of this subsection (1)(d), "fruits" and 28
"vegetables" do not include cannabis, useable cannabis, or cannabis-29
infused products; and 30
(e) Wood biomass fuel; as to such persons the amount of tax with 31
respect to the business is equal to the value of wood biomass fuel 32
manufactured, multiplied by the rate of 0.138 percent. For the 33
purposes of this section, "wood biomass fuel" means a liquid or 34
gaseous fuel that is produced from lignocellulosic feedstocks, 35
including wood, forest, or field residue and dedicated energy crops, 36
and that does not include wood treated with chemical preservations 37
such as creosote, pentachlorophenol, or copper-chrome-arsenic.38
(2) Upon every person engaging within this state in the business 39
of splitting or processing dried peas; as to such persons the amount 40
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of tax with respect to such business is equal to the value of the 1
peas split or processed, multiplied by the rate of 0.138 percent.2
(3) ((Upon every nonprofit corporation and nonprofit association 3
engaging within this state in research and development, as to such 4
corporations and associations, the amount of tax with respect to such 5
activities is equal to the gross income derived from such activities 6
multiplied by the rate of 0.484 percent.7
(4))) Upon every person engaging within this state in the 8
business of slaughtering, breaking and/or processing perishable meat 9
products and/or selling the same at wholesale only and not at retail; 10
as to such persons the tax imposed is equal to the gross proceeds 11
derived from such sales multiplied by the rate of 0.138 percent.12
(((5)(a))) (4) Upon every person engaging within this state in 13
the business of acting as a travel agent or tour operator and whose 14
annual taxable amount for the prior calendar year from such business 15
was $250,000 or less; as to such persons the amount of the tax with 16
respect to such activities is equal to the gross income derived from 17
such activities multiplied by the rate of 0.275 percent.18
(((b) Upon every person engaging within this state in the 19
business of acting as a travel agent or tour operator and whose 20
annual taxable amount for the prior calendar year from such business 21
was more than $250,000; as to such persons the amount of the tax with 22
respect to such activities is equal to the gross income derived from 23
such activities multiplied by the rate of 0.275 percent through June 24
30, 2019, and 0.9 percent beginning July 1, 2019.25
(6) Upon every person engaging within this state in business as 26
an international steamship agent, international customs house broker, 27
international freight forwarder, vessel and/or cargo charter broker 28
in foreign commerce, and/or international air cargo agent; as to such 29
persons the amount of the tax with respect to only international 30
activities is equal to the gross income derived from such activities 31
multiplied by the rate of 0.275 percent.32
(7) Upon every person engaging within this state in the business 33
of stevedoring and associated activities pertinent to the movement of 34
goods and commodities in waterborne interstate or foreign commerce; 35
as to such persons the amount of tax with respect to such business is 36
equal to the gross proceeds derived from such activities multiplied 37
by the rate of 0.275 percent. Persons subject to taxation under this 38
subsection are exempt from payment of taxes imposed by chapter 82.16 39
RCW for that portion of their business subject to taxation under this 40
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subsection. Stevedoring and associated activities pertinent to the 1
conduct of goods and commodities in waterborne interstate or foreign 2
commerce are defined as all activities of a labor, service or 3
transportation nature whereby cargo may be loaded or unloaded to or 4
from vessels or barges, passing over, onto or under a wharf, pier, or 5
similar structure; cargo may be moved to a warehouse or similar 6
holding or storage yard or area to await further movement in import 7
or export or may move to a consolidation freight station and be 8
stuffed, unstuffed, containerized, separated or otherwise segregated 9
or aggregated for delivery or loaded on any mode of transportation 10
for delivery to its consignee. Specific activities included in this 11
definition are: Wharfage, handling, loading, unloading, moving of 12
cargo to a convenient place of delivery to the consignee or a 13
convenient place for further movement to export mode; documentation 14
services in connection with the receipt, delivery, checking, care, 15
custody and control of cargo required in the transfer of cargo; 16
imported automobile handling prior to delivery to consignee; terminal 17
stevedoring and incidental vessel services, including but not limited 18
to plugging and unplugging refrigerator service to containers, 19
trailers, and other refrigerated cargo receptacles, and securing ship 20
hatch covers. 21
(8))) (5)(a) Upon every person engaging within this state in the 22
business of disposing of low-level waste, as defined in RCW 23
70A.380.010; as to such persons the amount of the tax with respect to 24
such business is equal to the gross income of the business, excluding 25
any fees imposed under chapter 70A.384 RCW, multiplied by the rate of 26
3.3 percent. 27
(b) If the gross income of the taxpayer is attributable to 28
activities both within and without this state, the gross income 29
attributable to this state must be determined in accordance with the 30
methods of apportionment required under RCW 82.04.460.31
(((9) Upon every person engaging within this state as an 32
insurance producer or title insurance agent licensed under chapter 33
48.17 RCW or a surplus line broker licensed under chapter 48.15 RCW; 34
as to such persons, the amount of the tax with respect to such 35
licensed activities is equal to the gross income of such business 36
multiplied by the rate of 0.484 percent.37
(10))) (6) Upon every person engaging within this state in 38
business as a hospital, as defined in chapter 70.41 RCW, that is 39
operated as a nonprofit corporation or by the state or any of its 40
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political subdivisions, as to such persons, the amount of tax with 1
respect to such activities is equal to the gross income of the 2
business multiplied by the rate of 0.75 percent through June 30, 3
1995, and 1.5 percent thereafter. 4
(((11))) (7)(a) Beginning October 1, 2005, upon every person 5
engaging within this state in the business of manufacturing 6
commercial airplanes, or components of such airplanes, or making 7
sales, at retail or wholesale, of commercial airplanes or components 8
of such airplanes, manufactured by the seller, as to such persons the 9
amount of tax with respect to such business is, in the case of 10
manufacturers, equal to the value of the product manufactured and the 11
gross proceeds of sales of the product manufactured, or in the case 12
of processors for hire, equal to the gross income of the business, 13
multiplied by the rate of: 14
(i) 0.4235 percent from October 1, 2005, through June 30, 2007;15
(ii) 0.2904 percent beginning July 1, 2007, through March 31, 16
2020; and 17
(iii) Beginning April 1, 2020, 0.484 percent, subject to any 18
reduction required under (e) of this subsection (((11))) (7). The tax 19
rate in this subsection (((11))) (7)(a)(iii) applies to all business 20
activities described in this subsection (((11))) (7)(a).21
(b) Beginning July 1, 2008, upon every person who is not eligible 22
to report under the provisions of (a) of this subsection (((11))) (7) 23
and is engaging within this state in the business of manufacturing 24
tooling specifically designed for use in manufacturing commercial 25
airplanes or components of such airplanes, or making sales, at retail 26
or wholesale, of such tooling manufactured by the seller, as to such 27
persons the amount of tax with respect to such business is, in the 28
case of manufacturers, equal to the value of the product manufactured 29
and the gross proceeds of sales of the product manufactured, or in 30
the case of processors for hire, be equal to the gross income of the 31
business, multiplied by the rate of: 32
(i) 0.2904 percent through March 31, 2020; and33
(ii) Beginning April 1, 2020, the following rates, which are 34
subject to any reduction required under (e) of this subsection 35
(((11))) (7): 36
(A) The rate under RCW 82.04.250(1) on the business of making 37
retail sales of tooling specifically designed for use in 38
manufacturing commercial airplanes or components of such airplanes; 39
and 40
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(B) 0.484 percent on all other business activities described in 1
this subsection (((11))) (7)(b). 2
(c) For the purposes of this subsection (((11))) (7), "commercial 3
airplane" and "component" have the same meanings as provided in RCW 4
82.32.550. 5
(d)(i) In addition to all other requirements under this title, a 6
person reporting under the tax rate provided in this subsection 7
(((11))) (7) must file a complete annual tax performance report with 8
the department under RCW 82.32.534. However, this requirement does 9
not apply to persons reporting under the tax rate in (a)(iii) of this 10
subsection (((11))) (7), so long as that rate remains 0.484 percent, 11
or under any of the tax rates in (b)(ii)(A) and (B) of this 12
subsection (((11))) (7), so long as those tax rates remain the rate 13
imposed pursuant to RCW 82.04.250(1) and 0.484 percent, respectively.14
(ii) Nothing in (d)(i) of this subsection (((11))) (7) may be 15
construed as affecting the obligation of a person reporting under a 16
tax rate provided in this subsection (((11))) (7) to file a complete 17
annual tax performance report with the department under RCW 18
82.32.534: (A) Pursuant to another provision of this title as a 19
result of claiming a tax credit or exemption; or (B) pursuant to 20
(d)(i) of this subsection (((11))) (7) as a result of claiming the 21
tax rates in (a)(ii) or (b)(i) of this subsection (((11))) (7) for 22
periods ending before April 1, 2020. 23
(e)(i) After March 31, 2021, the tax rates under (a)(iii) and 24
(b)(ii) of this subsection (((11))) (7) must be reduced to 0.357 25
percent provided the conditions in RCW 82.04.2602 are met. The 26
effective date of the rates authorized under this subsection (((11))) 27
(7)(e) must occur on the first day of the next calendar quarter that 28
is at least 60 days after the department receives the last of the two 29
written notices pursuant to RCW 82.04.2602 (3) and (4).30
(ii) Both a significant commercial airplane manufacturer 31
separately and the rest of the aerospace industry as a whole, 32
receiving the rate of 0.357 percent under this subsection (((11))) 33
(7)(e) are subject to the aerospace apprenticeship utilization rates 34
required under RCW 49.04.220 by April 1, 2026, or five years after 35
the effective date of the 0.357 percent rate authorized under this 36
subsection (((11))) (7)(e), whichever is later, as determined by the 37
department of labor and industries. 38
(iii) The provisions of RCW 82.32.805 and 82.32.808 do not apply 39
to this subsection (((11))) (7)(e). 40
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(f)(i) Except as provided in (f)(ii) of this subsection (((11))) 1
(7), this subsection (((11))) (7) does not apply on and after July 1, 2
2040. 3
(ii) With respect to the manufacturing of commercial airplanes or 4
making sales, at retail or wholesale, of commercial airplanes, this 5
subsection (((11))) (7) does not apply on and after July 1st of the 6
year in which the department makes a determination that any final 7
assembly or wing assembly of any version or variant of a commercial 8
airplane that is the basis of a siting of a significant commercial 9
airplane manufacturing program in the state under RCW 82.32.850 has 10
been sited outside the state of Washington. This subsection (((11))) 11
(7)(f)(ii) only applies to the manufacturing or sale of commercial 12
airplanes that are the basis of a siting of a significant commercial 13
airplane manufacturing program in the state under RCW 82.32.850. This 14
subsection (((11))) (7)(f)(ii) continues to apply during the time 15
that a person is subject to the tax rate in (a)(iii) of this 16
subsection (((11))) (7). 17
(g) For the purposes of this subsection, "a significant 18
commercial airplane manufacturer" means a manufacturer of commercial 19
airplanes with at least 50,000 full-time employees in Washington as 20
of January 1, 2021. 21
(((12))) (8)(a) Until July 1, 2045, upon every person engaging 22
within this state in the business of extracting timber or extracting 23
for hire timber; as to such persons the amount of tax with respect to 24
the business is, in the case of extractors, equal to the value of 25
products, including by-products, extracted, or in the case of 26
extractors for hire, equal to the gross income of the business, 27
multiplied by the rate of 0.4235 percent from July 1, 2006, through 28
June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 29
2045. 30
(b) Until July 1, 2045, upon every person engaging within this 31
state in the business of manufacturing or processing for hire: (i) 32
Timber into timber products or wood products; (ii) timber products 33
into other timber products or wood products; or (iii) products 34
defined in RCW 19.27.570(1); as to such persons the amount of the tax 35
with respect to the business is, in the case of manufacturers, equal 36
to the value of products, including by-products, manufactured, or in 37
the case of processors for hire, equal to the gross income of the 38
business, multiplied by the rate of 0.4235 percent from July 1, 2006, 39
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through June 30, 2007, and 0.2904 percent from July 1, 2007, through 1
June 30, 2045. 2
(c) Until July 1, 2045, upon every person engaging within this 3
state in the business of selling at wholesale: (i) Timber extracted 4
by that person; (ii) timber products manufactured by that person from 5
timber or other timber products; (iii) wood products manufactured by 6
that person from timber or timber products; or (iv) products defined 7
in RCW 19.27.570(1) manufactured by that person; as to such persons 8
the amount of the tax with respect to the business is equal to the 9
gross proceeds of sales of the timber, timber products, wood 10
products, or products defined in RCW 19.27.570(1) multiplied by the 11
rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 12
0.2904 percent from July 1, 2007, through June 30, 2045.13
(d) Until July 1, 2045, upon every person engaging within this 14
state in the business of selling standing timber; as to such persons 15
the amount of the tax with respect to the business is equal to the 16
gross income of the business multiplied by the rate of 0.2904 17
percent. For purposes of this subsection (((12))) (8)(d), "selling 18
standing timber" means the sale of timber apart from the land, where 19
the buyer is required to sever the timber within 30 months from the 20
date of the original contract, regardless of the method of payment 21
for the timber and whether title to the timber transfers before, 22
upon, or after severance. 23
(e) For purposes of this subsection, the following definitions 24
apply: 25
(i) "Biocomposite surface products" means surface material 26
products containing, by weight or volume, more than 50 percent 27
recycled paper and that also use nonpetroleum -based phenolic resin as 28
a bonding agent. 29
(ii) "Paper and paper products" means products made of interwoven 30
cellulosic fibers held together largely by hydrogen bonding. "Paper 31
and paper products" includes newsprint; office, printing, fine, and 32
pressure-sensitive papers; paper napkins, towels, and toilet tissue; 33
kraft bag, construction, and other kraft industrial papers; 34
paperboard, liquid packaging containers, containerboard, corrugated, 35
and solid-fiber containers including linerboard and corrugated 36
medium; and related types of cellulosic products containing 37
primarily, by weight or volume, cellulosic materials. "Paper and 38
paper products" does not include books, newspapers, magazines, 39
p. 13 SB 5794
periodicals, and other printed publications, advertising materials, 1
calendars, and similar types of printed materials. 2
(iii) "Recycled paper" means paper and paper products having 50 3
percent or more of their fiber content that comes from postconsumer 4
waste. For purposes of this subsection (((12))) (8)(e)(iii), 5
"postconsumer waste" means a finished material that would normally be 6
disposed of as solid waste, having completed its life cycle as a 7
consumer item. 8
(iv) "Timber" means forest trees, standing or down, on privately 9
or publicly owned land. "Timber" does not include Christmas trees 10
that are cultivated by agricultural methods or short-rotation 11
hardwoods as defined in RCW 84.33.035. 12
(v) "Timber products" means: 13
(A) Logs, wood chips, sawdust, wood waste, and similar products 14
obtained wholly from the processing of timber, short-rotation 15
hardwoods as defined in RCW 84.33.035, or both; 16
(B) Pulp, including market pulp and pulp derived from recovered 17
paper or paper products; and 18
(C) Recycled paper, but only when used in the manufacture of 19
biocomposite surface products. 20
(vi) "Wood products" means paper and paper products; dimensional 21
lumber; engineered wood products such as particleboard, oriented 22
strand board, medium density fiberboard, and plywood; wood doors; 23
wood windows; and biocomposite surface products. 24
(f) Except for small harvesters as defined in RCW 84.33.035, a 25
person reporting under the tax rate provided in this subsection 26
(((12))) (8) must file a complete annual tax performance report with 27
the department under RCW 82.32.534. 28
(g) Nothing in this subsection (((12))) (8) may be construed to 29
affect the taxation of any activity defined as a retail sale in RCW 30
82.04.050(2) (b) or (c), defined as a wholesale sale in RCW 31
82.04.060(2), or taxed under RCW 82.04.280(1)(g). 32
(((13))) (9) Upon every person engaging within this state in 33
inspecting, testing, labeling, and storing canned salmon owned by 34
another person, as to such persons, the amount of tax with respect to 35
such activities is equal to the gross income derived from such 36
activities multiplied by the rate of 0.484 percent.37
Sec. 103. RCW 82.04.260 and 2023 c 422 s 5 are each amended to 38
read as follows: 39
p. 14 SB 5794
(1) Upon every person engaging within this state in the business 1
of manufacturing: 2
(a) Wheat into flour, barley into pearl barley, soybeans into 3
soybean oil, canola into canola oil, canola meal, or canola by-4
products, or sunflower seeds into sunflower oil; as to such persons 5
the amount of tax with respect to such business is equal to the value 6
of the flour, pearl barley, oil, canola meal, or canola by-product 7
manufactured, multiplied by the rate of 0.138 percent;8
(b) Beginning July 1, 2035, seafood products that remain in a 9
raw, raw frozen, or raw salted state at the completion of the 10
manufacturing by that person; or selling manufactured seafood 11
products that remain in a raw, raw frozen, or raw salted state at the 12
completion of the manufacturing, to purchasers who transport in the 13
ordinary course of business the goods out of this state; as to such 14
persons the amount of tax with respect to such business is equal to 15
the value of the products manufactured or the gross proceeds derived 16
from such sales, multiplied by the rate of 0.138 percent. Sellers 17
must keep and preserve records for the period required by RCW 18
82.32.070 establishing that the goods were transported by the 19
purchaser in the ordinary course of business out of this state;20
(c)(i) Except as provided otherwise in (c)(iii) of this 21
subsection, beginning July 1, 2035, until January 1, 2046, dairy 22
products; or selling dairy products that the person has manufactured 23
to purchasers who either transport in the ordinary course of business 24
the goods out of state or purchasers who use such dairy products as 25
an ingredient or component in the manufacturing of a dairy product; 26
as to such persons the tax imposed is equal to the value of the 27
products manufactured or the gross proceeds derived from such sales 28
multiplied by the rate of 0.138 percent. Sellers must keep and 29
preserve records for the period required by RCW 82.32.070 30
establishing that the goods were transported by the purchaser in the 31
ordinary course of business out of this state or sold to a 32
manufacturer for use as an ingredient or component in the 33
manufacturing of a dairy product. 34
(ii) For the purposes of this subsection (1)(c), "dairy products" 35
means: 36
(A) Products, not including any cannabis-infused product, that as 37
of September 20, 2001, are identified in 21 C.F.R., chapter 1, parts 38
131, 133, and 135, including by-products from the manufacturing of 39
the dairy products, such as whey and casein; and 40
p. 15 SB 5794
(B) Products comprised of not less than 70 percent dairy products 1
that qualify under (c)(ii)(A) of this subsection, measured by weight 2
or volume. 3
(iii) The preferential tax rate provided to taxpayers under this 4
subsection (1)(c) does not apply to sales of dairy products on or 5
after July 1, 2023, where a dairy product is used by the purchaser as 6
an ingredient or component in the manufacturing in Washington of a 7
dairy product; 8
(d)(i) Beginning July 1, 2035, fruits or vegetables by canning, 9
preserving, freezing, processing, or dehydrating fresh fruits or 10
vegetables, or selling at wholesale fruits or vegetables manufactured 11
by the seller by canning, preserving, freezing, processing, or 12
dehydrating fresh fruits or vegetables and sold to purchasers who 13
transport in the ordinary course of business the goods out of this 14
state; as to such persons the amount of tax with respect to such 15
business is equal to the value of the products manufactured or the 16
gross proceeds derived from such sales multiplied by the rate of 17
0.138 percent. Sellers must keep and preserve records for the period 18
required by RCW 82.32.070 establishing that the goods were 19
transported by the purchaser in the ordinary course of business out 20
of this state. 21
(ii) For purposes of this subsection (1)(d), "fruits" and 22
"vegetables" do not include cannabis, useable cannabis, or cannabis-23
infused products; and 24
(e) Wood biomass fuel; as to such persons the amount of tax with 25
respect to the business is equal to the value of wood biomass fuel 26
manufactured, multiplied by the rate of 0.138 percent. For the 27
purposes of this section, "wood biomass fuel" means a liquid or 28
gaseous fuel that is produced from lignocellulosic feedstocks, 29
including wood, forest, or field residue and dedicated energy crops, 30
and that does not include wood treated with chemical preservations 31
such as creosote, pentachlorophenol, or copper-chrome-arsenic.32
(2) Upon every person engaging within this state in the business 33
of splitting or processing dried peas; as to such persons the amount 34
of tax with respect to such business is equal to the value of the 35
peas split or processed, multiplied by the rate of 0.138 percent.36
(3) ((Upon every nonprofit corporation and nonprofit association 37
engaging within this state in research and development, as to such 38
corporations and associations, the amount of tax with respect to such 39
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activities is equal to the gross income derived from such activities 1
multiplied by the rate of 0.484 percent. 2
(4))) Upon every person engaging within this state in the 3
business of slaughtering, breaking and/or processing perishable meat 4
products and/or selling the same at wholesale only and not at retail; 5
as to such persons the tax imposed is equal to the gross proceeds 6
derived from such sales multiplied by the rate of 0.138 percent.7
(((5)(a))) (4) Upon every person engaging within this state in 8
the business of acting as a travel agent or tour operator and whose 9
annual taxable amount for the prior calendar year from such business 10
was $250,000 or less; as to such persons the amount of the tax with 11
respect to such activities is equal to the gross income derived from 12
such activities multiplied by the rate of 0.275 percent.13
(((b) Upon every person engaging within this state in the 14
business of acting as a travel agent or tour operator and whose 15
annual taxable amount for the prior calendar year from such business 16
was more than $250,000; as to such persons the amount of the tax with 17
respect to such activities is equal to the gross income derived from 18
such activities multiplied by the rate of 0.275 percent through June 19
30, 2019, and 0.9 percent beginning July 1, 2019.20
(6) Upon every person engaging within this state in business as 21
an international steamship agent, international customs house broker, 22
international freight forwarder, vessel and/or cargo charter broker 23
in foreign commerce, and/or international air cargo agent; as to such 24
persons the amount of the tax with respect to only international 25
activities is equal to the gross income derived from such activities 26
multiplied by the rate of 0.275 percent.27
(7) Upon every person engaging within this state in the business 28
of stevedoring and associated activities pertinent to the movement of 29
goods and commodities in waterborne interstate or foreign commerce; 30
as to such persons the amount of tax with respect to such business is 31
equal to the gross proceeds derived from such activities multiplied 32
by the rate of 0.275 percent. Persons subject to taxation under this 33
subsection are exempt from payment of taxes imposed by chapter 82.16 34
RCW for that portion of their business subject to taxation under this 35
subsection. Stevedoring and associated activities pertinent to the 36
conduct of goods and commodities in waterborne interstate or foreign 37
commerce are defined as all activities of a labor, service or 38
transportation nature whereby cargo may be loaded or unloaded to or 39
from vessels or barges, passing over, onto or under a wharf, pier, or 40
p. 17 SB 5794
similar structure; cargo may be moved to a warehouse or similar 1
holding or storage yard or area to await further movement in import 2
or export or may move to a consolidation freight station and be 3
stuffed, unstuffed, containerized, separated or otherwise segregated 4
or aggregated for delivery or loaded on any mode of transportation 5
for delivery to its consignee. Specific activities included in this 6
definition are: Wharfage, handling, loading, unloading, moving of 7
cargo to a convenient place of delivery to the consignee or a 8
convenient place for further movement to export mode; documentation 9
services in connection with the receipt, delivery, checking, care, 10
custody and control of cargo required in the transfer of cargo; 11
imported automobile handling prior to delivery to consignee; terminal 12
stevedoring and incidental vessel services, including but not limited 13
to plugging and unplugging refrigerator service to containers, 14
trailers, and other refrigerated cargo receptacles, and securing ship 15
hatch covers. 16
(8))) (5)(a) Upon every person engaging within this state in the 17
business of disposing of low-level waste, as defined in RCW 18
70A.380.010; as to such persons the amount of the tax with respect to 19
such business is equal to the gross income of the business, excluding 20
any fees imposed under chapter 70A.384 RCW, multiplied by the rate of 21
3.3 percent. 22
(b) If the gross income of the taxpayer is attributable to 23
activities both within and without this state, the gross income 24
attributable to this state must be determined in accordance with the 25
methods of apportionment required under RCW 82.04.460.26
(((9) Upon every person engaging within this state as an 27
insurance producer or title insurance agent licensed under chapter 28
48.17 RCW or a surplus line broker licensed under chapter 48.15 RCW; 29
as to such persons, the amount of the tax with respect to such 30
licensed activities is equal to the gross income of such business 31
multiplied by the rate of 0.484 percent.32
(10))) (6) Upon every person engaging within this state in 33
business as a hospital, as defined in chapter 70.41 RCW, that is 34
operated as a nonprofit corporation or by the state or any of its 35
political subdivisions, as to such persons, the amount of tax with 36
respect to such activities is equal to the gross income of the 37
business multiplied by the rate of 0.75 percent through June 30, 38
1995, and 1.5 percent thereafter. 39
p. 18 SB 5794
(((11))) (7)(a) Beginning October 1, 2005, upon every person 1
engaging within this state in the business of manufacturing 2
commercial airplanes, or components of such airplanes, or making 3
sales, at retail or wholesale, of commercial airplanes or components 4
of such airplanes, manufactured by the seller, as to such persons the 5
amount of tax with respect to such business is, in the case of 6
manufacturers, equal to the value of the product manufactured and the 7
gross proceeds of sales of the product manufactured, or in the case 8
of processors for hire, equal to the gross income of the business, 9
multiplied by the rate of: 10
(i) 0.4235 percent from October 1, 2005, through June 30, 2007;11
(ii) 0.2904 percent beginning July 1, 2007, through March 31, 12
2020; and 13
(iii) Beginning April 1, 2020, 0.484 percent, subject to any 14
reduction required under (e) of this subsection (((11))) (7). The tax 15
rate in this subsection (((11))) (7)(a)(iii) applies to all business 16
activities described in this subsection (((11))) (7)(a).17
(b) Beginning July 1, 2008, upon every person who is not eligible 18
to report under the provisions of (a) of this subsection (((11))) (7) 19
and is engaging within this state in the business of manufacturing 20
tooling specifically designed for use in manufacturing commercial 21
airplanes or components of such airplanes, or making sales, at retail 22
or wholesale, of such tooling manufactured by the seller, as to such 23
persons the amount of tax with respect to such business is, in the 24
case of manufacturers, equal to the value of the product manufactured 25
and the gross proceeds of sales of the product manufactured, or in 26
the case of processors for hire, be equal to the gross income of the 27
business, multiplied by the rate of: 28
(i) 0.2904 percent through March 31, 2020; and29
(ii) Beginning April 1, 2020, the following rates, which are 30
subject to any reduction required under (e) of this subsection 31
(((11))) (7): 32
(A) The rate under RCW 82.04.250(1) on the business of making 33
retail sales of tooling specifically designed for use in 34
manufacturing commercial airplanes or components of such airplanes; 35
and 36
(B) 0.484 percent on all other business activities described in 37
this subsection (((11))) (7)(b). 38
p. 19 SB 5794
(c) For the purposes of this subsection (((11))) (7), "commercial 1
airplane" and "component" have the same meanings as provided in RCW 2
82.32.550. 3
(d)(i) In addition to all other requirements under this title, a 4
person reporting under the tax rate provided in this subsection 5
(((11))) (7) must file a complete annual tax performance report with 6
the department under RCW 82.32.534. However, this requirement does 7
not apply to persons reporting under the tax rate in (a)(iii) of this 8
subsection (((11))) (7), so long as that rate remains 0.484 percent, 9
or under any of the tax rates in (b)(ii)(A) and (B) of this 10
subsection (((11))) (7), so long as those tax rates remain the rate 11
imposed pursuant to RCW 82.04.250(1) and 0.484 percent, respectively.12
(ii) Nothing in (d)(i) of this subsection (((11))) (7) may be 13
construed as affecting the obligation of a person reporting under a 14
tax rate provided in this subsection (((11))) (7) to file a complete 15
annual tax performance report with the department under RCW 16
82.32.534: (A) Pursuant to another provision of this title as a 17
result of claiming a tax credit or exemption; or (B) pursuant to 18
(d)(i) of this subsection (((11))) (7) as a result of claiming the 19
tax rates in (a)(ii) or (b)(i) of this subsection (((11))) (7) for 20
periods ending before April 1, 2020. 21
(e)(i) After March 31, 2021, the tax rates under (a)(iii) and 22
(b)(ii) of this subsection (((11))) (7) must be reduced to 0.357 23
percent provided the conditions in RCW 82.04.2602 are met. The 24
effective date of the rates authorized under this subsection (((11))) 25
(7)(e) must occur on the first day of the next calendar quarter that 26
is at least 60 days after the department receives the last of the two 27
written notices pursuant to RCW 82.04.2602 (3) and (4).28
(ii) Both a significant commercial airplane manufacturer 29
separately and the rest of the aerospace industry as a whole, 30
receiving the rate of 0.357 percent under this subsection (((11))) 31
(7)(e) are subject to the aerospace apprenticeship utilization rates 32
required under RCW 49.04.220 by April 1, 2026, or five years after 33
the effective date of the 0.357 percent rate authorized under this 34
subsection (((11))) (7)(e), whichever is later, as determined by the 35
department of labor and industries. 36
(iii) The provisions of RCW 82.32.805 and 82.32.808 do not apply 37
to this subsection (((11))) (7)(e). 38
p. 20 SB 5794
(f)(i) Except as provided in (f)(ii) of this subsection (((11))) 1
(7), this subsection (((11))) (7) does not apply on and after July 1, 2
2040. 3
(ii) With respect to the manufacturing of commercial airplanes or 4
making sales, at retail or wholesale, of commercial airplanes, this 5
subsection (((11))) (7) does not apply on and after July 1st of the 6
year in which the department makes a determination that any final 7
assembly or wing assembly of any version or variant of a commercial 8
airplane that is the basis of a siting of a significant commercial 9
airplane manufacturing program in the state under RCW 82.32.850 has 10
been sited outside the state of Washington. This subsection (((11))) 11
(7)(f)(ii) only applies to the manufacturing or sale of commercial 12
airplanes that are the basis of a siting of a significant commercial 13
airplane manufacturing program in the state under RCW 82.32.850. This 14
subsection (((11))) (7)(f)(ii) continues to apply during the time 15
that a person is subject to the tax rate in (a)(iii) of this 16
subsection (((11))) (7). 17
(g) For the purposes of this subsection, "a significant 18
commercial airplane manufacturer" means a manufacturer of commercial 19
airplanes with at least 50,000 full-time employees in Washington as 20
of January 1, 2021. 21
(((12))) (8)(a) Until July 1, 2045, upon every person engaging 22
within this state in the business of extracting timber or extracting 23
for hire timber; as to such persons the amount of tax with respect to 24
the business is, in the case of extractors, equal to the value of 25
products, including by-products, extracted, or in the case of 26
extractors for hire, equal to the gross income of the business, 27
multiplied by the rate of 0.4235 percent from July 1, 2006, through 28
June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 29
2045. 30
(b) Until July 1, 2045, upon every person engaging within this 31
state in the business of manufacturing or processing for hire: (i) 32
Timber into timber products or wood products; (ii) timber products 33
into other timber products or wood products; or (iii) products 34
defined in RCW 19.27.570(1); as to such persons the amount of the tax 35
with respect to the business is, in the case of manufacturers, equal 36
to the value of products, including by-products, manufactured, or in 37
the case of processors for hire, equal to the gross income of the 38
business, multiplied by the rate of 0.4235 percent from July 1, 2006, 39
p. 21 SB 5794
through June 30, 2007, and 0.2904 percent from July 1, 2007, through 1
June 30, 2045. 2
(c) Until July 1, 2045, upon every person engaging within this 3
state in the business of selling at wholesale: (i) Timber extracted 4
by that person; (ii) timber products manufactured by that person from 5
timber or other timber products; (iii) wood products manufactured by 6
that person from timber or timber products; or (iv) products defined 7
in RCW 19.27.570(1) manufactured by that person; as to such persons 8
the amount of the tax with respect to the business is equal to the 9
gross proceeds of sales of the timber, timber products, wood 10
products, or products defined in RCW 19.27.570(1) multiplied by the 11
rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 12
0.2904 percent from July 1, 2007, through June 30, 2045.13
(d) Until July 1, 2045, upon every person engaging within this 14
state in the business of selling standing timber; as to such persons 15
the amount of the tax with respect to the business is equal to the 16
gross income of the business multiplied by the rate of 0.2904 17
percent. For purposes of this subsection (((12))) (8)(d), "selling 18
standing timber" means the sale of timber apart from the land, where 19
the buyer is required to sever the timber within 30 months from the 20
date of the original contract, regardless of the method of payment 21
for the timber and whether title to the timber transfers before, 22
upon, or after severance. 23
(e) For purposes of this subsection, the following definitions 24
apply: 25
(i) "Biocomposite surface products" means surface material 26
products containing, by weight or volume, more than 50 percent 27
recycled paper and that also use nonpetroleum -based phenolic resin as 28
a bonding agent. 29
(ii) "Paper and paper products" means products made of interwoven 30
cellulosic fibers held together largely by hydrogen bonding. "Paper 31
and paper products" includes newsprint; office, printing, fine, and 32
pressure-sensitive papers; paper napkins, towels, and toilet tissue; 33
kraft bag, construction, and other kraft industrial papers; 34
paperboard, liquid packaging containers, containerboard, corrugated, 35
and solid-fiber containers including linerboard and corrugated 36
medium; and related types of cellulosic products containing 37
primarily, by weight or volume, cellulosic materials. "Paper and 38
paper products" does not include books, newspapers, magazines, 39
p. 22 SB 5794
periodicals, and other printed publications, advertising materials, 1
calendars, and similar types of printed materials. 2
(iii) "Recycled paper" means paper and paper products having 50 3
percent or more of their fiber content that comes from postconsumer 4
waste. For purposes of this subsection (((12))) (8)(e)(iii), 5
"postconsumer waste" means a finished material that would normally be 6
disposed of as solid waste, having completed its life cycle as a 7
consumer item. 8
(iv) "Timber" means forest trees, standing or down, on privately 9
or publicly owned land. "Timber" does not include Christmas trees 10
that are cultivated by agricultural methods or short-rotation 11
hardwoods as defined in RCW 84.33.035. 12
(v) "Timber products" means: 13
(A) Logs, wood chips, sawdust, wood waste, and similar products 14
obtained wholly from the processing of timber, short-rotation 15
hardwoods as defined in RCW 84.33.035, or both; 16
(B) Pulp, including market pulp and pulp derived from recovered 17
paper or paper products; and 18
(C) Recycled paper, but only when used in the manufacture of 19
biocomposite surface products. 20
(vi) "Wood products" means paper and paper products; dimensional 21
lumber; engineered wood products such as particleboard, oriented 22
strand board, medium density fiberboard, and plywood; wood doors; 23
wood windows; and biocomposite surface products. 24
(f) Except for small harvesters as defined in RCW 84.33.035, a 25
person reporting under the tax rate provided in this subsection 26
(((12))) (8) must file a complete annual tax performance report with 27
the department under RCW 82.32.534. 28
(g) Nothing in this subsection (((12))) (8) may be construed to 29
affect the taxation of any activity defined as a retail sale in RCW 30
82.04.050(2) (b) or (c), defined as a wholesale sale in RCW 31
82.04.060(2), or taxed under RCW 82.04.280(1)(g). 32
(((13))) (9) Upon every person engaging within this state in 33
inspecting, testing, labeling, and storing canned salmon owned by 34
another person, as to such persons, the amount of tax with respect to 35
such activities is equal to the gross income derived from such 36
activities multiplied by the rate of 0.484 percent.37
(((14))) (10)(a) Upon every person engaging within this state in 38
the business of printing a newspaper, publishing a newspaper, or 39
both, the amount of tax on such business is equal to the gross income 40
p. 23 SB 5794
of the business multiplied by the rate of 0.35 percent until July 1, 1
2024, and 0.484 percent thereafter. 2
(b) A person reporting under the tax rate provided in this 3
subsection (((14))) (10) must file a complete annual tax performance 4
report with the department under RCW 82.32.534. 5
Sec. 104. RCW 82.04.290 and 2020 c 2 s 3 are each amended to 6
read as follows: 7
(1) ((Upon every person engaging within this state in the 8
business of providing qualifying international investment management 9
services, as to such persons, the amount of tax with respect to such 10
business is equal to the gross income or gross proceeds of sales of 11
the business multiplied by a rate of 0.275 percent.12
(2)))(a) Upon every person engaging within this state in any 13
business activity other than or in addition to an activity taxed 14
explicitly under another section in this chapter or subsection (((1) 15
or (3))) (2) of this section; as to such persons the amount of tax on 16
account of such activities is equal to the gross income of the 17
business multiplied by the rate of: 18
(i) 1.75 percent; or 19
(ii) 1.5 percent for: 20
(A) Any person subject to the surcharge imposed under RCW 21
82.04.299; 22
(B) Any person whose gross income of the business subject to the 23
tax imposed under this subsection (((2))) (1), for the immediately 24
preceding calendar year, was less than ((one million dollars )) 25
$1,000,000, unless (I) the person is affiliated with one or more 26
other persons, and (II) the aggregate gross income of the business 27
subject to the tax imposed under this subsection (((2))) (1) for all 28
affiliated persons was greater than or equal to ((one million 29
dollars)) $1,000,000 for the immediately preceding calendar year; and30
(C) Hospitals as defined in RCW 70.41.020, including any hospital 31
that comes within the scope of chapter 71.12 RCW if the hospital is 32
also licensed under chapter 70.41 RCW. This subsection (((2))) (1)33
(a)(ii)(C) must not be construed as modifying RCW 82.04.260(((10))) 34
(6). 35
(b) This subsection (((2))) (1) includes, among others, and 36
without limiting the scope hereof (whether or not title to materials 37
used in the performance of such business passes to another by 38
accession, confusion or other than by outright sale), persons engaged 39
p. 24 SB 5794
in the business of rendering any type of service which does not 1
constitute a "sale at retail" or a "sale at wholesale." The value of 2
advertising, demonstration, and promotional supplies and materials 3
furnished to an agent by his or her principal or supplier to be used 4
for informational, educational, and promotional purposes is not 5
considered a part of the agent's remuneration or commission and is 6
not subject to taxation under this section. 7
(c) 14.3 percent of the revenues collected under (a)(i) of this 8
subsection (((2))) (1) must be deposited into the workforce education 9
investment account created in RCW 43.79.195. 10
(d)(i) To aid in the effective administration of this subsection 11
(((2))) (1), the department may require a person claiming to be 12
subject to the 1.5 percent tax rate under (a)(ii)(B) of this 13
subsection (((2))) (1) to identify all of the person's affiliates, 14
including their department tax registration number or unified 15
business identifier number, as may be applicable, or to certify that 16
the person is not affiliated with any other person. Requests under 17
this subsection (((2))) (1)(d)(i) must be in writing and may be made 18
electronically. 19
(ii) If the department establishes, by clear, cogent, and 20
convincing evidence, that a person, with intent to evade the 21
additional taxes due under the 1.75 percent tax rate in (a)(i) of 22
this subsection (((2))) (1), failed to provide the department with 23
complete and accurate information in response to a written request 24
under (d)(i) of this subsection (((2))) (1) within ((thirty)) 30 days 25
of such request, the person is ineligible for the 1.5 percent tax 26
rate in (a)(ii) of this subsection (((2))) (1) for the entire current 27
calendar year and the following four calendar years. However, the 28
department must waive the provisions of this subsection (((2))) (1)29
(d)(ii) for any tax reporting period that the person is otherwise 30
eligible for the 1.5 percent tax rate in (a)(ii) of this subsection 31
(((2))) (1) if (A) the department has not previously determined that 32
the person failed to fully comply with (d)(i) of this subsection 33
(((2))) (1), and (B) within ((thirty)) 30 days of the notice of 34
additional tax due as a result of the person's failure to fully 35
comply with (d)(i) of this subsection (((2))) (1) the department 36
determines that the person has come into full compliance with (d)(i) 37
of this subsection (((2))) (1). This subsection (((2))) (1)(d) 38
applies only with respect to persons claiming entitlement to the 1.5 39
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percent tax rate solely by reason of (a)(ii)(B) of this subsection 1
(((2))) (1). 2
(e) For the purposes of (a)(ii)(B) of this subsection (((2))) 3
(1), if a taxpayer is subject to the reconciliation provisions of RCW 4
82.04.462(4), and calculates gross income of the business subject to 5
the tax imposed under this subsection (((2))) (1) for the immediately 6
preceding calendar year, or aggregate gross income of the business 7
subject to the tax imposed under this subsection (((2))) (1) for the 8
immediately preceding calendar year for all affiliated persons, based 9
on incomplete information, the taxpayer must correct the reporting 10
for the current calendar year when complete information for the 11
immediately preceding calendar year is available. 12
(f) For purposes of this subsection (((2))) (1), the definitions 13
in this subsection (((2))) (1)(f) apply: 14
(i) "Affiliate" means a person that directly or indirectly, 15
through one or more intermediaries, controls, is controlled by, or is 16
under common control with another person; and 17
(ii) "Control" means the possession, directly or indirectly, of 18
more than ((eighty)) 80 percent of the power to direct or cause the 19
direction of the management and policies of a person, whether through 20
the ownership of voting shares, by contract, or otherwise.21
(((3))) (2)(a) Until July 1, 2040, upon every person engaging 22
within this state in the business of performing aerospace product 23
development for others, as to such persons, the amount of tax with 24
respect to such business is equal to the gross income of the business 25
multiplied by a rate of 0.9 percent. 26
(b) A person reporting under the tax rate provided in this 27
subsection (((3))) (2) must file a complete annual report with the 28
department under RCW 82.32.534. 29
(c) "Aerospace product development" has the meaning as provided 30
in RCW 82.04.4461. 31
Sec. 105. RCW 48.14.0201 and 2016 c 133 s 2 are each amended to 32
read as follows: 33
(1) As used in this section, "taxpayer" means a health 34
maintenance organization as defined in RCW 48.46.020, a health care 35
service contractor as defined in chapter 48.44 RCW, or a self-funded 36
multiple employer welfare arrangement as defined in RCW 48.125.010.37
(2) Each taxpayer must pay a tax on or before the first day of 38
March of each year to the state treasurer through the insurance 39
p. 26 SB 5794
commissioner's office. The tax must be equal to the total amount of 1
all premiums and prepayments for health care services collected or 2
received by the taxpayer under RCW 48.14.090 during the preceding 3
calendar year multiplied by the rate of two percent. For tax 4
purposes, the reporting of premiums and prepayments must be on a 5
written basis or on a paid-for basis consistent with the basis 6
required by the annual statement. 7
(3) Taxpayers must prepay their tax obligations under this 8
section. The minimum amount of the prepayments is the percentages of 9
the taxpayer's tax obligation for the preceding calendar year 10
recomputed using the rate in effect for the current year. For the 11
prepayment of taxes due during the first calendar year, the minimum 12
amount of the prepayments is the percentages of the taxpayer's tax 13
obligation that would have been due had the tax been in effect during 14
the previous calendar year. The tax prepayments must be paid to the 15
state treasurer through the commissioner's office by the due dates 16
and in the following amounts: 17
(a) On or before June 15, ((forty-five)) 45 percent;18
(b) On or before September 15, ((twenty-five)) 25 percent;19
(c) On or before December 15, ((twenty-five)) 25 percent.20
(4) For good cause demonstrated in writing, the commissioner may 21
approve an amount smaller than the preceding calendar year's tax 22
obligation as recomputed for calculating the health maintenance 23
organization's, health care service contractor's, self-funded 24
multiple employer welfare arrangement's, or certified health plan's 25
prepayment obligations for the current tax year. 26
(5)(a) Except as provided in (b) of this subsection, moneys 27
collected under this section are deposited in the general fund.28
(b) Beginning January 1, 2014, moneys collected from taxpayers 29
for premiums written on qualified health benefit plans and qualified 30
dental plans offered through the health benefit exchange under 31
chapter 43.71 RCW must be deposited in the health benefit exchange 32
account under RCW 43.71.060. 33
(6) The taxes imposed in this section do not apply to:34
(a) Amounts received by any taxpayer from the United States or 35
any instrumentality thereof as prepayments for health care services 36
provided under Title XVIII (medicare) of the federal social security 37
act. 38
(b) Amounts received by any taxpayer from the state of Washington 39
as prepayments for health care services provided under:40
p. 27 SB 5794
(i) The medical care services program as provided in RCW 1
74.09.035; or 2
(ii) The Washington basic health plan on behalf of subsidized 3
enrollees as provided in chapter 70.47 RCW. 4
(c) ((Amounts received by any health care service contractor as 5
defined in chapter 48.44 RCW, or any health maintenance organization 6
as defined in chapter 48.46 RCW, as prepayments for health care 7
services included within the definition of practice of dentistry 8
under RCW 18.32.020, except amounts received for pediatric oral 9
services that qualify as coverage for the minimum essential coverage 10
requirement under P.L. 111-148 (2010), as amended, and for stand-11
alone family dental plans as defined in RCW 43.71.080(4)(a), only 12
when offered in the individual market, as defined in RCW 13
48.43.005(27), or to a small group, as defined in RCW 48.43.005(33).14
(d))) Participant contributions to self-funded multiple employer 15
welfare arrangements that are not taxable in this state.16
(7) Beginning January 1, 2000, the state preempts the field of 17
imposing excise or privilege taxes upon taxpayers and no county, 18
city, town, or other municipal subdivision has the right to impose 19
any such taxes upon such taxpayers. This subsection is limited to 20
premiums and payments for health benefit plans offered by health care 21
service contractors under chapter 48.44 RCW, health maintenance 22
organizations under chapter 48.46 RCW, and self-funded multiple 23
employer welfare arrangements as defined in RCW 48.125.010. The 24
preemption authorized by this subsection must not impair the ability 25
of a county, city, town, or other municipal subdivision to impose 26
excise or privilege taxes upon the health care services directly 27
delivered by the employees of a health maintenance organization under 28
chapter 48.46 RCW. 29
(8)(a) The taxes imposed by this section apply to a self-funded 30
multiple employer welfare arrangement only in the event that they are 31
not preempted by the employee retirement income security act of 1974, 32
as amended, 29 U.S.C. Sec. 1001 et seq. The arrangements and the 33
commissioner must initially request an advisory opinion from the 34
United States department of labor or obtain a declaratory ruling from 35
a federal court on the legality of imposing state premium taxes on 36
these arrangements. Once the legality of the taxes has been 37
determined, the multiple employer welfare arrangement certified by 38
the insurance commissioner must begin payment of these taxes.39
p. 28 SB 5794
(b) If there has not been a final determination of the legality 1
of these taxes, then beginning on the earlier of (i) the date the 2
fourth multiple employer welfare arrangement has been certified by 3
the insurance commissioner, or (ii) April 1, 2006, the arrangement 4
must deposit the taxes imposed by this section into an interest 5
bearing escrow account maintained by the arrangement. Upon a final 6
determination that the taxes are not preempted by the employee 7
retirement income security act of 1974, as amended, 29 U.S.C. Sec. 8
1001 et seq., all funds in the interest bearing escrow account must 9
be transferred to the state treasurer. 10
(9) The effect of transferring contracts for health care services 11
from one taxpayer to another taxpayer is to transfer the tax 12
prepayment obligation with respect to the contracts.13
(10) On or before June 1st of each year, the commissioner must 14
notify each taxpayer required to make prepayments in that year of the 15
amount of each prepayment and must provide remittance forms to be 16
used by the taxpayer. However, a taxpayer's responsibility to make 17
prepayments is not affected by failure of the commissioner to send, 18
or the taxpayer to receive, the notice or forms. 19
Sec. 106. RCW 82.04.050 and 2021 c 296 s 8 and 2021 c 143 s 2 20
are each reenacted and amended to read as follows:21
(1)(a) "Sale at retail" or "retail sale" means every sale of 22
tangible personal property (including articles produced, fabricated, 23
or imprinted) to all persons irrespective of the nature of their 24
business and including, among others, without limiting the scope 25
hereof, persons who install, repair, clean, alter, improve, 26
construct, or decorate real or personal property of or for consumers 27
other than a sale to a person who: 28
(i) Purchases for the purpose of resale as tangible personal 29
property in the regular course of business without intervening use by 30
such person, but a purchase for the purpose of resale by a regional 31
transit authority under RCW 81.112.300 is not a sale for resale; or32
(ii) Installs, repairs, cleans, alters, imprints, improves, 33
constructs, or decorates real or personal property of or for 34
consumers, if such tangible personal property becomes an ingredient 35
or component of such real or personal property without intervening 36
use by such person; or 37
(iii) Purchases for the purpose of consuming the property 38
purchased in producing for sale as a new article of tangible personal 39
p. 29 SB 5794
property or substance, of which such property becomes an ingredient 1
or component or is a chemical used in processing, when the primary 2
purpose of such chemical is to create a chemical reaction directly 3
through contact with an ingredient of a new article being produced 4
for sale; or 5
(iv) ((Purchases for the purpose of consuming the property 6
purchased in producing ferrosilicon which is subsequently used in 7
producing magnesium for sale, if the primary purpose of such property 8
is to create a chemical reaction directly through contact with an 9
ingredient of ferrosilicon; or10
(v))) Purchases for the purpose of providing the property to 11
consumers as part of competitive telephone service, as defined in RCW 12
82.04.065; or 13
(((vi))) (v) Purchases for the purpose of satisfying the person's 14
obligations under an extended warranty as defined in subsection (7) 15
of this section, if such tangible personal property replaces or 16
becomes an ingredient or component of property covered by the 17
extended warranty without intervening use by such person.18
(b) The term includes every sale of tangible personal property 19
that is used or consumed or to be used or consumed in the performance 20
of any activity defined as a "sale at retail" or "retail sale" even 21
though such property is resold or used as provided in (a)(i) through 22
(((vi))) (v) of this subsection following such use.23
(c) The term also means every sale of tangible personal property 24
to persons engaged in any business that is taxable under RCW 25
82.04.280(1) (a), (b), and (g), 82.04.290, and 82.04.2908.26
(2) The term "sale at retail" or "retail sale" includes the sale 27
of or charge made for tangible personal property consumed and/or for 28
labor and services rendered in respect to the following:29
(a) The installing, repairing, cleaning, altering, imprinting, or 30
improving of tangible personal property of or for consumers, 31
including charges made for the mere use of facilities in respect 32
thereto, but excluding charges made for the use of self-service 33
laundry facilities, and also excluding sales of laundry service to 34
nonprofit health care facilities, and excluding services rendered in 35
respect to live animals, birds and insects; 36
(b) The constructing, repairing, decorating, or improving of new 37
or existing buildings or other structures under, upon, or above real 38
property of or for consumers, including the installing or attaching 39
of any article of tangible personal property therein or thereto, 40
p. 30 SB 5794
whether or not such personal property becomes a part of the realty by 1
virtue of installation, and also includes the sale of services or 2
charges made for the clearing of land and the moving of earth 3
excepting the mere leveling of land used in commercial farming or 4
agriculture; 5
(c) The constructing, repairing, or improving of any structure 6
upon, above, or under any real property owned by an owner who conveys 7
the property by title, possession, or any other means to the person 8
performing such construction, repair, or improvement for the purpose 9
of performing such construction, repair, or improvement and the 10
property is then reconveyed by title, possession, or any other means 11
to the original owner; 12
(d) The cleaning, fumigating, razing, or moving of existing 13
buildings or structures, but does not include the charge made for 14
janitorial services; and for purposes of this section the term 15
"janitorial services" means those cleaning and caretaking services 16
ordinarily performed by commercial janitor service businesses 17
including, but not limited to, wall and window washing, floor 18
cleaning and waxing, and the cleaning in place of rugs, drapes and 19
upholstery. The term "janitorial services" does not include painting, 20
papering, repairing, furnace or septic tank cleaning, snow removal or 21
sandblasting; 22
(e) Automobile towing and similar automotive transportation 23
services, but not in respect to those required to report and pay 24
taxes under chapter 82.16 RCW; 25
(f) The furnishing of lodging and all other services by a hotel, 26
rooming house, tourist court, motel, trailer camp, and the granting 27
of any similar license to use real property, as distinguished from 28
the renting or leasing of real property, and it is presumed that the 29
occupancy of real property for a continuous period of one month or 30
more constitutes a rental or lease of real property and not a mere 31
license to use or enjoy the same. For the purposes of this 32
subsection, it is presumed that the sale of and charge made for the 33
furnishing of lodging for a continuous period of one month or more to 34
a person is a rental or lease of real property and not a mere license 35
to enjoy the same. For the purposes of this section, it is presumed 36
that the sale of and charge made for the furnishing of lodging 37
offered regularly for public occupancy for periods of less than a 38
month constitutes a license to use or enjoy the property subject to 39
sales and use tax and not a rental or lease of property;40
p. 31 SB 5794
(g) The installing, repairing, altering, or improving of digital 1
goods for consumers; 2
(h) Persons taxable under (a), (b), (c), (d), (e), (f), and (g) 3
of this subsection when such sales or charges are for property, labor 4
and services which are used or consumed in whole or in part by such 5
persons in the performance of any activity defined as a "sale at 6
retail" or "retail sale" even though such property, labor and 7
services may be resold after such use or consumption. Nothing 8
contained in this subsection may be construed to modify subsection 9
(1) of this section and nothing contained in subsection (1) of this 10
section may be construed to modify this subsection.11
(3) The term "sale at retail" or "retail sale" includes the sale 12
of or charge made for personal, business, or professional services 13
including amounts designated as interest, rents, fees, admission, and 14
other service emoluments however designated, received by persons 15
engaging in the following business activities: 16
(a) Abstract, title insurance, and escrow services;17
(b) Credit bureau services; 18
(c) Automobile parking and storage garage services;19
(d) Landscape maintenance and horticultural services but 20
excluding (i) horticultural services provided to farmers and (ii) 21
pruning, trimming, repairing, removing, and clearing of trees and 22
brush near electric transmission or distribution lines or equipment, 23
if performed by or at the direction of an electric utility;24
(e) Service charges associated with tickets to professional 25
sporting events; 26
(f) The following personal services: Tanning salon services, 27
tattoo parlor services, steam bath services, turkish bath services, 28
escort services, and dating services; and 29
(g)(i) Operating an athletic or fitness facility, including all 30
charges for the use of such a facility or for any associated services 31
and amenities, except as provided in (g)(ii) of this subsection.32
(ii) Notwithstanding anything to the contrary in (g)(i) of this 33
subsection (3), the term "sale at retail" and "retail sale" under 34
this subsection does not include: 35
(A) Separately stated charges for the use of an athletic or 36
fitness facility where such use is primarily for a purpose other than 37
engaging in or receiving instruction in a physical fitness activity;38
(B) Separately stated charges for the use of a discrete portion 39
of an athletic or fitness facility, other than a pool, where such 40
p. 32 SB 5794
discrete portion of the facility does not by itself meet the 1
definition of "athletic or fitness facility" in this subsection;2
(C) Separately stated charges for services, such as advertising, 3
massage, nutritional consulting, and body composition testing, that 4
do not require the customer to engage in physical fitness activities 5
to receive the service. The exclusion in this subsection 6
(3)(g)(ii)(C) does not apply to personal training services and 7
instruction in a physical fitness activity; 8
(D) Separately stated charges for physical therapy provided by a 9
physical therapist, as those terms are defined in RCW 18.74.010, or 10
occupational therapy provided by an occupational therapy 11
practitioner, as those terms are defined in RCW 18.59.020, when 12
performed pursuant to a referral from an authorized health care 13
practitioner or in consultation with an authorized health care 14
practitioner. For the purposes of this subsection (3)(g)(ii)(D), an 15
authorized health care practitioner means a health care practitioner 16
licensed under chapter 18.83, 18.25, 18.36A, 18.57, 18.71, or 18.71A 17
RCW, or, until July 1, 2022, chapter 18.57A RCW; 18
(E) Rent or association fees charged by a landlord or residential 19
association to a tenant or residential owner with access to an 20
athletic or fitness facility maintained by the landlord or 21
residential association, unless the rent or fee varies depending on 22
whether the tenant or owner has access to the facility;23
(F) Services provided in the regular course of employment by an 24
employee with access to an athletic or fitness facility maintained by 25
the employer for use without charge by its employees or their family 26
members; 27
(G) The provision of access to an athletic or fitness facility by 28
an educational institution to its students and staff. However, 29
charges made by an educational institution to its alumni or other 30
members of the public for the use of any of the educational 31
institution's athletic or fitness facilities are a retail sale under 32
this subsection (3)(g). For purposes of this subsection 33
(3)(g)(ii)(G), "educational institution" has the same meaning as in 34
RCW 82.04.170; 35
(H) Yoga, chi gong, or martial arts classes, training, or events 36
held at a community center, park, school gymnasium, college or 37
university, hospital or other medical facility, private residence, or 38
any other facility that is not operated within and as part of an 39
athletic or fitness facility. 40
p. 33 SB 5794
(iii) Nothing in (g)(ii) of this subsection (3) may be construed 1
to affect the taxation of sales made by the operator of an athletic 2
or fitness facility, where such sales are defined as a retail sale 3
under any provision of this section other than this subsection (3).4
(iv) For the purposes of this subsection (3)(g), the following 5
definitions apply: 6
(A) "Athletic or fitness facility" means an indoor or outdoor 7
facility or portion of a facility that is primarily used for: 8
Exercise classes; strength and conditioning programs; personal 9
training services; tennis, racquetball, handball, squash, or 10
pickleball; or other activities requiring the use of exercise or 11
strength training equipment, such as treadmills, elliptical machines, 12
stair climbers, stationary cycles, rowing machines, pilates 13
equipment, balls, climbing ropes, jump ropes, and weightlifting 14
equipment. 15
(B) "Martial arts" means any of the various systems of training 16
for physical combat or self-defense. "Martial arts" includes, but is 17
not limited to, karate, kung fu, tae kwon do, Krav Maga, boxing, 18
kickboxing, jujitsu, shootfighting, wrestling, aikido, judo, hapkido, 19
Kendo, tai chi, and mixed martial arts. 20
(C) "Physical fitness activities" means activities that involve 21
physical exertion for the purpose of improving or maintaining the 22
general fitness, strength, flexibility, conditioning, or health of 23
the participant. "Physical fitness activities" includes participating 24
in yoga, chi gong, or martial arts. 25
(4)(a) The term also includes the renting or leasing of tangible 26
personal property to consumers. 27
(b) The term does not include the renting or leasing of tangible 28
personal property where the lease or rental is for the purpose of 29
sublease or subrent. 30
(5) The term also includes the providing of "competitive 31
telephone service," "telecommunications service," or "ancillary 32
services," as those terms are defined in RCW 82.04.065, to consumers.33
(6)(a) The term also includes the sale of prewritten computer 34
software to a consumer, regardless of the method of delivery to the 35
end user. For purposes of (a) and (b) of this subsection, the sale of 36
prewritten computer software includes the sale of or charge made for 37
a key or an enabling or activation code, where the key or code is 38
required to activate prewritten computer software and put the 39
software into use. There is no separate sale of the key or code from 40
p. 34 SB 5794
the prewritten computer software, regardless of how the sale may be 1
characterized by the vendor or by the purchaser. 2
(b) The term "retail sale" does not include the sale of or charge 3
made for: 4
(i) Custom software; or 5
(ii) The customization of prewritten computer software.6
(c)(i) The term also includes the charge made to consumers for 7
the right to access and use prewritten computer software, where 8
possession of the software is maintained by the seller or a third 9
party, regardless of whether the charge for the service is on a per 10
use, per user, per license, subscription, or some other basis.11
(ii)(A) The service described in (c)(i) of this subsection (6) 12
includes the right to access and use prewritten computer software to 13
perform data processing. 14
(B) For purposes of this subsection (6)(c)(ii), "data processing" 15
means the systematic performance of operations on data to extract the 16
required information in an appropriate form or to convert the data to 17
usable information. Data processing includes check processing, image 18
processing, form processing, survey processing, payroll processing, 19
claim processing, and similar activities. 20
(7) The term also includes the sale of or charge made for an 21
extended warranty to a consumer. For purposes of this subsection, 22
"extended warranty" means an agreement for a specified duration to 23
perform the replacement or repair of tangible personal property at no 24
additional charge or a reduced charge for tangible personal property, 25
labor, or both, or to provide indemnification for the replacement or 26
repair of tangible personal property, based on the occurrence of 27
specified events. The term "extended warranty" does not include an 28
agreement, otherwise meeting the definition of extended warranty in 29
this subsection, if no separate charge is made for the agreement and 30
the value of the agreement is included in the sales price of the 31
tangible personal property covered by the agreement. For purposes of 32
this subsection, "sales price" has the same meaning as in RCW 33
82.08.010. 34
(8)(a) The term also includes the following sales to consumers of 35
digital goods, digital codes, and digital automated services:36
(i) Sales in which the seller has granted the purchaser the right 37
of permanent use; 38
(ii) Sales in which the seller has granted the purchaser a right 39
of use that is less than permanent; 40
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(iii) Sales in which the purchaser is not obligated to make 1
continued payment as a condition of the sale; and 2
(iv) Sales in which the purchaser is obligated to make continued 3
payment as a condition of the sale. 4
(b) A retail sale of digital goods, digital codes, or digital 5
automated services under this subsection (8) includes any services 6
provided by the seller exclusively in connection with the digital 7
goods, digital codes, or digital automated services, whether or not a 8
separate charge is made for such services. 9
(c) For purposes of this subsection, "permanent" means perpetual 10
or for an indefinite or unspecified length of time. A right of 11
permanent use is presumed to have been granted unless the agreement 12
between the seller and the purchaser specifies or the circumstances 13
surrounding the transaction suggest or indicate that the right to use 14
terminates on the occurrence of a condition subsequent.15
(9) The term also includes the charge made for providing tangible 16
personal property along with an operator for a fixed or indeterminate 17
period of time. A consideration of this is that the operator is 18
necessary for the tangible personal property to perform as designed. 19
For the purpose of this subsection (9), an operator must do more than 20
maintain, inspect, or set up the tangible personal property.21
(10) The term does not include the sale of or charge made for 22
labor and services rendered in respect to the building, repairing, or 23
improving of any street, place, road, highway, easement, right-of-24
way, mass public transportation terminal or parking facility, bridge, 25
tunnel, or trestle which is owned by a municipal corporation or 26
political subdivision of the state or by the United States and which 27
is used or to be used primarily for foot or vehicular traffic 28
including mass transportation vehicles of any kind.29
(11) The term also does not include sales of chemical sprays or 30
washes to persons for the purpose of postharvest treatment of fruit 31
for the prevention of scald, fungus, mold, or decay, nor does it 32
include sales of feed, seed, seedlings, fertilizer, agents for 33
enhanced pollination including insects such as bees, and spray 34
materials to: (a) Persons who participate in the federal conservation 35
reserve program, the environmental quality incentives program, the 36
wetlands reserve program, and the wildlife habitat incentives 37
program, or their successors administered by the United States 38
department of agriculture; (b) farmers for the purpose of producing 39
for sale any agricultural product; (c) farmers for the purpose of 40
p. 36 SB 5794
providing bee pollination services; and (d) farmers acting under 1
cooperative habitat development or access contracts with an 2
organization exempt from federal income tax under 26 U.S.C. Sec. 3
501(c)(3) of the federal internal revenue code or the Washington 4
state department of fish and wildlife to produce or improve wildlife 5
habitat on land that the farmer owns or leases. 6
(12) The term does not include the sale of or charge made for 7
labor and services rendered in respect to the constructing, 8
repairing, decorating, or improving of new or existing buildings or 9
other structures under, upon, or above real property of or for the 10
United States, any instrumentality thereof, or a county or city 11
housing authority created pursuant to chapter 35.82 RCW, including 12
the installing, or attaching of any article of tangible personal 13
property therein or thereto, whether or not such personal property 14
becomes a part of the realty by virtue of installation. Nor does the 15
term include the sale of services or charges made for the clearing of 16
land and the moving of earth of or for the United States, any 17
instrumentality thereof, or a county or city housing authority. Nor 18
does the term include the sale of services or charges made for 19
cleaning up for the United States, or its instrumentalities, 20
radioactive waste and other by-products of weapons production and 21
nuclear research and development. 22
(13) The term does not include the sale of or charge made for 23
labor, services, or tangible personal property pursuant to agreements 24
providing maintenance services for bus, rail, or rail fixed guideway 25
equipment when a regional transit authority is the recipient of the 26
labor, services, or tangible personal property, and a transit agency, 27
as defined in RCW 81.104.015, performs the labor or services.28
(14) The term does not include the sale for resale of any service 29
described in this section if the sale would otherwise constitute a 30
"sale at retail" and "retail sale" under this section.31
(15)(a) The term "sale at retail" or "retail sale" includes 32
amounts charged, however labeled, to consumers to engage in any of 33
the activities listed in this subsection (15)(a), including the 34
furnishing of any associated equipment or, except as otherwise 35
provided in this subsection, providing instruction in such 36
activities, where such charges are not otherwise defined as a "sale 37
at retail" or "retail sale" in this section: 38
(i)(A) Golf, including any variant in which either golf balls or 39
golf clubs are used, such as miniature golf, hitting golf balls at a 40
p. 37 SB 5794
driving range, and golf simulators, and including fees charged by a 1
golf course to a player for using his or her own cart. However, 2
charges for golf instruction are not a retail sale, provided that if 3
the instruction involves the use of a golfing facility that would 4
otherwise require the payment of a fee, such as green fees or driving 5
range fees, such fees, including the applicable retail sales tax, 6
must be separately identified and charged by the golfing facility 7
operator to the instructor or the person receiving the instruction.8
(B) Notwithstanding (a)(i)(A) of this subsection (15) and except 9
as otherwise provided in this subsection (15)(a)(i)(B), the term 10
"sale at retail" or "retail sale" does not include amounts charged to 11
participate in, or conduct, a golf tournament or other competitive 12
event. However, amounts paid by event participants to the golf 13
facility operator are retail sales under this subsection (15)(a)(i). 14
Likewise, amounts paid by the event organizer to the golf facility 15
are retail sales under this subsection (15)(a)(i), if such amounts 16
vary based on the number of event participants; 17
(ii) Ballooning, hang gliding, indoor or outdoor sky diving, 18
paragliding, parasailing, and similar activities; 19
(iii) Air hockey, billiards, pool, foosball, darts, shuffleboard, 20
ping pong, and similar games; 21
(iv) Access to amusement park, theme park, and water park 22
facilities, including but not limited to charges for admission and 23
locker or cabana rentals. Discrete charges for rides or other 24
attractions or entertainment that are in addition to the charge for 25
admission are not a retail sale under this subsection (15)(a)(iv). 26
For the purposes of this subsection, an amusement park or theme park 27
is a location that provides permanently affixed amusement rides, 28
games, and other entertainment, but does not include parks or zoos 29
for which the primary purpose is the exhibition of wildlife, or 30
fairs, carnivals, and festivals as defined in (b)(i) of this 31
subsection; 32
(v) Batting cage activities; 33
(vi) Bowling, but not including competitive events, except that 34
amounts paid by the event participants to the bowling alley operator 35
are retail sales under this subsection (15)(a)(vi). Likewise, amounts 36
paid by the event organizer to the operator of the bowling alley are 37
retail sales under this subsection (15)(a)(vi), if such amounts vary 38
based on the number of event participants; 39
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(vii) Climbing on artificial climbing structures, whether indoors 1
or outdoors; 2
(viii) Day trips for sightseeing purposes; 3
(ix) Bungee jumping, zip lining, and riding inside a ball, 4
whether inflatable or otherwise; 5
(x) Horseback riding offered to the public, where the seller 6
furnishes the horse to the buyer and providing instruction is not the 7
primary focus of the activity, including guided rides, but not 8
including therapeutic horseback riding provided by an instructor 9
certified by a nonprofit organization that offers national or 10
international certification for therapeutic riding instructors;11
(xi) Fishing, including providing access to private fishing areas 12
and charter or guided fishing, except that fishing contests and 13
license fees imposed by a government entity are not a retail sale 14
under this subsection; 15
(xii) Guided hunting and hunting at game farms and shooting 16
preserves, except that hunting contests and license fees imposed by a 17
government entity are not a retail sale under this subsection;18
(xiii) Swimming, but only in respect to (A) recreational or 19
fitness swimming that is open to the public, such as open swim, lap 20
swimming, and special events like kids night out and pool parties 21
during open swim time, and (B) pool parties for private events, such 22
as birthdays, family gatherings, and employee outings. Fees for 23
swimming lessons, to participate in swim meets and other 24
competitions, or to join a swim team, club, or aquatic facility are 25
not retail sales under this subsection (15)(a)(xiii);26
(xiv) Go-karting, bumper cars, and other motorized activities 27
where the seller provides the vehicle and the premises where the 28
buyer will operate the vehicle; 29
(xv) Indoor or outdoor playground activities, such as inflatable 30
bounce structures and other inflatables; mazes; trampolines; slides; 31
ball pits; games of tag, including laser tag and soft-dart tag; and 32
human gyroscope rides, regardless of whether such activities occur at 33
the seller's place of business, but not including playground 34
activities provided for children by a licensed child day care center 35
or licensed family day care provider as those terms are defined in 36
RCW 43.216.010; 37
(xvi) Shooting sports and activities, such as target shooting, 38
skeet, trap, sporting clays, "5" stand, and archery, but only in 39
respect to discrete charges to members of the public to engage in 40
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these activities, but not including fees to enter a competitive 1
event, instruction that is entirely or predominately classroom based, 2
or to join or renew a membership at a club, range, or other facility;3
(xvii) Paintball and airsoft activities; 4
(xviii) Skating, including ice skating, roller skating, and 5
inline skating, but only in respect to discrete charges to members of 6
the public to engage in skating activities, but not including skating 7
lessons, competitive events, team activities, or fees to join or 8
renew a membership at a skating facility, club, or other 9
organization; 10
(xix) Nonmotorized snow sports and activities, such as downhill 11
and cross-country skiing, snowboarding, ski jumping, sledding, snow 12
tubing, snowshoeing, and similar snow sports and activities, whether 13
engaged in outdoors or in an indoor facility with or without snow, 14
but only in respect to discrete charges to the public for the use of 15
land or facilities to engage in nonmotorized snow sports and 16
activities, such as fees, however labeled, for the use of ski lifts 17
and tows and daily or season passes for access to trails or other 18
areas where nonmotorized snow sports and activities are conducted. 19
However, fees for the following are not retail sales under this 20
subsection (15)(a)(xix): (A) Instructional lessons; (B) permits 21
issued by a governmental entity to park a vehicle on or access public 22
lands; and (C) permits or leases granted by an owner of private 23
timberland for recreational access to areas used primarily for 24
growing and harvesting timber; and 25
(xx) Scuba diving; snorkeling; river rafting; surfing; 26
kiteboarding; flyboarding; water slides; inflatables, such as water 27
pillows, water trampolines, and water rollers; and similar water 28
sports and activities. 29
(b) Notwithstanding anything to the contrary in this subsection 30
(15), the term "sale at retail" or "retail sale" does not include 31
charges: 32
(i) Made for admission to, and rides or attractions at, fairs, 33
carnivals, and festivals. For the purposes of this subsection, fairs, 34
carnivals, and festivals are events that do not exceed 21 days and a 35
majority of the amusement rides, if any, are not affixed to real 36
property; 37
(ii) Made by an educational institution to its students and staff 38
for activities defined as retail sales by (a)(i) through (xx) of this 39
subsection. However, charges made by an educational institution to 40
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its alumni or other members of the general public for these 1
activities are a retail sale under this subsection (15). For purposes 2
of this subsection (15)(b)(ii), "educational institution" has the 3
same meaning as in RCW 82.04.170; 4
(iii) Made by a vocational school for commercial diver training 5
that is licensed by the workforce training and education coordinating 6
board under chapter 28C.10 RCW; or 7
(iv) Made for day camps offered by a nonprofit organization or 8
state or local governmental entity that provide youth not older than 9
age 18, or that are focused on providing individuals with 10
disabilities or mental illness, the opportunity to participate in a 11
variety of supervised activities. 12
(16)(a) The term "sale at retail" or "retail sale" includes the 13
purchase or acquisition of tangible personal property and specified 14
services by a person who receives either a qualifying grant exempt 15
from tax under RCW 82.04.767 or 82.16.320 or a grant deductible under 16
RCW 82.04.4339, except for transactions excluded from the definition 17
of "sale at retail" or "retail sale" by any other provision of this 18
section. Nothing in this subsection (16) may be construed to limit 19
the application of any other provision of this section to purchases 20
by a recipient of either a qualifying grant exempt from tax under RCW 21
82.04.767 or a grant deductible under RCW 82.04.4339, or by any other 22
person. 23
(b) For purposes of this subsection (16), "specified services" 24
means: 25
(i) The constructing, repairing, decorating, or improving of new 26
or existing buildings or other structures under, upon, or above real 27
property, including the installing or attaching of any article of 28
tangible personal property therein or thereto, whether or not such 29
personal property becomes a part of the realty by virtue of 30
installation; 31
(ii) The clearing of land or the moving of earth, whether or not 32
associated with activities described in (b)(i) of this subsection 33
(16); 34
(iii) The razing or moving of existing buildings or structures; 35
and 36
(iv) Landscape maintenance and horticultural services.37
Sec. 107. RCW 82.04.110 and 2009 c 535 s 405 are each amended to 38
read as follows: 39
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(1) Except as otherwise provided in this section, "manufacturer" 1
means every person who, either directly or by contracting with others 2
for the necessary labor or mechanical services, manufactures for sale 3
or for commercial or industrial use from his or her own materials or 4
ingredients any articles, substances, or commodities.5
(2)(((a))) When the owner of equipment or facilities furnishes, 6
or sells to the customer prior to manufacture, all or a portion of 7
the materials that become a part or whole of the manufactured 8
article, the department shall prescribe equitable rules for 9
determining tax liability. 10
(((b) A person who produces aluminum master alloys is a processor 11
for hire rather than a manufacturer, regardless of the portion of the 12
aluminum provided by that person's customer. For the purposes of this 13
subsection (2)(b), "aluminum master alloy" means an alloy registered 14
with the aluminum association as a grain refiner or a hardener alloy 15
using the American national standards institute designating system 16
H35.3.))17
(3) A nonresident of this state who is the owner of materials 18
processed for it in this state by a processor for hire shall not be 19
deemed to be engaged in business in this state as a manufacturer 20
because of the performance of such processing work for it in this 21
state. 22
(4) The owner of materials from which a nuclear fuel assembly is 23
made for it by a processor for hire shall not be subject to tax under 24
this chapter as a manufacturer of the fuel assembly.25
(5) For purposes of this section, the terms "articles," 26
"substances," "materials," "ingredients," and "commodities" do not 27
include digital goods. 28
Sec. 108. RCW 82.04.120 and 2019 c 202 s 3 are each amended to 29
read as follows: 30
(1) "To manufacture" embraces all activities of a commercial or 31
industrial nature wherein labor or skill is applied, by hand or 32
machinery, to materials so that as a result thereof a new, different 33
or useful substance or article of tangible personal property is 34
produced for sale or commercial or industrial use, and includes:35
(a) The production or fabrication of special made or custom made 36
articles; 37
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(b) The production or fabrication of dental appliances, devices, 1
restorations, substitutes, or other dental laboratory products by a 2
dental laboratory or dental technician; 3
(c) Cutting, delimbing, and measuring of felled, cut, or taken 4
trees; 5
(d) Crushing and/or blending of rock, sand, stone, gravel, or 6
ore; 7
(e) The production of compressed natural gas or liquefied natural 8
gas for use as a transportation fuel as defined in RCW 82.16.310; and9
(f) The production or processing of renewable natural gas.10
(2) "To manufacture" does not include: 11
(a) Conditioning of seed for use in planting; cubing hay or 12
alfalfa; 13
(b) Activities which consist of cutting, grading, or ice glazing 14
seafood which has been cooked, frozen, or canned outside this state;15
(c) The growing, harvesting, or producing of agricultural 16
products; 17
(d) ((Packing of agricultural products, including sorting, 18
washing, rinsing, grading, waxing, treating with fungicide, 19
packaging, chilling, or placing in controlled atmospheric storage;20
(e))) The production of digital goods; 21
(((f))) (e) The production of computer software if the computer 22
software is delivered from the seller to the purchaser by means other 23
than tangible storage media, including the delivery by use of a 24
tangible storage media where the tangible storage media is not 25
physically transferred to the purchaser; and 26
(((g))) (f) Except as provided in subsection (1)(((e))) (d) of 27
this section, any activity that is integral to any public service 28
business as defined in RCW 82.16.010 and with respect to which the 29
gross income associated with such activity: (i) Is subject to tax 30
under chapter 82.16 RCW; or (ii) would be subject to tax under 31
chapter 82.16 RCW if such activity were conducted in this state or if 32
not for an exemption or deduction. 33
(3) With respect to wastewater treatment facilities:34
(a) "To manufacture" does not include the treatment of 35
wastewater, the production of reclaimed water, and the production of 36
class B biosolids; and 37
(b) "To manufacture" does include the production of class A or 38
exceptional quality biosolids, but only with respect to the 39
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processing activities that occur after the biosolids have reached 1
class B standards. 2
Sec. 109. RCW 82.04.43395 and 2023 c 313 s 1 are each amended to 3
read as follows: 4
(1) An accountable community of health may deduct from the 5
measure of tax delivery system reform incentive payments, medicaid 6
transformation project funding, or both, distributed by the 7
Washington state health care authority, as described in Sec. 1115 8
medicaid demonstration project number 11-W-00304/0, as approved by 9
the centers for medicare and medicaid services in accordance with 10
Sec. 1115(a) of the social security act. 11
(2) A hospital that is owned by a municipal corporation or 12
political subdivision, or a hospital that is affiliated with a state 13
institution, may deduct from the measure of tax ((either or both of 14
the following:15
(a) Incentive)) incentive payments received through the medicaid 16
quality improvement program established through 42 C.F.R. 438.6 (b)(2)17
((;18
(b) Delivery system reform incentive payments, medicaid 19
transformation project funding, or both, received through the project 20
described in Sec. 1115 medicaid demonstration project number 11-21
W-00304/0, approved by the centers for medicare and medicaid services 22
in accordance with Sec. 1115(a) of the social security act)).23
(3) Managed care organizations may deduct from the measure of tax 24
the incentive payments received for achieving quality performance 25
standards established through 42 C.F.R. 438.6 (b)(2), as existing on 26
July 28, 2019. 27
(4) The definitions in this subsection apply throughout this 28
section unless the context clearly requires otherwise.29
(a) "Accountable community of health" means a regional nonprofit 30
designated by the health care authority to work together with the 31
health care delivery system, health plans, public health, social 32
services, community-based organizations, the justice system, schools, 33
tribal partners, and local government leaders to improve the health 34
equity of their communities as part of Sec. 1115 medicaid 35
demonstration project number 11-W-00304/0. 36
(b) "Managed care organization" has the same meaning as provided 37
in RCW 74.60.010. 38
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Sec. 110. RCW 82.12.022 and 2017 3rd sp.s. c 37 s 707 are each 1
amended to read as follows: 2
(1) A use tax is levied on every person in this state for the 3
privilege of using natural gas or manufactured gas, including 4
compressed natural gas and liquefied natural gas, within this state 5
as a consumer. 6
(2) The tax must be levied and collected in an amount equal to 7
the value of the article used by the taxpayer multiplied by the rate 8
in effect for the public utility tax on gas distribution businesses 9
under RCW 82.16.020. The "value of the article used" does not include 10
any amounts that are paid for the hire or use of a gas distribution 11
business as defined in RCW 82.16.010(2) in transporting the gas 12
subject to tax under this subsection if those amounts are subject to 13
tax under that chapter. 14
(3) ((The tax levied in this section does not apply to the use of 15
natural or manufactured gas delivered to the consumer by other means 16
than through a pipeline.17
(4))) The tax levied in this section does not apply to the use of 18
natural or manufactured gas if the person who sold the gas to the 19
consumer has paid a tax under RCW 82.16.020 with respect to the gas 20
for which exemption is sought under this subsection.21
(((5)(a) The tax levied in this section does not apply to the use 22
of natural or manufactured gas by an aluminum smelter as that term is 23
defined in RCW 82.04.217 before January 1, 2027.24
(b) A person claiming the exemption provided in this subsection 25
(5) must file a complete annual tax performance report with the 26
department under RCW 82.32.534.27
(6))) (4) The tax imposed by this section does not apply to the 28
use of natural gas, compressed natural gas, or liquefied natural gas, 29
if the consumer uses the gas for transportation fuel as defined in 30
RCW 82.16.310. 31
(((7) The tax levied in this section does not apply to the use of 32
natural or manufactured gas by a silicon smelter as that term is 33
defined in RCW 82.16.315.34
(8))) (5) There is a credit against the tax levied under this 35
section in an amount equal to any tax paid by: 36
(a) The person who sold the gas to the consumer when that tax is 37
a gross receipts tax similar to that imposed pursuant to RCW 38
82.16.020 by another state with respect to the gas for which a credit 39
is sought under this subsection; or 40
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(b) The person consuming the gas upon which a use tax similar to 1
the tax imposed by this section was paid to another state with 2
respect to the gas for which a credit is sought under this 3
subsection. 4
(((9))) (6) The use tax imposed in this section must be paid by 5
the consumer to the department. 6
(((10))) (7) There is imposed a reporting requirement on the 7
person who delivered the gas to the consumer to make a quarterly 8
report to the department. Such report must contain the volume of gas 9
delivered, name of the consumer to whom delivered, and such other 10
information as the department may require by rule.11
(((11))) (8) The department may adopt rules under chapter 34.05 12
RCW for the administration and enforcement of sections 1 through 6, 13
chapter 384, Laws of 1989. 14
Sec. 111. RCW 82.12.022 and 2017 c 135 s 27 are each amended to 15
read as follows: 16
(1) A use tax is levied on every person in this state for the 17
privilege of using natural gas or manufactured gas, including 18
compressed natural gas and liquefied natural gas, within this state 19
as a consumer. 20
(2) The tax must be levied and collected in an amount equal to 21
the value of the article used by the taxpayer multiplied by the rate 22
in effect for the public utility tax on gas distribution businesses 23
under RCW 82.16.020. The "value of the article used" does not include 24
any amounts that are paid for the hire or use of a gas distribution 25
business as defined in RCW 82.16.010(2) in transporting the gas 26
subject to tax under this subsection if those amounts are subject to 27
tax under that chapter. 28
(3) ((The tax levied in this section does not apply to the use of 29
natural or manufactured gas delivered to the consumer by other means 30
than through a pipeline.31
(4))) The tax levied in this section does not apply to the use of 32
natural or manufactured gas if the person who sold the gas to the 33
consumer has paid a tax under RCW 82.16.020 with respect to the gas 34
for which exemption is sought under this subsection.35
(((5)(a) The tax levied in this section does not apply to the use 36
of natural or manufactured gas by an aluminum smelter as that term is 37
defined in RCW 82.04.217 before January 1, 2027.38
p. 46 SB 5794
(b) A person claiming the exemption provided in this subsection 1
(5) must file a complete annual tax performance report with the 2
department under RCW 82.32.534.3
(6))) (4) The tax imposed by this section does not apply to the 4
use of natural gas, compressed natural gas, or liquefied natural gas, 5
if the consumer uses the gas for transportation fuel as defined in 6
RCW 82.16.310. 7
(((7))) (5) There is a credit against the tax levied under this 8
section in an amount equal to any tax paid by: 9
(a) The person who sold the gas to the consumer when that tax is 10
a gross receipts tax similar to that imposed pursuant to RCW 11
82.16.020 by another state with respect to the gas for which a credit 12
is sought under this subsection; or 13
(b) The person consuming the gas upon which a use tax similar to 14
the tax imposed by this section was paid to another state with 15
respect to the gas for which a credit is sought under this 16
subsection. 17
(((8))) (6) The use tax imposed in this section must be paid by 18
the consumer to the department. 19
(((9))) (7) There is imposed a reporting requirement on the 20
person who delivered the gas to the consumer to make a quarterly 21
report to the department. Such report must contain the volume of gas 22
delivered, name of the consumer to whom delivered, and such other 23
information as the department may require by rule.24
(((10))) (8) The department may adopt rules under chapter 34.05 25
RCW for the administration and enforcement of sections 1 through 6, 26
chapter 384, Laws of 1989. 27
Sec. 112. RCW 82.21.040 and 2024 c 241 s 1 are each amended to 28
read as follows: 29
The following are exempt from the tax imposed in this chapter:30
(1) Any successive possession of a previously taxed hazardous 31
substance. If tax due under this chapter has not been paid with 32
respect to a hazardous substance, the department may collect the tax 33
from any person who has had possession of the hazardous substance. If 34
the tax is paid by any person other than the first person having 35
taxable possession of a hazardous substance, the amount of tax paid 36
shall constitute a debt owed by the first person having taxable 37
possession to the person who paid the tax. 38
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(2) Any possession of a hazardous substance by a natural person 1
under circumstances where the substance is used, or is to be used, 2
for a personal or domestic purpose (and not for any business purpose) 3
by that person or a relative of, or person residing in the same 4
dwelling as, that person. 5
(3) Any possession of a hazardous substance amount which is 6
determined as minimal by the department of ecology and which is 7
possessed by a retailer for the purpose of making sales to ultimate 8
consumers. This exemption does not apply to pesticide or petroleum 9
products. 10
(4) ((Any possession of alumina or natural gas.11
(5)))(a) Until January 1, 2028, any possession of a hazardous 12
substance as defined in RCW 82.21.020(1)(c) that is solely for use by 13
a farmer or certified applicator as an agricultural crop protection 14
product and warehoused in this state or transported to or from this 15
state, provided that the person possessing the substance does not 16
otherwise use, manufacture, package for sale, or sell the substance 17
in this state. 18
(b) The definitions in this subsection apply throughout this 19
section unless the context clearly requires otherwise.20
(i) "Agricultural crop protection product" means a chemical 21
regulated under the federal insecticide, fungicide, and rodenticide 22
act, 7 U.S.C. Sec. 136 as amended as of September 1, 2015, when used 23
to prevent, destroy, repel, mitigate, or control predators, diseases, 24
weeds, or other pests. 25
(ii) "Certified applicator" has the same meaning as provided in 26
RCW 17.21.020. 27
(iii) "Farmer" has the same meaning as in RCW 82.04.213.28
(iv) "Manufacturing" includes mixing or combining agricultural 29
crop protection products with other chemicals or other agricultural 30
crop protection products. 31
(v) "Package for sale" includes transferring agricultural crop 32
protection products from one container to another, including the 33
transfer of fumigants and other liquid or gaseous chemicals from one 34
tank to another. 35
(vi) "Use" has the same meaning as in RCW 82.12.010.36
(((6))) (5) Persons or activities which the state is prohibited 37
from taxing under the United States Constitution. 38
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Sec. 113. RCW 82.23A.030 and 1989 c 383 s 17 are each amended to 1
read as follows: 2
The following are exempt from the tax imposed in this chapter:3
(1) Any successive possession of a previously taxed petroleum 4
product. If tax due under this chapter has not been paid with respect 5
to a petroleum product, the department may collect the tax from any 6
person who has had possession of the petroleum product. If the tax is 7
paid by any person other than the first person having taxable 8
possession of a petroleum product, the amount of tax paid shall 9
constitute a debt owed by the first person having taxable possession 10
to the person who paid the tax. 11
(2) Any possession of a petroleum product by a natural person 12
under circumstances where the substance is used, or is to be used, 13
for a personal or domestic purpose (and not for any business purpose) 14
by that person or a relative of, or person residing in the same 15
dwelling as, that person. 16
(3) Persons or activities which the state is prohibited from 17
taxing under the United States Constitution. 18
(4) ((Any persons possessing a petroleum product where such 19
possession first occurred before July 1, 1989.20
(5))) Any possession of (a) natural gas, (b) petroleum coke, or 21
(c) liquid fuel or fuel gas used in petroleum processing.22
(((6))) (5) Any possession of petroleum products that are 23
exported for use or sale outside this state as fuel.24
(((7))) (6) Any possession of petroleum products packaged for 25
sale to ultimate consumers. 26
Sec. 114. RCW 82.29A.130 and 2023 c 343 s 2 are each amended to 27
read as follows: 28
The following leasehold interests are exempt from taxes imposed 29
pursuant to RCW 82.29A.030 and 82.29A.040: 30
(1) All leasehold interests constituting a part of the operating 31
properties of any public utility that is assessed and taxed as a 32
public utility pursuant to chapter 84.12 RCW. 33
(2) All leasehold interests in facilities owned or used by a 34
school, college or university which leasehold provides housing for 35
students and which is otherwise exempt from taxation under provisions 36
of RCW 84.36.010 and 84.36.050. 37
(3) All leasehold interests of subsidized housing where the fee 38
ownership of such property is vested in the government of the United 39
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States, or the state of Washington or any political subdivision 1
thereof but only if income qualification exists for such housing.2
(4) All leasehold interests used for fair purposes of a nonprofit 3
fair association that sponsors or conducts a fair or fairs which 4
receive support from revenues collected pursuant to RCW 67.16.100 and 5
allocated by the director of the department of agriculture where the 6
fee ownership of such property is vested in the government of the 7
United States, the state of Washington or any of its political 8
subdivisions. However, this exemption does not apply to the leasehold 9
interest of any sublessee of such nonprofit fair association if such 10
leasehold interest would be taxable if it were the primary lease.11
(5) All leasehold interests in any property of any public entity 12
used as a residence by an employee of that public entity who is 13
required as a condition of employment to live in the publicly owned 14
property. 15
(6) All leasehold interests held by enrolled Indians of lands 16
owned or held by any Indian or Indian tribe where the fee ownership 17
of such property is vested in or held in trust by the United States 18
and which are not subleased to other than to a lessee which would 19
qualify pursuant to this chapter, RCW 84.36.451 and 84.40.175.20
(7) All leasehold interests in any real property of any Indian or 21
Indian tribe, band, or community that is held in trust by the United 22
States or is subject to a restriction against alienation imposed by 23
the United States. However, this exemption applies only where it is 24
determined that contract rent paid is greater than or equal to 90 25
percent of fair market rental, to be determined by the department of 26
revenue using the same criteria used to establish taxable rent in RCW 27
82.29A.020(2)(g). 28
(8) All leasehold interests for which annual taxable rent is less 29
than $250 per year. For purposes of this subsection leasehold 30
interests held by the same lessee in contiguous properties owned by 31
the same lessor are deemed a single leasehold interest.32
(9) All leasehold interests which give use or possession of the 33
leased property for a continuous period of less than 30 days: 34
PROVIDED, That for purposes of this subsection, successive leases or 35
lease renewals giving substantially continuous use of possession of 36
the same property to the same lessee are deemed a single leasehold 37
interest: PROVIDED FURTHER, That no leasehold interest is deemed to 38
give use or possession for a period of less than 30 days solely by 39
virtue of the reservation by the public lessor of the right to use 40
p. 50 SB 5794
the property or to allow third parties to use the property on an 1
occasional, temporary basis. 2
(10) All leasehold interests under month-to-month leases in 3
residential units rented for residential purposes of the lessee 4
pending destruction or removal for the purpose of constructing a 5
public highway or building. 6
(11) All leasehold interests in any publicly owned real or 7
personal property to the extent such leasehold interests arises 8
solely by virtue of a contract for public improvements or work 9
executed under the public works statutes of this state or of the 10
United States between the public owner of the property and a 11
contractor. 12
(12) ((All leasehold interests that give use or possession of 13
state adult correctional facilities for the purposes of operating 14
correctional industries under RCW 72.09.100.15
(13))) All leasehold interests used to provide organized and 16
supervised recreational activities for persons with disabilities of 17
all ages in a camp facility and for public recreational purposes by a 18
nonprofit organization, association, or corporation that would be 19
exempt from property tax under RCW 84.36.030(1) if it owned the 20
property. If the publicly owned property is used for any taxable 21
purpose, the leasehold excise taxes set forth in RCW 82.29A.030 and 22
82.29A.040 must be imposed and must be apportioned accordingly.23
(((14))) (13) All leasehold interests in the public or 24
entertainment areas of a baseball stadium with natural turf and a 25
retractable roof or canopy that is in a county with a population of 26
over 1,000,000, that has a seating capacity of over 40,000, and that 27
is constructed on or after January 1, 1995. "Public or entertainment 28
areas" include ticket sales areas, ramps and stairs, lobbies and 29
concourses, parking areas, concession areas, restaurants, hospitality 30
and stadium club areas, kitchens or other work areas primarily 31
servicing other public or entertainment areas, public rest room 32
areas, press and media areas, control booths, broadcast and 33
production areas, retail sales areas, museum and exhibit areas, 34
scoreboards or other public displays, storage areas, loading, 35
staging, and servicing areas, seating areas and suites, the playing 36
field, and any other areas to which the public has access or which 37
are used for the production of the entertainment event or other 38
public usage, and any other personal property used for these 39
p. 51 SB 5794
purposes. "Public or entertainment areas" does not include locker 1
rooms or private offices exclusively used by the lessee.2
(((15))) (14) All leasehold interests in the public or 3
entertainment areas of a stadium and exhibition center, as defined in 4
RCW 36.102.010, that is constructed on or after January 1, 1998. For 5
the purposes of this subsection, "public or entertainment areas" has 6
the same meaning as in subsection (((14))) (13) of this section, and 7
includes exhibition areas. 8
(((16))) (15) All leasehold interests in public facilities 9
districts, as provided in chapter 36.100 or 35.57 RCW.10
(((17))) (16) All leasehold interests in property that is: (a) 11
Owned by the United States government or a municipal corporation; (b) 12
listed on any federal or state register of historical sites; and (c) 13
wholly contained within a designated national historic reserve under 14
16 U.S.C. Sec. 461. 15
(((18))) (17) All leasehold interests in the public or 16
entertainment areas of an amphitheater if a private entity is 17
responsible for 100 percent of the cost of constructing the 18
amphitheater which is not reimbursed by the public owner, both the 19
public owner and the private lessee sponsor events at the facility on 20
a regular basis, the lessee is responsible under the lease or 21
agreement to operate and maintain the facility, and the amphitheater 22
has a seating capacity of over 17,000 reserved and general admission 23
seats and is in a county that had a population of over 350,000, but 24
less than 425,000 when the amphitheater first opened to the public.25
For the purposes of this subsection, "public or entertainment 26
areas" include box offices or other ticket sales areas, entrance 27
gates, ramps and stairs, lobbies and concourses, parking areas, 28
concession areas, restaurants, hospitality areas, kitchens or other 29
work areas primarily servicing other public or entertainment areas, 30
public rest room areas, press and media areas, control booths, 31
broadcast and production areas, retail sales areas, museum and 32
exhibit areas, scoreboards or other public displays, storage areas, 33
loading, staging, and servicing areas, seating areas including lawn 34
seating areas and suites, stages, and any other areas to which the 35
public has access or which are used for the production of the 36
entertainment event or other public usage, and any other personal 37
property used for these purposes. "Public or entertainment areas" 38
does not include office areas used predominately by the lessee.39
p. 52 SB 5794
(((19))) (18) All leasehold interests in real property used for 1
the placement of military housing meeting the requirements of RCW 2
84.36.665. 3
(((20))) (19) All leasehold interests in facilities owned or used 4
by a community college or technical college, which leasehold interest 5
provides: 6
(a) Food services for students, faculty, and staff;7
(b) The operation of a bookstore on campus; or 8
(c) Maintenance, operational, or administrative services to the 9
community college or technical college. 10
(((21))) (20)(a) All leasehold interests in the public or 11
entertainment areas of an arena if it: 12
(i) Has a seating capacity of more than 2,000;13
(ii) Is located on city-owned land; and 14
(iii) Is owned by a city with a population over 200,000 within a 15
county with a population of less than 1,500,000. 16
(b) For the purposes of this subsection (((21))) (20), "public or 17
entertainment areas" has the same meaning as provided in subsection 18
(((18))) (17) of this section. 19
(((22))) (21) All leasehold interests in facilities owned by the 20
state parks and recreation commission that are listed on the national 21
register of historic places or the Washington heritage register.22
(((23))) (22)(a) All leasehold interests in the public or 23
entertainment areas of an arena if: 24
(i) The arena has a seating capacity of more than 4,000;25
(ii) The arena is located on city-owned land; 26
(iii) The arena is located within a city with a population over 27
100,000; and 28
(iv) Private entities were responsible for 100 percent of the 29
cost of constructing improvements to the arena, which were not 30
reimbursed by the public owner. 31
(b) For the purposes of this subsection (((23))) (22), "public or 32
entertainment areas" has the same meaning as provided in subsection 33
(((18))) (17) of this section, except that it also includes office 34
areas used predominately by the lessee. 35
(c) A taxpayer claiming an exemption under this subsection 36
(((23))) (22) must file a complete annual tax performance report as 37
provided in RCW 82.32.534. 38
(d) This subsection (((23))) (22) does not apply to leasehold 39
interests on or after October 1, 2033. 40
p. 53 SB 5794
Sec. 115. RCW 82.29A.130 and 2019 c 335 s 1 are each amended to 1
read as follows: 2
The following leasehold interests are exempt from taxes imposed 3
pursuant to RCW 82.29A.030 and 82.29A.040: 4
(1) All leasehold interests constituting a part of the operating 5
properties of any public utility that is assessed and taxed as a 6
public utility pursuant to chapter 84.12 RCW. 7
(2) All leasehold interests in facilities owned or used by a 8
school, college or university which leasehold provides housing for 9
students and which is otherwise exempt from taxation under provisions 10
of RCW 84.36.010 and 84.36.050. 11
(3) All leasehold interests of subsidized housing where the fee 12
ownership of such property is vested in the government of the United 13
States, or the state of Washington or any political subdivision 14
thereof but only if income qualification exists for such housing.15
(4) All leasehold interests used for fair purposes of a nonprofit 16
fair association that sponsors or conducts a fair or fairs which 17
receive support from revenues collected pursuant to RCW 67.16.100 and 18
allocated by the director of the department of agriculture where the 19
fee ownership of such property is vested in the government of the 20
United States, the state of Washington or any of its political 21
subdivisions. However, this exemption does not apply to the leasehold 22
interest of any sublessee of such nonprofit fair association if such 23
leasehold interest would be taxable if it were the primary lease.24
(5) All leasehold interests in any property of any public entity 25
used as a residence by an employee of that public entity who is 26
required as a condition of employment to live in the publicly owned 27
property. 28
(6) All leasehold interests held by enrolled Indians of lands 29
owned or held by any Indian or Indian tribe where the fee ownership 30
of such property is vested in or held in trust by the United States 31
and which are not subleased to other than to a lessee which would 32
qualify pursuant to this chapter, RCW 84.36.451 and 84.40.175.33
(7) All leasehold interests in any real property of any Indian or 34
Indian tribe, band, or community that is held in trust by the United 35
States or is subject to a restriction against alienation imposed by 36
the United States. However, this exemption applies only where it is 37
determined that contract rent paid is greater than or equal to ninety 38
percent of fair market rental, to be determined by the department of 39
p. 54 SB 5794
revenue using the same criteria used to establish taxable rent in RCW 1
82.29A.020(2)(g). 2
(8) All leasehold interests for which annual taxable rent is less 3
than two hundred fifty dollars per year. For purposes of this 4
subsection leasehold interests held by the same lessee in contiguous 5
properties owned by the same lessor are deemed a single leasehold 6
interest. 7
(9) All leasehold interests which give use or possession of the 8
leased property for a continuous period of less than thirty days: 9
PROVIDED, That for purposes of this subsection, successive leases or 10
lease renewals giving substantially continuous use of possession of 11
the same property to the same lessee are deemed a single leasehold 12
interest: PROVIDED FURTHER, That no leasehold interest is deemed to 13
give use or possession for a period of less than thirty days solely 14
by virtue of the reservation by the public lessor of the right to use 15
the property or to allow third parties to use the property on an 16
occasional, temporary basis. 17
(10) All leasehold interests under month-to-month leases in 18
residential units rented for residential purposes of the lessee 19
pending destruction or removal for the purpose of constructing a 20
public highway or building. 21
(11) All leasehold interests in any publicly owned real or 22
personal property to the extent such leasehold interests arises 23
solely by virtue of a contract for public improvements or work 24
executed under the public works statutes of this state or of the 25
United States between the public owner of the property and a 26
contractor. 27
(12) ((All leasehold interests that give use or possession of 28
state adult correctional facilities for the purposes of operating 29
correctional industries under RCW 72.09.100.30
(13))) All leasehold interests used to provide organized and 31
supervised recreational activities for persons with disabilities of 32
all ages in a camp facility and for public recreational purposes by a 33
nonprofit organization, association, or corporation that would be 34
exempt from property tax under RCW 84.36.030(1) if it owned the 35
property. If the publicly owned property is used for any taxable 36
purpose, the leasehold excise taxes set forth in RCW 82.29A.030 and 37
82.29A.040 must be imposed and must be apportioned accordingly.38
(((14))) (13) All leasehold interests in the public or 39
entertainment areas of a baseball stadium with natural turf and a 40
p. 55 SB 5794
retractable roof or canopy that is in a county with a population of 1
over one million, that has a seating capacity of over forty thousand, 2
and that is constructed on or after January 1, 1995. "Public or 3
entertainment areas" include ticket sales areas, ramps and stairs, 4
lobbies and concourses, parking areas, concession areas, restaurants, 5
hospitality and stadium club areas, kitchens or other work areas 6
primarily servicing other public or entertainment areas, public rest 7
room areas, press and media areas, control booths, broadcast and 8
production areas, retail sales areas, museum and exhibit areas, 9
scoreboards or other public displays, storage areas, loading, 10
staging, and servicing areas, seating areas and suites, the playing 11
field, and any other areas to which the public has access or which 12
are used for the production of the entertainment event or other 13
public usage, and any other personal property used for these 14
purposes. "Public or entertainment areas" does not include locker 15
rooms or private offices exclusively used by the lessee.16
(((15))) (14) All leasehold interests in the public or 17
entertainment areas of a stadium and exhibition center, as defined in 18
RCW 36.102.010, that is constructed on or after January 1, 1998. For 19
the purposes of this subsection, "public or entertainment areas" has 20
the same meaning as in subsection (((14))) (13) of this section, and 21
includes exhibition areas. 22
(((16))) (15) All leasehold interests in public facilities 23
districts, as provided in chapter 36.100 or 35.57 RCW.24
(((17))) (16) All leasehold interests in property that is: (a) 25
Owned by the United States government or a municipal corporation; (b) 26
listed on any federal or state register of historical sites; and (c) 27
wholly contained within a designated national historic reserve under 28
16 U.S.C. Sec. 461. 29
(((18))) (17) All leasehold interests in the public or 30
entertainment areas of an amphitheater if a private entity is 31
responsible for one hundred percent of the cost of constructing the 32
amphitheater which is not reimbursed by the public owner, both the 33
public owner and the private lessee sponsor events at the facility on 34
a regular basis, the lessee is responsible under the lease or 35
agreement to operate and maintain the facility, and the amphitheater 36
has a seating capacity of over seventeen thousand reserved and 37
general admission seats and is in a county that had a population of 38
over three hundred fifty thousand, but less than four hundred twenty-39
five thousand when the amphitheater first opened to the public.40
p. 56 SB 5794
For the purposes of this subsection, "public or entertainment 1
areas" include box offices or other ticket sales areas, entrance 2
gates, ramps and stairs, lobbies and concourses, parking areas, 3
concession areas, restaurants, hospitality areas, kitchens or other 4
work areas primarily servicing other public or entertainment areas, 5
public rest room areas, press and media areas, control booths, 6
broadcast and production areas, retail sales areas, museum and 7
exhibit areas, scoreboards or other public displays, storage areas, 8
loading, staging, and servicing areas, seating areas including lawn 9
seating areas and suites, stages, and any other areas to which the 10
public has access or which are used for the production of the 11
entertainment event or other public usage, and any other personal 12
property used for these purposes. "Public or entertainment areas" 13
does not include office areas used predominately by the lessee.14
(((19))) (18) All leasehold interests in real property used for 15
the placement of military housing meeting the requirements of RCW 16
84.36.665. 17
(((20))) (19) All leasehold interests in facilities owned or used 18
by a community college or technical college, which leasehold interest 19
provides: 20
(a) Food services for students, faculty, and staff;21
(b) The operation of a bookstore on campus; or22
(c) Maintenance, operational, or administrative services to the 23
community college or technical college. 24
(((21))) (20)(a) All leasehold interests in the public or 25
entertainment areas of an arena if it: 26
(i) Has a seating capacity of more than two thousand;27
(ii) Is located on city-owned land; and 28
(iii) Is owned by a city with a population over two hundred 29
thousand within a county with a population of less than one million 30
five hundred thousand. 31
(b) For the purposes of this subsection (((21))) (20), "public or 32
entertainment areas" has the same meaning as provided in subsection 33
(((18))) (17) of this section. 34
Sec. 116. RCW 82.45.010 and 2022 c 199 s 3 are each amended to 35
read as follows: 36
(1) As used in this chapter, the term "sale" has its ordinary 37
meaning and includes any conveyance, grant, assignment, quitclaim, or 38
transfer of the ownership of or title to real property, including 39
p. 57 SB 5794
standing timber, or any estate or interest therein for a valuable 1
consideration, and any contract for such conveyance, grant, 2
assignment, quitclaim, or transfer, and any lease with an option to 3
purchase real property, including standing timber, or any estate or 4
interest therein or other contract under which possession of the 5
property is given to the purchaser, or any other person at the 6
purchaser's direction, and title to the property is retained by the 7
vendor as security for the payment of the purchase price. The term 8
also includes the grant, assignment, quitclaim, sale, or transfer of 9
improvements constructed upon leased land. 10
(2)(a) The term "sale" also includes the transfer or acquisition 11
within any thirty-six month period of a controlling interest in any 12
entity with an interest in real property located in this state for a 13
valuable consideration. 14
(b) For the sole purpose of determining whether, pursuant to the 15
exercise of an option, a controlling interest was transferred or 16
acquired within a thirty-six month period, the date that the option 17
agreement was executed is the date on which the transfer or 18
acquisition of the controlling interest is deemed to occur. For all 19
other purposes under this chapter, the date upon which the option is 20
exercised is the date of the transfer or acquisition of the 21
controlling interest. 22
(c) For purposes of this subsection, all acquisitions of persons 23
acting in concert must be aggregated for purposes of determining 24
whether a transfer or acquisition of a controlling interest has taken 25
place. The department must adopt standards by rule to determine when 26
persons are acting in concert. In adopting a rule for this purpose, 27
the department must consider the following: 28
(i) Persons must be treated as acting in concert when they have a 29
relationship with each other such that one person influences or 30
controls the actions of another through common ownership; and31
(ii) When persons are not commonly owned or controlled, they must 32
be treated as acting in concert only when the unity with which the 33
purchasers have negotiated and will consummate the transfer of 34
ownership interests supports a finding that they are acting as a 35
single entity. If the acquisitions are completely independent, with 36
each purchaser buying without regard to the identity of the other 37
purchasers, then the acquisitions are considered separate 38
acquisitions. 39
(3) The term "sale" does not include: 40
p. 58 SB 5794
(a) A transfer by gift, devise, or inheritance.1
(b) A transfer by transfer on death deed, to the extent that it 2
is not in satisfaction of a contractual obligation of the decedent 3
owed to the recipient of the property. 4
(c) A transfer of any leasehold interest other than of the type 5
mentioned above. 6
(d) A cancellation or forfeiture of a vendee's interest in a 7
contract for the sale of real property, whether or not such contract 8
contains a forfeiture clause, or deed in lieu of foreclosure of a 9
mortgage. 10
(e) The partition of property by tenants in common by agreement 11
or as the result of a court decree. 12
(f) The assignment of property or interest in property from one 13
spouse or one domestic partner to the other spouse or other domestic 14
partner in accordance with the terms of a decree of dissolution of 15
marriage or state registered domestic partnership or in fulfillment 16
of a property settlement agreement. 17
(g) The assignment or other transfer of a vendor's interest in a 18
contract for the sale of real property, even though accompanied by a 19
conveyance of the vendor's interest in the real property involved.20
(h) Transfers by appropriation or decree in condemnation 21
proceedings brought by the United States, the state or any political 22
subdivision thereof, or a municipal corporation. 23
(i) A mortgage or other transfer of an interest in real property 24
merely to secure a debt, or the assignment thereof.25
(j) Any transfer or conveyance made pursuant to a deed of trust 26
or an order of sale by the court in any mortgage, deed of trust, or 27
lien foreclosure proceeding or upon execution of a judgment, or deed 28
in lieu of foreclosure to satisfy a mortgage or deed of trust.29
(k) A conveyance to the federal housing administration or 30
veterans administration by an authorized mortgagee made pursuant to a 31
contract of insurance or guaranty with the federal housing 32
administration or veterans administration. 33
(l) ((A transfer in compliance with the terms of any lease or 34
contract upon which the tax as imposed by this chapter has been paid 35
or where the lease or contract was entered into prior to the date 36
this tax was first imposed.37
(m))) The sale of any grave or lot in an established cemetery.38
p. 59 SB 5794
(((n))) (m) A sale by the United States, this state or any 1
political subdivision thereof, or a municipal corporation of this 2
state. 3
(((o))) (n) A sale to a regional transit authority or public 4
corporation under RCW 81.112.320 under a sale/leaseback agreement 5
under RCW 81.112.300. 6
(((p))) (o) A transfer of real property, however effected, if it 7
consists of a mere change in identity or form of ownership of an 8
entity where there is no change in the beneficial ownership. These 9
include transfers to a corporation or partnership which is wholly 10
owned by the transferor and/or the transferor's spouse or domestic 11
partner or children of the transferor or the transferor's spouse or 12
domestic partner. However, if thereafter such transferee corporation 13
or partnership voluntarily transfers such real property, or such 14
transferor, spouse or domestic partner, or children of the transferor 15
or the transferor's spouse or domestic partner voluntarily transfer 16
stock in the transferee corporation or interest in the transferee 17
partnership capital, as the case may be, to other than (i) the 18
transferor and/or the transferor's spouse or domestic partner or 19
children of the transferor or the transferor's spouse or domestic 20
partner, (ii) a trust having the transferor and/or the transferor's 21
spouse or domestic partner or children of the transferor or the 22
transferor's spouse or domestic partner as the only beneficiaries at 23
the time of the transfer to the trust, or (iii) a corporation or 24
partnership wholly owned by the original transferor and/or the 25
transferor's spouse or domestic partner or children of the transferor 26
or the transferor's spouse or domestic partner, within three years of 27
the original transfer to which this exemption applies, and the tax on 28
the subsequent transfer has not been paid within sixty days of 29
becoming due, excise taxes become due and payable on the original 30
transfer as otherwise provided by law. 31
(((q))) (p)(i) A transfer that for federal income tax purposes 32
does not involve the recognition of gain or loss for entity 33
formation, liquidation or dissolution, and reorganization, including 34
but not limited to nonrecognition of gain or loss because of 35
application of 26 U.S.C. Sec. 332, 337, 351, 368 (a)(1), 721, or 731 36
of the internal revenue code of 1986, as amended. 37
(ii) However, the transfer described in (((q))) (p)(i) of this 38
subsection cannot be preceded or followed within a thirty-six month 39
period by another transfer or series of transfers, that, when 40
p. 60 SB 5794
combined with the otherwise exempt transfer or transfers described in 1
(((q))) (p)(i) of this subsection, results in the transfer of a 2
controlling interest in the entity for valuable consideration, and in 3
which one or more persons previously holding a controlling interest 4
in the entity receive cash or property in exchange for any interest 5
the person or persons acting in concert hold in the entity. This 6
subsection (3)(((q))) (p)(ii) does not apply to that part of the 7
transfer involving property received that is the real property 8
interest that the person or persons originally contributed to the 9
entity or when one or more persons who did not contribute real 10
property or belong to the entity at a time when real property was 11
purchased receive cash or personal property in exchange for that 12
person or persons' interest in the entity. The real estate excise tax 13
under this subsection (3)(((q))) (p)(ii) is imposed upon the person 14
or persons who previously held a controlling interest in the entity.15
(((r))) (q) A qualified sale of a manufactured/mobile home 16
community, as defined in RCW 59.20.030. 17
(((s))) (r)(i) A transfer of a qualified low-income housing 18
development or controlling interest in a qualified low-income housing 19
development, unless, due to noncompliance with federal statutory 20
requirements, the seller is subject to recapture, in whole or in 21
part, of its allocated federal low-income housing tax credits within 22
the four years prior to the date of transfer. 23
(ii) For purposes of this subsection (3)(((s))) (r), "qualified 24
low-income housing development" means real property and improvements 25
in respect to which the seller or, in the case of a transfer of a 26
controlling interest, the owner or beneficial owner, was allocated 27
federal low-income housing tax credits authorized under 26 U.S.C. 28
Sec. 42 or successor statute, by the Washington state housing finance 29
commission or successor state-authorized tax credit allocating 30
agency. 31
(iii) This subsection (3)(((s))) (r) does not apply to transfers 32
of a qualified low-income housing development or controlling interest 33
in a qualified low-income housing development occurring on or after 34
July 1, 2035. 35
(iv) The Washington state housing finance commission, in 36
consultation with the department, must gather data on: (A) The fiscal 37
savings, if any, accruing to transferees as a result of the exemption 38
provided in this subsection (3)(((s))) (r); (B) the extent to which 39
transferors of qualified low-income housing developments receive 40
p. 61 SB 5794
consideration, including any assumption of debt, as part of a 1
transfer subject to the exemption provided in this subsection (3)2
(((s))) (r); and (C) the continued use of the property for low-income 3
housing. The Washington state housing finance commission must provide 4
this information to the joint legislative audit and review committee. 5
The committee must conduct a review of the tax preference created 6
under this subsection (3)(((s))) (r) in calendar year 2033, as 7
required under chapter 43.136 RCW. 8
(((t))) (s)(i) A qualified transfer of residential property by a 9
legal representative of a person with developmental disabilities to a 10
qualified entity subject to the following conditions:11
(A) The adult child with developmental disabilities of the 12
transferor of the residential property must be allowed to reside in 13
the residence or successor property so long as the placement is safe 14
and appropriate as determined by the department of social and health 15
services; 16
(B) The title to the residential property is conveyed without the 17
receipt of consideration by the legal representative of a person with 18
developmental disabilities to a qualified entity; 19
(C) The residential property must have no more than four living 20
units located on it; and 21
(D) The residential property transferred must remain in continued 22
use for fifty years by the qualified entity as supported living for 23
persons with developmental disabilities by the qualified entity or 24
successor entity. If the qualified entity sells or otherwise conveys 25
ownership of the residential property the proceeds of the sale or 26
conveyance must be used to acquire similar residential property and 27
such similar residential property must be considered the successor 28
for continued use. The property will not be considered in continued 29
use if the department of social and health services finds that the 30
property has failed, after a reasonable time to remedy, to meet any 31
health and safety statutory or regulatory requirements. If the 32
department of social and health services determines that the property 33
fails to meet the requirements for continued use, the department of 34
social and health services must notify the department and the real 35
estate excise tax based on the value of the property at the time of 36
the transfer into use as residential property for persons with 37
developmental disabilities becomes immediately due and payable by the 38
qualified entity. The tax due is not subject to penalties, fees, or 39
interest under this title. 40
p. 62 SB 5794
(ii) For the purposes of this subsection (3)(((t))) (s) the 1
definitions in RCW 71A.10.020 apply. 2
(iii) A "qualified entity" is: 3
(A) A nonprofit organization under Title 26 U.S.C. Sec. 501 (c)(3) 4
of the federal internal revenue code of 1986, as amended, as of June 5
7, 2018, or a subsidiary under the same taxpayer identification 6
number that provides residential supported living for persons with 7
developmental disabilities; or 8
(B) A nonprofit adult family home, as defined in RCW 70.128.010, 9
that exclusively serves persons with developmental disabilities.10
(iv) In order to receive an exemption under this subsection (3)11
(((t))) (s) an affidavit must be submitted by the transferor of the 12
residential property and must include a copy of the transfer 13
agreement and any other documentation as required by the department.14
(((u))) (t)(i) The sale by an affordable homeownership 15
facilitator of self-help housing to a low-income household.16
(ii) The definitions in this subsection (3)(((u))) (t) apply to 17
this subsection (3)(((u))) (t) unless the context clearly requires 18
otherwise. 19
(A) "Affordable homeownership facilitator" means a nonprofit 20
community or neighborhood-based organization that is exempt from 21
income tax under Title 26 U.S.C. Sec. 501 (c) of the internal revenue 22
code of 1986, as amended, as of October 1, 2019, and that is the 23
developer of self-help housing. 24
(B) "Low-income" means household income as defined by the 25
department, provided that the definition may not exceed eighty 26
percent of median household income, adjusted for household size, for 27
the county in which the dwelling is located. 28
(C) "Self-help housing" means dwelling residences provided for 29
ownership by low-income individuals and families whose ownership 30
requirement includes labor participation. "Self-help housing" does 31
not include residential rental housing provided on a commercial basis 32
to the general public. 33
(((v))) (u)(i) A sale or transfer of real property to a 34
qualifying grantee that uses the property for housing for low-income 35
persons and receives or otherwise qualifies the property for an 36
exemption from real and personal property taxes under RCW 84.36.560, 37
84.36.049, 35.82.210, 35.21.755, or 84.36.010. For purposes of this 38
subsection (3)(((v))) (u), "qualifying grantee" means a nonprofit 39
entity as defined in RCW 84.36.560, a nonprofit entity or qualified 40
p. 63 SB 5794
cooperative association as defined in RCW 84.36.049, a housing 1
authority created under RCW 35.82.030 or 35.82.300, a public 2
corporation established under RCW 35.21.660 or 35.21.730, or a county 3
or municipal corporation. A qualifying grantee that is a county or 4
municipal corporation must record a covenant at the time of transfer 5
that prohibits using the property for any purpose other than for low-6
income housing for a period of at least 10 years. At a minimum, the 7
covenant must address price restrictions and household income limits 8
for the low-income housing. A qualifying grantee must comply with the 9
requirements described in (((v))) (u)(i)(A), (B), or (C) of this 10
subsection and must also certify, by affidavit at the time of sale or 11
transfer, that it intends to comply with those requirements.12
(A) If the qualifying grantee intends to operate existing housing 13
on the property, within one year of the sale or transfer:14
(I) The qualifying grantee must receive or qualify the property 15
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 16
35.21.755, or 84.36.010; and 17
(II) The property must be used as housing for low-income persons.18
(B) If the qualifying grantee intends to develop new housing on 19
the site, within five years of the sale or transfer:20
(I) The qualifying grantee must receive or qualify the property 21
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 22
35.21.755, or 84.36.010; and 23
(II) The property must be used as housing for low-income persons.24
(C) If the qualifying grantee intends to substantially 25
rehabilitate the premises as defined in RCW 59.18.200, within three 26
years: 27
(I) The qualifying grantee must receive or qualify the property 28
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 29
35.21.755, or 84.36.010; and 30
(II) The property must be used as housing for low-income persons.31
(ii) If the qualifying grantee fails to satisfy the requirements 32
described in (((v))) (u)(i)(A), (B), or (C) of this subsection, 33
within the timelines described in (((v))) (u)(i)(A), (B), or (C) of 34
this subsection, the qualifying grantee must pay the tax that would 35
have otherwise been due at the time of initial transfer, plus 36
interest calculated from the date of initial transfer pursuant to RCW 37
82.32.050. 38
(iii) If a qualifying grantee transfers the property to a 39
different qualifying grantee within the original timelines described 40
p. 64 SB 5794
in (((v))) (u)(i)(A), (B), or (C) of this subsection, neither the 1
original qualifying grantee nor the new qualifying grantee is 2
required to pay the tax, so long as the new qualifying grantee 3
satisfies the requirements as described in (((v))) (u)(i)(A), (B), or 4
(C) of this subsection within the exemption period of the initial 5
transfer. If the new qualifying grantee fails to satisfy the 6
requirements described in (((v))) (u)(i)(A), (B), or (C) of this 7
subsection, only the new qualifying grantee is liable for the payment 8
of taxes required by (((v))) (u)(ii) of this subsection. There is no 9
limit on the number of transfers between qualifying grantees within 10
the original timelines. 11
(iv) Each affidavit must be filed with the department upon 12
completion of the sale or transfer of property, including transfers 13
from a qualifying grantee to a different qualifying grantee. The 14
qualifying grantee must provide proof to the department as required 15
by the department once the requirements as described in (((v))) (u)16
(i)(A), (B), or (C) of this subsection have been satisfied.17
(v) For the purposes of this subsection (3)(((v))) (u), "low-18
income" has the same meaning as in (((u))) (t) of this subsection.19
Sec. 117. RCW 82.45.010 and 2022 c 199 s 4 are each amended to 20
read as follows: 21
(1) As used in this chapter, the term "sale" has its ordinary 22
meaning and includes any conveyance, grant, assignment, quitclaim, or 23
transfer of the ownership of or title to real property, including 24
standing timber, or any estate or interest therein for a valuable 25
consideration, and any contract for such conveyance, grant, 26
assignment, quitclaim, or transfer, and any lease with an option to 27
purchase real property, including standing timber, or any estate or 28
interest therein or other contract under which possession of the 29
property is given to the purchaser, or any other person at the 30
purchaser's direction, and title to the property is retained by the 31
vendor as security for the payment of the purchase price. The term 32
also includes the grant, assignment, quitclaim, sale, or transfer of 33
improvements constructed upon leased land. 34
(2)(a) The term "sale" also includes the transfer or acquisition 35
within any thirty-six month period of a controlling interest in any 36
entity with an interest in real property located in this state for a 37
valuable consideration. 38
p. 65 SB 5794
(b) For the sole purpose of determining whether, pursuant to the 1
exercise of an option, a controlling interest was transferred or 2
acquired within a thirty-six month period, the date that the option 3
agreement was executed is the date on which the transfer or 4
acquisition of the controlling interest is deemed to occur. For all 5
other purposes under this chapter, the date upon which the option is 6
exercised is the date of the transfer or acquisition of the 7
controlling interest. 8
(c) For purposes of this subsection, all acquisitions of persons 9
acting in concert must be aggregated for purposes of determining 10
whether a transfer or acquisition of a controlling interest has taken 11
place. The department must adopt standards by rule to determine when 12
persons are acting in concert. In adopting a rule for this purpose, 13
the department must consider the following: 14
(i) Persons must be treated as acting in concert when they have a 15
relationship with each other such that one person influences or 16
controls the actions of another through common ownership; and17
(ii) When persons are not commonly owned or controlled, they must 18
be treated as acting in concert only when the unity with which the 19
purchasers have negotiated and will consummate the transfer of 20
ownership interests supports a finding that they are acting as a 21
single entity. If the acquisitions are completely independent, with 22
each purchaser buying without regard to the identity of the other 23
purchasers, then the acquisitions are considered separate 24
acquisitions. 25
(3) The term "sale" does not include: 26
(a) A transfer by gift, devise, or inheritance.27
(b) A transfer by transfer on death deed, to the extent that it 28
is not in satisfaction of a contractual obligation of the decedent 29
owed to the recipient of the property. 30
(c) A transfer of any leasehold interest other than of the type 31
mentioned above. 32
(d) A cancellation or forfeiture of a vendee's interest in a 33
contract for the sale of real property, whether or not such contract 34
contains a forfeiture clause, or deed in lieu of foreclosure of a 35
mortgage. 36
(e) The partition of property by tenants in common by agreement 37
or as the result of a court decree. 38
(f) The assignment of property or interest in property from one 39
spouse or one domestic partner to the other spouse or other domestic 40
p. 66 SB 5794
partner in accordance with the terms of a decree of dissolution of 1
marriage or state registered domestic partnership or in fulfillment 2
of a property settlement agreement. 3
(g) The assignment or other transfer of a vendor's interest in a 4
contract for the sale of real property, even though accompanied by a 5
conveyance of the vendor's interest in the real property involved.6
(h) Transfers by appropriation or decree in condemnation 7
proceedings brought by the United States, the state or any political 8
subdivision thereof, or a municipal corporation. 9
(i) A mortgage or other transfer of an interest in real property 10
merely to secure a debt, or the assignment thereof.11
(j) Any transfer or conveyance made pursuant to a deed of trust 12
or an order of sale by the court in any mortgage, deed of trust, or 13
lien foreclosure proceeding or upon execution of a judgment, or deed 14
in lieu of foreclosure to satisfy a mortgage or deed of trust.15
(k) A conveyance to the federal housing administration or 16
veterans administration by an authorized mortgagee made pursuant to a 17
contract of insurance or guaranty with the federal housing 18
administration or veterans administration. 19
(l) ((A transfer in compliance with the terms of any lease or 20
contract upon which the tax as imposed by this chapter has been paid 21
or where the lease or contract was entered into prior to the date 22
this tax was first imposed.23
(m))) The sale of any grave or lot in an established cemetery.24
(((n))) (m) A sale by the United States, this state or any 25
political subdivision thereof, or a municipal corporation of this 26
state. 27
(((o))) (n) A sale to a regional transit authority or public 28
corporation under RCW 81.112.320 under a sale/leaseback agreement 29
under RCW 81.112.300. 30
(((p))) (o) A transfer of real property, however effected, if it 31
consists of a mere change in identity or form of ownership of an 32
entity where there is no change in the beneficial ownership. These 33
include transfers to a corporation or partnership which is wholly 34
owned by the transferor and/or the transferor's spouse or domestic 35
partner or children of the transferor or the transferor's spouse or 36
domestic partner. However, if thereafter such transferee corporation 37
or partnership voluntarily transfers such real property, or such 38
transferor, spouse or domestic partner, or children of the transferor 39
or the transferor's spouse or domestic partner voluntarily transfer 40
p. 67 SB 5794
stock in the transferee corporation or interest in the transferee 1
partnership capital, as the case may be, to other than (i) the 2
transferor and/or the transferor's spouse or domestic partner or 3
children of the transferor or the transferor's spouse or domestic 4
partner, (ii) a trust having the transferor and/or the transferor's 5
spouse or domestic partner or children of the transferor or the 6
transferor's spouse or domestic partner as the only beneficiaries at 7
the time of the transfer to the trust, or (iii) a corporation or 8
partnership wholly owned by the original transferor and/or the 9
transferor's spouse or domestic partner or children of the transferor 10
or the transferor's spouse or domestic partner, within three years of 11
the original transfer to which this exemption applies, and the tax on 12
the subsequent transfer has not been paid within sixty days of 13
becoming due, excise taxes become due and payable on the original 14
transfer as otherwise provided by law. 15
(((q))) (p)(i) A transfer that for federal income tax purposes 16
does not involve the recognition of gain or loss for entity 17
formation, liquidation or dissolution, and reorganization, including 18
but not limited to nonrecognition of gain or loss because of 19
application of 26 U.S.C. Sec. 332, 337, 351, 368 (a)(1), 721, or 731 20
of the internal revenue code of 1986, as amended. 21
(ii) However, the transfer described in (((q))) (p)(i) of this 22
subsection cannot be preceded or followed within a thirty-six month 23
period by another transfer or series of transfers, that, when 24
combined with the otherwise exempt transfer or transfers described in 25
(((q))) (p)(i) of this subsection, results in the transfer of a 26
controlling interest in the entity for valuable consideration, and in 27
which one or more persons previously holding a controlling interest 28
in the entity receive cash or property in exchange for any interest 29
the person or persons acting in concert hold in the entity. This 30
subsection (3)(((q))) (p)(ii) does not apply to that part of the 31
transfer involving property received that is the real property 32
interest that the person or persons originally contributed to the 33
entity or when one or more persons who did not contribute real 34
property or belong to the entity at a time when real property was 35
purchased receive cash or personal property in exchange for that 36
person or persons' interest in the entity. The real estate excise tax 37
under this subsection (3)(((q))) (p)(ii) is imposed upon the person 38
or persons who previously held a controlling interest in the entity.39
p. 68 SB 5794
(((r))) (q) A qualified sale of a manufactured/mobile home 1
community, as defined in RCW 59.20.030, that takes place on or after 2
June 12, 2008, but before December 31, 2018. 3
(((s))) (r)(i) A transfer of a qualified low-income housing 4
development or controlling interest in a qualified low-income housing 5
development, unless, due to noncompliance with federal statutory 6
requirements, the seller is subject to recapture, in whole or in 7
part, of its allocated federal low-income housing tax credits within 8
the four years prior to the date of transfer. 9
(ii) For purposes of this subsection (3)(((s))) (r), "qualified 10
low-income housing development" means real property and improvements 11
in respect to which the seller or, in the case of a transfer of a 12
controlling interest, the owner or beneficial owner, was allocated 13
federal low-income housing tax credits authorized under 26 U.S.C. 14
Sec. 42 or successor statute, by the Washington state housing finance 15
commission or successor state-authorized tax credit allocating 16
agency. 17
(iii) This subsection (3)(((s))) (r) does not apply to transfers 18
of a qualified low-income housing development or controlling interest 19
in a qualified low-income housing development occurring on or after 20
July 1, 2035. 21
(iv) The Washington state housing finance commission, in 22
consultation with the department, must gather data on: (A) The fiscal 23
savings, if any, accruing to transferees as a result of the exemption 24
provided in this subsection (3)(((s))) (r); (B) the extent to which 25
transferors of qualified low-income housing developments receive 26
consideration, including any assumption of debt, as part of a 27
transfer subject to the exemption provided in this subsection (3)28
(((s))) (r); and (C) the continued use of the property for low-income 29
housing. The Washington state housing finance commission must provide 30
this information to the joint legislative audit and review committee. 31
The committee must conduct a review of the tax preference created 32
under this subsection (3)(((s))) (r) in calendar year 2033, as 33
required under chapter 43.136 RCW. 34
(((t))) (s)(i) A qualified transfer of residential property by a 35
legal representative of a person with developmental disabilities to a 36
qualified entity subject to the following conditions:37
(A) The adult child with developmental disabilities of the 38
transferor of the residential property must be allowed to reside in 39
the residence or successor property so long as the placement is safe 40
p. 69 SB 5794
and appropriate as determined by the department of social and health 1
services; 2
(B) The title to the residential property is conveyed without the 3
receipt of consideration by the legal representative of a person with 4
developmental disabilities to a qualified entity; 5
(C) The residential property must have no more than four living 6
units located on it; and 7
(D) The residential property transferred must remain in continued 8
use for fifty years by the qualified entity as supported living for 9
persons with developmental disabilities by the qualified entity or 10
successor entity. If the qualified entity sells or otherwise conveys 11
ownership of the residential property the proceeds of the sale or 12
conveyance must be used to acquire similar residential property and 13
such similar residential property must be considered the successor 14
for continued use. The property will not be considered in continued 15
use if the department of social and health services finds that the 16
property has failed, after a reasonable time to remedy, to meet any 17
health and safety statutory or regulatory requirements. If the 18
department of social and health services determines that the property 19
fails to meet the requirements for continued use, the department of 20
social and health services must notify the department and the real 21
estate excise tax based on the value of the property at the time of 22
the transfer into use as residential property for persons with 23
developmental disabilities becomes immediately due and payable by the 24
qualified entity. The tax due is not subject to penalties, fees, or 25
interest under this title. 26
(ii) For the purposes of this subsection (3)(((t))) (s) the 27
definitions in RCW 71A.10.020 apply. 28
(iii) A "qualified entity" is: 29
(A) A nonprofit organization under Title 26 U.S.C. Sec. 501 (c)(3) 30
of the federal internal revenue code of 1986, as amended, as of June 31
7, 2018, or a subsidiary under the same taxpayer identification 32
number that provides residential supported living for persons with 33
developmental disabilities; or 34
(B) A nonprofit adult family home, as defined in RCW 70.128.010, 35
that exclusively serves persons with developmental disabilities.36
(iv) In order to receive an exemption under this subsection (3)37
(((t))) (s) an affidavit must be submitted by the transferor of the 38
residential property and must include a copy of the transfer 39
agreement and any other documentation as required by the department.40
p. 70 SB 5794
(((u))) (t)(i) A sale or transfer of real property to a 1
qualifying grantee that uses the property for housing for low-income 2
persons and receives or otherwise qualifies the property for an 3
exemption from real and personal property taxes under RCW 84.36.560, 4
84.36.049, 35.82.210, 35.21.755, or 84.36.010. For purposes of this 5
subsection (3)(((u))) (t), "qualifying grantee" means a nonprofit 6
entity as defined in RCW 84.36.560, a nonprofit entity or qualified 7
cooperative association as defined in RCW 84.36.049, a housing 8
authority created under RCW 35.82.030 or 35.82.300, a public 9
corporation established under RCW 35.21.660 or 35.21.730, or a county 10
or municipal corporation. A qualifying grantee that is a county or 11
municipal corporation must record a covenant at the time of transfer 12
that prohibits using the property for any purpose other than for low-13
income housing for a period of at least 10 years. At a minimum, the 14
covenant must address price restrictions and household income limits 15
for the low-income housing. A qualifying grantee must comply with the 16
requirements described in (((u))) (t)(i)(A), (B), or (C) of this 17
subsection and must also certify, by affidavit at the time of sale or 18
transfer, that it intends to comply with those requirements.19
(A) If the qualifying grantee intends to operate existing housing 20
on the property, within one year of the sale or transfer:21
(I) The qualifying grantee must receive or qualify the property 22
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 23
35.21.755, or 84.36.010; and 24
(II) The property must be used as housing for low-income persons.25
(B) If the qualifying grantee intends to develop new housing on 26
the site, within five years of the sale or transfer:27
(I) The qualifying grantee must receive or qualify the property 28
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 29
35.21.755, or 84.36.010; and 30
(II) The property must be used as housing for low-income persons.31
(C) If the qualifying grantee intends to substantially 32
rehabilitate the premises as defined in RCW 59.18.200, within three 33
years: 34
(I) The qualifying grantee must receive or qualify the property 35
for a tax exemption under RCW 84.36.560, 84.36.049, 35.82.210, 36
35.21.755, or 84.36.010; and 37
(II) The property must be used as housing for low-income persons.38
(ii) If the qualifying grantee fails to satisfy the requirements 39
described in (((u))) (t)(i)(A), (B), or (C) of this subsection, 40
p. 71 SB 5794
within the timelines described in (((u))) (t)(i)(A), (B), or (C) of 1
this subsection, the qualifying grantee must pay the tax that would 2
have otherwise been due at the time of initial transfer, plus 3
interest calculated from the date of initial transfer pursuant to RCW 4
82.32.050. 5
(iii) If a qualifying grantee transfers the property to a 6
different qualifying grantee within the original timelines described 7
in (((u))) (t)(i)(A), (B), or (C) of this subsection, neither the 8
original qualifying grantee nor the new qualifying grantee is 9
required to pay the tax, so long as the new qualifying grantee 10
satisfies the requirements as described in (((u))) (t)(i)(A), (B), or 11
(C) of this subsection within the exemption period of the initial 12
transfer. If the new qualifying grantee fails to satisfy the 13
requirements described in (((u))) (t)(i)(A), (B), or (C) of this 14
subsection, only the new qualifying grantee is liable for the payment 15
of taxes required by (((u))) (t)(ii) of this subsection. There is no 16
limit on the number of transfers between qualifying grantees within 17
the original timelines. 18
(iv) Each affidavit must be filed with the department upon 19
completion of the sale or transfer of property, including transfers 20
from a qualifying grantee to a different qualifying grantee. The 21
qualifying grantee must provide proof to the department as required 22
by the department once the requirements as described in (((u))) (t)23
(i)(A), (B), or (C) of this subsection have been satisfied.24
(v) For the purposes of this subsection (3)(((u))) (t), "low-25
income" means household income as defined by the department, provided 26
that the definition may not exceed 80 percent of median household 27
income, adjusted for household size, for the county in which the 28
dwelling is located. 29
Sec. 118. RCW 82.45.030 and 2011 c 58 s 15 are each amended to 30
read as follows: 31
(1) As used in this chapter, the term "selling price" means the 32
true and fair value of the property conveyed. If property has been 33
conveyed in an arm's length transaction between unrelated persons for 34
a valuable consideration, a rebuttable presumption exists that the 35
selling price is equal to the total consideration paid or contracted 36
to be paid to the transferor, or to another for the transferor's 37
benefit. 38
p. 72 SB 5794
(2) If the sale is a transfer of a controlling interest in an 1
entity with an interest in real property located in this state, the 2
selling price shall be the true and fair value of the real property 3
owned by the entity and located in this state. If the true and fair 4
value of the real property located in this state cannot reasonably be 5
determined, the selling price shall be determined according to 6
subsection (4) of this section. 7
(3) As used in this section, "total consideration paid or 8
contracted to be paid" includes money or anything of value, paid or 9
delivered or contracted to be paid or delivered in return for the 10
sale, and shall include the amount of any lien, mortgage, contract 11
indebtedness, or other incumbrance, either given to secure the 12
purchase price, or any part thereof, or remaining unpaid on such 13
property at the time of sale. 14
Total consideration shall not include the amount of any 15
outstanding lien or incumbrance in favor of the United States, the 16
state, or a municipal corporation for taxes, special benefits, or 17
improvements. 18
((When a transfer or conveyance is made by deed in lieu of 19
foreclosure to satisfy a deed of trust, total consideration shall not 20
include the amount of any relocation assistance provided to the 21
transferor.))22
(4) If the total consideration for the sale cannot be ascertained 23
or the true and fair value of the property to be valued at the time 24
of the sale cannot reasonably be determined, the market value 25
assessment for the property maintained on the county property tax 26
rolls at the time of the sale shall be used as the selling price.27
Sec. 119. RCW 82.64.030 and 1994 sp.s. c 7 s 907 are each 28
amended to read as follows: 29
The following are exempt from the taxes imposed in this chapter:30
(1) Any successive sale of a previously taxed syrup.31
(2) Any syrup that is transferred to a point outside the state 32
for use outside the state. The department shall provide by rule 33
appropriate procedures and exemption certificates for the 34
administration of this exemption. 35
(3) Any sale at wholesale of a trademarked syrup by any person to 36
a person commonly known as a bottler who is appointed by the owner of 37
the trademark to manufacture, distribute, and sell such trademarked 38
syrup within a specified geographic territory. 39
p. 73 SB 5794
(((4) Any sale of syrup in respect to which a tax on the 1
privilege of possession was paid under this chapter before June 1, 2
1991.))3
Sec. 120. RCW 84.36.010 and 2020 c 272 s 1 are each amended to 4
read as follows: 5
(1) All property belonging exclusively to the United States, the 6
state, or any county or municipal corporation; all property belonging 7
exclusively to any federally recognized Indian tribe, if (a) the 8
tribe is located in the state, and (b) the property is used 9
exclusively for essential government services; ((all state route 10
number 16 corridor transportation systems and facilities constructed 11
under chapter 47.46 RCW;)) all property under a financing contract 12
pursuant to chapter 39.94 RCW or recorded agreement granting 13
immediate possession and use to the public bodies listed in this 14
section or under an order of immediate possession and use pursuant to 15
RCW 8.04.090; and, for a period of forty years from acquisition, all 16
property of a community center; is exempt from taxation. All property 17
belonging exclusively to a foreign national government is exempt from 18
taxation if that property is used exclusively as an office or 19
residence for a consul or other official representative of the 20
foreign national government, and if the consul or other official 21
representative is a citizen of that foreign nation.22
(2) For the purposes of this section the following definitions 23
apply unless the context clearly requires otherwise.24
(a) "Community center" means property, including a building or 25
buildings, determined to be surplus to the needs of a district by a 26
local school board, and purchased or acquired by a nonprofit 27
organization for the purposes of converting them into community 28
facilities for the delivery of nonresidential coordinated services 29
for community members. The community center may make space available 30
to businesses, individuals, or other parties through the loan or 31
rental of space in or on the property. 32
(b) "Essential government services" means services such as tribal 33
administration, public facilities, fire, police, public health, 34
education, sewer, water, environmental and land use, transportation, 35
utility services, and economic development. 36
(c) "Economic development" means commercial activities, including 37
those that facilitate the creation or retention of businesses or 38
p. 74 SB 5794
jobs, or that improve the standard of living or economic health of 1
tribal communities. 2
Sec. 121. RCW 84.36.030 and 2014 c 99 s 4 are each amended to 3
read as follows: 4
The following real and personal property is exempt from taxation:5
(1)(a) Property owned by nonprofit organizations or associations, 6
organized and conducted for nonsectarian purposes, which shall be 7
used for character-building, benevolent, protective or rehabilitative 8
social services directed at persons of all ages. 9
(b) The sale of donated merchandise is not considered a nonexempt 10
use of the property under this section if the proceeds are devoted to 11
the furtherance of the purposes of the selling organization or 12
association as specified in this subsection (1). 13
(2) Property owned by any nonprofit church, denomination, group 14
of churches, or an organization or association, the membership of 15
which is comprised solely of churches or their qualified 16
representatives, which is utilized as a camp facility if used for 17
organized and supervised recreational activities and church purposes 18
as related to such camp facilities. The exemption provided by this 19
((paragraph)) subsection shall apply to a maximum of two hundred 20
acres of any such camp as selected by the church, including buildings 21
and other improvements thereon. 22
(3) Property, including buildings and improvements required for 23
the maintenance and safeguarding of such property, owned by nonprofit 24
organizations or associations engaged in character building of boys 25
and girls under eighteen years of age, and used for such purposes and 26
uses, provided such purposes and uses are for the general public 27
good: PROVIDED, That if existing charters provide that organizations 28
or associations, which would otherwise qualify under the provisions 29
of this ((paragraph)) subsection, serve boys and girls up to the age 30
of twenty-one years, then such organizations or associations shall be 31
deemed qualified pursuant to this section. 32
(4) Property owned by all organizations and societies of veterans 33
of any war of the United States, recognized as such by the department 34
of defense, which shall have national charters, and which shall have 35
for their general purposes and objects the preservation of the 36
memories and associations incident to their war service and the 37
consecration of the efforts of their members to mutual helpfulness 38
and to patriotic and community service to state and nation. To be 39
p. 75 SB 5794
exempt such property must be used in such manner as may be reasonably 1
necessary to carry out the purposes and objects of such societies.2
(5) Property owned by all corporations, incorporated under any 3
act of congress, whose principal purposes are to furnish volunteer 4
aid to members of the armed forces of the United States and also to 5
carry on a system of national and international relief and to apply 6
the same in mitigating the sufferings caused by pestilence, famine, 7
fire, floods, and other national calamities and to devise and carry 8
on measures for preventing the same. 9
(6) ((Property owned by nonprofit organizations exempt from 10
federal income tax under section 501 (c)(3) of the internal revenue 11
code of 1954, as amended, that are guarantee agencies under the 12
federal guaranteed student loan program or that issue debt to provide 13
or acquire student loans.14
(7))) To be exempt under this section, the property must be used 15
exclusively for the purposes for which exemption is granted, except 16
as otherwise provided in this section or RCW 84.36.805.17
(((8))) (7) For the purposes of this section, "general public 18
good" means members of the community derive a benefit from the rental 19
or use of the property by the nonprofit community group or 20
organization. 21
NEW SECTION. Sec. 122. The following acts or parts of acts are 22
each repealed:23
(1) RCW 82.04.4496 (Credit—Clean alternative fuel commercial 24
vehicles) and 2022 c 182 s 307, 2019 c 287 s 8, & 2017 c 116 s 1;25
(2) RCW 82.16.0496 (Credit—Clean alternative fuel commercial 26
vehicles—Alternative fuel vehicle infrastructure) and 2022 c 182 s 27
308, 2019 c 287 s 13, 2017 c 116 s 2, 2016 c 29 s 2, & 2015 3rd sp.s. 28
c 44 s 412; 29
(3) RCW 82.08.9999 (Exemptions—Vehicles using clean alternative 30
fuels and electric vehicles) and 2022 c 182 s 305, 2021 c 145 s 13, & 31
2019 c 287 s 9; 32
(4) RCW 82.12.9999 (Exemptions—Vehicles using clean alternative 33
fuels and electric vehicles) and 2022 c 182 s 306 & 2019 c 287 s 10;34
(5) RCW 82.08.809 (Exemptions—Vehicles using clean alternative 35
fuels and electric vehicles, exceptions—Quarterly transfers) and 2016 36
sp.s. c 32 s 2, 2015 3rd sp.s. c 44 s 408, 2010 1st sp.s. c 11 s 2, & 37
2005 c 296 s 1; 38
p. 76 SB 5794
(6) RCW 82.12.809 (Exemptions—Vehicles using clean alternative 1
fuels and electric vehicles, exceptions—Quarterly transfers) and 2016 2
sp.s. c 32 s 3, 2015 3rd sp.s. c 44 s 409, 2010 1st sp.s. c 11 s 3, & 3
2005 c 296 s 3; 4
(7) RCW 82.04.062 ("Sale at wholesale," "sale at retail" excludes 5
sale of precious metal bullion and monetized bullion —Computation of 6
tax) and 1985 c 471 s 5; 7
(8) RCW 82.16.0497 (Credit—Light and power business, gas 8
distribution business) and 2020 c 139 s 26, 2006 c 213 s 1, & 2001 c 9
214 s 13; 10
(9) RCW 82.04.44525 (Credit—New employment for international 11
service activities in eligible areas—Designation of census tracts for 12
eligibility—Records—Tax due upon ineligibility—Interest assessment—13
Information from employment security department) and 2009 c 535 s 14
1104, 2008 c 81 s 9, & 1998 c 313 s 2; 15
(10) RCW 82.08.02566 (Exemptions—Sales of tangible personal 16
property incorporated in prototype for parts, auxiliary equipment, 17
and aircraft modification—Limitations on yearly exemption) and 2003 c 18
168 s 208, 1997 c 302 s 1, & 1996 c 247 s 4; 19
(11) RCW 82.12.02566 (Exemptions—Use of tangible personal 20
property incorporated in prototype for aircraft parts, auxiliary 21
equipment, and aircraft modification—Limitations on yearly exemption) 22
and 2003 c 168 s 209, 1997 c 302 s 2, & 1996 c 247 s 5;23
(12) RCW 82.04.272 (Tax on warehousing and reselling prescription 24
drugs) and 2013 c 19 s 127, 2003 c 168 s 401, & 1998 c 343 s 1;25
(13) RCW 82.04.315 (Exemptions—International banking facilities) 26
and 1982 c 95 s 7; 27
(14) RCW 82.04.4292 (Deductions—Interest on investments or loans 28
secured by mortgages or deeds of trust) and 2012 2nd sp.s. c 6 s 102, 29
2010 1st sp.s. c 23 s 301, & 1980 c 37 s 12; 30
(15) RCW 82.04.293 (International investment management services—31
Definitions) and 2019 c 426 s 3, 1997 c 7 s 3, & 1995 c 229 s 1;32
(16) RCW 82.04.29005 (Tax on loan interest —2012 2nd sp.s. c 6) 33
and 2012 2nd sp.s. c 6 s 101; 34
(17) RCW 82.16.046 (Exemptions—Operation of state route No. 16) 35
and 1998 c 179 s 5; 36
(18) RCW 82.29A.132 (Exemptions—Operation of state route No. 16) 37
and 1998 c 179 s 6; 38
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(19) RCW 82.45.190 (Exemptions—State route No. 16 corridor 1
transportation systems and facilities) and 1998 c 179 s 7;2
(20) RCW 82.08.02568 (Exemptions—Sales of carbon and similar 3
substances that become an ingredient or component of anodes or 4
cathodes used in producing aluminum for sale) and 1996 c 170 s 1;5
(21) RCW 82.12.02568 (Exemptions—Use of carbon and similar 6
substances that become an ingredient or component of anodes or 7
cathodes used in producing aluminum for sale) and 1996 c 170 s 2;8
(22) RCW 82.04.4482 (Credit—Sales of electricity or gas to an 9
aluminum smelter) and 2004 c 24 s 9; 10
(23) RCW 82.16.0498 (Credit—Sales of electricity or gas to an 11
aluminum smelter) and 2004 c 24 s 13; 12
(24) RCW 82.12.0265 (Exemptions—Use by bailee of tangible 13
personal property consumed in research, development, etc., 14
activities) and 1980 c 37 s 64; 15
(25) RCW 36.100.090 (Tax deferral—New public facilities) and 1995 16
1st sp.s. c 14 s 6; 17
(26) RCW 82.12.024 (Deferral of use tax on certain users of 18
natural or manufactured gas) and 2001 c 214 s 10; 19
(27) RCW 82.04.545 (Exemptions—Sales of electricity or gas to 20
silicon smelters) and 2017 3rd sp.s. c 37 s 705 & 2017 3rd sp.s. c 37 21
s 704; 22
(28) RCW 82.16.315 (Exemptions—Sales of electricity or gas to 23
silicon smelters) and 2017 3rd sp.s. c 37 s 703 & 2017 3rd sp.s. c 37 24
s 702; 25
(29) RCW 82.16.0495 (Credit—Electricity sold to a direct service 26
industrial customer) and 2001 c 214 s 11; 27
(30) RCW 36.102.070 (Deferral of taxes —Application by public 28
stadium authority —Department of revenue approval —Repayment—29
Schedules—Interest—Debt for taxes —Information not confidential) and 30
1997 c 220 s 201; 31
(31) RCW 82.08.02569 (Exemptions—Sales of tangible personal 32
property related to a building or structure that is an integral part 33
of a laser interferometer gravitational wave observatory) and 1996 c 34
113 s 1; 35
(32) RCW 82.12.02569 (Exemptions—Use of tangible personal 36
property related to a building or structure that is an integral part 37
of a laser interferometer gravitational wave observatory) and 1996 c 38
113 s 2; 39
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(33) RCW 82.04.421 (Exemptions—Out-of-state membership sales in 1
discount programs) and 1997 c 408 s 1; 2
(34) RCW 82.04.4331 (Deductions—Insurance claims for state health 3
care coverage) and 1988 c 107 s 33; 4
(35) RCW 82.04.4295 (Deductions—Manufacturing activities 5
completed outside the United States) and 1980 c 37 s 15;6
(36) RCW 82.04.447 (Credit—Natural or manufactured gas purchased 7
by direct service industrial customers—Reports) and 2001 c 214 s 9;8
(37) RCW 82.04.4332 (Deductions—Tuition fees of foreign degree-9
granting institutions) and 1993 c 181 s 10; 10
(38) RCW 82.29A.137 (Exemptions—Certain leasehold interests 11
related to the manufacture of superefficient airplanes) and 2017 c 12
135 s 35, 2013 3rd sp.s. c 2 s 13, 2010 c 114 s 134, & 2003 2nd sp.s. 13
c 1 s 13; and 14
(39) RCW 82.04.434 (Credit—Public safety standards and testing) 15
and 1991 c 13 s 1. 16
PART II17
CORRECTING INTERNAL REFERENCES18
Sec. 201. RCW 82.04.29004 and 2019 c 420 s 2 are each amended to 19
read as follows: 20
(1) Beginning January 1, 2020, in addition to any other taxes 21
imposed under this chapter, an additional tax is imposed on specified 22
financial institutions. The additional tax is equal to the gross 23
income of the business taxable under RCW 82.04.290(((2))) (1) 24
multiplied by the rate of 1.2 percent. 25
(2) The definitions in this subsection apply throughout this 26
section unless the context clearly requires otherwise.27
(a) "Affiliated" means a person that directly or indirectly, 28
through one or more intermediaries, controls, is controlled by, or is 29
under common control with another person. For purposes of this 30
subsection (2)(a), "control" means the possession, directly or 31
indirectly, of more than ((fifty)) 50 percent of the power to direct 32
or cause the direction of the management and policies of a person, 33
whether through the ownership of voting shares, by contract, or 34
otherwise. 35
(b) "Consolidated financial institution group" means all 36
financial institutions that are affiliated with each other.37
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(c) "Consolidated financial statement" means a consolidated 1
financial institution group's consolidated reports of condition and 2
income filed with the federal financial institutions examination 3
council, or successor agency. 4
(d) "Financial institution" means: 5
(i) Any corporation or other business entity chartered under 6
Titles 30A, 30B, 31, 32, and 33 RCW, or registered under the federal 7
bank holding company act of 1956, as amended, or registered as a 8
savings and loan holding company under the federal national housing 9
act, as amended; 10
(ii) A national bank organized and existing as a national bank 11
association pursuant to the provisions of the national bank act, 12 12
U.S.C. Sec. 21 et seq.; 13
(iii) A savings association or federal savings bank as defined in 14
the federal deposit insurance act, 12 U.S.C. Sec. 1813(b)(1);15
(iv) Any bank or thrift institution incorporated or organized 16
under the laws of any state; 17
(v) Any corporation organized under the provisions of 12 U.S.C. 18
Sec. 611 through 631; 19
(vi) Any agency or branch of a foreign depository as defined in 20
12 U.S.C. Sec. 3101 ((that is not exempt under RCW 82.04.315));21
(vii) A production credit association organized under the federal 22
farm credit act of 1933, all of whose stock held by the federal 23
production credit corporation has been retired; 24
(viii) Any corporation or other business entity who receives 25
gross income taxable under RCW 82.04.290, and whose voting interests 26
are more than ((fifty)) 50 percent owned, directly or indirectly, by 27
any person or business entity described in (d)(i) through (vii) of 28
this subsection other than an insurance company liable for the 29
insurance premiums tax under RCW 48.14.020 or any other company 30
taxable under chapter 48.14 RCW; 31
(ix)(A) A corporation or other business entity that receives more 32
than ((fifty)) 50 percent of its total gross income for federal 33
income tax purposes from finance leases. For purposes of this 34
subsection, a "finance lease" means a lease that meets two 35
requirements: 36
(I) It is the type of lease permitted to be made by national 37
banks (see 12 U.S.C. Sec. 24 (7) and (10), comptroller of the currency 38
regulations, part 23, leasing (added by 56 C.F.R. Sec. 28314, June 39
p. 80 SB 5794
20, 1991, effective July 22, 1991), and regulation Y of the federal 1
reserve system 12 C.F.R. Part 225.25, as amended); and2
(II) It is the economic equivalent of an extension of credit, 3
i.e., the lease is treated by the lessor as a loan for federal income 4
tax purposes. In no event does a lease qualify as an extension of 5
credit where the lessor takes depreciation on such property for 6
federal income tax purposes. 7
(B) For this classification to apply, the average of the gross 8
income in the current tax year and immediately preceding two tax 9
years must satisfy the more than ((fifty)) 50 percent requirement;10
(x) Any other person or business entity, other than an insurance 11
general agent taxable under RCW 82.04.280(1)(e), an insurance 12
business exempt from the business and occupation tax under RCW 13
82.04.320, a real estate broker taxable under RCW 82.04.255, a 14
securities dealer or international investment management company 15
taxable under RCW 82.04.290(((2))) (1), that receives more than 16
((fifty)) 50 percent of its gross receipts from activities that a 17
person described in (d)(ii) through (vii) and (ix) of this subsection 18
is authorized to transact. 19
(e)(i) "Specified financial institution" means a financial 20
institution that is a member of a consolidated financial institution 21
group that reported on its consolidated financial statement for the 22
previous calendar year annual net income of at least ((one billion 23
dollars)) $1,000,000,000, not including net income attributable to 24
noncontrolling interests, as the terms "net income" and 25
"noncontrolling interest" are used in the consolidated financial 26
statement. 27
(ii) If financial institutions are no longer required to file 28
consolidated financial statements, "specified financial institution" 29
means any person that was subject to the additional tax in this 30
section in at least two of the previous four calendar years.31
(3) The department must notify the fiscal committees of the 32
legislature if financial institutions are no longer required to file 33
consolidated financial statements. 34
(4) To aid in the effective administration of the additional tax 35
imposed in this section, the department may require a person believed 36
to be a specified financial institution to disclose whether it is a 37
member of a consolidated financial institution group and, if so, to 38
identify all other members of its consolidated financial institution 39
group. A person failing to comply with this subsection is deemed to 40
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have intended to evade tax payable under this section and is subject 1
to the penalty in RCW 82.32.090(7) on any tax due under this section 2
by the person and any financial institution affiliated with the 3
person. 4
(5) Taxes collected under this section must be deposited into the 5
general fund. 6
Sec. 202. RCW 82.04.4451 and 2022 c 295 s 1 are each amended to 7
read as follows: 8
(1) In computing the tax imposed under this chapter, a credit is 9
allowed against the amount of tax otherwise due under this chapter, 10
as provided in this section. Except for taxpayers that report at 11
least 50 percent of their taxable amount under RCW 82.04.255, 12
82.04.290(((2))) (1)(a), and 82.04.285, the maximum credit for a 13
taxpayer for a reporting period is $55 multiplied by the number of 14
months in the reporting period, as determined under RCW 82.32.045. 15
For a taxpayer that reports at least 50 percent of its taxable amount 16
under RCW 82.04.255, 82.04.290(((2))) (1)(a), and 82.04.285, the 17
maximum credit for a reporting period is $160 multiplied by the 18
number of months in the reporting period, as determined under RCW 19
82.32.045. 20
(2) When the amount of tax otherwise due under this chapter is 21
equal to or less than the maximum credit, a credit is allowed equal 22
to the amount of tax otherwise due under this chapter.23
(3) When the amount of tax otherwise due under this chapter 24
exceeds the maximum credit, a reduced credit is allowed equal to 25
twice the maximum credit, minus the tax otherwise due under this 26
chapter, but not less than zero. 27
(4) The department may prepare a tax credit table consisting of 28
tax ranges using increments of no more than ((five dollars)) $5 and a 29
corresponding tax credit to be applied to those tax ranges. The table 30
shall be prepared in such a manner that no taxpayer will owe a 31
greater amount of tax by using the table than would be owed by 32
performing the calculation under subsections (1) through (3) of this 33
section. A table prepared by the department under this subsection 34
must be used by all taxpayers in taking the credit provided in this 35
section. 36
Sec. 203. RCW 82.04.540 and 2006 c 301 s 1 are each amended to 37
read as follows: 38
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(1) The provision of professional employer services by a 1
professional employer organization is taxable under RCW 2
82.04.290(((2))) (1). 3
(2) A professional employer organization is allowed a deduction 4
from the gross income of the business derived from performing 5
professional employer services that is equal to the portion of the 6
fee charged to a client that represents the actual cost of wages and 7
salaries, benefits, workers' compensation, payroll taxes, 8
withholding, or other assessments paid to or on behalf of a covered 9
employee by the professional employer organization under a 10
professional employer agreement. 11
(3) For the purposes of this section, the following definitions 12
apply: 13
(a) "Client" means any person who enters into a professional 14
employer agreement with a professional employer organization. For 15
purposes of this subsection (3)(a), "person" has the same meaning as 16
"buyer" in RCW 82.08.010. 17
(b) "Coemployer" means either a professional employer 18
organization or a client. 19
(c) "Coemployment relationship" means a relationship which is 20
intended to be an ongoing relationship rather than a temporary or 21
project-specific one, wherein the rights, duties, and obligations of 22
an employer which arise out of an employment relationship have been 23
allocated between coemployers pursuant to a professional employer 24
agreement and applicable state law. In such a coemployment 25
relationship: 26
(i) The professional employer organization is entitled to enforce 27
only such employer rights and is subject to only those obligations 28
specifically allocated to the professional employer organization by 29
the professional employer agreement or applicable state law;30
(ii) The client is entitled to enforce those rights and obligated 31
to provide and perform those employer obligations allocated to such 32
client by the professional employer agreement and applicable state 33
law; and 34
(iii) The client is entitled to enforce any right and obligated 35
to perform any obligation of an employer not specifically allocated 36
to the professional employer organization by the professional 37
employer agreement or applicable state law. 38
(d) "Covered employee" means an individual having a coemployment 39
relationship with a professional employer organization and a client 40
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who meets all of the following criteria: (i) The individual has 1
received written notice of coemployment with the professional 2
employer organization, and (ii) the individual's coemployment 3
relationship is pursuant to a professional employer agreement. 4
Individuals who are officers, directors, shareholders, partners, and 5
managers of the client are covered employees to the extent the 6
professional employer organization and the client have expressly 7
agreed in the professional employer agreement that such individuals 8
would be covered employees and provided such individuals meet the 9
criteria of this subsection and act as operational managers or 10
perform day-to-day operational services for the client.11
(e) "Professional employer agreement" means a written contract by 12
and between a client and a professional employer organization that 13
provides: 14
(i) For the coemployment of covered employees; and15
(ii) For the allocation of employer rights and obligations 16
between the client and the professional employer organization with 17
respect to the covered employees. 18
(f) "Professional employer organization" means any person engaged 19
in the business of providing professional employer services. The 20
following shall not be deemed to be professional employer 21
organizations or the providing of professional employer services for 22
purposes of this section: 23
(i) Arrangements wherein a person, whose principal business 24
activity is not entering into professional employer arrangements and 25
which does not hold itself out as a professional employer 26
organization, shares employees with a commonly owned company within 27
the meaning of section 414 (b) and (c) of the internal revenue code of 28
1986, as amended; 29
(ii) Independent contractor arrangements by which a person 30
assumes responsibility for the product produced or service performed 31
by such person or his or her agents and retains and exercises primary 32
direction and control over the work performed by the individuals 33
whose services are supplied under such arrangements; or34
(iii) Providing staffing services. 35
(g) "Professional employer services" means the service of 36
entering into a coemployment relationship with a client in which all 37
or a majority of the employees providing services to a client or to a 38
division or work unit of a client are covered employees.39
(h) "Staffing services" means services consisting of a person:40
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(i) Recruiting and hiring its own employees; 1
(ii) Finding other organizations that need the services of those 2
employees; 3
(iii) Assigning those employees on a temporary basis to perform 4
work at or services for the other organizations to support or 5
supplement the other organizations' workforces, or to provide 6
assistance in special work situations such as, but not limited to, 7
employee absences, skill shortages, seasonal workloads, or to perform 8
special assignments or projects, all under the direction and 9
supervision of the customer; and 10
(iv) Customarily attempting to reassign the employees to other 11
organizations when they finish each assignment. 12
Sec. 204. RCW 82.04.620 and 2007 c 447 s 1 are each amended to 13
read as follows: 14
In computing tax there may be deducted from the measure of tax 15
imposed by RCW 82.04.290(((2))) (1) amounts received by physicians or 16
clinics for drugs for infusion or injection by licensed physicians or 17
their agents for human use pursuant to a prescription, but only if 18
the amounts: (1) Are separately stated on invoices or other billing 19
statements; (2) do not exceed the then current federal rate; and (3) 20
are covered or required under a health care service program 21
subsidized by the federal or state government. The federal rate means 22
the rate at or below which the federal government or its agents 23
reimburse providers for prescription drugs administered to patients 24
as provided for in the medicare, part B, drugs average sales price 25
information resource as published by the United States department of 26
health and human services, or any successor index thereto.27
Sec. 205. RCW 82.04.051 and 2021 c 145 s 4 are each amended to 28
read as follows: 29
(1) As used in RCW 82.04.050 and including for the purposes of 30
the taxes imposed in chapter 82.08 RCW in addition to the taxes 31
imposed in this chapter, the term "services rendered in respect to" 32
means, in the context of constructing, building, repairing, 33
improving, and decorating buildings or other structures, those 34
services that are directly related to the constructing, building, 35
repairing, improving, and decorating of buildings or other structures 36
and that are performed by a person who is responsible for the 37
performance of the constructing, building, repairing, improving, or 38
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decorating activity. The term does not include services such as 1
engineering, architectural, surveying, flagging, accounting, legal, 2
consulting, land development or management, or administrative 3
services provided to the consumer of, or person responsible for 4
performing, the constructing, building, repairing, improving, or 5
decorating services. 6
(2) A contract or agreement under which a person is responsible 7
for both services that would otherwise be subject to tax as a service 8
under RCW 82.04.290(((2))) (1) and also constructing, building, 9
repairing, improving, or decorating activities that would otherwise 10
be subject to tax under another section of this chapter is subject to 11
the tax that applies to the predominant activity under the contract 12
or agreement. 13
(3) Unless otherwise provided by law, a contract or agreement 14
under which a person is responsible for activities that are subject 15
to tax as a service under RCW 82.04.290(((2))) (1), and a subsequent 16
contract or agreement under which the same person is responsible for 17
constructing, building, repairing, improving, or decorating 18
activities subject to tax under another section of this chapter, 19
shall not be combined and taxed as a single activity if at the time 20
of the first contract or agreement it was not contemplated by the 21
parties, as evidenced by the facts, that the same person would be 22
awarded both contracts. 23
(4) The definitions in this subsection apply throughout this 24
section unless the context clearly requires otherwise.25
(a) "Land development or management" means site identification, 26
zoning, permitting, and other preconstruction regulatory services 27
provided to the consumer of the constructing, building, repairing, 28
improving, or decorating services. This includes, but is not limited 29
to, acting as an owner's representative during any design or 30
construction period, including recommending a contractor, monitoring 31
the budget and schedule, approving invoices, and interacting on the 32
behalf of the consumer with the person who has control over the work 33
itself or responsible for the performance of the work.34
(b) "Responsible for the performance" means that the person is 35
obligated to perform the activities, either personally or through a 36
third party. A person who reviews work for a consumer, retailer, or 37
wholesaler but does not supervise or direct the work is not 38
responsible for the performance of the work. A person who is 39
financially obligated for the work, such as a bank, but who does not 40
p. 86 SB 5794
have control over the work itself is not responsible for the 1
performance of the work. 2
Sec. 206. RCW 82.04.257 and 2017 c 323 s 515 are each amended to 3
read as follows: 4
(1) Except as provided in subsection (2) of this section, upon 5
every person engaging within this state in the business of making 6
sales at retail or wholesale of digital goods, digital codes, digital 7
automated services, or services described in RCW 82.04.050 (2)(g) or 8
(6)(c), as to such persons, the amount of tax with respect to such 9
business is equal to the gross proceeds of sales of the business, 10
multiplied by the rate of 0.471 percent in the case of retail sales 11
and by the rate of 0.484 percent in the case of wholesale sales.12
(2) Persons providing subscription television services or 13
subscription radio services are subject to tax under RCW 14
82.04.290(((2))) (1) on the gross income of the business received 15
from providing such services. 16
(3) For purposes of this section, a person is considered to be 17
engaging within this state in the business of making sales of digital 18
goods, digital codes, digital automated services, or services 19
described in RCW 82.04.050 (2)(g) or (6)(c), if the person makes 20
sales of digital goods, digital codes, digital automated services, or 21
services described in RCW 82.04.050 (2)(g) or (6)(c) and the sales 22
are sourced to this state under RCW 82.32.730 for sales tax purposes 23
or would have been sourced to this state under RCW 82.32.730 if the 24
sale had been taxable under chapter 82.08 RCW. 25
(4) A person subject to tax under this section is subject to the 26
mandatory electronic filing and payment requirements in RCW 27
82.32.080. 28
Sec. 207. RCW 82.04.29001 and 2003 c 168 s 602 are each amended 29
to read as follows: 30
(1) The creation and distribution of custom software is a service 31
taxable under RCW 82.04.290(((2))) (1). Duplication of the software 32
for the same person, or by the same person for its own use, does not 33
change the character of the software. 34
(2) The customization of prewritten computer software is a 35
service taxable under RCW 82.04.290(((2))) (1). 36
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Sec. 208. RCW 82.04.29002 and 2010 1st sp.s. c 23 s 1101 are 1
each amended to read as follows: 2
(1) Beginning May 1, 2010, through June 30, 2013, an additional 3
rate of tax of 0.30 percent is added to the rate provided for in RCW 4
82.04.255, 82.04.285, and 82.04.290(((2))) (1)(a). 5
(2)(a) The additional rate in subsection (1) of this section does 6
not apply to persons engaging within this state in business as a 7
hospital. "Hospital" has the meaning provided in chapter 70.41 RCW 8
but also includes any hospital that comes within the scope of chapter 9
71.12 RCW if the hospital is also licensed under chapter 70.41 RCW.10
(b) The additional rate in subsection (1) of this section does 11
not apply to amounts received from performing scientific research and 12
development services including but not limited to research and 13
development in the physical, engineering, and life sciences (such as 14
agriculture, bacteriological, biotechnology, chemical, life sciences, 15
and physical science research and development laboratories or 16
services). 17
Sec. 209. RCW 82.04.297 and 2010 c 111 s 303 are each amended to 18
read as follows: 19
(1) The provision of internet access is subject to tax under RCW 20
82.04.290(((2))) (1). 21
(2)(a) Except as provided in (b) of this subsection, "internet" 22
and "internet access" have the same meaning as those terms are 23
defined in the federal internet tax freedom act, Title 47 U.S.C. Sec. 24
151 note, as existing on July 1, 2009. 25
(b) "Internet access" does not include telecommunications service 26
purchased, used, or sold by a person that provides a service that 27
enables users to connect to the internet to access content, 28
information, or other services offered over the internet, to the 29
extent such telecommunications service is purchased, used, or sold: 30
(i) To provide such service; or (ii) to otherwise enable users to 31
access content, information, or other services offered over the 32
internet. 33
(3) Unless the context clearly requires otherwise, the 34
definitions in this section apply throughout this chapter.35
Sec. 210. RCW 82.04.299 and 2022 c 170 s 1 and 2022 c 56 s 4 are 36
each reenacted and amended to read as follows: 37
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(1)(a) Beginning with business activities occurring on or after 1
April 1, 2020, in addition to the taxes imposed under RCW 2
82.04.290(((2))) (1), a workforce education investment surcharge is 3
imposed on select advanced computing businesses. The surcharge is 4
equal to the gross income of the business subject to the tax under 5
RCW 82.04.290(((2))) (1), multiplied by the rate of 1.22 percent.6
(b) Except as provided in (e) of this subsection (1), in no case 7
will the combined surcharge imposed under this subsection (1) paid by 8
all members of an affiliated group be more than ((nine million 9
dollars)) $9,000,000 annually. 10
(c) For persons subject to the surcharge imposed under this 11
subsection (1) that report under one or more tax classifications, the 12
surcharge applies only to business activities taxed under RCW 13
82.04.290(((2))) (1). 14
(d) The surcharge imposed under this subsection (1) must be 15
reported and paid on a quarterly basis in a manner as required by the 16
department. Returns and amounts payable under this subsection (1) are 17
due by the last day of the month immediately following the end of the 18
reporting period covered by the return. All other taxes must be 19
reported and paid as required under RCW 82.32.045.20
(e)(i) To aid in the effective administration of the surcharge in 21
this subsection (1), the department may require persons believed to 22
be engaging in advanced computing or affiliated with a person 23
believed to be engaging in advanced computing to disclose whether 24
they are a member of an affiliated group and, if so, to identify all 25
other members of the affiliated group subject to the surcharge.26
(ii) If the department establishes, by clear, cogent, and 27
convincing evidence, that one or more members of an affiliated group, 28
with intent to evade the surcharge under this subsection (1), failed 29
to fully comply with this subsection (1)(e), the department must 30
assess against that person, or those persons collectively, a penalty 31
equal to ((fifty)) 50 percent of the amount of the total surcharge 32
payable by all members of that affiliated group for the calendar year 33
during which the person or persons failed to fully comply with this 34
subsection (1)(e). The penalty under this subsection (1)(e) is in 35
lieu of and not in addition to the evasion penalty under RCW 36
82.32.090(7). 37
(f) For the purposes of this subsection (1) the following 38
definitions apply: 39
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(i) "Advanced computing" means designing or developing computer 1
software or computer hardware, whether directly or contracting with 2
another person, including: Modifications to computer software or 3
computer hardware; cloud computing services; or operating as a 4
marketplace facilitator as defined by RCW 82.08.0531, an online 5
search engine, or online social networking platform;6
(ii) "Affiliate" and "affiliated" means a person that directly or 7
indirectly, through one or more intermediaries, controls, is 8
controlled by, or is under common control with another person;9
(iii) "Affiliated group" means a group of two or more persons 10
that are affiliated with each other; 11
(iv) "Cloud computing services" means on-demand delivery of 12
computing resources, such as networks, servers, storage, 13
applications, and services, over the internet; 14
(v) "Control" means the possession, directly or indirectly, of 15
more than ((fifty)) 50 percent of the power to direct or cause the 16
direction of the management and policies of a person, whether through 17
the ownership of voting shares, by contract, or otherwise; and18
(vi) "Select advanced computing business" means a person who is a 19
member of an affiliated group with at least one member of the 20
affiliated group engaging in the business of advanced computing, and 21
the affiliated group has worldwide gross revenue of more than 22
((twenty-five billion dollars )) $25,000,000,000 during the 23
immediately preceding calendar year. A person who is primarily 24
engaged within this state in the provision of commercial mobile 25
service, as that term is defined in 47 U.S.C. Sec. 332 (d)(1), shall 26
not be considered a select advanced computing business. A person who 27
is primarily engaged in this state in the operation and provision of 28
access to transmission facilities and infrastructure that the person 29
owns or leases for the transmission of voice, data, text, sound, and 30
video using wired telecommunications networks shall not be considered 31
a select advanced computing business. A person that is primarily 32
engaged in business as a "financial institution" as defined in RCW 33
82.04.29004, as that section existed on January 1, 2020, shall not be 34
considered a select advanced computing business. For purposes of this 35
subsection (1)(f)(vi), "primarily" is determined based on gross 36
income of the business. 37
(2)(a) The workforce education investment surcharge under this 38
section does not apply to: 39
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(i) Any hospital as defined in RCW 70.41.020, including any 1
hospital that comes within the scope of chapter 71.12 RCW if the 2
hospital is also licensed under chapter 70.41 RCW; or3
(ii) A provider clinic offering primary care, multispecialty and 4
surgical services, including behavioral health services, and any 5
affiliate of the provider clinic if the affiliate is an organization 6
that offers health care services or provides administrative support 7
for a provider clinic, or is an independent practice association or 8
accountable care organization. 9
(b) The exemptions under this subsection (2) do not apply to 10
amounts received by any member of an affiliated group other than the 11
businesses described in (a) of this subsection. 12
(c) For purposes of the exemption in (a)(ii) of this subsection:13
(i) "Health care services" means services offered by health care 14
providers relating to the prevention, cure, or treatment of illness, 15
injury, or disease. 16
(ii) "Primary care" means wellness and prevention services and 17
the diagnosis and treatment of health conditions. 18
(3) Revenues from the surcharge under this section must be 19
deposited directly into the workforce education investment account 20
established in RCW 43.79.195. 21
(4) The department has the authority to determine through an 22
audit or other investigation whether a person is subject to the 23
surcharge imposed in this section. 24
Sec. 211. RCW 82.04.360 and 2010 1st sp.s. c 23 s 702 are each 25
amended to read as follows: 26
(1) This chapter does not apply to any person in respect to his 27
or her employment in the capacity of an employee or servant as 28
distinguished from that of an independent contractor. For the 29
purposes of this section, the definition of employee includes those 30
persons that are defined in section 3121 (d)(3)(B) of the federal 31
internal revenue code of 1986, as amended through January 1, 1991.32
(2) Until July 1, 2010, this chapter does not apply to amounts 33
received by an individual from a corporation as compensation for 34
serving as a member of that corporation's board of directors. 35
Beginning on July 1, 2010, such amounts are taxable under RCW 36
82.04.290(((2))) (1). 37
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(3) A booth renter is an independent contractor for purposes of 1
this chapter. For purposes of this section, "booth renter" means any 2
person who: 3
(a) Performs cosmetology, barbering, esthetics, or manicuring 4
services for which a license is required under chapter 18.16 RCW; and5
(b) Pays a fee for the use of salon or shop facilities and 6
receives no compensation or other consideration from the owner of the 7
salon or shop for the services performed. 8
Sec. 212. RCW 82.04.43396 and 2019 c 217 s 1 are each amended to 9
read as follows: 10
(1) In computing tax under RCW 82.04.290(((2))) (1), a seller may 11
deduct from the measure of tax the amount of scan-down allowances.12
(2) For purposes of this section, a provision that the seller 13
must sell at a certain retail price or a specific price reduction 14
does not constitute either: 15
(a) A service provided by the seller to the manufacturer or 16
wholesaler; or 17
(b) A business activity directly or indirectly benefiting the 18
manufacturer or wholesaler. 19
(3) The definitions in this subsection apply throughout this 20
section unless the context clearly requires otherwise.21
(a) "Product" means: 22
(i) Food and food ingredients other than prepared food, as those 23
terms are defined in RCW 82.08.0293, whether or not exempt from sales 24
tax under RCW 82.08.0293; and 25
(ii) Pet food and specialty pet food as defined in RCW 15.53.901.26
(b) "Scan-down allowance" means a payment or credit offered to a 27
seller by a manufacturer or wholesaler of products, where:28
(i) The amount of the payment or credit is based on the quantity 29
of the product to be sold at retail by the seller within a specified 30
period of time; 31
(ii) The seller knew the terms of the offer before making the 32
sales that generated the payment or credit from the manufacturer or 33
wholesaler; and 34
(iii) The seller is not required to provide any services to the 35
manufacturer or wholesaler or engage in any business activities 36
directly or indirectly benefiting the manufacturer or wholesaler, in 37
order to receive the payment or credit from the manufacturer or 38
wholesaler. 39
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Sec. 213. RCW 82.04.280 and 2019 c 449 s 1 are each amended to 1
read as follows: 2
(1) Upon every person engaging within this state in the business 3
of: (a) Printing materials other than newspapers, and of publishing 4
periodicals or magazines; (b) building, repairing or improving any 5
street, place, road, highway, easement, right-of-way, mass public 6
transportation terminal or parking facility, bridge, tunnel, or 7
trestle which is owned by a municipal corporation or political 8
subdivision of the state or by the United States and which is used or 9
to be used, primarily for foot or vehicular traffic including mass 10
transportation vehicles of any kind and including any readjustment, 11
reconstruction or relocation of the facilities of any public, private 12
or cooperatively owned utility or railroad in the course of such 13
building, repairing or improving, the cost of which readjustment, 14
reconstruction, or relocation, is the responsibility of the public 15
authority whose street, place, road, highway, easement, right-of-way, 16
mass public transportation terminal or parking facility, bridge, 17
tunnel, or trestle is being built, repaired or improved; (c) 18
extracting for hire or processing for hire, except persons taxable as 19
extractors for hire or processors for hire under another section of 20
this chapter; (d) operating a cold storage warehouse or storage 21
warehouse, but not including the rental of cold storage lockers; (e) 22
representing and performing services for fire or casualty insurance 23
companies as an independent resident managing general agent licensed 24
under the provisions of chapter 48.17 RCW; (f) radio and television 25
broadcasting, but excluding revenues from network, national, and 26
regional advertising computed either: (i) As a standard deduction 27
that the department must publish by rule by September 30, 2020, and 28
by September 30th of every fifth year thereafter, based on the 29
national average thereof as reported by the United States census 30
bureau's economic census; or (ii) in lieu thereof by itemization by 31
the individual broadcasting station, and excluding that portion of 32
revenue represented by the out-of-state audience computed as a ratio 33
to the broadcasting station's total audience as measured by the 0.5 34
millivolt/meter signal strength contour for AM radio, the one 35
millivolt/meter or ((sixty)) 60 dBu signal strength contour for FM 36
radio, the ((twenty-eight)) 28 dBu signal strength contour for 37
television channels two through six, the ((thirty-six)) 36 dBu signal 38
strength contour for television channels seven through ((thirteen)) 39
13, and the ((forty-one)) 41 dBu signal strength contour for 40
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television channels ((fourteen)) 14 through ((sixty-nine)) 69 with 1
delivery by wire, satellite, or any other means, if any; (g) engaging 2
in activities which bring a person within the definition of consumer 3
contained in RCW 82.04.190(6); as to such persons, the amount of tax 4
on such business is equal to the gross income of the business 5
multiplied by the rate of 0.484 percent. 6
(2) For the purposes of this section, the following definitions 7
apply unless the context clearly requires otherwise.8
(a) "Cold storage warehouse" means a storage warehouse used to 9
store fresh and/or frozen perishable fruits or vegetables, meat, 10
seafood, dairy products, or fowl, or any combination thereof, at a 11
desired temperature to maintain the quality of the product for 12
orderly marketing. 13
(b) "Storage warehouse" means a building or structure, or any 14
part thereof, in which goods, wares, or merchandise are received for 15
storage for compensation, except field warehouses, fruit warehouses, 16
fruit packing plants, warehouses licensed under chapter 22.09 RCW, 17
public garages storing automobiles, railroad freight sheds, docks and 18
wharves, and "self-storage" or "mini storage" facilities whereby 19
customers have direct access to individual storage areas by separate 20
entrance. (("Storage warehouse" does not include a building or 21
structure, or that part of such building or structure, in which an 22
activity taxable under RCW 82.04.272 is conducted.))23
(c) "Periodical or magazine" means a printed publication, other 24
than a newspaper, issued regularly at stated intervals at least once 25
every three months, including any supplement or special edition of 26
the publication. 27
PART III28
MODIFYING THE AIRCRAFT EXCISE TAX FOR PURPOSES OF THE COMMUTER AIR 29
CARRIER AIRPLANES PROPERTY TAX EXEMPTION30
Sec. 301. RCW 82.48.030 and 2013 c 56 s 3 are each amended to 31
read as follows: 32
(1)(a) Except as otherwise provided in (b) of this subsection, 33
the amount of the tax imposed by this chapter for each calendar year 34
is as follows: 35
36 Type of aircraft Registration fee
37 Single engine fixed wing $ 50
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1 Small multi-engine fixed wing 65
2 Large multi-engine fixed wing 80
3 Turboprop multi-engine fixed wing 100
4 Turbojet multi-engine fixed wing 125
5 Helicopter 75
6 Sailplane 20
7 Lighter than air 20
8 Home built 20
(b) ((The)) Until January 1, 2036, the amount of tax imposed by 9
this chapter for each calendar year with respect to aircraft owned 10
and operated by a commuter air carrier that is not an airplane 11
company as defined in RCW 84.12.200 is as follows:12
13
14
Gross maximum take-off
weight of the aircraft
Registration fee
15 Less than 4,001 lbs. (($500)) $750
16 4,001-6,000 lbs. (($1,000)) $1,500
17 6,001-8,000 lbs. (($2,000)) $3,000
18 8,001-9,000 lbs. (($3,000)) $4,500
19 9,001-12,500 lbs. (($4,000)) $6,000
(2)(a) The amount of tax imposed under subsection (1) of this 20
section for each calendar year must be divided into ((twelve)) 12 21
parts corresponding to the months of the calendar year and the excise 22
tax upon an aircraft registered for the first time in this state 23
after the last day of any month may only be levied for the remaining 24
months of the calendar year including the month in which the aircraft 25
is being registered. However, the minimum amount payable is ((three 26
dollars)) $3. 27
(b) An aircraft is deemed registered for the first time in this 28
state when such aircraft was not previously registered by this state 29
for the year immediately preceding the year in which application for 30
registration is made. 31
PART IV32
ADJUSTING FOR INFLATION THE TAX CREDITS FOR ELIGIBLE BUSINESS 33
PROJECTS IN RURAL COUNTIES34
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Sec. 401. RCW 82.62.030 and 2022 c 56 s 12 are each amended to 1
read as follows: 2
(1)(a) A person shall be allowed a credit against the tax due 3
under chapter 82.04 RCW as provided in this section. The credit shall 4
equal: (i) ((Four thousand dollars )) $6,000 for each qualified 5
employment position with wages and benefits greater than ((forty 6
thousand dollars )) $60,000 annually that is directly created in an 7
eligible business project and (ii) ((two thousand dollars )) $3,000 8
for each qualified employment position with wages and benefits less 9
than or equal to ((forty thousand dollars )) $60,000 annually that is 10
directly created in an eligible business project. 11
(b) For purposes of calculating the amount of credit under (a) of 12
this subsection with respect to qualified employment positions as 13
defined in RCW 82.62.010(8)(a)(ii): 14
(i) In determining the number of qualified employment positions, 15
a fractional amount is rounded down to the nearest whole number; and16
(ii) Wages and benefits for each qualified employment position 17
shall be equal to the quotient derived by dividing: (A) The sum of 18
the wages and benefits earned for the four consecutive full calendar 19
quarter period for which a credit under this chapter is earned by all 20
of the person's new seasonal employees hired during that period; by 21
(B) the number of qualified employment positions plus any fractional 22
amount subject to rounding as provided under (b)(i) of this 23
subsection. For purposes of this chapter, a credit is earned for the 24
four consecutive full calendar quarters after the calendar quarter 25
during which the first qualified employment position is filled.26
(c) The department must annually adjust for inflation the wage 27
and benefits in (a) of this subsection (1) based on the annual 28
percentage increase in the consumer price index for all urban 29
consumers in the western region for all items as provided in the most 30
recent 12-month period by the bureau of labor statistics of the 31
United States department of labor by November 25th of the year before 32
the taxes are payable. 33
(2) The department shall keep a running total of all credits 34
allowed under this chapter during each fiscal year. The department 35
shall not allow any credits which would cause the total to exceed 36
((seven million five hundred thousand dollars )) $7,500,000 in any 37
fiscal year. If all or part of an application for credit is 38
disallowed under this subsection, the disallowed portion shall be 39
carried over to the next fiscal year. However, the carryover into the 40
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next fiscal year is only permitted to the extent that the cap for the 1
next fiscal year is not exceeded. 2
(3) No recipient may use the tax credits to decertify a union or 3
to displace existing jobs in any community in the state.4
(4)(a) The credit may be used against any tax due under chapter 5
82.04 RCW, and, except as otherwise provided under this subsection 6
(4), may be carried over until used. 7
(b) Credits earned expire the first day of January of the year 8
that is six years from the later of the year that: 9
(i) The department is notified by the recipient, or a 10
representative of the recipient, that the recipient has ceased 11
engaging in business within this state as those terms are defined in 12
chapter 82.04 RCW; 13
(ii) The department closes the recipient's tax reporting account; 14
or 15
(iii) The recipient last claimed the credit on a return filed 16
with the department. 17
(5) No refunds may be granted for unused credits under this 18
section. 19
PART V20
MODIFYING THE EXPIRATION DATE FOR CERTAIN TAX PREFERENCES21
Sec. 501. RCW 82.85.010 and 2017 3rd sp.s. c 37 s 801 are each 22
amended to read as follows: 23
(1) Businesses that invest capital create jobs and generate 24
economic activity that supports a healthy Washington economy. The 25
legislature finds that these investments result in future revenues 26
that support schools and our communities. Therefore, the legislature 27
finds that a pilot program must be conducted to evaluate the 28
effectiveness of a program that invests business taxes from new 29
investments into workforce training programs that support 30
manufacturing businesses in the state of Washington thereby creating 31
jobs and capital investments in the state for the benefit of its 32
citizens. 33
(2)(a) This subsection is the tax preference performance 34
statement for the sales and use tax deferral provided in RCW 35
82.85.040 on expenditures made to build or expand qualified 36
investment projects and purchases of machinery and equipment. This 37
performance statement is only intended to be used for subsequent 38
p. 97 SB 5794
evaluation of the tax preference. It is not intended to create a 1
private right of action by any party or be used to determine 2
eligibility for preferential tax treatment. 3
(b) The legislature categorizes the tax preference as one 4
intended to create or retain jobs and to provide funding to support 5
job readiness training, professional development, or apprenticeship 6
programs in manufacturing or production occupations, as indicated in 7
RCW 82.32.808(2) (c) and (f). 8
(c) It is the legislature's specific public policy objective to 9
provide a pilot program that would provide a sales tax deferral on 10
the construction and expenditure costs of up to two new manufacturing 11
facilities per calendar year, one of which must be located in eastern 12
Washington and one of which must be located in western Washington. 13
When deferred taxes are repaid, the deferred taxes are reinvested to 14
support job readiness training, professional development, or 15
apprenticeship programs in manufacturing or production occupations.16
(d) To measure the effectiveness of the deferral provided in this 17
part in achieving the specific public policy objective described in 18
(c) of this subsection, the joint legislative audit and review 19
committee should refer to information available from the employment 20
security department and department of revenue. If a review finds that 21
each eligible investment project generated at least ((twenty)) 20 22
full-time jobs , half of which are permanent full-time employment 23
positions, and increased training opportunities for manufacturing and 24
production jobs, then the legislature intends for the legislative 25
auditor to recommend extending the expiration date of the tax 26
preference. For purposes of this subsection (2)(d), the term full-27
time jobs include both temporary construction jobs and permanent 28
full-time employment positions created at the eligible investment 29
project within one year of the date that the facility became 30
operationally complete as determined by the department of revenue.31
(3) This section expires January 1, ((2026)) 2036.32
Sec. 502. RCW 82.85.020 and 2017 3rd sp.s. c 37 s 802 are each 33
amended to read as follows: 34
(1) The definitions in this section apply throughout this chapter 35
unless the context clearly requires otherwise. 36
(a) "Applicant" means a person applying for a tax deferral under 37
this chapter. 38
p. 98 SB 5794
(b) "Eligible investment project" means an investment project for 1
qualified buildings and machinery and equipment on two new, 2
renovated, or expanded manufacturing operations per calendar year, 3
one of which must be located east of the crest of the Cascade 4
mountains and one of which must be located west of the crest of the 5
Cascade mountains. The deferral provided in this section only applies 6
to the state and local sales and use taxes due on the first ((ten 7
million dollars )) $10,000,000 in costs for qualified buildings and 8
machinery and equipment. 9
(c) "Initiation of construction" has the same meaning as in RCW 10
82.63.010. 11
(d) "Investment project" means an investment in qualified 12
buildings or qualified machinery and equipment, including labor and 13
services rendered in the planning, installation, and construction of 14
the project. 15
(e) "Manufacturing" has the same meaning as provided in RCW 16
82.04.120. 17
(f) "Person" has the same meaning as provided in RCW 82.04.030.18
(g) "Qualified buildings" means construction of new structures, 19
and expansion or renovation of existing structures for the purpose of 20
increasing floor space or production capacity, used for 21
manufacturing, including plant offices and warehouses or other 22
buildings for the storage of raw material or finished goods if such 23
facilities are an essential or an integral part of a factory, mill, 24
plant, or laboratory used for manufacturing. If a qualified building 25
is used partly for manufacturing and partly for other purposes, the 26
applicable tax deferral must be determined by apportionment of the 27
costs of construction under rules adopted by the department.28
(h) "Qualified machinery and equipment" means all new industrial 29
fixtures, equipment, and support facilities that are an integral and 30
necessary part of a manufacturing operation. "Qualified machinery and 31
equipment" includes: Computers; software; data processing equipment; 32
laboratory equipment; manufacturing components such as belts, 33
pulleys, shafts, and moving parts; molds, tools, and dies; operating 34
structures; and all equipment used to control, monitor, or operate 35
the machinery. 36
(i) "Recipient" means a person receiving a tax deferral under 37
this chapter. 38
(2) This section expires January 1, ((2026)) 2036.39
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Sec. 503. RCW 82.85.040 and 2017 3rd sp.s. c 37 s 803 are each 1
amended to read as follows: 2
(1) Application for deferral of taxes under this chapter must be 3
made before initiation of the construction of the investment project 4
or acquisition of equipment or machinery. The application must be 5
made to the department in a form and manner prescribed by the 6
department. The deferrals are available on a first-in-time basis. The 7
application must contain information regarding the location of the 8
investment project, the applicant's average employment in the state 9
for the prior year, estimated or actual new employment related to the 10
project, estimated or actual wages of employees related to the 11
project, estimated or actual costs, time schedules for completion and 12
operation, and other information required by the department. The 13
department must rule on the application within ((sixty)) 60 days.14
(2) The department may not approve applications for more than two 15
eligible investment projects per calendar year. 16
(3) This section expires January 1, ((2026)) 2036.17
Sec. 504. RCW 82.04.43391 and 2019 c 8 s 703 are each amended to 18
read as follows: 19
(1) In computing tax there may be deducted from the measure of 20
tax interest and fees on loans secured by commercial aircraft 21
primarily used to provide routine air service and owned by:22
(a) An air carrier, as defined in RCW 82.42.010, which is 23
primarily engaged in the business of providing passenger air service;24
(b) An affiliate of such air carrier; or 25
(c) A parent entity for which such air carrier is an affiliate.26
(2) The deduction authorized under this section is not available 27
to any person who is physically present in this state as determined 28
under RCW 82.04.067. 29
(3) For purposes of this section, the following definitions 30
apply: 31
(a) "Affiliate" means a person is "affiliated," as defined in RCW 32
82.04.645, with another person; and 33
(b) "Commercial aircraft" means a commercial airplane as defined 34
in RCW 82.32.550. 35
(4) This section expires January 1, 2036.36
Sec. 505. RCW 82.08.0262 and 2015 c 86 s 305 are each amended to 37
read as follows: 38
p. 100 SB 5794
(1) The tax levied by RCW 82.08.020 does not apply to:1
(a) Sales of airplanes (i) to the United States government; (ii) 2
for use in conducting interstate or foreign commerce by transporting 3
property or persons for hire or by performing services under a 4
contract with the United States government; or (iii) until January 1, 5
2036, for use in providing intrastate air transportation by a 6
commuter air carrier; 7
(b) Sales of locomotives, railroad cars, or watercraft for use in 8
conducting interstate or foreign commerce by transporting property or 9
persons for hire or for use in conducting commercial deep sea fishing 10
operations outside the territorial waters of the state;11
(c) Sales of tangible personal property that becomes a component 12
part of such airplanes, locomotives, railroad cars, or watercraft, 13
and of motor vehicles or trailers whether owned by or leased with or 14
without drivers and used by the holder of a carrier permit issued by 15
the interstate commerce commission or its successor agency 16
authorizing transportation by motor vehicle across the boundaries of 17
this state, in the course of constructing, repairing, cleaning, 18
altering, or improving the same; and 19
(d) Sales of or charges made for labor and services rendered in 20
respect to such constructing, repairing, cleaning, altering, or 21
improving. 22
(2) The term "commuter air carrier" means an air carrier holding 23
authority under Title 14, Part 298 of the Code of Federal Regulations 24
that carries passengers on at least five round trips per week on at 25
least one route between two or more points according to its published 26
flight schedules that specify the times, days of the week, and places 27
between which those flights are performed. 28
Sec. 506. RCW 82.12.0254 and 2015 c 86 s 306 are each amended to 29
read as follows: 30
(1) The provisions of this chapter do not apply in respect to the 31
use of: 32
(a) Any airplane used primarily in (i) conducting interstate or 33
foreign commerce by transporting property or persons for hire or by 34
performing services under a contract with the United States 35
government or (ii) until January 1, 2036, providing intrastate air 36
transportation by a commuter air carrier as defined in RCW 37
82.08.0262; 38
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(b) Any locomotive, railroad car, or watercraft used primarily in 1
conducting interstate or foreign commerce by transporting property or 2
persons for hire or used primarily in commercial deep sea fishing 3
operations outside the territorial waters of the state;4
(c) Tangible personal property that becomes a component part of 5
any such airplane, locomotive, railroad car, or watercraft in the 6
course of repairing, cleaning, altering, or improving the same; and7
(d) Labor and services rendered in respect to such repairing, 8
cleaning, altering, or improving. 9
(2) The provisions of this chapter do not apply in respect to the 10
use by a nonresident of this state of any vehicle used exclusively in 11
transporting persons or property across the boundaries of this state 12
and in intrastate operations incidental thereto when such vehicle is 13
registered in a foreign state and in respect to the use by a 14
nonresident of this state of any vehicle so registered and used 15
within this state for a period not exceeding ((fifteen)) 15 16
consecutive days under such rules as the department must adopt. 17
However, under circumstances determined to be justifiable by the 18
department a second ((fifteen)) 15 day period may be authorized 19
consecutive with the first ((fifteen)) 15 day period; and for the 20
purposes of this exemption the term "nonresident" as used herein 21
includes a user who has one or more places of business in this state 22
as well as in one or more other states, but the exemption for 23
nonresidents applies only to those vehicles which are most frequently 24
dispatched, garaged, serviced, maintained, and operated from the 25
user's place of business in another state. 26
(3) The provisions of this chapter do not apply in respect to the 27
use by the holder of a carrier permit issued by the interstate 28
commerce commission or its successor agency of any vehicle whether 29
owned by or leased with or without driver to the permit holder and 30
used in substantial part in the normal and ordinary course of the 31
user's business for transporting therein persons or property for hire 32
across the boundaries of this state; and in respect to the use of any 33
vehicle while being operated under the authority of a trip permit 34
issued by the director of licensing pursuant to RCW 46.16A.320 and 35
moving upon the highways from the point of delivery in this state to 36
a point outside this state; and in respect to the use of tangible 37
personal property which becomes a component part of any vehicle used 38
by the holder of a carrier permit issued by the interstate commerce 39
commission or its successor agency authorizing transportation by 40
p. 102 SB 5794
motor vehicle across the boundaries of this state whether such 1
vehicle is owned by or leased with or without driver to the permit 2
holder, in the course of repairing, cleaning, altering, or improving 3
the same; also the use of labor and services rendered in respect to 4
such repairing, cleaning, altering, or improving. 5
Sec. 507. RCW 82.04.627 and 2015 c 86 s 301 are each amended to 6
read as follows: 7
(1) Except as provided in subsection (2) of this section, for 8
purposes of the taxes imposed under this chapter on the sale of parts 9
to the manufacturer of a commercial airplane, the sale is deemed to 10
take place at the site of the final testing or inspection under 11
federal aviation regulation part 21, subpart F or G.12
(2) This section does not apply to: 13
(a) Sales of a standard part, such as a nut or bolt, manufactured 14
in compliance with a government or established industry 15
specification; 16
(b) Sales of a product produced under a technical standard order 17
authorization or letter of technical standard order design approval 18
pursuant to federal aviation regulation part 21, subpart O; or19
(c) Sales of parts in respect to which final testing or 20
inspection under federal aviation regulation part 21, subpart F or G 21
takes place in this state. 22
(3) "Commercial airplane" has the same meaning given in RCW 23
82.32.550. 24
(4) RCW 82.32.805 and 82.32.808 do not apply to this section.25
PART VI26
CLARIFYING THE PUBLIC POLICY OBJECTIVE FOR CERTAIN TAX PREFERENCES TO 27
IMPROVE THE EFFECTIVENESS OF FUTURE TAX PREFERENCE PERFORMANCE 28
REVIEWS29
NEW SECTION. Sec. 601. (1) This section is the tax preference 30
performance statement for the tax preference contained in RCW 31
84.36.040(1)(e) and 84.36.046. This performance statement is only 32
intended to be used for subsequent evaluation of the tax preference. 33
It is not intended to create a private right of action by any party 34
or to be used to determine eligibility for preferential tax 35
treatment.36
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(2) The legislature categorizes this tax preference as one 1
intended to provide tax relief for certain businesses or individuals, 2
as described in RCW 82.32.808(2)(e). 3
(3) It is the legislature's specific public policy objective to 4
support the provision of charity care and other community benefits by 5
nonprofit hospitals and cancer clinics. 6
(4) To measure the effectiveness of the tax preferences in RCW 7
84.36.040(1)(e) and 84.36.046, the joint legislative audit and review 8
committee must evaluate the extent to which charitable care is 9
provided by nonprofit hospitals and nonprofit cancer clinics. The 10
review must include an evaluation of: 11
(a) The total statewide value of charitable care including, but 12
not limited to, medical care provided by nonprofit hospitals and 13
nonprofit cancer clinics for which payment is not expected and 14
patients are not billed; 15
(b) The total statewide value of charitable care as compared to 16
the value of beneficiary savings; 17
(c) The types of medical services provided by beneficiary 18
hospitals as compared to nonbeneficiary hospitals; and19
(d) Other applicable community benefits including, but not 20
limited to, the difference between the state's medicaid payment rates 21
and hospitals' costs for serving medicaid patients, services to 22
patients under other programs with income eligibility requirements, 23
and access to medical training, education, and research programs.24
(5) In order to obtain the data necessary to perform the review 25
in subsection (4) of this section, the joint legislative audit and 26
review committee may refer to data provided by the department of 27
revenue, the department of health, or any other data collected by the 28
state. 29
NEW SECTION. Sec. 602. (1) This section is the tax preference 30
performance statement for the tax preference contained in RCW 31
82.04.260(7), 82.04.290(2), 82.04.250(3), 82.04.4461, 82.04.4463, 32
82.08.975, 82.12.975, 82.29A.137, and 84.36.655. This performance 33
statement is only intended to be used for subsequent evaluation of 34
the tax preference. It is not intended to create a private right of 35
action by any party or to be used to determine eligibility for 36
preferential tax treatment.37
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(2) The legislature categorizes these tax preferences as ones 1
intended to improve industry competitiveness and create or retain 2
jobs, as described in RCW 82.32.808(2) (b) and (c).3
(3) It is the legislature's specific public policy objective to:4
(a) Reduce the cost of doing business in Washington for the 5
aerospace industry; 6
(b) Encourage the continued presence of the aerospace industry;7
(c) Provide jobs with good wages; and 8
(d) Maintain and grow Washington's aerospace industry workforce.9
(4)(a) The joint legislative audit and review committee must 10
review the aerospace tax preferences at least once every 10 years.11
(b) As part of its tax preference review, the committee must 12
specifically assess changes in aerospace industry employment in 13
Washington in comparison with other states and internationally. To 14
the extent practicable, the committee must use occupational data 15
statistics provided by the bureau of labor statistics and state 16
agencies responsible for administering unemployment insurance to 17
perform this assessment. 18
(c) If a review finds that Washington is among the top three 19
aerospace employers as compared to other states, then the legislature 20
intends to extend the expiration dates of the aerospace tax 21
incentives. 22
(5) In order to obtain the data necessary to perform the review 23
in subsection (4) of this section, the joint legislative audit and 24
review committee may refer to data provided by the department of 25
revenue and any other data collected by the state.26
NEW SECTION. Sec. 603. (1) This section is the tax preference 27
performance statement for the tax preference contained in RCW 28
82.04.43391. This performance statement is only intended to be used 29
for subsequent evaluation of the tax preference. It is not intended 30
to create a private right of action by any party or to be used to 31
determine eligibility for preferential tax treatment.32
(2) The legislature categorizes this tax preference as one 33
intended to improve industry competitiveness, as described in RCW 34
82.32.808(2)(b). 35
(3) It is the legislature's specific public policy objective to 36
support the continued presence of the aerospace industry in 37
Washington. 38
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(4) To measure the effectiveness of this tax preference, the 1
joint legislative audit and review committee must evaluate the 2
estimated loss in state revenue resulting from the tax preference 3
compared to the overall economic impact of airlines headquartered in 4
this state. The review must include an evaluation of both direct and 5
indirect beneficiaries. 6
(5) In order to obtain the data necessary to perform the review 7
in subsection (4) of this section, the joint legislative audit and 8
review committee may refer to data provided by the department of 9
revenue, the department of transportation, and any other data 10
collected by the state. 11
NEW SECTION. Sec. 604. (1) This section is the tax preference 12
performance statement for the tax preference contained in RCW 13
84.36.040(1)(f). This performance statement is only intended to be 14
used for subsequent evaluation of the tax preference. It is not 15
intended to create a private right of action by any party or to be 16
used to determine eligibility for preferential tax treatment.17
(2) The legislature categorizes this tax preference as one 18
intended to provide tax relief for certain businesses or individuals, 19
as described in RCW 82.32.808(2)(e). 20
(3) It is the legislature's specific public policy objective to 21
support nonprofit outpatient dialysis centers, which tend to have a 22
higher share of patients on the kidney transplant waitlist and 23
receive lower revenue per treatment as compared to for-profit 24
outpatient dialysis facilities. 25
(4) To measure the effectiveness of this tax preference, the 26
joint legislative audit and review committee must include in its 27
review a comparison of nonprofit and for-profit outpatient dialysis 28
facilities, including the share of patients on the kidney transplant 29
waitlist, amount of revenue received per treatment, and any relevant 30
quality measures. 31
(5) In order to obtain the data necessary to perform the review 32
in subsection (4) of this section, the joint legislative audit and 33
review committee may refer to data provided by the department of 34
revenue, the department of health, or any other data collected by the 35
state. 36
NEW SECTION. Sec. 605. (1) This section is the tax preference 37
performance statement for the tax preference contained in RCW 38
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82.08.0262(1)(a)(iii) and 82.12.0254(1)(a)(ii). This performance 1
statement is only intended to be used for subsequent evaluation of 2
the tax preference. It is not intended to create a private right of 3
action by any party or to be used to determine eligibility for 4
preferential tax treatment. 5
(2) The legislature categorizes this tax preference as one 6
intended to improve industry competitiveness, as described in RCW 7
82.32.808(2)(b). 8
(3) It is the legislature's specific public policy objective to 9
support in-state commuter air carrier services, including expanding 10
in-state flight services, maintaining air service to Washington's 11
small or rural airports, and lowering the cost of providing commuter 12
air carrier services in this state. 13
(4) To measure the effectiveness of this tax preference, the 14
joint legislative audit and review committee must include in its 15
review an evaluation of: 16
(a) Any changes in the number of commuter air carriers operating 17
in this state; 18
(b) Any changes in the number of airports and airfields severed 19
by commuter air carriers; 20
(c) The cost of providing commuter air carrier services in this 21
state as compared to other states; and 22
(d) Any other metric the committee finds relevant in completing 23
its review of this tax preference. 24
(5) In order to obtain the data necessary to perform the review 25
in subsection (4) of this section, the joint legislative audit and 26
review committee may refer to data provided by the department of 27
revenue, the department of transportation, and any other data 28
collected by the state. 29
NEW SECTION. Sec. 606. (1) This section is the tax preference 30
performance statement for the tax preference contained in RCW 31
84.36.133. This performance statement is only intended to be used for 32
subsequent evaluation of the tax preference. It is not intended to 33
create a private right of action by any party or to be used to 34
determine eligibility for preferential tax treatment.35
(2) The legislature categorizes this tax preference as one 36
intended to reduce structural inefficiencies in the tax structure, as 37
described in RCW 82.32.808(2)(d). 38
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(3) It is the legislature's specific public policy objective to 1
streamline and simplify tax reporting for certain commuter air 2
carriers. 3
(4) To measure the effectiveness of this tax preference, the 4
joint legislative audit and review committee must evaluate:5
(a) The effectiveness of the aircraft excise tax in providing an 6
equitable alternative to the property tax for certain commuter air 7
carriers; and 8
(b) Any other metric the committee finds relevant in completing 9
its review of this tax preference. 10
(5) In order to obtain the data necessary to perform the review 11
in subsection (4) of this section, the joint legislative audit and 12
review committee may refer to data provided by the department of 13
revenue, the department of transportation, and any other data 14
collected by the state. 15
PART VII16
CLARIFYING THAT THE PUBLIC UTILITY TAX APPLIES TO THE IN-STATE 17
PORTION OF INTERSTATE ACTIVITY18
Sec. 701. RCW 82.16.020 and 2017 3rd sp.s. c 10 s 14 are each 19
amended to read as follows: 20
(1) There is levied and collected from every person a tax for the 21
act or privilege of engaging within this state in any one or more of 22
the businesses herein mentioned. The tax is equal to the gross income 23
of the business, multiplied by the rate set out after the business, 24
as follows: 25
(a) Express, sewerage collection, and telegraph businesses: Three 26
and six-tenths percent; 27
(b) Light and power business: Three and sixty-two one-hundredths 28
percent; 29
(c) Gas distribution business: Three and six-tenths percent;30
(d) Urban transportation business: Six-tenths of one percent;31
(e) Vessels under sixty-five feet in length, except tugboats, 32
operating upon the waters within the state: Six-tenths of one 33
percent; 34
(f) Motor transportation, railroad, railroad car, and tugboat 35
businesses, and all public service businesses other than ones 36
mentioned above: One and eight-tenths of one percent;37
(g) Water distribution business: Four and seven-tenths percent;38
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(h) Log transportation business: One and twenty-eight one- 1
hundredths percent. The reduced rate established in this subsection 2
(1)(h) is not subject to the ten-year expiration provision in RCW 3
82.32.805(1)(a). 4
(2) An additional tax is imposed equal to the rate specified in 5
RCW 82.02.030 multiplied by the tax payable under subsection (1) of 6
this section. 7
(3) Twenty percent of the moneys collected under subsection (1) 8
of this section on water distribution businesses and sixty percent of 9
the moneys collected under subsection (1) of this section on sewerage 10
collection businesses must be deposited in the education legacy trust 11
account created in RCW 83.100.230 from July 1, 2013, through June 30, 12
2023, and thereafter in the public works assistance account created 13
in RCW 43.155.050. 14
(4)(a) The tax authorized in this section applies to the in-state 15
portion of interstate activity.16
(b) The department may, by rule, provide a method of apportioning 17
or allocating gross income derived from the in-state portion of 18
interstate activities taxed under this section. Any apportionment or 19
allocation standard under this subsection (4)(b) must provide for an 20
equitable and constitutionally permissible division of the tax base.21
PART VIII22
MISCELLANEOUS23
NEW SECTION. Sec. 801. Section 102 of this act expires January 24
1, 2034.25
NEW SECTION. Sec. 802. Section 103 of this act takes effect 26
January 1, 2034.27
NEW SECTION. Sec. 803. The contingent expiration date in 28
section 1407, chapter 37, Laws of 2017 3rd sp. sess. applies to 29
section 110 of this act.30
NEW SECTION. Sec. 804. Section 111 of this act takes effect 31
when section 110 of this act expires.32
NEW SECTION. Sec. 805. Section 114 of this act expires January 33
1, 2034.34
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NEW SECTION. Sec. 806. Section 115 of this act takes effect 1
January 1, 2034.2
NEW SECTION. Sec. 807. Section 116 of this act expires January 3
1, 2030.4
NEW SECTION. Sec. 808. Section 117 of this act takes effect 5
January 1, 2030.6
NEW SECTION. Sec. 809. Except for sections 103, 111, 115, and 7
117 of this act, this act takes effect January 1, 2026.8
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