The following is a brief summary of the tax-related bills passed by the Legislature and signed into law by Gov. Inslee during the 2016 legislative session:
Effective April 1, 2016, (Engrossed Third Substitute House Bill 1713, Chapter 29, Laws of 2016) integrates the involuntary treatment provisions and systems for chemical dependency and mental health. RCW 82.04.4277 is amended to:
- Expand the current business and occupation (B&O) tax deduction for health and social welfare organizations providing mental health services under a government funded program to include chemical dependency services;
- Expand the current B&O tax deduction for behavioral health organizations (BHOs) to include amounts received by BHOs from the state of Washington for distribution to a health and social welfare organization for providing chemical dependency services; and
- Extend the B&O tax deductions described above to January 1, 2020, from August 1, 2016.
Certain qualified stand-alone dental plans offered in the individual or small group markets exempt from B&O tax
Effective June 9, 2016, House Bill 2768 (Chapter 133, Laws of 2016) imposes the insurance premiums tax on stand-alone family dental plans and allows the Washington Healthplanfinder to levy an assessment on standalone family dental plans to help fund operations. The Office of the Insurance Commissioner administers the insurance premiums tax. Amounts subject to the insurance premiums tax are exempt from business and occupation (B&O) tax.
Under federal law a retail sales tax exemption is provided when a motor vehicle is sold to a tribe or an enrolled tribal member and delivery is made to the tribe or enrolled tribal member in their Indian country. Starting June 9, 2016, a new Washington law (Engrossed Substitute Senate Bill (ESSB) 6427, Chapter 232, Laws of 2016) states there are updated requirements to document:
- The sale of a motor vehicle was to a tribe or an enrolled tribal member and
- The motor vehicle was delivered to or the sale was made in the buyer’s Indian country.
Beginning July 1, 2016, the sales and use tax exemptions provided by RCW 82.08.809 and 82.12.809 for new passenger cars, light duty trucks, and medium duty passenger vehicles that are exclusively powered by a clean alternative fuel or qualified plug-in hybrids capable of traveling 30 miles or more on battery power alone have been expanded with the following changes:
- Department of Licensing will publish a list of vehicles that qualify for the exemptions. The list will be updated every 6 months. The list will contain vehicles whose lowest manufacturer’s suggested retail price for the base model is $42,500 or less.
- The exemptions apply up to $32,000 of the vehicle’s selling price or the total of lease payments made plus the selling price of the leased vehicle if the original lessee purchases the leased vehicle prior to the expiration of the exemption.
- The exemptions expire on whichever date comes first, June 30, 2019, or when the cumulative number of qualified vehicles titled in Washington on or after July 15, 2015, reaches 7,500.
- Leased vehicles that qualified for the exemptions prior to the expiration continue to qualify for the exemptions through the term of the lease up to $32,000 total lease payments.
The business and occupation (B&O) tax and public utility tax (PUT) credits available to persons that purchase alternative fuel commercial vehicles have been expanded to leased vehicles beginning July 1, 2016. RCW 82.04.4496 and 82.16.0496. Vehicles leased prior to July 1 do not qualify for the credits. See (Substitute House Bill HB) 2884)
Beginning July 1, 2016, the penalty for failure to submit an Annual Tax Survey or Report is reduced from 100 percent of the tax preference claimed to 35 percent. An additional 15-percent penalty is imposed if the taxpayer has filed a late Survey or Report in the past for the same tax preference. Penalties and interest may not be assessed on these amounts.
The due date for submitting the annual Survey or Report is changed from April 30 to May 31.
Effective July 1, 2016, a new law (Substitute House Bill 2938; Chapter 137, Laws of 2016) provides an exception to Washington’s nexus law whereby attendance and/or participation by one or more representatives of a person at one “trade convention” per calendar year does not establish a physical presence in Washington and, therefore, does not create nexus for retail sales. A trade convention is an event that is not marketed to the general public.
This exception does not apply to person making retail sales at trade conventions, including persons taking orders for products or services where receipt will occur in Washington State.
Special Notice: Trade Convention Exception from Nexus for Retail Sales
Effective July 1, 2016, eligible FAR Part 145 repair stations are exempt from sales tax on purchases of labor and materials used in the construction of new buildings. The FAR Part 145 repair station must be located in an international airport owned by a county with a population of greater than one million five hundred thousand to be eligible. The exemption is in the form of a remittance. Remittance of local sales and use tax is immediate; remittance of the state sales and use tax may not occur until after the facility has been operationally complete for four years, but not earlier than December 1, 2021. The Department of Revenue may not refund the state sales and use tax unless the purchaser reports at least 100 average employment positions to the Employment Security Department for the period from September 1, 2020, to September 1, 2021, with average annualized wages of $80,000.