Excise taxes

AN ACT Relating to funding public schools, health care, social 1
services, and other programs and services to benefit Washingtonians 2
by modernizing the excise taxes on select services and nicotine 3
products and requiring certain large businesses to make a one-time 4
prepayment of state sales tax collection; amending RCW 82.04.192, 5
82.26.010, and 82.32.045; reenacting and amending RCW 82.04.050 and 6
82.32.050; creating new sections; and providing effective dates.7
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:8
NEW SECTION. Sec. 1. The legislature finds that, through the 9
state's general fund, the state funds public schools, health care, 10
and social services that help Washingtonians to succeed and thrive. 11
These revenues help the state meet its paramount duty to amply 12
provide every child in the state with an education, including 13
children who qualify for special education services, creating the 14
opportunity for each child to succeed in school and achieve success 15
in life. Revenues generated by this act will support health care and 16
other programs that protect the safety and well-being of the public, 17
including behavioral health services for those living with mental 18
illness or substance use disorder, as well as supervision of 19
individuals who have committed crimes. These revenues will also fund 20
social services that provide critical, basic needs assistance for our 21
S-3146.1
SENATE BILL 5814
State of Washington 69th Legislature 2025 Regular Session
By Senators Frame, Trudeau, Alvarado, Nobles, Pedersen, Valdez, and
C. Wilson
Read first time 04/16/25. Referred to Committee on Ways & Means.
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state's most vulnerable residents, including support for those with 1
developmental disabilities and long-term care for the elderly.2
Furthermore, the legislature finds that the state's tax code must 3
be periodically reviewed and updated to ensure that tax policy 4
reflects our modern economy. The legislature recognizes that our 5
state and nation have moved away from a predominantly goods-based 6
economy towards a more service-based economy. As a result, 7
Washington's tax code, which is heavily reliant on sales taxes, 8
continues to reach a narrowing share of economic activity subject to 9
the retail sales tax. Similar to the marketplace fairness act of 10
2017, which extended retail sales tax to remote retailers with no 11
physical presence in the state to ensure the tax code reflected the 12
growing shift of retail sales toward online sales and away from 13
brick-and-mortar stores located in the state, so too must this 14
legislature consider extending the retail sales tax to computer-15
related services, as well as remove exemptions to the retail sales 16
tax for digital automated services which have not been updated since 17
2009, and other services to which it is more appropriate to apply 18
retail sales tax in the state's current economy. The legislature 19
further recognizes that taxes on tobacco products, which have largely 20
gone unchanged over the last several decades, do not adequately 21
capture new and emerging nicotine products. As certain new products 22
come onto the market, they are exempt from excise tax, creating an 23
unfair advantage in the market against their competitors.24
Thus, to help meet the state's paramount duty of amply providing 25
every child in the state with an education and to support the health 26
and well-being of Washingtonians, the legislature intends to 27
modernize the sales tax and taxes on nicotine products by extending 28
retail sales tax to select services, repealing certain sales tax 29
exemptions, applying taxes on tobacco to new nicotine products, and 30
requiring certain large businesses to make a one-time prepayment of 31
state sales tax collections. 32
PART I33
EXTENDING RETAIL SALES TAX TO SELECT SERVICES34
Sec. 101. RCW 82.04.050 and 2021 c 296 s 8 and 2021 c 143 s 2 35
are each reenacted and amended to read as follows:36
(1)(a) "Sale at retail" or "retail sale" means every sale of 37
tangible personal property (including articles produced, fabricated, 38
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or imprinted) to all persons irrespective of the nature of their 1
business and including, among others, without limiting the scope 2
hereof, persons who install, repair, clean, alter, improve, 3
construct, or decorate real or personal property of or for consumers 4
other than a sale to a person who: 5
(i) Purchases for the purpose of resale as tangible personal 6
property in the regular course of business without intervening use by 7
such person, but a purchase for the purpose of resale by a regional 8
transit authority under RCW 81.112.300 is not a sale for resale; or9
(ii) Installs, repairs, cleans, alters, imprints, improves, 10
constructs, or decorates real or personal property of or for 11
consumers, if such tangible personal property becomes an ingredient 12
or component of such real or personal property without intervening 13
use by such person; or 14
(iii) Purchases for the purpose of consuming the property 15
purchased in producing for sale as a new article of tangible personal 16
property or substance, of which such property becomes an ingredient 17
or component or is a chemical used in processing, when the primary 18
purpose of such chemical is to create a chemical reaction directly 19
through contact with an ingredient of a new article being produced 20
for sale; or 21
(iv) Purchases for the purpose of consuming the property 22
purchased in producing ferrosilicon which is subsequently used in 23
producing magnesium for sale, if the primary purpose of such property 24
is to create a chemical reaction directly through contact with an 25
ingredient of ferrosilicon; or 26
(v) Purchases for the purpose of providing the property to 27
consumers as part of competitive telephone service, as defined in RCW 28
82.04.065; or 29
(vi) Purchases for the purpose of satisfying the person's 30
obligations under an extended warranty as defined in subsection (7) 31
of this section, if such tangible personal property replaces or 32
becomes an ingredient or component of property covered by the 33
extended warranty without intervening use by such person.34
(b) The term includes every sale of tangible personal property 35
that is used or consumed or to be used or consumed in the performance 36
of any activity defined as a "sale at retail" or "retail sale" even 37
though such property is resold or used as provided in (a)(i) through 38
(vi) of this subsection following such use. 39
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(c) The term also means every sale of tangible personal property 1
to persons engaged in any business that is taxable under RCW 2
82.04.280(1) (a), (b), and (g), 82.04.290, and 82.04.2908.3
(2) The term "sale at retail" or "retail sale" includes the sale 4
of or charge made for tangible personal property consumed and/or for 5
labor and services rendered in respect to the following:6
(a) The installing, repairing, cleaning, altering, imprinting, or 7
improving of tangible personal property of or for consumers, 8
including charges made for the mere use of facilities in respect 9
thereto, but excluding charges made for the use of self-service 10
laundry facilities, and also excluding sales of laundry service to 11
nonprofit health care facilities, and excluding services rendered in 12
respect to live animals, birds and insects; 13
(b) The constructing, repairing, decorating, or improving of new 14
or existing buildings or other structures under, upon, or above real 15
property of or for consumers, including the installing or attaching 16
of any article of tangible personal property therein or thereto, 17
whether or not such personal property becomes a part of the realty by 18
virtue of installation, and also includes the sale of services or 19
charges made for the clearing of land and the moving of earth 20
excepting the mere leveling of land used in commercial farming or 21
agriculture; 22
(c) The constructing, repairing, or improving of any structure 23
upon, above, or under any real property owned by an owner who conveys 24
the property by title, possession, or any other means to the person 25
performing such construction, repair, or improvement for the purpose 26
of performing such construction, repair, or improvement and the 27
property is then reconveyed by title, possession, or any other means 28
to the original owner; 29
(d) The cleaning, fumigating, razing, or moving of existing 30
buildings or structures, but does not include the charge made for 31
janitorial services; and for purposes of this section the term 32
"janitorial services" means those cleaning and caretaking services 33
ordinarily performed by commercial janitor service businesses 34
including, but not limited to, wall and window washing, floor 35
cleaning and waxing, and the cleaning in place of rugs, drapes and 36
upholstery. The term "janitorial services" does not include painting, 37
papering, repairing, furnace or septic tank cleaning, snow removal or 38
sandblasting; 39
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(e) Automobile towing and similar automotive transportation 1
services, but not in respect to those required to report and pay 2
taxes under chapter 82.16 RCW; 3
(f) The furnishing of lodging and all other services by a hotel, 4
rooming house, tourist court, motel, trailer camp, and the granting 5
of any similar license to use real property, as distinguished from 6
the renting or leasing of real property, and it is presumed that the 7
occupancy of real property for a continuous period of one month or 8
more constitutes a rental or lease of real property and not a mere 9
license to use or enjoy the same. For the purposes of this 10
subsection, it is presumed that the sale of and charge made for the 11
furnishing of lodging for a continuous period of one month or more to 12
a person is a rental or lease of real property and not a mere license 13
to enjoy the same. For the purposes of this section, it is presumed 14
that the sale of and charge made for the furnishing of lodging 15
offered regularly for public occupancy for periods of less than a 16
month constitutes a license to use or enjoy the property subject to 17
sales and use tax and not a rental or lease of property;18
(g) The installing, repairing, altering, or improving of digital 19
goods for consumers; 20
(h) Persons taxable under (a), (b), (c), (d), (e), (f), and (g) 21
of this subsection when such sales or charges are for property, labor 22
and services which are used or consumed in whole or in part by such 23
persons in the performance of any activity defined as a "sale at 24
retail" or "retail sale" even though such property, labor and 25
services may be resold after such use or consumption. Nothing 26
contained in this subsection may be construed to modify subsection 27
(1) of this section and nothing contained in subsection (1) of this 28
section may be construed to modify this subsection.29
(3) The term "sale at retail" or "retail sale" includes the sale 30
of or charge made for personal, business, or professional services 31
including amounts designated as interest, rents, fees, admission, and 32
other service emoluments however designated, received by persons 33
engaging in the following business activities: 34
(a) Abstract, title insurance, and escrow services;35
(b) Credit bureau services; 36
(c) Automobile parking and storage garage services;37
(d) Landscape maintenance and horticultural services but 38
excluding (i) horticultural services provided to farmers and (ii) 39
pruning, trimming, repairing, removing, and clearing of trees and 40
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brush near electric transmission or distribution lines or equipment, 1
if performed by or at the direction of an electric utility;2
(e) Service charges associated with tickets to professional 3
sporting events; 4
(f) The following personal services: Tanning salon services, 5
tattoo parlor services, steam bath services, turkish bath services, 6
escort services, and dating services; ((and))7
(g) Information technology technical consulting services 8
including, but not limited to, planning and designing information 9
technology systems, network systems integration design services, and 10
systems integration design and consulting;11
(h) Information technology training services, technical support, 12
and other services including, but not limited to, assisting with 13
network operations and support, help desk services, in-person 14
training related to hardware or software, network system support 15
services, data entry services, and data processing services;16
(i) Custom website development services. For the purposes of this 17
subsection (3), "website development services" means the design, 18
development, and support of a website provided by a website developer 19
to a customer;20
(j) Investigation, security services, security monitoring 21
services, and armored car services including, but not limited to, 22
background checks, security guard and patrol services, personal and 23
event security, armored car transportation of cash and valuables, and 24
security system services and monitoring. This does not include 25
locksmith services;26
(k) Temporary staffing services. For the purposes of this 27
subsection (3), "temporary staffing services" means providing workers 28
to other businesses for limited periods of time to supplement their 29
workforce and fill employment vacancies on a contract or for fee 30
basis;31
(l) Advertising services, except for advertising services 32
rendered in respect to printing, publishing, radio, and television; 33
and34
(m)(i) Operating an athletic or fitness facility, including all 35
charges for the use of such a facility or for any associated services 36
and amenities, except as provided in (((g))) (m)(ii) of this 37
subsection. 38
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(ii) Notwithstanding anything to the contrary in (((g))) (m)(i) 1
of this subsection (3), the term "sale at retail" and "retail sale" 2
under this subsection does not include: 3
(A) Separately stated charges for the use of an athletic or 4
fitness facility where such use is primarily for a purpose other than 5
engaging in or receiving instruction in a physical fitness activity;6
(B) Separately stated charges for the use of a discrete portion 7
of an athletic or fitness facility, other than a pool, where such 8
discrete portion of the facility does not by itself meet the 9
definition of "athletic or fitness facility" in this subsection;10
(C) Separately stated charges for services, such as 11
((advertising,)) massage, nutritional consulting, and body 12
composition testing, that do not require the customer to engage in 13
physical fitness activities to receive the service. The exclusion in 14
this subsection (3)(((g))) (m)(ii)(C) does not apply to personal 15
training services and instruction in a physical fitness activity;16
(D) Separately stated charges for physical therapy provided by a 17
physical therapist, as those terms are defined in RCW 18.74.010, or 18
occupational therapy provided by an occupational therapy 19
practitioner, as those terms are defined in RCW 18.59.020, when 20
performed pursuant to a referral from an authorized health care 21
practitioner or in consultation with an authorized health care 22
practitioner. For the purposes of this subsection (3)(((g))) (m)23
(ii)(D), an authorized health care practitioner means a health care 24
practitioner licensed under chapter 18.83, 18.25, 18.36A, 18.57, 25
18.71, or 18.71A RCW, or, until July 1, 2022, chapter 18.57A RCW;26
(E) Rent or association fees charged by a landlord or residential 27
association to a tenant or residential owner with access to an 28
athletic or fitness facility maintained by the landlord or 29
residential association, unless the rent or fee varies depending on 30
whether the tenant or owner has access to the facility;31
(F) Services provided in the regular course of employment by an 32
employee with access to an athletic or fitness facility maintained by 33
the employer for use without charge by its employees or their family 34
members; 35
(G) The provision of access to an athletic or fitness facility by 36
an educational institution to its students and staff. However, 37
charges made by an educational institution to its alumni or other 38
members of the public for the use of any of the educational 39
institution's athletic or fitness facilities are a retail sale under 40
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this subsection (3)(((g))) (m). For purposes of this subsection (3)1
(((g))) (m)(ii)(G), "educational institution" has the same meaning as 2
in RCW 82.04.170; 3
(H) Yoga, chi gong, or martial arts classes, training, or events 4
held at a community center, park, school gymnasium, college or 5
university, hospital or other medical facility, private residence, or 6
any other facility that is not operated within and as part of an 7
athletic or fitness facility. 8
(iii) Nothing in (((g))) (m)(ii) of this subsection (3) may be 9
construed to affect the taxation of sales made by the operator of an 10
athletic or fitness facility, where such sales are defined as a 11
retail sale under any provision of this section other than this 12
subsection (3). 13
(iv) For the purposes of this subsection (3)(((g))) (m), the 14
following definitions apply: 15
(A) "Athletic or fitness facility" means an indoor or outdoor 16
facility or portion of a facility that is primarily used for: 17
Exercise classes; strength and conditioning programs; personal 18
training services; tennis, racquetball, handball, squash, or 19
pickleball; or other activities requiring the use of exercise or 20
strength training equipment, such as treadmills, elliptical machines, 21
stair climbers, stationary cycles, rowing machines, pilates 22
equipment, balls, climbing ropes, jump ropes, and weightlifting 23
equipment. 24
(B) "Martial arts" means any of the various systems of training 25
for physical combat or self-defense. "Martial arts" includes, but is 26
not limited to, karate, kung fu, tae kwon do, Krav Maga, boxing, 27
kickboxing, jujitsu, shootfighting, wrestling, aikido, judo, hapkido, 28
Kendo, tai chi, and mixed martial arts. 29
(C) "Physical fitness activities" means activities that involve 30
physical exertion for the purpose of improving or maintaining the 31
general fitness, strength, flexibility, conditioning, or health of 32
the participant. "Physical fitness activities" includes participating 33
in yoga, chi gong, or martial arts. 34
(4)(a) The term also includes the renting or leasing of tangible 35
personal property to consumers. 36
(b) The term does not include the renting or leasing of tangible 37
personal property where the lease or rental is for the purpose of 38
sublease or subrent. 39
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(5) The term also includes the providing of "competitive 1
telephone service," "telecommunications service," or "ancillary 2
services," as those terms are defined in RCW 82.04.065, to consumers.3
(6)(a) The term also includes the sale of prewritten computer 4
software, custom software, and customization of prewritten computer 5
software to a consumer, regardless of the method of delivery to the 6
end user. For purposes of (((a) and (b) of)) this subsection (6)(a), 7
the sale of prewritten computer software includes the sale of or 8
charge made for a key or an enabling or activation code, where the 9
key or code is required to activate prewritten computer software and 10
put the software into use. There is no separate sale of the key or 11
code from the prewritten computer software, regardless of how the 12
sale may be characterized by the vendor or by the purchaser.13
(b) ((The term "retail sale" does not include the sale of or 14
charge made for:15
(i) Custom software; or16
(ii) The customization of prewritten computer software.17
(c)))(i) The term also includes the charge made to consumers for 18
the right to access and use prewritten computer software , custom 19
software, and customization of prewritten computer software , where 20
possession of the software is maintained by the seller or a third 21
party, regardless of whether the charge for the service is on a per 22
use, per user, per license, subscription, or some other basis.23
(ii)(A) The service described in (((c))) (b)(i) of this 24
subsection (6) includes the right to access and use prewritten 25
computer software , custom software, and customization of prewritten 26
computer software to perform data processing. 27
(B) For purposes of this subsection (6)(((c))) (b)(ii), "data 28
processing" means the systematic performance of operations on data to 29
extract the required information in an appropriate form or to convert 30
the data to usable information. Data processing includes check 31
processing, image processing, form processing, survey processing, 32
payroll processing, claim processing, and similar activities.33
(7) The term also includes the sale of or charge made for an 34
extended warranty to a consumer. For purposes of this subsection, 35
"extended warranty" means an agreement for a specified duration to 36
perform the replacement or repair of tangible personal property at no 37
additional charge or a reduced charge for tangible personal property, 38
labor, or both, or to provide indemnification for the replacement or 39
repair of tangible personal property, based on the occurrence of 40
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specified events. The term "extended warranty" does not include an 1
agreement, otherwise meeting the definition of extended warranty in 2
this subsection, if no separate charge is made for the agreement and 3
the value of the agreement is included in the sales price of the 4
tangible personal property covered by the agreement. For purposes of 5
this subsection, "sales price" has the same meaning as in RCW 6
82.08.010. 7
(8)(a) The term also includes the following sales to consumers of 8
digital goods, digital codes, and digital automated services:9
(i) Sales in which the seller has granted the purchaser the right 10
of permanent use; 11
(ii) Sales in which the seller has granted the purchaser a right 12
of use that is less than permanent; 13
(iii) Sales in which the purchaser is not obligated to make 14
continued payment as a condition of the sale; and 15
(iv) Sales in which the purchaser is obligated to make continued 16
payment as a condition of the sale. 17
(b) A retail sale of digital goods, digital codes, or digital 18
automated services under this subsection (8) includes any services 19
provided by the seller exclusively in connection with the digital 20
goods, digital codes, or digital automated services, whether or not a 21
separate charge is made for such services. 22
(c) For purposes of this subsection, "permanent" means perpetual 23
or for an indefinite or unspecified length of time. A right of 24
permanent use is presumed to have been granted unless the agreement 25
between the seller and the purchaser specifies or the circumstances 26
surrounding the transaction suggest or indicate that the right to use 27
terminates on the occurrence of a condition subsequent.28
(9) The term also includes the charge made for providing tangible 29
personal property along with an operator for a fixed or indeterminate 30
period of time. A consideration of this is that the operator is 31
necessary for the tangible personal property to perform as designed. 32
For the purpose of this subsection (9), an operator must do more than 33
maintain, inspect, or set up the tangible personal property.34
(10) The term does not include the sale of or charge made for 35
labor and services rendered in respect to the building, repairing, or 36
improving of any street, place, road, highway, easement, right-of-37
way, mass public transportation terminal or parking facility, bridge, 38
tunnel, or trestle which is owned by a municipal corporation or 39
political subdivision of the state or by the United States and which 40
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is used or to be used primarily for foot or vehicular traffic 1
including mass transportation vehicles of any kind.2
(11) The term also does not include sales of chemical sprays or 3
washes to persons for the purpose of postharvest treatment of fruit 4
for the prevention of scald, fungus, mold, or decay, nor does it 5
include sales of feed, seed, seedlings, fertilizer, agents for 6
enhanced pollination including insects such as bees, and spray 7
materials to: (a) Persons who participate in the federal conservation 8
reserve program, the environmental quality incentives program, the 9
wetlands reserve program, and the wildlife habitat incentives 10
program, or their successors administered by the United States 11
department of agriculture; (b) farmers for the purpose of producing 12
for sale any agricultural product; (c) farmers for the purpose of 13
providing bee pollination services; and (d) farmers acting under 14
cooperative habitat development or access contracts with an 15
organization exempt from federal income tax under 26 U.S.C. Sec. 16
501(c)(3) of the federal internal revenue code or the Washington 17
state department of fish and wildlife to produce or improve wildlife 18
habitat on land that the farmer owns or leases. 19
(12) The term does not include the sale of or charge made for 20
labor and services rendered in respect to the constructing, 21
repairing, decorating, or improving of new or existing buildings or 22
other structures under, upon, or above real property of or for the 23
United States, any instrumentality thereof, or a county or city 24
housing authority created pursuant to chapter 35.82 RCW, including 25
the installing, or attaching of any article of tangible personal 26
property therein or thereto, whether or not such personal property 27
becomes a part of the realty by virtue of installation. Nor does the 28
term include the sale of services or charges made for the clearing of 29
land and the moving of earth of or for the United States, any 30
instrumentality thereof, or a county or city housing authority. Nor 31
does the term include the sale of services or charges made for 32
cleaning up for the United States, or its instrumentalities, 33
radioactive waste and other by-products of weapons production and 34
nuclear research and development. 35
(13) The term does not include the sale of or charge made for 36
labor, services, or tangible personal property pursuant to agreements 37
providing maintenance services for bus, rail, or rail fixed guideway 38
equipment when a regional transit authority is the recipient of the 39
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labor, services, or tangible personal property, and a transit agency, 1
as defined in RCW 81.104.015, performs the labor or services.2
(14) The term does not include the sale for resale of any service 3
described in this section if the sale would otherwise constitute a 4
"sale at retail" and "retail sale" under this section.5
(15)(a) The term "sale at retail" or "retail sale" includes 6
amounts charged, however labeled, to consumers to engage in any of 7
the activities listed in this subsection (15)(a), including the 8
furnishing of any associated equipment or, except as otherwise 9
provided in this subsection, providing instruction in such 10
activities, where such charges are not otherwise defined as a "sale 11
at retail" or "retail sale" in this section: 12
(i)(A) Golf, including any variant in which either golf balls or 13
golf clubs are used, such as miniature golf, hitting golf balls at a 14
driving range, and golf simulators, and including fees charged by a 15
golf course to a player for using his or her own cart. However, 16
charges for golf instruction are not a retail sale, provided that if 17
the instruction involves the use of a golfing facility that would 18
otherwise require the payment of a fee, such as green fees or driving 19
range fees, such fees, including the applicable retail sales tax, 20
must be separately identified and charged by the golfing facility 21
operator to the instructor or the person receiving the instruction.22
(B) Notwithstanding (a)(i)(A) of this subsection (15) and except 23
as otherwise provided in this subsection (15)(a)(i)(B), the term 24
"sale at retail" or "retail sale" does not include amounts charged to 25
participate in, or conduct, a golf tournament or other competitive 26
event. However, amounts paid by event participants to the golf 27
facility operator are retail sales under this subsection (15)(a)(i). 28
Likewise, amounts paid by the event organizer to the golf facility 29
are retail sales under this subsection (15)(a)(i), if such amounts 30
vary based on the number of event participants; 31
(ii) Ballooning, hang gliding, indoor or outdoor sky diving, 32
paragliding, parasailing, and similar activities; 33
(iii) Air hockey, billiards, pool, foosball, darts, shuffleboard, 34
ping pong, and similar games; 35
(iv) Access to amusement park, theme park, and water park 36
facilities, including but not limited to charges for admission and 37
locker or cabana rentals. Discrete charges for rides or other 38
attractions or entertainment that are in addition to the charge for 39
admission are not a retail sale under this subsection (15)(a)(iv). 40
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For the purposes of this subsection, an amusement park or theme park 1
is a location that provides permanently affixed amusement rides, 2
games, and other entertainment, but does not include parks or zoos 3
for which the primary purpose is the exhibition of wildlife, or 4
fairs, carnivals, and festivals as defined in (b)(i) of this 5
subsection; 6
(v) Batting cage activities; 7
(vi) Bowling, but not including competitive events, except that 8
amounts paid by the event participants to the bowling alley operator 9
are retail sales under this subsection (15)(a)(vi). Likewise, amounts 10
paid by the event organizer to the operator of the bowling alley are 11
retail sales under this subsection (15)(a)(vi), if such amounts vary 12
based on the number of event participants; 13
(vii) Climbing on artificial climbing structures, whether indoors 14
or outdoors; 15
(viii) Day trips for sightseeing purposes; 16
(ix) Bungee jumping, zip lining, and riding inside a ball, 17
whether inflatable or otherwise; 18
(x) Horseback riding offered to the public, where the seller 19
furnishes the horse to the buyer and providing instruction is not the 20
primary focus of the activity, including guided rides, but not 21
including therapeutic horseback riding provided by an instructor 22
certified by a nonprofit organization that offers national or 23
international certification for therapeutic riding instructors;24
(xi) Fishing, including providing access to private fishing areas 25
and charter or guided fishing, except that fishing contests and 26
license fees imposed by a government entity are not a retail sale 27
under this subsection; 28
(xii) Guided hunting and hunting at game farms and shooting 29
preserves, except that hunting contests and license fees imposed by a 30
government entity are not a retail sale under this subsection;31
(xiii) Swimming, but only in respect to (A) recreational or 32
fitness swimming that is open to the public, such as open swim, lap 33
swimming, and special events like kids night out and pool parties 34
during open swim time, and (B) pool parties for private events, such 35
as birthdays, family gatherings, and employee outings. Fees for 36
swimming lessons, to participate in swim meets and other 37
competitions, or to join a swim team, club, or aquatic facility are 38
not retail sales under this subsection (15)(a)(xiii);39
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(xiv) Go-karting, bumper cars, and other motorized activities 1
where the seller provides the vehicle and the premises where the 2
buyer will operate the vehicle; 3
(xv) Indoor or outdoor playground activities, such as inflatable 4
bounce structures and other inflatables; mazes; trampolines; slides; 5
ball pits; games of tag, including laser tag and soft-dart tag; and 6
human gyroscope rides, regardless of whether such activities occur at 7
the seller's place of business, but not including playground 8
activities provided for children by a licensed child day care center 9
or licensed family day care provider as those terms are defined in 10
RCW 43.216.010; 11
(xvi) Shooting sports and activities, such as target shooting, 12
skeet, trap, sporting clays, "5" stand, and archery, but only in 13
respect to discrete charges to members of the public to engage in 14
these activities, but not including fees to enter a competitive 15
event, instruction that is entirely or predominately classroom based, 16
or to join or renew a membership at a club, range, or other facility;17
(xvii) Paintball and airsoft activities; 18
(xviii) Skating, including ice skating, roller skating, and 19
inline skating, but only in respect to discrete charges to members of 20
the public to engage in skating activities, but not including skating 21
lessons, competitive events, team activities, or fees to join or 22
renew a membership at a skating facility, club, or other 23
organization; 24
(xix) Nonmotorized snow sports and activities, such as downhill 25
and cross-country skiing, snowboarding, ski jumping, sledding, snow 26
tubing, snowshoeing, and similar snow sports and activities, whether 27
engaged in outdoors or in an indoor facility with or without snow, 28
but only in respect to discrete charges to the public for the use of 29
land or facilities to engage in nonmotorized snow sports and 30
activities, such as fees, however labeled, for the use of ski lifts 31
and tows and daily or season passes for access to trails or other 32
areas where nonmotorized snow sports and activities are conducted. 33
However, fees for the following are not retail sales under this 34
subsection (15)(a)(xix): (A) Instructional lessons; (B) permits 35
issued by a governmental entity to park a vehicle on or access public 36
lands; and (C) permits or leases granted by an owner of private 37
timberland for recreational access to areas used primarily for 38
growing and harvesting timber; and 39
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(xx) Scuba diving; snorkeling; river rafting; surfing; 1
kiteboarding; flyboarding; water slides; inflatables, such as water 2
pillows, water trampolines, and water rollers; and similar water 3
sports and activities. 4
(b) Notwithstanding anything to the contrary in this subsection 5
(15), the term "sale at retail" or "retail sale" does not include 6
charges: 7
(i) Made for admission to, and rides or attractions at, fairs, 8
carnivals, and festivals. For the purposes of this subsection, fairs, 9
carnivals, and festivals are events that do not exceed 21 days and a 10
majority of the amusement rides, if any, are not affixed to real 11
property; 12
(ii) Made by an educational institution to its students and staff 13
for activities defined as retail sales by (a)(i) through (xx) of this 14
subsection. However, charges made by an educational institution to 15
its alumni or other members of the general public for these 16
activities are a retail sale under this subsection (15). For purposes 17
of this subsection (15)(b)(ii), "educational institution" has the 18
same meaning as in RCW 82.04.170; 19
(iii) Made by a vocational school for commercial diver training 20
that is licensed by the workforce training and education coordinating 21
board under chapter 28C.10 RCW; or 22
(iv) Made for day camps offered by a nonprofit organization or 23
state or local governmental entity that provide youth not older than 24
age 18, or that are focused on providing individuals with 25
disabilities or mental illness, the opportunity to participate in a 26
variety of supervised activities. 27
(16)(a) The term "sale at retail" or "retail sale" includes the 28
purchase or acquisition of tangible personal property and specified 29
services by a person who receives either a qualifying grant exempt 30
from tax under RCW 82.04.767 or 82.16.320 or a grant deductible under 31
RCW 82.04.4339, except for transactions excluded from the definition 32
of "sale at retail" or "retail sale" by any other provision of this 33
section. Nothing in this subsection (16) may be construed to limit 34
the application of any other provision of this section to purchases 35
by a recipient of either a qualifying grant exempt from tax under RCW 36
82.04.767 or a grant deductible under RCW 82.04.4339, or by any other 37
person. 38
(b) For purposes of this subsection (16), "specified services" 39
means: 40
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(i) The constructing, repairing, decorating, or improving of new 1
or existing buildings or other structures under, upon, or above real 2
property, including the installing or attaching of any article of 3
tangible personal property therein or thereto, whether or not such 4
personal property becomes a part of the realty by virtue of 5
installation; 6
(ii) The clearing of land or the moving of earth, whether or not 7
associated with activities described in (b)(i) of this subsection 8
(16); 9
(iii) The razing or moving of existing buildings or structures; 10
and 11
(iv) Landscape maintenance and horticultural services.12
PART II13
ELIMINATING CERTAIN DIGITAL AUTOMATED SERVICE EXCLUSIONS14
Sec. 201. RCW 82.04.192 and 2020 c 139 s 4 are each amended to 15
read as follows: 16
(1) "Digital audio works" means works that result from the 17
fixation of a series of musical, spoken, or other sounds, including 18
ringtones. 19
(2) "Digital audiovisual works" means a series of related images 20
which, when shown in succession, impart an impression of motion, 21
together with accompanying sounds, if any. 22
(3)(a) "Digital automated service," except as provided in (b) of 23
this subsection (3), means any service transferred electronically 24
that uses one or more software applications. 25
(b) "Digital automated service" does not include:26
(i) ((Any service that primarily involves the application of 27
human effort by the seller, and the human effort originated after the 28
customer requested the service;29
(ii))) The loaning or transferring of money or the purchase, 30
sale, or transfer of financial instruments. For purposes of this 31
subsection (3)(b)(((ii))) (i), "financial instruments" include cash, 32
accounts receivable and payable, loans and notes receivable and 33
payable, debt securities, equity securities, as well as derivative 34
contracts such as forward contracts, swap contracts, and options;35
(((iii))) (ii) Dispensing cash or other physical items from a 36
machine; 37
(((iv))) (iii) Payment processing services; 38
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(((v))) (iv) Parimutuel wagering and handicapping contests as 1
authorized by chapter 67.16 RCW; 2
(((vi))) (v) Telecommunications services and ancillary services 3
as those terms are defined in RCW 82.04.065; 4
(((vii))) (vi) The internet and internet access as those terms 5
are defined in RCW 82.04.297; 6
(((viii))) (vii) The service described in RCW 82.04.050(6)(((c))) 7
(b); 8
(((ix))) (viii) Online educational programs provided by a:9
(A) Public or private elementary or secondary school; or10
(B) An institution of higher education as defined in sections 11
1001 or 1002 of the federal higher education act of 1965 (Title 20 12
U.S.C. Secs. 1001 and 1002), as existing on July 1, 2009. For 13
purposes of this subsection (3)(b)(((ix))) (viii)(B), an online 14
educational program must be encompassed within the institution's 15
accreditation; 16
(((x) Live presentations, such as lectures, seminars, workshops, 17
or courses, where participants are connected to other participants 18
via the internet or telecommunications equipment, which allows 19
audience members and the presenter or instructor to give, receive, 20
and discuss information with each other in real time;21
(xi))) (ix) Travel agent services, including online travel 22
services, and automated systems used by travel agents to book 23
reservations; 24
(((xii))) (x)(A) A service that allows the person receiving the 25
service to make online sales of products or services, digital or 26
otherwise, using either: (I) The service provider's website; or (II) 27
the service recipient's website, but only when the service provider's 28
technology is used in creating or hosting the service recipient's 29
website or is used in processing orders from customers using the 30
service recipient's website. 31
(B) The service described in this subsection (3)(b)(((xii))) (x) 32
does not include the underlying sale of the products or services, 33
digital or otherwise, by the person receiving the service;34
(((xiii) Advertising services. For purposes of this subsection 35
(3)(b)(xiii), "advertising services" means all services directly 36
related to the creation, preparation, production, or the 37
dissemination of advertisements. Advertising services include layout, 38
art direction, graphic design, mechanical preparation, production 39
supervision, placement, and rendering advice to a client concerning 40
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the best methods of advertising that client's products or services. 1
Advertising services also include online referrals, search engine 2
marketing and lead generation optimization, web campaign planning, 3
the acquisition of advertising space in the internet media, and the 4
monitoring and evaluation of website traffic for purposes of 5
determining the effectiveness of an advertising campaign. Advertising 6
services do not include web hosting services and domain name 7
registration; 8
(xiv))) (xi) The mere storage of digital products, digital codes, 9
computer software, or master copies of software. This exclusion from 10
the definition of digital automated services includes providing space 11
on a server for web hosting or the backing up of data or other 12
information; 13
(((xv) Data processing services. For purposes of this subsection 14
(3)(b)(xv), "data processing service" means a primarily automated 15
service provided to a business or other organization where the 16
primary object of the service is the systematic performance of 17
operations by the service provider on data supplied in whole or in 18
part by the customer to extract the required information in an 19
appropriate form or to convert the data to usable information. Data 20
processing services include check processing, image processing, form 21
processing, survey processing, payroll processing, claim processing, 22
and similar activities. Data processing does not include the service 23
described in RCW 82.04.050(6)(c);)) and 24
(((xvi))) (xii) Digital goods. 25
(4) "Digital books" means works that are generally recognized in 26
the ordinary and usual sense as books. 27
(5) "Digital code" means a code that provides a purchaser with 28
the right to obtain one or more digital products, if all of the 29
digital products to be obtained through the use of the code have the 30
same sales and use tax treatment. "Digital code" does not include a 31
code that represents a stored monetary value that is deducted from a 32
total as it is used by the purchaser. "Digital code" also does not 33
include a code that represents a redeemable card, gift card, or gift 34
certificate that entitles the holder to select digital products of an 35
indicated cash value. A digital code may be obtained by any means, 36
including email or by tangible means regardless of its designation as 37
song code, video code, book code, or some other term.38
(6)(a) "Digital goods," except as provided in (b) of this 39
subsection (6), means sounds, images, data, facts, or information, or 40
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any combination thereof, transferred electronically, including, but 1
not limited to, specified digital products and other products 2
transferred electronically not included within the definition of 3
specified digital products. 4
(b) The term "digital goods" does not include: 5
(i) Telecommunications services and ancillary services as those 6
terms are defined in RCW 82.04.065; 7
(ii) Computer software as defined in RCW 82.04.215;8
(iii) The internet and internet access as those terms are defined 9
in RCW 82.04.297; 10
(iv)(A) Except as provided in (b)(iv)(B) of this subsection (6), 11
the representation of a personal or professional service in 12
electronic form, such as an electronic copy of an engineering report 13
prepared by an engineer, where the service primarily involves the 14
application of human effort by the service provider, and the human 15
effort originated after the customer requested the service.16
(B) The exclusion in (b)(iv)(A) of this subsection (6) does not 17
apply to photographers in respect to amounts received for the taking 18
of photographs that are transferred electronically to the customer, 19
but only if the customer is an end user, as defined in RCW 20
82.04.190(11), of the photographs. Such amounts are considered to be 21
for the sale of digital goods; and 22
(v) Services and activities excluded from the definition of 23
digital automated services in subsection (3)(b)(i) through (((xv))) 24
(xi) of this section and not otherwise described in (b)(i) through 25
(iv) of this subsection (6). 26
(7) "Digital products" means digital goods and digital automated 27
services. 28
(8) "Electronically transferred" or "transferred electronically" 29
means obtained by the purchaser by means other than tangible storage 30
media. It is not necessary that a copy of the product be physically 31
transferred to the purchaser. So long as the purchaser may access the 32
product, it will be considered to have been electronically 33
transferred to the purchaser. 34
(9) "Specified digital products" means electronically transferred 35
digital audiovisual works, digital audio works, and digital books.36
(10) "Subscription radio services" means the sale of audio 37
programming by a radio broadcaster as defined in RCW 82.08.0208, 38
except as otherwise provided in this subsection. "Subscription radio 39
services" does not include audio programming that is sold on a pay-40
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per-program basis or that allows the buyer to access a library of 1
programs at any time for a specific charge for that service.2
(11) "Subscription television services" means the sale of video 3
programming by a television broadcaster as defined in RCW 82.08.0208, 4
except as otherwise provided in this subsection. "Subscription 5
television services" does not include video programming that is sold 6
on a pay-per-program basis or that allows the buyer to access a 7
library of programs at any time for a specific charge for that 8
service, but only if the seller is not subject to a franchise fee in 9
this state under the authority of Title 47 U.S.C. Sec. 542 (a) on the 10
gross revenue derived from the sale. 11
PART III12
CONCERNING THE TAXATION OF NICOTINE PRODUCTS13
Sec. 301. RCW 82.26.010 and 2020 c 139 s 31 are each amended to 14
read as follows: 15
The definitions in this section apply throughout this chapter 16
unless the context clearly requires otherwise. 17
(1) "Actual price" means the total amount of consideration for 18
which tobacco products are sold, valued in money, whether received in 19
money or otherwise, including any charges by the seller necessary to 20
complete the sale such as charges for delivery, freight, 21
transportation, or handling. 22
(2) "Affiliated" means related in any way by virtue of any form 23
or amount of common ownership, control, operation, or management.24
(3) "Board" means the liquor and cannabis board.25
(4) "Business" means any trade, occupation, activity, or 26
enterprise engaged in for the purpose of selling or distributing 27
tobacco products in this state. 28
(5) "Cigar" means a roll for smoking that is of any size or shape 29
and that is made wholly or in part of tobacco, irrespective of 30
whether the tobacco is pure or flavored, adulterated or mixed with 31
any other ingredient, if the roll has a wrapper made wholly or in 32
greater part of tobacco. "Cigar" does not include a cigarette.33
(6) "Cigarette" has the same meaning as in RCW 82.24.010.34
(7) "Department" means the department of revenue.35
(8) "Distributor" means (a) any person engaged in the business of 36
selling tobacco products in this state who brings, or causes to be 37
brought, into this state from without the state any tobacco products 38
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for sale, (b) any person who makes, manufactures, fabricates, or 1
stores tobacco products in this state for sale in this state, (c) any 2
person engaged in the business of selling tobacco products without 3
this state who ships or transports tobacco products to retailers in 4
this state, to be sold by those retailers, (d) any person engaged in 5
the business of selling tobacco products in this state who handles 6
for sale any tobacco products that are within this state but upon 7
which tax has not been imposed. 8
(9) "Indian country" means the same as defined in chapter 82.24 9
RCW. 10
(10) "Little cigar" means a cigar that has a cellulose acetate 11
integrated filter. 12
(11) "Manufacturer" means a person who manufactures and sells 13
tobacco products. 14
(12) "Manufacturer's representative" means a person hired by a 15
manufacturer to sell or distribute the manufacturer's tobacco 16
products, and includes employees and independent contractors.17
(13) "Moist snuff" means tobacco , or a similar product containing 18
nicotine, that is finely cut, ground, or powdered; is not for 19
smoking; and is intended to be placed in the oral, but not the nasal, 20
cavity. 21
(14) "Person" means any individual, receiver, administrator, 22
executor, assignee, trustee in bankruptcy, trust, estate, firm, 23
copartnership, joint venture, club, company, joint stock company, 24
business trust, municipal corporation, the state and its departments 25
and institutions, political subdivision of the state of Washington, 26
corporation, limited liability company, association, society, any 27
group of individuals acting as a unit, whether mutual, cooperative, 28
fraternal, nonprofit, or otherwise. The term excludes any person 29
immune from state taxation, including the United States or its 30
instrumentalities, and federally recognized Indian tribes and 31
enrolled tribal members, conducting business within Indian country.32
(15) "Place of business" means any place where tobacco products 33
are sold or where tobacco products are manufactured, stored, or kept 34
for the purpose of sale, including any vessel, vehicle, airplane, 35
train, or vending machine. 36
(16) "Retail outlet" means each place of business from which 37
tobacco products are sold to consumers. 38
(17) "Retailer" means any person engaged in the business of 39
selling tobacco products to ultimate consumers. 40
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(18)(a) "Sale" means any transfer, exchange, or barter, in any 1
manner or by any means whatsoever, for a consideration, and includes 2
and means all sales made by any person. 3
(b) The term "sale" includes a gift by a person engaged in the 4
business of selling tobacco products, for advertising, promoting, or 5
as a means of evading the provisions of this chapter.6
(19)(a) "Taxable sales price" means: 7
(i) In the case of a taxpayer that is not affiliated with the 8
manufacturer, distributor, or other person from whom the taxpayer 9
purchased tobacco products, the actual price for which the taxpayer 10
purchased the tobacco products; 11
(ii) In the case of a taxpayer that purchases tobacco products 12
from an affiliated manufacturer, affiliated distributor, or other 13
affiliated person, and that sells those tobacco products to 14
unaffiliated distributors, unaffiliated retailers, or ultimate 15
consumers, the actual price for which that taxpayer sells those 16
tobacco products to unaffiliated distributors, unaffiliated 17
retailers, or ultimate consumers; 18
(iii) In the case of a taxpayer that sells tobacco products only 19
to affiliated distributors or affiliated retailers, the price, 20
determined as nearly as possible according to the actual price, that 21
other distributors sell similar tobacco products of like quality and 22
character to unaffiliated distributors, unaffiliated retailers, or 23
ultimate consumers; 24
(iv) In the case of a taxpayer that is a manufacturer selling 25
tobacco products directly to ultimate consumers, the actual price for 26
which the taxpayer sells those tobacco products to ultimate 27
consumers; 28
(v) In the case of a taxpayer that has acquired tobacco products 29
under a sale as defined in subsection (18)(b) of this section, the 30
price, determined as nearly as possible according to the actual 31
price, that the taxpayer or other distributors sell the same tobacco 32
products or similar tobacco products of like quality and character to 33
unaffiliated distributors, unaffiliated retailers, or ultimate 34
consumers; or 35
(vi) In any case where (a)(i) through (v) of this subsection do 36
not apply, the price, determined as nearly as possible according to 37
the actual price, that the taxpayer or other distributors sell the 38
same tobacco products or similar tobacco products of like quality and 39
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character to unaffiliated distributors, unaffiliated retailers, or 1
ultimate consumers. 2
(b) For purposes of (a)(i) and (ii) of this subsection only, 3
"person" includes both persons as defined in subsection (14) of this 4
section and any person immune from state taxation, including the 5
United States or its instrumentalities, and federally recognized 6
Indian tribes and enrolled tribal members, conducting business within 7
Indian country. 8
(c) The department may adopt rules regarding the determination of 9
taxable sales price under this subsection. 10
(20) "Taxpayer" means a person liable for the tax imposed by this 11
chapter. 12
(21) "Tobacco products" means cigars, cheroots, stogies, 13
periques, granulated, plug cut, crimp cut, ready rubbed, and other 14
smoking tobacco, snuff, snuff flour, cavendish, plug and twist 15
tobacco, fine-cut and other chewing tobaccos, shorts, refuse scraps, 16
clippings, cuttings and sweepings of tobacco, and other kinds and 17
forms of tobacco, prepared in such manner as to be suitable for 18
chewing or smoking in a pipe or otherwise, or both for chewing and 19
smoking, and any other product, regardless of form, that contains 20
tobacco or nicotine, whether derived from tobacco or created 21
synthetically, and is intended for human consumption or placement in 22
the oral or nasal cavity or absorption into the human body by any 23
other means, but does not include cigarettes as defined in RCW 24
82.24.010. 25
(22) "Unaffiliated distributor" means a distributor that is not 26
affiliated with the manufacturer, distributor, or other person from 27
whom the distributor has purchased tobacco products.28
(23) "Unaffiliated retailer" means a retailer that is not 29
affiliated with the manufacturer, distributor, or other person from 30
whom the retailer has purchased tobacco products. 31
PART IV32
REQUIRING CERTAIN BUSINESSES TO MAKE A ONE-TIME PREPAYMENT OF STATE 33
SALES TAX COLLECTIONS34
Sec. 401. RCW 82.32.045 and 2023 c 374 s 12 are each amended to 35
read as follows: 36
(1)(a) Except as otherwise provided in this chapter ((and)), 37
subsection (6) of this section , and (b) of this subsection , payments 38
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of the taxes imposed under chapters 82.04, 82.08, 82.12, 82.14, 1
82.16, and 82.27 RCW, along with reports and returns on forms 2
prescribed by the department, are due monthly within 25 days after 3
the end of the month in which the taxable activities occur.4
(b)(i) Monthly filers with $3,000,000 or more taxable retail 5
sales during calendar year 2026 must remit a prepayment on or before 6
June 25, 2027, of the tax imposed under chapter 82.08 RCW equal to 80 7
percent of the amount of state sales tax collected by the taxpayer 8
during the June 2026 reporting period.9
(ii) The tax return and the remaining tax liability are due on or 10
before July 26, 2027. The taxpayer must correct the collection 11
amounts on the regularly filed excise tax return due on or before 12
July 26, 2027.13
(2) The department of revenue may relieve any taxpayer or class 14
of taxpayers from the obligation of remitting monthly and may require 15
the return to cover other longer reporting periods, but in no event 16
may returns be filed for a period greater than one year. Except as 17
provided in subsection (3) of this section, for these taxpayers, tax 18
payments are due on or before the last day of the month next 19
succeeding the end of the period covered by the return.20
(3) For annual filers, tax payments, along with reports and 21
returns on forms prescribed by the department, are due on or before 22
April 15th of the year immediately following the end of the period 23
covered by the return. 24
(4) The department of revenue may also require verified annual 25
returns from any taxpayer, setting forth such additional information 26
as it may deem necessary to correctly determine tax liability.27
(5) Notwithstanding subsections (1) and (2) of this section, the 28
department may relieve any person of the requirement to file returns 29
if the following conditions are met: 30
(a) The person's value of products, gross proceeds of sales, or 31
gross income of the business, from all business activities taxable 32
under chapter 82.04 RCW, is less than $125,000 per year;33
(b) The person's gross income of the business from all activities 34
taxable under chapter 82.16 RCW is less than $24,000 per year; and35
(c) The person is not required to collect or pay to the 36
department of revenue any other tax or fee which the department is 37
authorized to collect. 38
(6)(a) Taxes imposed under chapter 82.08 or 82.12 RCW on taxable 39
events that occur beginning January 1, 2019, through June 30, 2019, 40
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and payable by a consumer directly to the department are due, on 1
returns prescribed by the department, by July 25, 2019.2
(b) This subsection (6) does not apply to the reporting and 3
payment of taxes imposed under chapters 82.08 and 82.12 RCW:4
(i) On the retail sale or use of motor vehicles, vessels, or 5
aircraft; or 6
(ii) By consumers who are engaged in business, unless the 7
department has relieved the consumer of the requirement to file 8
returns pursuant to subsection (5) of this section.9
Sec. 402. RCW 82.32.050 and 2022 c 282 s 2 and 2022 c 41 s 2 are 10
each reenacted and amended to read as follows: 11
(1) If upon examination of any returns or from other information 12
obtained by the department it appears that a tax or penalty has been 13
paid less than that properly due, the department shall assess against 14
the taxpayer such additional amount found to be due and shall add 15
thereto interest on the tax only. The department shall notify the 16
taxpayer by mail, or electronically as provided in RCW 82.32.135, of 17
the additional amount and the additional amount shall become due and 18
shall be paid within ((thirty)) 30 days from the date of the notice, 19
or within such further time as the department may provide.20
(a) For tax liabilities arising before January 1, 1992, interest 21
shall be computed at the rate of nine percent per annum from the last 22
day of the year in which the deficiency is incurred until the earlier 23
of December 31, 1998, or the date of payment. After December 31, 24
1998, the rate of interest shall be variable and computed as provided 25
in subsection (2) of this section. The rate so computed shall be 26
adjusted on the first day of January of each year for use in 27
computing interest for that calendar year. 28
(b) For tax liabilities arising after December 31, 1991, the rate 29
of interest shall be variable and computed as provided in subsection 30
(2) of this section from the last day of the year in which the 31
deficiency is incurred until the date of payment. The rate so 32
computed shall be adjusted on the first day of January of each year 33
for use in computing interest for that calendar year.34
(c)(i) Except as otherwise provided in this subsection (1)(c), 35
interest imposed after December 31, 1998, shall be computed from the 36
last day of the month following each calendar year included in a 37
notice, and the last day of the month following the final month 38
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included in a notice if not the end of a calendar year, until the due 1
date of the notice. 2
(ii) For interest associated with annual tax reporting periods 3
having a due date as prescribed in RCW 82.32.045(3), interest must be 4
computed from the last day of April immediately following each such 5
annual reporting period included in the notice, until the due date of 6
the notice. 7
(iii) For purposes of computing interest under (c)(i) and (ii) of 8
this subsection (1): 9
(A) The same computation of interest applies regardless of 10
whether the department grants additional time for filing any return 11
under RCW 82.32.080(4)(a)(i). 12
(B) If the department extends a due date under subsection (3) of 13
this section or RCW 82.32.080(4)(b), and payment is not made in full 14
by the extended due date, interest is computed from the last day of 15
the month in which the extended due date occurs until the date of 16
payment. 17
(iv) If payment in full is not made by the due date of the 18
notice, additional interest shall be computed under this subsection 19
(1)(c) until the date of payment. The rate of interest shall be 20
variable and computed as provided in subsection (2) of this section. 21
The rate so computed shall be adjusted on the first day of January of 22
each year for use in computing interest for that calendar year.23
(2) For the purposes of this section, the rate of interest to be 24
charged to the taxpayer shall be an average of the federal short-term 25
rate as defined in 26 U.S.C. Sec. 1274 (d) plus two percentage points. 26
The rate set for each new year shall be computed by taking an 27
arithmetical average to the nearest percentage point of the federal 28
short-term rate, compounded annually. That average shall be 29
calculated using the rates from four months: January, April, and July 30
of the calendar year immediately preceding the new year, and October 31
of the previous preceding year. 32
(3) During a state of emergency declared under RCW 43.06.010(12), 33
the department, on its own motion or at the request of any taxpayer 34
affected by the emergency, may extend the due date of any assessment 35
or correction of an assessment for additional taxes, penalties, or 36
interest as the department deems proper. 37
(4) No assessment or correction of an assessment for additional 38
taxes, penalties, or interest due may be made by the department more 39
than four years after the close of the tax year, except (a) against a 40
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taxpayer who has not registered as required by this chapter, (b) upon 1
a showing of fraud or of misrepresentation of a material fact by the 2
taxpayer, or (c) where a taxpayer has executed a written waiver of 3
such limitation. The execution of a written waiver shall also extend 4
the period for making a refund or credit as provided in RCW 5
82.32.060(2). 6
(5)(a) For taxes remitted under RCW 82.32.045(1)(b), a one-time 7
penalty equal to 10 percent of the amount of the tax due and payable 8
applies for:9
(i) The failure of the taxpayer to submit the prepayment of state 10
sales tax pursuant to RCW 82.32.045 collected and remitted under 11
chapter 82.08 RCW; or12
(ii) A taxpayer submitting a prepayment pursuant to RCW 82.32.045 13
lower than 80 percent of the amount of sales tax collected during the 14
June 2026 reporting period.15
(b) The department may waive the penalty under (a) of this 16
subsection if the taxpayer provides documentation to the department 17
indicating that the taxpayer's June 2027 taxable retail sales are 18
less than 80 percent of the taxpayer's June 2026 taxable retail 19
sales.20
(6) For the purposes of this section, the following definitions 21
apply: 22
(a) "Due date of the notice" means the date indicated in the 23
notice by which the amount due in the notice must be paid, or such 24
later date as provided by RCW 1.12.070(3). 25
(b) "Return" means any document a person is required by the state 26
of Washington to file to satisfy or establish a tax or fee obligation 27
that is administered or collected by the department and that has a 28
statutorily defined due date. "Return" also means an application for 29
refund under RCW 82.08.0206. 30
PART V31
MISCELLANEOUS32
NEW SECTION. Sec. 501. If any provision of this act or its 33
application to any person or circumstance is held invalid, the 34
remainder of the act or the application of the provision to other 35
persons or circumstances is not affected.36
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NEW SECTION. Sec. 502. This act is necessary for the support of 1
the state government and its existing public institutions.2
NEW SECTION. Sec. 503. Sections 101 and 201 of this act take 3
effect October 1, 2025.4
NEW SECTION. Sec. 504. Section 301 of this act takes effect 5
January 1, 2026.6
NEW SECTION. Sec. 505. Sections 401 and 402 of this act take 7
effect January 1, 2027.8
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