The following is a brief summary of tax-related bills passed by the Legislature and signed into law by Gov. Gregoire during the 2007 legislative session:
Business & occupation tax
Incentives
Property tax
Public utility tax
Sales & use tax
Timber
Other
Business & occupation (B&O) tax
E85 motor fuel
Current law provides a deduction from B&O tax for sales of biodiesel and alcohol fuel and sales/use tax exemptions for equipment used to dispense fuel. SHB 1029 amends the definition of alcohol fuel and replaces it with "E85 motor fuel," which is defined as a blend of ethanol and hydrocarbon with the ethanol comprising 75 percent to 85 percent denatured fuel ethanol by volume. Also, the expiration date of the B&O tax deduction and sales/use tax exemptions is extended six years to July 1, 2015. Effective July 22, 2007.
Special Notice: Biofuel Sellers - Update
B&O tax exemption; resale of natural/manufactured gas
SHB 1508 provides a business and occupation tax exemption for certain sales of natural or manufactured gas. To qualify for the exemption, the total number of natural or manufactured gas a company sells within the United States cannot exceed 20% of what the seller consumed in the United States, in the same calendar year. Effective July 22, 2007.
Special Notice: B&O Tax Exemption for Sales of Natural and Manufactured Gas by Industrial Users
B&O tax exemption; wholesale sales of unprocessed milk
HB 1549 extends the B&O tax exemption for persons who purchase and resell wheat, oats, dry peas, dry beans, corn, lentils, triticale, canola, rye, or barley to persons who uby and resell unprocessed milk. Effective July 22, 2007.
Modification of new jobs B&O tax credit
SHB 1566 modifies the existing B&O tax credit for creating new manufacturing or research and development jobs in rural counties or community empowerment zones. To qualify for the credit, a business must increase its average full-time qualified employment positions at the facility by at least 15 percent over the prior calendar year. Effective January 1, 2008.
Special Notice: Rural County B&O Tax Credit for New Employees in Manufacturing - Modifications
B&O deduction for administration of prescription drugs
SHB 1891 provides a B&O tax deduction for amounts received by physicians and clinics for prescription drugs for injection or infusion by licensed physicians or their agents, if the charges for the drugs meet certain requirements. Effective October 1, 2007.
Incentives
B&O and PUT exemptions for farm services
ESHB 2352 provides a business and occupation tax and/or public utility tax exemption to certain providers of custom farming and other farming-related services for farmers. Effective August 1, 2007.
Special Notice: Services for Farms - B&O and Public Utility Tax Exemption
Property Tax
County Treasurers; administrative practices
HB 1166 modifies county treasurers’ administrative provisions. Among the changes included in this bill are clarifications that for purposes of the advance tax and distraint, personal property includes mobile homes, manufactured homes, and park model trailers, and clarification that tax title lands are exempt from taxation and special assessments except specific local improvement assessments. The bill is effective July 22, 2007.
School district levies for technology
2SHB 1280 allows school districts to impose 2-year through 6-year levies to fund costs associated with the application and modernization of technology systems. These levies are in addition to other maintenance and operation levies imposed by the school district, and are not subject to the limitation found in RCW 84.52.053.
Property tax exemption for low-income rental housing
HB 1450 adds language to RCW 84.40.030 regarding valuation of real property. The legislation specifies that assessors should consider restrictions on rental income, appreciation, and liquidity as contained in agreements between owners of rental property and government agencies when determining the value of the property. Effective July 22, 2007.
Property tax exemption for nightclub sprinkler systems
2SHB 1811 amends the exemption provisions for automatic sprinkler systems installed in nightclubs. This legislation extends the exemption to leasehold improvements typically carried as personal property of the lessee. Effective July 22, 2007.
Property tax exemption for targeted, multi-unit housing
E2SHB 1910 changes the size of city in which this exemption may be available. The threshold for city size is reduced from 30,000 to 15,000 and the city size is reduced to 5,000 in “buildable lands” counties. This bill also provides incentive for projects to contain affordable housing.
The Governor vetoed the emergency clause, so the bill is effective July 22, 2007.
Targeted multi-unit residential facilities; UW Tacoma campus
ESHB 2164 affects the exemption for multi-family dwellings in urban areas by prohibiting application of the exemption in areas defined by the University of Washington as necessary for the future growth of its campus. The bill is effective July 1, 2007.
Approval of special property tax levies for schools
EHJR 4204 is a constitutional amendment that eliminates the super-majority approval and validation requirement for school district maintenance and operation levies. To become law, the amendment must be approved and ratified by a majority of voters in the next general election.
Early payment of property taxes
SB 5732 allows a county treasurer to accept tax payments and issue receipts for such payments once he/she has completed the tax roll for the current year's collection.
It also eliminates the requirement that a county treasurer wait until February 15th to collect tax payments on real property.
Public Utility Tax
Public utility tax deduction; shipping of farm products to port
HB 1443 provides a state public utility tax deduction for gross income derived from the transportation of agricultural commodities from points of origin in this state to interim storage facilities in this state for transshipment, without intervening transportation, to a marine export facility for shipment by vessel outside of this state. Effective July 22, 2007.
Sales & Use Tax
Vessels purchased by nonresident individuals
SHB 1002 provides a one-year retail sales tax exemption for certain vessels purchased in this state by nonresident individuals. A comparable use tax exemption is also available for vessels brought into this state by nonresident individuals. Effective July 1, 2007.
Special Notice: Vessels and Nonresident Individuals Tax Exemptions and Use Permit
Sales tax exemption for repair of farm machinery and equipment
EHB 1902 broadens the sales tax exemption for repair of farm machinery and equipment to include installation services for replacement parts, as well as repairs to the machinery and equipment when no replacement parts are installed. Also, the definition of qualifying farm machinery and equipment is broadened to include farm vehicles.
Special Notice: Repair Parts and/or Services for Farm Machinery and Equipment - Sales and Use Tax Exemptions
Sales tax exemption; electronically transmitted financial data
ESHB 1981 provides sales and use tax exemptions for the purchase or use of electronically delivered standard financial information by an investment management company or financial institution. Effective August 1, 2007.
Special Notice: Limited Exemption for Electronically Delivered Standard Financial Information
Sales tax deferral; early application
HB 2032 amends 2006 legislation that expanded existing sales tax preferences for firms that process certain food products. This bill allows businesses to apply for the tax deferral before July 1, 2007. However, other provisions continue to take effect on July 1, 2007. The bill is effective April 30, 2007.
Sales to and repair of vehicles for nonresidents
SHB 2158 changes the documentation requirements necessary for making tax exempt sales of motor vehicles, trailers, and campers to nonresidents. It also provides the conditions under which charges for parts installed during the repair of such vehicles are exempt from sales tax. SHB 2158 is effective July 22, 2007.
Special Notice: Vehicles and Parts Sales to Nonresidents
Sales tax exemption expanded; biodiesel fuel used on farms
SSB 5009 expands the sales and use tax exemption for biodiesel used on farms. In addition, any fuel blend is exempt, but only if the component fuels of the blend would qualify for this exemption if they were sold as separate products. Last year new sales and use tax exemptions were adopted for diesel or aircraft fuel used in farming. Effective May 11, 2007.
Special Notice: Farm Fuel Users - Sales and Use Tax Exemption Update
Adoption of streamlined sales and use tax agreement
SSB 5089 establishes laws allowing Washington's tax structure to conform to the Streamlined Sales and Use Tax Agreement (SSUTA), a cooperative effort of multiple states, local governments, and the business community. The new law applies to Washington retailers who sell and deliver or ship goods and merchandise to customers in Washington. Effective July 1, 2008.
Special Notice: The Streamlined Sales and Use Tax Agreement (SSUTA) Effective July 1, 2008
More Streamlined Sales and Use Tax information
Sales/use tax exemptions for fuel used by passenger ferries
E2SSB 5862 extends sales/use tax exemptions relating to motor vehicle fuel and special fuel to include fuel purchased by a public transportation benefit area or a county-owned ferry or county ferry district for use in passenger-only ferries. Effective April 27, 2007.
Timber
Reporting of timber sales data extended
Purchasers of private timber are presently required to report data relating to the purchase to the Department of Revenue if they buy more than 200,000 board feet in a given transaction. The requirement to report this data was adopted in 1994 and was scheduled to expire three years later. However, the information is so useful that the reporting requirement has subsequently been extended every three years. HB 1185 extends the expiration date by three years to July 1, 2010. Effective July 1, 2007.
Excise taxation of forest products businesses
SHB 1513 extends the preferential rate for timber harvesting and certain manufacturing/processing activities to include certain sales of standing timber and changes certain definitions for this program. It also changes the current B&O tax exemption for small harvesters with gross annual income of less than $100,000 to a deduction of $100,000 for all small harvesters. Effective July 1, 2007.
Special Notice: Timber Activities - Reduced Business and Occupation Tax Rates
Other
Leasehold tax exemption; amateur radio repeaters
SHB 2335 provides a leasehold excise tax exemption for leasehold interests in publicly owned property used for the placement of amateur radio repeaters, if the repeaters are made available to, or are used in support of, public agencies for emergency communications. Effective July 22, 2007.
Special Notice: Leasehold Excise Tax Exemption for Certain Amateur Radio Repeaters
Clarification of exemptions for import and export sales
SB 5434 codifies existing practice under WAC 458-20-193C by providing B&O and retail sales tax exemptions for goods in the process of being imported to or exported from this state.
Tax credits/exemptions for tobacco sellers
SB 5551 provides a credit against the tax on tobacco products other than cigarettes (commonly referred to as the "other tobacco products" tax or the "OTP" tax) for tax paid on products sold to the federal government or to Indian tribes or certain tribal entities. It also provides a B&O tax exemption for compensation received by cigarette wholesalers and retailers for affixing tax stamps to packages of cigarettes.
SB 5551 takes effect July 22, 2007.
Leasehold tax exemption; federal property on historic reserves
SB 5607 expands an exemption from leasehold excise tax which was enacted in 2005 for leased property at Ft. Vancouver in Clark County or at Ebey's Landing on Whidbey Island. The present exemption applies to leasehold interests in property owned by a municipality that is listed on a federal or state register of historical sites and is contained wholly within a national historic reserve. The bill extends the exemption to include leasehold interests in property that is owned by the federal government. Effective July 22, 2007.