The legislature recognizes that Washingtonians have been greatly impacted by the COVID-19 pandemic, which caused significant economic hardship for many. Along with rising costs of living across the state, the economic impacts of COVID-19 have put an additional strain on households already struggling to meet their basic needs. The legislature finds that Washington's tax system is the most regressive in the nation. Under Washington's regressive tax system, those who earn the least in the state pay a significantly higher percentage of their income in state and local retail sales tax, further increasing the economic burden on families.
The legislature finds that independent, local, main street businesses across the state have also been significantly impacted by the COVID-19 pandemic. While many big box stores with national and international resources were able to pivot to online sales or other strategies to weather the economic crisis, many main street businesses were unable to do the same and are now struggling.
Further, the legislature finds that the state's access to one-time funds should be used to benefit families and businesses throughout the state. Therefore, the legislature intends to create a one-time sales and use tax holiday for certain items, reducing the costs of goods for those families that need it most and spurring local economic activity.
This section adds a new section to an existing chapter 82.08. Here is the modified chapter for context.
Subject to the limitations and conditions provided in this section, the tax levied by RCW 82.08.020 does not apply to sales of qualified items purchased by an individual between 12:00 a.m. on September 3, 2022, and 11:59 p.m. on September 5, 2022.
Rules adopted by the department for the administration of this section must be substantially consistent with the streamlined sales and use tax agreement, as used in chapter 82.58 RCW.
The following definitions apply to this section:
"Clothing" means human wearing apparel suitable for general use.
"Computers and related products" means a computer, as defined in RCW 82.04.215, computer software, as defined in RCW 82.04.215, and computer accessories. "Computer accessory" means an item relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
"Energy star qualified appliances" means appliances to be used in a home environment that meet the United States environmental protection agency energy star program requirements.
"Health care equipment" means durable medical equipment purchased at a retail establishment without a physician's written prescription. "Durable medical equipment" has the same meaning as in RCW 82.08.0283.
"Individual" means a natural person purchasing the qualified item for personal use and consumption. An "individual" does not include persons purchasing qualified items for use and consumption by a business or in a business capacity.
"Over-the-counter drug" has the same meaning as in RCW 82.08.0281.
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"Qualified items" means clothing, certain computers and related products, school supplies, energy star qualified appliances, over-the-counter drugs, and certain health care equipment purchased by an individual. Each item must be priced at $1,000 or less.
"Qualified items" does not include motor vehicles, boats, services, construction, tobacco or marijuana products, alcoholic beverages, utilities, travel, or meals.
"School supply item" means an item commonly used by a student in a course of study.
This section adds a new section to an existing chapter 82.12. Here is the modified chapter for context.
Subject to the limitations and conditions provided in this section, the provisions of this chapter do not apply to sales of qualified items purchased by an individual between 12:00 a.m. on September 3, 2022, and 11:59 p.m. on September 5, 2022.
Rules adopted by the department for the administration of this section must be substantially consistent with the streamlined sales and use tax agreement, as used in chapter 82.58 RCW.
The following definitions apply to this section:
"Clothing" means human wearing apparel suitable for general use.
"Computers and related products" means a computer, as defined in RCW 82.04.215, computer software, as defined in RCW 82.04.215, and computer accessories. "Computer accessory" means an item relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.
"Energy star qualified appliances" means appliances to be used in a home environment that meet the United States environmental protection agency energy star program requirements.
"Health care equipment" means durable medical equipment purchased at a retail establishment without a physician's written prescription. "Durable medical equipment" has the same meaning as in RCW 82.08.0283.
"Individual" means a natural person purchasing the qualified item for personal use and consumption. An "individual" does not include persons purchasing qualified items for use and consumption by a business or in a business capacity.
"Over-the-counter drug" has the same meaning as in RCW 82.08.0281.
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"Qualified items" means clothing, certain computers and related products, school supplies, energy star qualified appliances, over-the-counter drugs, and certain health care equipment purchased by an individual. Each item must be priced at $1,000 or less.
"Qualified items" does not include motor vehicles, boats, services, construction, tobacco or marijuana products, alcoholic beverages, utilities, travel, or meals.
"School supply item" means an item commonly used by a student in a course of study.
This section adds a new section to an existing chapter 82.14. Here is the modified chapter for context.
The shop local and save sales and use tax holiday mitigation account is created in the state treasury. Expenditures from the account may only be made pursuant to section 5 of this act as mitigation payments to local taxing districts impacted by the sales and use tax suspension on certain items pursuant to sections 2 and 3 of this act and based on the estimates in section 5 of this act.
This section adds a new section to an existing chapter 82.14. Here is the modified chapter for context.
In order to mitigate local sales and use tax revenue losses as the result of the shop local and save sales and use tax holiday authorized in sections 2 and 3 of this act, the state treasurer must transfer mitigation payments from the shop local and save sales and use tax holiday mitigation account to local taxing districts impacted by the shop local and save sales and use tax holiday by December 1, 2022. The department shall determine the local taxing districts and mitigation payment amounts under this section.
The department must estimate the revenue losses for each impacted local taxing district as the result of the shop local and save sales and use tax holiday authorized under sections 2 and 3 of this act. The department must notify the state treasurer by November 18, 2022, of the amount of each mitigation payment that must be transferred from the shop local and save sales and use tax holiday mitigation account to each local taxing district.
The department of revenue's estimates under this section may not be overturned by a court except upon a showing of willful misconduct by clear, cogent, and convincing evidence.
RCW 82.32.805 and 82.32.808 do not apply to this act.