wa-law.org > bill > 2025-26 > HB 2084 > Original Bill

HB 2084 - Tax preferences

Source

Section 101

Section 102

The repeal in section 101 of this act does not affect any existing right acquired or liability or obligation incurred under the statute repealed or under any rule or order adopted under that statute nor does it affect any proceeding instituted under the repealed statute.

Section 201

  1. Upon every person engaging in this state in the business of renting or leasing individual storage space at self-service storage facilities as defined in RCW 19.150.010, as to such persons the amount of tax with respect to such business is equal to the gross proceeds of the rent or lease multiplied by the following rates:

    1. 1.75 percent; or

    2. 1.5 percent for any person whose gross income of the business subject to the tax imposed under this section for the immediately preceding calendar year, was less than $1,000,000, unless the person is affiliated with one or more other persons, and the aggregate gross income of the business subject to the tax imposed under this section for all affiliated persons was greater than or equal to $1,000,000 for the immediately preceding calendar year.

  2. The department may require a person claiming to be subject to the 1.5 percent tax rate to identify all the person's affiliates including their department tax registration number or unified business identifier number, as may be applicable, or to certify that the person is not affiliated with any other person. Requests must be in writing and may be made electronically.

  3. If the department establishes, by clear, cogent, and convincing evidence, that a person, with intent to evade the additional taxes due under the 1.75 percent tax rate in subsection (1)(a) of this section, failed to provide the department with complete and accurate information in response to a written request under subsection (2) of this section within 30 days of such request, the person is ineligible for the 1.5 percent tax rate in subsection (1)(b) of this section for the entire current calendar year and the following four calendar years. However, the department must waive the provisions of this subsection (3) for any tax reporting period that the person is otherwise eligible for the 1.5 percent tax rate in subsection (1)(b) of this section if:

    1. The department has not previously determined that the person failed to fully comply with subsection (2) of this section; and

    2. Within 30 days of the notice of additional tax due as a result of the person's failure to fully comply with subsection (2) of this section, the department determines that the person has come into full compliance with subsection (2) of this section.

  4. For the purposes of subsection (1)(b) of this section, if a taxpayer is subject to the reconciliation provisions of RCW 82.04.462(4), and calculates gross income of the business subject to the tax imposed under this section for the immediately preceding calendar year, or aggregate gross income of the business subject to the tax imposed under this section for the immediately preceding calendar year for all affiliated persons, based on incomplete information, the taxpayer must correct the reporting for the current calendar year when complete information for the immediately preceding calendar year is available.

  5. For purposes of this section, "affiliate" means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person.

Section 202

This chapter shall not apply to gross proceeds derived from the sale of real estate. A sale of real estate does not include the gross proceeds derived from individual storage space rentals or leases for 30 days or longer. This however, shall not be construed to allow a deduction of amounts received as commissions from the sale of real estate, nor as fees, handling charges, discounts, interest or similar financial charges resulting from, or relating to, real estate transactions.

Section 203

  1. Except as otherwise provided in this section, any person earning apportionable income taxable under this chapter and also taxable in another state must, for the purpose of computing tax liability under this chapter, apportion to this state, in accordance with RCW 82.04.462, that portion of the person's apportionable income derived from business activities performed within this state.

  2. The department must by rule provide a method of apportioning the apportionable income of financial institutions, where such apportionable income is taxable under RCW 82.04.290. The rule adopted by the department must, to the extent feasible, be consistent with the multistate tax commission's recommended formula for the apportionment and allocation of net income of financial institutions as existing on June 1, 2010, or such subsequent date as may be provided by the department by rule, consistent with the purposes of this section, except that:

    1. The department's rule must provide for a single factor apportionment method based on the receipts factor; and

    2. The definition of "financial institution" contained in appendix A to the multistate tax commission's recommended formula for the apportionment and allocation of net income of financial institutions is advisory only.

  3. The department may by rule provide a method or methods of apportioning or allocating gross income derived from sales of telecommunications service and competitive telephone service taxed under this chapter, if the gross proceeds of sales subject to tax under this chapter do not fairly represent the extent of the taxpayer's income attributable to this state. The rule must provide for an equitable and constitutionally permissible division of the tax base.

  4. For purposes of this section, the following definitions apply unless the context clearly requires otherwise:

    1. "Apportionable income" means gross income of the business generated from engaging in apportionable activities, including income received from apportionable activities performed outside this state if the income would be taxable under this chapter if received from activities in this state, less the exemptions and deductions allowable under this chapter. For purposes of this subsection, "apportionable activities" means only those activities taxed under:

      1. RCW 82.04.255;

      2. RCW 82.04.260 (3), (5), (6), (7), (8), (9), (10), and (13);

      3. RCW 82.04.280(1)(e);

      4. RCW 82.04.285;

    2. RCW 82.04.286;

    1. RCW 82.04.290;

    2. RCW 82.04.2907;

    3. RCW 82.04.2908;

     ix. RCW 82.04.263, but only to the extent of any activity that would be taxable under any of the provisions enumerated under (a)(i) through (viii) of this subsection (4) if the tax classification in RCW 82.04.263 did not exist;
    1. RCW 82.04.280(1)(a) or exempted under RCW 82.04.759, but only with respect to advertising; and
    1. Section 201 of this act.

    1. [Empty]

      1. "Taxable in another state" means that the taxpayer is subject to a business activities tax by another state on its income received from engaging in apportionable activities; or the taxpayer is not subject to a business activities tax by another state on its income received from engaging in apportionable activities, but any other state has jurisdiction to subject the taxpayer to a business activities tax on such income under the substantial nexus standards in RCW 82.04.067(1).

      2. For purposes of this subsection (4)(b), "business activities tax" and "state" have the same meaning as in RCW 82.04.462.

Section 204

  1. Except as otherwise provided in this section, any person earning apportionable income taxable under this chapter and also taxable in another state must, for the purpose of computing tax liability under this chapter, apportion to this state, in accordance with RCW 82.04.462, that portion of the person's apportionable income derived from business activities performed within this state.

  2. The department must by rule provide a method of apportioning the apportionable income of financial institutions, where such apportionable income is taxable under RCW 82.04.290. The rule adopted by the department must, to the extent feasible, be consistent with the multistate tax commission's recommended formula for the apportionment and allocation of net income of financial institutions as existing on June 1, 2010, or such subsequent date as may be provided by the department by rule, consistent with the purposes of this section, except that:

    1. The department's rule must provide for a single factor apportionment method based on the receipts factor; and

    2. The definition of "financial institution" contained in appendix A to the multistate tax commission's recommended formula for the apportionment and allocation of net income of financial institutions is advisory only.

  3. The department may by rule provide a method or methods of apportioning or allocating gross income derived from sales of telecommunications service and competitive telephone service taxed under this chapter, if the gross proceeds of sales subject to tax under this chapter do not fairly represent the extent of the taxpayer's income attributable to this state. The rule must provide for an equitable and constitutionally permissible division of the tax base.

  4. For purposes of this section, the following definitions apply unless the context clearly requires otherwise:

    1. "Apportionable income" means gross income of the business generated from engaging in apportionable activities, including income received from apportionable activities performed outside this state if the income would be taxable under this chapter if received from activities in this state, less the exemptions and deductions allowable under this chapter. For purposes of this subsection, "apportionable activities" means only those activities taxed under:

      1. RCW 82.04.255;

      2. RCW 82.04.260 (3), (5), (6), (7), (8), (9), (10), and (13);

      3. RCW 82.04.280(1)(e);

      4. RCW 82.04.285;

    2. RCW 82.04.286;

    1. RCW 82.04.290;

    2. RCW 82.04.2907;

    3. RCW 82.04.2908;

     ix. RCW 82.04.263, but only to the extent of any activity that would be taxable under any of the provisions enumerated under (a)(i) through (viii) of this subsection (4) if the tax classification in RCW 82.04.263 did not exist;
    1. RCW 82.04.260(14) and 82.04.280(1)(a), but only with respect to advertising; and
    1. Section 201 of this act.

    1. [Empty]

      1. "Taxable in another state" means that the taxpayer is subject to a business activities tax by another state on its income received from engaging in apportionable activities; or the taxpayer is not subject to a business activities tax by another state on its income received from engaging in apportionable activities, but any other state has jurisdiction to subject the taxpayer to a business activities tax on such income under the substantial nexus standards in RCW 82.04.067(1).

      2. For purposes of this subsection (4)(b), "business activities tax" and "state" have the same meaning as in RCW 82.04.462.

Section 301

  1. Upon every person engaging within this state in the business of warehousing and reselling drugs for human use pursuant to a prescription; as to such persons, the amount of the tax shall be equal to the gross income of the business multiplied by the rate of 0.484 percent.

  2. For the purposes of this section:

    1. "Prescription" and "drug" have the same meaning as in RCW 82.08.0281; and

    2. "Warehousing and reselling drugs for human use pursuant to a prescription" means the buying of drugs for human use pursuant to a prescription from a manufacturer or another wholesaler, and reselling of the drugs to persons selling at retail or to hospitals, clinics, health care providers, or other providers of health care services, by a wholesaler or retailer who is registered with the federal drug enforcement administration and licensed by the pharmacy quality assurance commission.

Section 302

Section 301 of this act applies to taxes due for reporting periods beginning on or after the effective date of this section.

Section 401

If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

Section 402

This act is necessary for the support of the state government and its existing public institutions.

Section 403

Sections 101, 102, 301, and 302 of this act take effect October 1, 2025.

Section 404

Sections 201 through 203 of this act take effect April 1, 2026.

Section 405

Section 203 of this act expires January 1, 2034.

Section 406

Section 204 of this act takes effect January 1, 2034.

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