Washington Business 2019 Legislative Review & Vote Record

2019 legislative review U.S. Constitution’s Commerce Clause by applying exclusively and in a discriminatory fashion to banks headquartered out-of- state. Banks are already subject to tax at the high professional services rate of 1.5 percent, and are also subject to the B&O surcharge in E2SHB 2158. ESSB 5997 non-resident sales tax exemption Passed/AWB Opposed Washington retailers have been able to offer a sales tax exemption to consumers from Oregon, Alaska, Montana and other states and Canadian provinces with a sales tax rate less than 3%. Engrossed Substitute Senate Bill 5997, sponsored by Sen. Christine Rolfes, D-Bainbridge Island, changes that exemption into a “remittance” program for only the state portion of the combined state and local sales tax. A consumer will need to save receipts and file for a remittance once per year, and is only eligible if the combined state portion of the sales tax is greater than $25. AWB opposed this primarily out of concern about reducing the volume of businesses in border communities. SHB 1403 simplifying municipal b&o tax Passed/AWB Supported Substitute House Bill 1403, sponsored by R ep. No el F r a me , D - Gre enwo o d , implements the unanimous recommendation of the Local Appor t ion ment Ta sk Force. The bi l l simplifies the service income factor in the two-factor formula used to apportion the gross receipts of service businesses among various cities in which the business may 30 association of washington business Rep. Luanne Van Werven, R-Lynden, chats with Rep. Matt Boehnke, R-Kennewick. Both serve on the House Innovation, Technology & Economic Development Committee. Boehnke is assistant ranking minority member on the panel. operate. Unlike the old formula, the new formula will rely on information typically ava i la ble i n com mercia l t ra n sac t ion receipts and captured by common business recordkeeping systems. The bill a lso established a consistent burden of proof for any taxpayers seeking application of an alternative apportionment method when the statutory method does not fairly represent the extent of the taxpayer’s business activity in the city. 2SHB 1059 extending b&o tax return filing date Passed/AWB Supported The Depa r t ment of Revenue a ssig n s taxpayers a filing frequency of annual, quarterly, or monthly. For an estimated 126,000 of the smallest businesses, that tax filing deadline for annual filing was Jan. 31 under state law, a date by which many independent contractors did not yet have 1099 forms, resulting in late penalties or the need to request filing extensions. This bill, sponsored by Rep. Luanne Van Werven, R-Lynden, changes the f iling deadline to April 15. AWB supported this bill as promoting taxpayer fairness and administrative simplicity. SSB 5581 marketplace fairness/ wayfair Passed/AWB Neutral The Department of Revenue proposed legislation to clean up online marketplace sa les t a x st at utes follow i ng t he U. S. Supreme Court decision in South Dakota v. Wayfair (2018). Sen. Christine Rolfes, D-Bainbridge Island, sponsored this “fix bill” which beca me a broader vehicle to address tax nexus not just for sales ta x collection obligations but also for purposes of imposing B&O tax on out-of- state businesses. The bill aligned nexus t h reshold s for B & O a nd sa les t a x at $100,000, and eliminated a transaction

Washington Business 2019 Legislative Review & Vote Record | Page 32