wa-law.org > bill > 2025-26 > SB 5576 > Original Bill
Beginning January 1, 2026, there is levied and collected a special excise tax of six percent on each retail sale of the furnishing of lodging constituting a short-term rental subject to tax under chapter 82.08 RCW. The revenue collected under this section must be deposited in the essential affordable housing local assistance account created in section 3 of this act. The special excise tax authorized under this section applies exclusively to sales of furnishing of short-term rental lodging facilitated through a short-term rental platform.
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
"Housing infrastructure" means all costs for the improvements needed in an area necessary to provide services that support the construction and ongoing use of new housing. The variety of services that support the construction and ongoing use of new housing include transportation, water, sewer, stormwater, electricity, broadband, and others as appropriate.
"Short-term rental" and "short-term rental platform" have the same meanings as in RCW 64.37.010.
The essential affordable housing local assistance account is hereby created in the state treasury. All receipts from the special excise tax authorized under section 1 of this act must be deposited in the account. Moneys in the account may be spent only after appropriation. The state treasurer shall distribute funds in the account on a monthly basis. A local jurisdiction must use the funds as provided in subsection (2) of this section.
Counties shall receive the special excise tax amounts from the furnishing of lodging of short-term rentals within the unincorporated areas of the county; and
Cities and towns shall receive the special excise tax amounts from the furnishing of lodging of short-term rentals within the incorporated area of the city or town.
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Except as provided in (b) of this subsection, expenditures from the account may be used by counties, cities, and towns exclusively for the operating and capital costs of affordable housing programs including, but not limited to, homeless housing assistance, temporary shelters, and other related services, or housing infrastructure projects. A county, city, or town may use revenues collected under this section for contracts, loans, or grants to nonprofit organizations or public housing authorities for services related to affordable housing programs.
If using the funding collected from the special excise tax under this section for housing infrastructure projects, a county, city, or town must meet the following requirements:
The housing infrastructure project must be designed to meet the maximum allowed density of the parcels it will serve;
If the county, city, or town imposes impact fees for new development, the county, city, or town must reduce the impact fees by the proportional costs that are paid by the moneys collected from the special excise tax under this section;
Projects may not be in areas limited only to single-family residential housing;
The county, city, or town must limit the size of any single-family residential unit constructed in the area served by the housing infrastructure project funded, wholly or partially, to 2,000 square feet or less; and
If the housing infrastructure project is within an urban growth area designated as the 20-year growth boundary for a city, the city must agree to annex the project area upon completion of the project.
A county, city, or town may retain up to 20 percent of the moneys received under this section in each calendar year for the direct and indirect costs incurred in the administration of services and programs as provided in (a) of this subsection.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Housing infrastructure" means all costs for the improvements needed in an area necessary to provide services that support the construction and ongoing use of new housing. The variety of services that support the construction and ongoing use of new housing include transportation, water, sewer, stormwater, electricity, broadband, and others as appropriate.
"Short-term rental" and "short-term rental platform" have the same meanings as in RCW 64.37.010.
Except as otherwise provided by law and to the extent not inconsistent with this chapter, chapter 82.32 RCW applies to the administration of taxes imposed under this chapter.
The department may adopt rules for administering the tax under this chapter.
The legislative body of any municipality may impose an excise tax on the sale of or charge made for the furnishing of lodging that is subject to tax under chapter 82.08 RCW. The rate of tax shall not exceed the lesser of two percent or a rate that, when combined with all other taxes imposed upon sales of lodging within the municipality under this chapter and chapters 36.100, 82.08, and 82.14 RCW, equals 12 percent. A tax under this chapter shall not be imposed in increments smaller than tenths of a percent.
Notwithstanding subsection (1) of this section:
If a municipality was authorized to impose taxes under this chapter or RCW 67.40.100 or both with a total rate exceeding four percent before July 27, 1997, such total authorization shall continue through January 31, 1999, and thereafter the municipality may impose a tax under this section at a rate not exceeding the rate actually imposed by the municipality on January 31, 1999.
If a city or town, other than a municipality imposing a tax under (a) of this subsection, is located in a county that imposed taxes under this chapter with a total rate of four percent or more on January 1, 1997, the city or town may not impose a tax under this section.
If a city has a population of 400,000 or more and is located in a county with a population of 1,000,000 or more, the rate of tax imposed under this chapter by the city shall not exceed the lesser of four percent or a rate that, when combined with all other taxes imposed upon sales of lodging in the municipality under this chapter and chapters 36.100, 82.08, and 82.14 RCW, equals 15.2 percent.
If a municipality was authorized to impose taxes under this chapter or RCW 67.40.100, or both, at a rate equal to six percent before January 1, 1998, the municipality may impose a tax under this section at a rate not exceeding the rate actually imposed by the municipality on January 1, 1998.
Any county ordinance or resolution adopted under this section shall contain a provision allowing a credit against the county tax for the full amount of any city or town tax imposed under this section upon the same taxable event.
In determining the effective combined rate of tax for purposes of the limit in subsections (1) and (2)(c) of this section, the tax rate under RCW 82.14.530 and section 1 of this act are not included.
A local sales and use tax change adopted after December 1, 2000, must provide an exemption for those sales of lodging for which, but for the exemption, the total sales tax rate imposed on sales of lodging would exceed the greater of:
Twelve percent; or
The total sales tax rate that would have applied to the sale of lodging if the sale were made on December 1, 2000.
For the purposes of this section:
"Local sales and use tax change" is defined as provided in RCW 82.14.055.
"Sale of lodging" means the sale of or charge made for the furnishing of lodging and all other services by a hotel, rooming house, tourist court, motel, trailer camp, and the granting of any similar license to use real property.
"Total sales tax rate" means the combined rates of all state and local taxes imposed under this chapter and chapters 36.100, 67.28, and 82.08 RCW, and any other tax authorized after March 29, 2001, if the tax is in the nature of a sales tax collected from the buyer, but excluding taxes imposed under RCW 81.104.170 before December 1, 2000, taxes imposed under RCW 82.14.530, and taxes imposed under section 1 of this act.
Whenever the department has issued a warrant under RCW 82.32.210 for the collection of unpaid trust fund taxes from a limited liability business entity and that business entity has been terminated, dissolved, or abandoned, or is insolvent, the department may pursue collection of the entity's unpaid trust fund taxes, including penalties and interest on those taxes, against any or all of the responsible individuals. For purposes of this subsection, "insolvent" means the condition that results when the sum of the entity's debts exceeds the fair market value of its assets. The department may presume that an entity is insolvent if the entity refuses to disclose to the department the nature of its assets and liabilities.
Personal liability under this section may be imposed for state and local trust fund taxes.
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For a responsible individual who is the current or a former chief executive or chief financial officer, liability under this section applies regardless of fault or whether the individual was or should have been aware of the unpaid trust fund tax liability of the limited liability business entity.
For any other responsible individual, liability under this section applies only if he or she willfully fails to pay or to cause to be paid to the department the trust fund taxes due from the limited liability business entity.
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Except as provided in this subsection (4)(a), a responsible individual who is the current or a former chief executive or chief financial officer is liable under this section only for trust fund tax liability accrued during the period that he or she was the chief executive or chief financial officer. However, if the responsible individual had the responsibility or duty to remit payment of the limited liability business entity's trust fund taxes to the department during any period of time that the person was not the chief executive or chief financial officer, that individual is also liable for trust fund tax liability that became due during the period that he or she had the duty to remit payment of the limited liability business entity's taxes to the department but was not the chief executive or chief financial officer.
All other responsible individuals are liable under this section only for trust fund tax liability that became due during the period he or she had the responsibility or duty to remit payment of the limited liability business entity's taxes to the department.
Persons described in subsection (3)(b) of this section are exempt from liability under this section in situations where nonpayment of the limited liability business entity's trust fund taxes is due to reasons beyond their control as determined by the department by rule.
Any person having been issued a notice of assessment under this section is entitled to the appeal procedures under RCW 82.32.160, 82.32.170, 82.32.180, 82.32.190, and 82.32.200.
This section does not relieve the limited liability business entity of its trust fund tax liability or otherwise impair other tax collection remedies afforded by law.
Collection authority and procedures prescribed in this chapter apply to collections under this section.
The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.
"Chief executive" means: The president of a corporation; or for other entities or organizations other than corporations or if the corporation does not have a president as one of its officers, the highest ranking executive manager or administrator in charge of the management of the company or organization.
"Chief financial officer" means: The treasurer of a corporation; or for entities or organizations other than corporations or if a corporation does not have a treasurer as one of its officers, the highest senior manager who is responsible for overseeing the financial activities of the entire company or organization.
"Limited liability business entity" means a type of business entity that generally shields its owners from personal liability for the debts, obligations, and liabilities of the entity, or a business entity that is managed or owned in whole or in part by an entity that generally shields its owners from personal liability for the debts, obligations, and liabilities of the entity. Limited liability business entities include corporations, limited liability companies, limited liability partnerships, trusts, general partnerships and joint ventures in which one or more of the partners or parties are also limited liability business entities, and limited partnerships in which one or more of the general partners are also limited liability business entities.
"Manager" has the same meaning as in RCW 25.15.006.
"Member" has the same meaning as in RCW 25.15.006, except that the term only includes members of member-managed limited liability companies.
"Officer" means any officer or assistant officer of a corporation, including the president, vice president, secretary, and treasurer.
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"Responsible individual" includes any current or former officer, manager, member, partner, or trustee of a limited liability business entity with an unpaid tax warrant issued by the department.
"Responsible individual" also includes any current or former employee or other individual, but only if the individual had the responsibility or duty to remit payment of the limited liability business entity's unpaid trust fund tax liability reflected in a tax warrant issued by the department.
Whenever any taxpayer has one or more limited liability business entities as a member, manager, or partner, "responsible individual" also includes any current and former officers, members, or managers of the limited liability business entity or entities or of any other limited liability business entity involved directly in the management of the taxpayer. For purposes of this subsection (9)(g)(iii), "taxpayer" means a limited liability business entity with an unpaid tax warrant issued against it by the department.
"Trust fund taxes" means taxes collected from purchasers and held in trust under RCW 82.08.050, including taxes imposed under RCW 82.08.020, 82.08.150, 82.51.010, and section 1 of this act.