title: RCW 82.87.110

text:
(1)(a) Except as otherwise provided in this section or RCW 82.32.080, taxpayers owing tax under this chapter must file, on forms prescribed by the department, a return with the department on or before the date the taxpayer's federal income tax return for the taxable year is required to be filed.
(b)(i) Except as provided in (b)(ii) of this subsection (1), returns and all supporting documents must be filed electronically using the department's online tax filing service or other method of electronic reporting as the department may authorize.
(ii) The department may waive the electronic filing requirement in this subsection for good cause as provided in RCW 82.32.080.
(2)(a) Every taxpayer owing tax under this chapter must include with the Washington return described in subsection (1) of this section a copy of the taxpayer's federal income tax return filed with the internal revenue service of the United States, including:
(i) All federal income tax forms, schedules, and other attachments that directly relate to the taxpayer's net long-term capital gain; and
(ii) Any information, returns, and federal tax documents received by the taxpayer that directly relate to the taxpayer's net long-term capital gain including, but not limited to, form 1099-B, schedule K-1 (form 1065), and schedule K-1 (form 1120-S).
(b) A taxpayer must provide to the department, upon request, other federal tax return information needed to verify the tax owed under this chapter.
(c) The department may prescribe by rule additional reporting or verification requirements under this subsection (2) to substantiate an individual's federal net long-term capital gain.
(3) Each taxpayer required to file a return under this section must, without assessment, notice, or demand, pay any tax due thereon to the department on or before the date fixed for the filing of the return, regardless of any filing extension. The tax must be paid by electronic funds transfer as defined in RCW 82.32.085 or by other forms of electronic payment as may be authorized by the department. The department may waive the electronic payment requirement for good cause as provided in RCW 82.32.080. If any tax due under this chapter is not paid by the due date, interest and penalties as provided in chapter 82.32 RCW apply to the deficiency.
(4)(a) In addition to the Washington return required to be filed under subsection (1) of this section, an individual claiming an exemption under RCW 82.87.050(2) must file documentation substantiating the following:
(i) The fair market value and basis of the real estate held directly by the entity in which the interest was sold or exchanged;
(ii) The percentage of the ownership interest sold or exchanged in the entity owning real estate; and
(iii) The methodology, if any, established by the entity in which the interest was sold or exchanged, for allocating gains or losses to the owners, partners, or shareholders of the entity from the sale of real estate.
(b) The department may by rule prescribe additional filing requirements to substantiate an individual's claim for an exemption under RCW 82.87.050(2). Prior to adopting any rule under this subsection (4)(b), the department must allow for an opportunity for participation by interested parties in the rule-making process in accordance with the administrative procedure act, chapter 34.05 RCW.
(5) If a taxpayer has obtained an extension of time for filing the federal income tax return for the taxable year and the taxpayer provides the department, on or before the date fixed for the filing of the return, regardless of any filing extension, evidence satisfactory to the department confirming the federal extension, the taxpayer is entitled to the same extension of time for filing the return required under this section. An extension under this subsection for the filing of a return under this chapter is not an extension of time to pay the tax due under this chapter.
(6)(a) If any return due under subsection (1) of this section, along with a copy of the federal income tax return, is not filed with the department by the due date or any extension granted by the department, the department must assess a penalty in the amount of five percent of the tax due for the taxable year covered by the return for each month or portion of a month that the return remains unfiled. The total penalty assessed under this subsection may not exceed 25 percent of the tax due for the taxable year covered by the delinquent return. The penalty under this subsection is in addition to any penalties assessed for the late payment of any tax due on the return.
(b) The department must waive or cancel the penalty imposed under this subsection if:
(i) The department is persuaded that the taxpayer's failure to file the return by the due date was due to circumstances beyond the taxpayer's control; or
(ii) The taxpayer has not been delinquent in filing any return due under this section during the preceding five calendar years and the taxpayer has not been contacted by the department for enforcement purposes regarding the reporting period covered by the waiver request.
(7) The department must waive or cancel the penalty imposed under RCW 82.32.090(1) on a payment required under this section when the circumstances under which the delinquency occurred do not qualify for waiver or cancellation under RCW 82.32.105(1) if all [of] the following apply:
(a) A taxpayer requests a waiver of penalty for a payment required under this section;
(b) The taxpayer has not been contacted by the department for enforcement purposes regarding the reporting period covered by the waiver request; and
(c) The taxpayer has timely remitted payment on all tax returns due under this section during the preceding five calendar years.
(8)(a) In the event a taxpayer's federal income tax return is changed in a manner that is final after their return required under subsection (1) of this section is filed with the department and the taypayer's [taxpayer's] federal income tax return is changed in a manner that impacts either the calculation of their Washington capital gains or their tax liability under this chapter, or both, the taxpayer must amend the taypayer's [taxpayer's] return due under subsection (1) of this section for the same tax year in which their federal income tax return is changed. For the purposes of this subsection (8), a federal income tax return is changed in a manner that is final when such change is not subject to either administrative review by the United States internal revenue service or judicial review in a court of competent jurisdiction, or both. A change is also final in the case of an audit finding in the following circumstances:
(i) The taxpayer has received audit findings from the internal revenue service for the tax period and the taxpayer does not timely file an administrative appeal with the internal revenue service.
(ii) The taxpayer consented to any of the audit findings for the tax period through a form or other written agreement with the United States internal revenue service.
(b) If the return is not amended, as required under this subsection (8), with the department within 90 days of the federal income tax return change becoming final, the department must assess on the 91st day a penalty in the amount of five percent of any additional tax due for the taxable year covered by the return for each month or portion of a month that the return is not timely amended as required by this subsection. The total penalty assessed under this subsection may not exceed 25 percent of the additional tax due for the taxable year covered by the delinquent return amendment. The penalty under this subsection (8)(b) is in addition to any penalties assessed under this section.
(9)(a) No assessment or correction of an assessment for additional taxes, penalties, or interest due may be made by the department more than four years after the year in which a return is filed under subsection (1) of this section except:
(i) When the taxpayer's federal income tax return is changed in a manner that requires an amended return under subsection (8) of this section; or
(ii) As provided in RCW 82.32.050(4).
(b) In the event the statute of limitations is extended under (a)(i) of this subsection, no assessment or correction of an assessment for additional taxes, penalties, or interest due may be made by the department more than four years after the year in which an amended return is filed with the department as required under subsection (8) of this section. Any assessment or correction of an assessment for additional taxes, penalties, or interest due under this subsection (9)(b) but made by the department more than four years after the year in which a return is filed under subsection (1) of this section must be directly related to the federal income tax return change described in subsection (8) of this section.
[ 2025 c 409 s 9; 2021 c 196 s 12.]
Notes:
Automatic expiration date and tax preference performance statement exemption—2021 c 196: See note following RCW 82.87.010.

catchline: Filing of returns—Additional documentation—Penalties—Amendment of taxpayer's return.


doc_type: statute

jurisdiction: wa

title: RCW 82.87.115

text:
(1) A taxpayer owing tax under this chapter for a taxable year may submit payment of the tax beginning six months before the due date for filing and payment for that taxable year. Payments must still be in the manner and form prescribed by the department.
(2) Interest may not be assessed for the time period before the due date if the department determines that the taxpayer overpaid the taxes owed for that taxable year and is entitled to a remittance.
[ 2026 c 191 s 1.]

license: public-domain-government-work

rule_set: Revised Code of Washington

catchline: Payment of tax prior to due date.

code: rcw

unit: section

court: Washington State Legislature


title: RCW 82.87.120

text:
(1) If the federal income tax liabilities of both spouses are determined on a joint federal return for the taxable year, they must file a joint return under this chapter.
(2) Except as otherwise provided in this subsection, if the federal income tax liability of any individual, including either spouse of a marital community, is determined on a separate federal return for the taxable year, they must file separate returns under this chapter. State registered domestic partners may file a joint return under this chapter even if they filed separate federal returns for the taxable year.
(3) The liability for tax due under this chapter of each spouse or state registered domestic partner is joint and several, unless:
(a) The spouse is relieved of liability for federal tax purposes as provided under Title 26 U.S.C. Sec. 6015 of the internal revenue code; or
(b) The department determines that the domestic partner qualifies for relief as provided by rule of the department. Such rule, to the extent possible without being inconsistent with this chapter, must follow Title 26 U.S.C. Sec. 6015.
(4)(a) Unless the context clearly indicates otherwise, individuals who are spouses or state registered domestic partners are not considered separate taxpayers for the purposes of this chapter regardless of whether they file a joint or separate return for the tax imposed under this chapter. The activities and assets of each spouse or state registered domestic partner are combined as if they were one individual for the purposes of determining the applicability of any threshold amounts, caps, deductions, credits, or any other amounts related to the activities or assets of an individual throughout this chapter.
(b)(i) Except as provided in (b)(ii) of this subsection (4), when an individual does not file a joint return for the tax imposed under this chapter, both spouses or state registered domestic partners must allocate between themselves their respective share of the marital community's or domestic partnership's assets and activity. The allocation must be reported to the department on any returns required to be filed pursuant to this chapter in a manner prescribed by the department.
(ii) If both spouses or state registered domestic partners cannot agree on an allocation of assets and activity as authorized under (b)(i) of this subsection (4), each spouse is limited to one-half of the total assets and activities of their marital community or domestic partnership.
[ 2025 c 409 s 10; 2021 c 196 s 13.]
Notes:
Effective date—2025 c 409 ss 3, 4, 8, 10, and 15: See note following RCW 82.87.160.
Automatic expiration date and tax preference performance statement exemption—2021 c 196: See note following RCW 82.87.010.

catchline: Joint filers—Separate filers—Tax liability.


title: RCW 82.87.130

text:
Except as otherwise provided by law and to the extent not inconsistent with the provisions of this chapter, chapter 82.32 RCW applies to the administration of taxes imposed under this chapter.
[ 2021 c 196 s 14.]
Notes:
Automatic expiration date and tax preference performance statement exemption—2021 c 196: See note following RCW 82.87.010.

catchline: Administration of taxes.


title: RCW 82.87.140

text:
(1) Any taxpayer who knowingly attempts to evade payment of the tax imposed under this chapter is guilty of a class C felony as provided in chapter 9A.20 RCW.
(2) Any taxpayer who knowingly fails to pay tax, make returns, keep records, or supply information, as required under this title, is guilty of a gross misdemeanor as provided in chapter 9A.20 RCW.
[ 2021 c 196 s 15.]
Notes:
Automatic expiration date and tax preference performance statement exemption—2021 c 196: See note following RCW 82.87.010.

catchline: Tax criminal penalties.


title: RCW 82.87.150

text:
(1) Beginning October 2025 and each October thereafter, the department must adjust the applicable amounts by multiplying the current applicable amounts by one plus the percentage by which the most current consumer price index available on October 1st of the current year exceeds the consumer price index for the prior 12-month period, and rounding the result to the nearest $1,000. If an adjustment under this subsection (1) would reduce the applicable amounts, the department must not adjust the applicable amounts for use in the following year. The department must publish the adjusted applicable amounts on its public website by October 31st.
(a) Except as provided in (b) of this subsection, the adjusted applicable amounts calculated under this subsection (1) take effect for taxes due and distributions made, as the case may be, in the following calendar year.
(b) The adjusted applicable amounts calculated under this subsection (1) for the distribution amount described in subsection (2)(a)(i) of this section apply to distributions made in the following fiscal year.
(2) For purposes of this section, the following definitions apply:
(a) "Applicable amounts" means:
(i) The distribution amount to the education legacy trust account as provided in RCW 82.87.030(1)(a);
(ii) The standard deduction amount in RCW 82.87.020(16) and 82.87.060(1);
(iii) The worldwide gross revenue amount under RCW 82.87.070; and
(iv) The minimum qualifying charitable donation amount and maximum charitable donation amount under RCW 82.87.080.
(b) "Consumer price index" means the consumer price index for all urban consumers, all items, for the Seattle area as calculated by the United States bureau of labor statistics or its successor agency.
(c) "Seattle area" means the geographic area sample that includes Seattle and surrounding areas.
[ 2025 c 409 s 11; 2021 c 196 s 17.]
Notes:
Automatic expiration date and tax preference performance statement exemption—2021 c 196: See note following RCW 82.87.010.

catchline: Annual adjustments.


title: RCW 82.87.160

text:
(1) Beginning in tax year 2025 with taxes due in 2026, to avoid taxing the same sale or exchange under both the business and occupation tax and capital gains tax, a nonrefundable credit is allowed against taxes due under this chapter on a sale or exchange that is also subject to the tax imposed under chapter 82.04 RCW. The credit is equal to the amount of tax imposed under chapter 82.04 RCW on such sale or exchange.
(2) The credit under this section is earned in regards to a sale or exchange, and may be claimed against taxes due under this chapter, for the tax reporting period in which the sale or exchange occurred. The credit claimed for a tax reporting period may not exceed the tax otherwise due under this chapter for that tax reporting period. Unused credit may not be carried forward or backward to another tax reporting period. No refunds may be granted for unused credit under this section.
(3)(a) By the last working day in March, June, September, and December of each fiscal year, the state treasurer must transfer from the general fund to the education legacy trust account created in RCW 83.100.230 and the common school construction fund, as applicable, an amount equal to the reduction in capital gains taxes due to this section, as determined by the department under (b) of this subsection (3). Moneys transferred from the general fund pursuant to this subsection (3)(a) must be distributed as provided in RCW 82.87.030 as if they were taxes collected under this chapter.
(b)(i) The department must notify the state treasurer of the amounts required to be transferred as provided in (a) of this subsection (3) no later than two weeks before the deadline for such transfers or such other date as may be mutually agreed to by the department and the state treasurer.
(ii) If the department determines, at any time, that a previous transfer amount determined under this subsection (3)(b) was overstated or understated for any reason, including an error in calculation by the department or a reporting error by the taxpayer, the department must adjust its calculation of the current amount to be transferred by an amount necessary to offset the previous overstatement or understatement.
(iii) No person may contest the department's determination under this subsection (3)(b) in any court more than 15 days after the department furnishes notice of such determination to the state treasurer. Any action contesting the department's determination must be made through a petition for judicial review pursuant to the administrative procedure act, chapter 34.05 RCW, and may only be filed in Thurston county. The person seeking judicial review is not required to exhaust any available administrative remedies.
(c) For purposes of this subsection (3), "reduction in capital gains taxes due to this section" means the reduction in taxes collected under this chapter due to the nonrefundable credit in this section, where such amounts have not already been offset by the transfer required by (a) of this subsection (3).
[ 2025 c 409 s 3.]
Notes:
Reviser's note: The tax preference enacted in 2025 c 409 s 3 expires January 1, 2037, pursuant to the automatic expiration date established in RCW 82.32.805(1)(a).
Effective date—2025 c 409 ss 3, 4, 8, 10, and 15: "Sections 3, 4, 8, 10, and 15 of this act take effect January 1, 2026." [ 2025 c 409 s 16.]
Application—2025 c 409: "(1) The expiration of RCW 82.04.4497 provided in RCW 82.04.4497(5) does not affect:
(a) Any existing right acquired or liability or obligation including, but not limited to:
(i) A taxpayer's liability for tax, penalty, or interest;
(ii) A taxpayer's ability to claim a credit under RCW 82.04.4497 earned from sales or exchanges that occurred before the expiration of RCW 82.04.4497; or
(iii) A taxpayer's ability to claim relief from tax, penalty, or interest;
(b) Any rule or order adopted under RCW 82.04.4497; or
(c) Any proceeding instituted under RCW 82.04.4497.
(2) For purposes of this section, "liability for tax" means that the obligation for payment of a tax has been incurred by a taxpayer, regardless of when the tax is payable or whether the amount of tax due has been established." [ 2025 c 409 s 2.]

catchline: Credit—Sale or exchange of long-term capital assets—Transfer from general fund.


title: RCW 82.87.170

text:
(1) Except as otherwise provided in this section, brokers and barter exchanges must provide all copies of United States internal revenue service form 1099-B, or any successor form if so renamed, electronically to the department for sales or exchanges of long-term capital assets for which:
(a) The long-term capital gain from such sales or exchanges is allocated to this state under RCW 82.87.100(1); and
(b) The broker or barter exchange is the payor.
(2) Copies of the form under subsection (1) of this section must be provided to the department no later than 90 days of filing the form with the internal revenue service and in a manner prescribed by the department.
(3) Brokers and barter exchanges that fail to comply with the requirement under subsection (1) of this section, or willfully file a false or fraudulent copy of United States internal revenue service form 1099-B, are subject to a penalty of $50 for each such failure or each such filing.
(4) A rebuttable presumption exists that the long-term capital gains from a sale or exchange is allocated to this state under any one of the following circumstances:
(a) The payee's last known place of domicile to the payor is located in this state;
(b) The payee's address on file with the broker or barter exchange is located in this state;
(c) The payee's address on their United States internal revenue service form 1099-B, or any successor form if so renamed, is located in this state;
(d) The payee's account with the broker or barter exchange was opened in this state; or
(e) The payee makes use of a broker or barter exchanges' physical place of business in this state.
(5) For the purposes of this section, the following definitions apply unless the context clearly indicates otherwise.
(a) "Broker" and "barter exchange" have the same meaning as provided by Title 26 U.S.C. Sec. 6045 of the internal revenue code.
(b) "Long-term capital asset" has the same meaning as provided under RCW 82.87.020.
(c) "Payee" means the person for which a broker or barter exchange files a United States internal revenue service form 1099-B.
(d) "Payor" means a broker or barter exchange that files a United States internal revenue service form 1099-B for a payee.
(e) "Resident" has the same meaning as provided under RCW 82.87.020.
[ 2025 c 409 s 15.]
Notes:
Effective date—2025 c 409 ss 3, 4, 8, 10, and 15: See note following RCW 82.87.160.

catchline: Brokers and barter exchanges—Submission of form 1099-B—Penalty—Allocation to state of long-term capital gains.


title: RCW 82.89.010

text:
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Applicant" means a person applying for a tax deferral under this chapter.
(2) "Eligible investment project" means an investment project of at least $2,000,000 in either qualified buildings or qualified machinery and equipment, or both, for any of the following new, renovated, or expanded:
(a) Manufacturing operations;
(b) Facilities to produce clean fuels, subject to the limitations in subsection (8)(d) of this section, renewable hydrogen, green electrolytic hydrogen, or green hydrogen carriers; or
(c) Storage facilities.
(3) "Green electrolytic hydrogen" means hydrogen produced through electrolysis and does not include hydrogen manufactured using steam reforming or any other conversion technology that produces hydrogen from a fossil fuel feedstock.
(4) "Green hydrogen carrier" means a chemical compound, created using electricity or renewable resources as energy input and without use of fossil fuel as a feedstock, from renewable hydrogen or green electrolytic hydrogen for the purposes of transportation, storage, and dispensing of hydrogen.
(5)(a) "Initiation of construction" means the date that a building permit is issued under the building code adopted under RCW 19.27.031 for:
(i) Construction of the qualified building, if the underlying ownership of the building vests exclusively with the person receiving the economic benefit of the deferral;
(ii) Construction of the qualified building, if the economic benefits of the deferral are passed to a lessee as provided in RCW 82.89.020; or
(iii) Tenant improvements for a qualified building, if the economic benefits of the deferral are passed to a lessee as provided in RCW 82.89.020.
(b) "Initiation of construction" does not include soil testing, site clearing and grading, site preparation, or any other related activities that are initiated before the issuance of a building permit for the construction of the foundation of the building.
(c) If the eligible investment project is a phased project, "initiation of construction" applies separately to each phase.
(6) "Investment project" means an investment in either qualified buildings or qualified machinery and equipment, or both, including labor and services rendered in the planning, installation, and construction of the project.
(7) "Manufacturing" has the same meaning as "to manufacture" in RCW 82.04.120.
(8) "Manufacturing operation" means manufacturing tangible personal property exclusively incorporated as an ingredient or component of or used in the generation of:
(a) Passenger cars, light duty trucks, medium duty passenger vehicles, buses, commercial vehicles as defined in RCW 46.04.140, or motorcycles that emit no exhaust gas from the onboard source of power, other than water vapor;
(b) Charging and fueling infrastructure for electric, hydrogen, or other vehicle types that emits no exhaust gas from the onboard source of power, other than water vapor;
(c) Renewable and green electrolytic hydrogen, including preparing renewable and green electrolytic hydrogen for distribution or converting it to a green hydrogen carrier;
(d) Clean fuel with associated greenhouse gas emissions not exceeding 80 percent of the 2017 levels established under *RCW 70A.535.020 or its successor statute under chapter 70A.535 RCW;
(e) Electricity from renewable resources; or
(f) Storage facilities.
(9) "Meaningful construction" means an active construction site, where excavation of a building site, laying of a building foundation, or other tangible signs of construction are taking place and that clearly show a progression in the construction process at the location designated by the taxpayer in the application for deferral. Planning, permitting, or land clearing before excavation of the building site, without more, does not constitute "meaningful construction."
(10) "Operationally complete" means the eligible investment project is capable of being used for its intended purpose as described in the application.
(11) "Person" has the same meaning as in RCW 82.04.030.
(12) "Qualified buildings" means construction of new structures, and expansion or renovation of existing structures for the purpose of increasing floor space or production capacity, used for manufacturing, including plant offices and warehouses or other buildings for the storage of raw materials or finished goods if the facilities are an essential or an integral part of a factory, mill, plant, or laboratory used for manufacturing. If a qualified building is used partly for manufacturing and partly for other purposes, the applicable tax deferral must be determined by apportionment of the costs of construction under rules adopted by the department.
(13) "Qualified machinery and equipment" means all new industrial fixtures, equipment, and support facilities that are an integral and necessary part of a manufacturing operation. "Qualified machinery and equipment" includes: Computers; software; data processing equipment; laboratory equipment; manufacturing components such as belts, pulleys, shafts, and moving parts; molds, tools, and dies; operating structures; and all equipment used to control, monitor, or operate the machinery.
(14) "Recipient" means a person receiving a tax deferral under this chapter.
(15) "Renewable resource" has the same meaning as in **RCW 82.08.816.
(16) "Storage facility" means a facility that:
(a) Accepts electricity as an energy source and uses a chemical, thermal, mechanical, or other process to store energy for subsequent delivery or consumption in the form of electricity; or
(b) Stores renewable hydrogen, green electrolytic hydrogen, or green hydrogen carrier for subsequent delivery or consumption.
[ 2022 c 185 s 1.]
Notes:
Reviser's note: *(1) RCW 70A.535.020 was repealed by 2022 c 182 s 414.
**(2) RCW 82.08.816 expired July 1, 2025.
Tax preference performance automatic expiration exception—Tax preference performance statement—2022 c 185: See notes following RCW 82.89.070.

catchline: Definitions.


title: RCW 82.89.020

text:
The lessor or owner of a qualified building is not eligible for a deferral under this chapter unless:
(1) The underlying ownership of the building, machinery, and equipment vests exclusively in the same person; or
(2)(a) The lessor by written contract agrees to pass the economic benefit of the deferral to the lessee;
(b) The lessee that receives the economic benefit of the deferral agrees in writing with the department to complete the annual tax performance report required under RCW 82.32.534; and
(c) The economic benefit of the deferral passed to the lessee is no less than the amount of tax deferred by the lessor and is evidenced by written documentation of any type of payment, credit, or other financial arrangement between the lessor or owner of the qualified building and the lessee.
[ 2022 c 185 s 2.]
Notes:
Tax preference performance automatic expiration exception—Tax preference performance statement—2022 c 185: See notes following RCW 82.89.070.

catchline: Conditions for lessors.


title: RCW 82.89.030

text:
(1) Applications for deferral of taxes under this chapter must be made before initiation of the construction of the eligible investment project or acquisition of equipment or machinery. The application must be made to the department in a form and manner prescribed by the department. The application must contain information regarding the location of the eligible investment project, the applicant's average employment in the state for the prior year, estimated or actual new employment related to the eligible investment project, estimated or actual wages of employees related to the eligible investment project, estimated or actual costs, time schedules for completion and operation, and other information required by the department. The department must rule on the application within 60 days.
(2) The department may not accept applications for the deferral under this chapter after June 30, 2032.
(3) This section expires January 1, 2033.
[ 2022 c 185 s 3.]
Notes:
Tax preference performance automatic expiration exception—Tax preference performance statement—2022 c 185: See notes following RCW 82.89.070.

catchline: Applications. (Expires January 1, 2033.)


title: RCW 82.89.040

text:
(1) The department must issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, 82.14, and 81.104 RCW on each eligible investment project. The certificate may only be used to make purchases of materials and equipment, labor, or services to be incorporated in the eligible investment project at the location listed on the certificate.
(2) No certificate may be issued for an investment project that has already received a deferral under this chapter or chapter 82.60 or 82.85 RCW.
(3) No certificate may be issued for an eligible investment project that has not had an application approved by the department as provided in RCW 82.89.030.
(4) The department must keep a running total of all deferrals granted under this chapter during each fiscal biennium.
(5) This section expires January 1, 2033.
[ 2022 c 185 s 4.]
Notes:
Tax preference performance automatic expiration exception—Tax preference performance statement—2022 c 185: See notes following RCW 82.89.070.

catchline: Tax deferral certificates. (Expires January 1, 2033.)


title: RCW 82.89.050

text:
(1) The recipient of a deferral certificate under RCW 82.89.040 must begin meaningful construction on an eligible investment project within two years of receiving a deferral certificate unless construction was delayed due to circumstances beyond the recipient's control. Lack of funding is not considered a circumstance beyond the recipient's control.
(2) If the recipient does not begin meaningful construction on an eligible investment project within two years of receiving a deferral certificate, the deferral certificate issued under RCW 82.89.040 is invalid and taxes deferred under this chapter are due immediately.
[ 2022 c 185 s 5.]
Notes:
Tax preference performance automatic expiration exception—Tax preference performance statement—2022 c 185: See notes following RCW 82.89.070.

catchline: Requirements for recipients—Meaningful construction.


title: RCW 82.89.060

text:
(1) The recipient must begin paying the deferred taxes in the second year after the date certified by the department as the date on which the eligible investment project has been operationally completed. The first payment of 10 percent of the deferred taxes is due on December 31st of the second calendar year after the certified date, with subsequent annual payments of 10 percent of the deferred taxes due on December 31st for each of the following nine years.
(2) The department may authorize an accelerated repayment schedule upon request of the recipient.
(3) Interest may not be charged on any taxes deferred under this chapter for the period of deferral, although all other penalties and interest applicable to delinquent excise taxes may be assessed and imposed for delinquent payments under this chapter.
(4) The department must assess interest at the rate provided for delinquent taxes, but not penalties, retroactively to the date of deferral for a recipient who must repay deferred taxes under this chapter because the department has found that a purchase is not eligible for tax deferral.
(5) The debt for deferred taxes are not extinguished by insolvency or other failure of the recipient.
(6) Transfer of ownership does not terminate the deferral. The deferral is transferred, subject to the successor meeting the eligibility requirements of this chapter, for the remaining periods of the deferral.
[ 2022 c 185 s 6.]
Notes:
Tax preference performance automatic expiration exception—Tax preference performance statement—2022 c 185: See notes following RCW 82.89.070.

catchline: Repayment schedule—Interest, penalties, and insolvency—Transfer of ownership.


title: RCW 82.89.070

text:
(1) The recipient of the deferral under this chapter must receive a reduction of the amount of state sales and use tax to be repaid under RCW 82.89.060 only as follows:
(a) Fifty percent of the state sales and use tax deferred, if the department of labor and industries certifies that the eligible investment project includes procurement from and contracts with women, minority, or veteran-owned businesses; procurement from and contracts with entities that have a history of complying with federal and state wage and hour laws and regulations; apprenticeship utilization; and preferred entry for workers living in the area where the eligible investment project is being constructed. In the event that an eligible investment project is built without one or more of these standards, and a project developer or its designated principal contractor demonstrates that it has made all good faith efforts to meet the standards but was unable to comply due to lack of availability of qualified businesses or local hires, the department of labor and industries may certify that the developer complied with that standard;
(b) Seventy-five percent of the state sales and use tax deferred, if the department of labor and industries certifies that the eligible investment project complies with (a) of this subsection and compensates workers at prevailing wage rates determined by local collective bargaining as determined by the department of labor and industries; or
(c) One hundred percent of the state sales and use tax deferred, if the department of labor and industries certifies that the eligible investment project is developed under a community workforce agreement or project labor agreement.
(2)(a) The department of labor and industries must adopt emergency and permanent rules to:
(i) Define and set minimum requirements for all labor standards identified in subsection (1) of this section as well as documentation requirements and a certification process. The certification process and timeline must be designed to prevent undue delay to project development; and
(ii) Set requirements for all good faith efforts under subsection (1)(a) and (b) of this section. Requirements for all good faith efforts must be designed to maximize the likelihood that the project is completed with the standards, and include:
(A) Proactive outreach to women, minority, and veteran-owned businesses;
(B) Advertising in local community publications and publications appropriate to identified firms and with the office of minority and women's business enterprises;
(C) Participating in community job fairs, conferences, and trade shows; and
(D) Other measures.
(b) The standards for procurement from and contracts with women and minority-owned businesses under subsection (1)(a) of this section must include a requirement that the recipient of the deferral consult with the office of minority and women's business enterprises to develop a plan to meet the standards or good faith efforts. The requirements for good faith efforts must include the office of minority and women's business enterprises review to determine compliance with the plan.
(c) The labor standard for procurement from and contracts with veteran-owned businesses under subsection (1)(a) of this section must include a requirement that the recipient of the deferral consult with the department of veterans affairs to develop a plan to meet the standards or good faith efforts. The requirements for good faith efforts must include the department of veterans affairs review to determine compliance with the plan.
(d) The department of labor and industries must consult with the office of minority and women's business enterprises, the department of veterans affairs, and the Washington apprenticeship and training council in setting standards and good faith efforts.
(3) Nothing in this section reduces the amount of local sales and use taxes to be repaid under RCW 82.89.060. The recipient must repay all local sales and use taxes due under chapters 82.08, 82.12, 82.14, and 81.104 RCW as provided in RCW 82.89.060.
[ 2022 c 185 s 7.]
Notes:
Tax preference performance automatic expiration exception—2022 c 185: "RCW 82.32.805 does not apply to this act." [ 2022 c 185 s 10.]
Tax preference performance statement—2022 c 185: "(1) This section is the tax preference performance statement for the tax preference contained in chapter 185, Laws of 2022. This performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or to be used to determine eligibility for preferential tax treatment.
(2) The legislature categorizes this tax preference as one intended to induce certain designated behavior by taxpayers, improve industry competitiveness, and create jobs.
(3) It is the legislature's specific public policy objective to build manufacturing capacity for carbon-free electricity and to financially incentivize the use of high labor standards.
(4)(a) To measure the effectiveness of the tax preference in this act, the joint legislative audit and review committee must evaluate at least the first five years of available data, reporting its findings to the legislature by December 31, 2028. The review must include evaluation of:
(i) The average construction wages for eligible projects;
(ii) The number of jobs created in the clean technology sector;
(iii) The use of apprenticeship programs, and women, minority, or veteran-owned businesses by eligible projects;
(iv) The degree to which the preference encouraged manufacturing and component production for technologies that reduce greenhouse gas emissions;
(v) Whether facilities benefiting from the preference would have been developed without the preference; and
(vi) Any other relevant metric.
(b) The legislature does not intend to change the expiration of the preference based on the findings of the review.
(5) In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any data collected by the state." [ 2022 c 185 s 11.]

catchline: Reduction of taxes.


title: RCW 82.89.080

text:
(1) Each recipient of a deferral of taxes granted under this chapter must file a complete annual tax performance report with the department under RCW 82.32.534. Reports must be filed for the first calendar year after the eligible investment project is operationally complete and continue through the end of the calendar year in which the final repayment occurs. If the economic benefits of the deferral are passed to a lessee, as provided in RCW 82.89.020, the lessee must file a complete annual tax performance report and the applicant is not required to file a complete annual tax performance report.
(2) If the eligible investment project is not operationally complete within five calendar years from the issuance of the tax deferral certificate, or if, on the basis of the tax performance report under RCW 82.32.534 or other information, the department finds that an eligible investment project is used for purposes other than those listed in RCW 82.89.010(2) at any time during the calendar year in which the investment is certified by the department as having been operationally completed, or at any time during any of the repayment period, a portion of deferred taxes is immediately due according to the following schedule:
Year in which use occurs
Percent of
deferred taxes due
1. . . .
100
2. . . .
100
3. . . .
100
4. . . .
90
5. . . .
80
6. . . .
70
7. . . .
60
8. . . .
50
9. . . .
40
10. . . .
30
11. . . .
20
12. . . .
10
(3) If the economic benefits of a tax deferral under this chapter are passed to a lessee as provided in RCW 82.89.020, the lessee is responsible for payment to the extent the lessee has received the economic benefit.
[ 2022 c 185 s 8.]
Notes:
Tax preference performance automatic expiration exception—Tax preference performance statement—2022 c 185: See notes following RCW 82.89.070.

catchline: Conditions on recipients—Annual tax performance report—Immediate repayment.


title: RCW 82.89.900

text:
To the extent not inconsistent with the provisions of this chapter, chapter 82.32 RCW applies to the administration of this chapter.
[ 2022 c 185 s 9.]
Notes:
Tax preference performance automatic expiration exception—Tax preference performance statement—2022 c 185: See notes following RCW 82.89.070.

catchline: Applicability of general administrative provisions.


title: RCW 82.89.901

text:
This act takes effect July 1, 2022.
[ 2022 c 185 s 13.]

catchline: Effective date—2022 c 185.


title: RCW 82.90.010

text:
(1) The legislature finds that while Washington state has significant solar resources and increasing electricity generation from solar installations, these are concentrated in rooftop installations and in utility-scale solar projects on rural lands that could otherwise be devoted to crop lands, grazing lands, or other productive uses. A recent study estimates that in the United States about 51 percent of utility-scale solar facilities are in deserts, 33 percent are on croplands, 10 percent are in grasslands and forests, and only 2.5 percent of solar power comes from urban areas.
(2) The legislature further finds that in urbanized areas the land devoted to transportation, both moving and parking vehicles, is substantial and becomes unavailable for additional uses. Surface parking lots that serve large commercial, industrial, and residential institutional developments present an opportunity for solar power on parking lot canopies to gain added benefits for the use of this land. Solar canopies would significantly contribute to the state's goals of reducing greenhouse gas emissions from the electricity sector and boost overall electricity supplies as the state increases the electrification of transportation and powering and heating buildings. Additionally, solar canopies provide weather protection in summer and winter to both the vehicles under the canopies and people moving from their cars into the buildings served by the parking lot.
(3) The legislature further finds that the initial capital costs of installing solar generation on parking lot canopies will in most cases be fully amortized over time with the power generated and sold into the electricity system, but that initial capital costs may deter incorporation of installations into new projects. For these reasons, the legislature intends to provide for a deferral of state and local sales and use taxes for eligible costs of the construction of a solar canopy at qualifying commercial centers.
[ 2022 c 161 s 1.]
Notes:
Tax preference performance statement—Automatic tax preference expiration—Exception—2022 c 161: See notes following RCW 82.90.040.

catchline: Findings—Intent.


title: RCW 82.90.020

text:
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Applicant" means a person applying for a tax deferral under this chapter.
(2) "Eligible area" means a qualifying commercial center.
(3) "Eligible investment project" means an investment project that is located, as of the date the application required by RCW 82.90.030 is received by the department, in an eligible area.
(4)(a) "Initiation of construction" means the date that a building permit is issued under the building code adopted under RCW 19.27.031 for:
(i) Construction of the eligible investment project, if the underlying ownership of the building vests exclusively with the person receiving the economic benefit of the deferral;
(ii) Construction of the eligible investment project, if the economic benefits of the deferral are passed to a lessee as provided in RCW 82.90.080; or
(iii) Tenant improvements for the eligible investment project, if the economic benefits of the deferral are passed to a lessee as provided in RCW 82.90.080.
(b) "Initiation of construction" does not include soil testing, site clearing and grading, site preparation, or any other related activities that are initiated before the issuance of a building permit for the construction of the foundation of the building.
(c) If the investment project is a phased project, "initiation of construction" applies separately to each phase.
(5) "Investment project" means an investment in a qualified solar canopy including labor and services rendered in the planning, installation, and construction of the project.
(6) "Meaningful construction" means an active construction site, where excavation of a building site, laying of a structure foundation, or other tangible signs of construction are taking place and that clearly show a progression in the construction process at the location designated by the taxpayer in the application for deferral. Planning, permitting, or land clearing before excavation of the building site, without more, do not constitute "meaningful construction."
(7) "Operationally complete" means the solar canopy has received its final electrical inspection and is connected to the electrical grid.
(8) "Person" has the meaning given in RCW 82.04.030.
(9) "Qualified solar canopy" means construction of a new solar canopy that has an area of at least 50,000 square feet.
(10) "Qualifying commercial center" means a property currently used for retail, industrial, office, or other commercial purposes, containing a parking area or other area dedicated for both vehicle use and placement of a solar canopy.
(11) "Recipient" means a person receiving a tax deferral under this chapter.
(12)(a) "Solar canopy" means an elevated structure, or multiple structures, containing a solar energy system, as defined in RCW 82.16.110, with a nameplate capacity of at least one megawatt of alternating current.
(b) "Solar canopy" includes the solar energy system, power lines, and any equipment required to connect the solar canopy to the electrical grid.
[ 2022 c 161 s 2.]
Notes:
Tax preference performance statement—Automatic tax preference expiration—Exception—2022 c 161: See notes following RCW 82.90.040.


title: RCW 82.90.030

text:
(1) Application for deferral of taxes under this chapter must be made before initiation of the construction of the investment project. The application must be made to the department in a form and manner prescribed by the department. The application must contain information regarding the location of the investment project, estimated or actual costs, time schedules for completion and operation, anticipated nameplate capacity and use of the electricity produced by the solar canopy, and other information required by the department. The department must rule on the application within 60 days. The department must compile this information for use by the joint legislative audit and review committee in its evaluation of the tax preference under section 9, chapter 161, Laws of 2022.
(2) The department may not accept applications for the deferral under this chapter after June 30, 2032.
[ 2022 c 161 s 3.]
Notes:
Tax preference performance statement—Automatic tax preference expiration—Exception—2022 c 161: See notes following RCW 82.90.040.

catchline: Applications.


title: RCW 82.90.040

text:
The department must issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible investment project.
[ 2022 c 161 s 4.]
Notes:
Tax preference performance statement—2022 c 161: "This section is the tax preference performance statement for the sales and use tax deferral program created in sections 4 and 7, chapter 161, Laws of 2022. This performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or be used to determine eligibility for preferential tax treatment.
(1) The legislature categorizes the tax preference created in this act as one intended to induce certain designated behavior by taxpayers, as indicated in RCW 82.32.808(2)(a).
(2) It is the legislature's specific public policy objective to incentivize the construction of solar canopies in the state of Washington in order to reduce greenhouse gas emissions from the electricity sector and boost overall electricity supplies as the state increases the electrification of transportation and powering and heating buildings.
(3) Pursuant to chapter 43.136 RCW, the joint legislative audit and review committee must review the sales and use tax deferral created in this act by December 31, 2030. The review must specifically evaluate:
(a) The number of solar canopies constructed in the state subject to a sales and use tax deferral under this act;
(b) The average and total electric output of solar canopies subject to a sales and use tax deferral under this act;
(c) The total beneficiary savings from the tax preference created in this act;
(d) The estimated reduction in greenhouse gas emissions resulting from energy produced from solar canopies assuming an equivalent amount of energy would have otherwise been generated through the combustion of fossil fuels; and
(e) Any other metrics the committee finds relevant to the evaluation of the tax preference created in this act in meeting its public policy objective.
(4) In order to obtain the data necessary to perform the review in subsection (3) of this section, the joint legislative audit and review committee shall use information collected, compiled, and provided by the department of revenue. The committee may also contact recipients of the sales and use tax deferral under this act to confirm details of solar canopies." [ 2022 c 161 s 9.]
Automatic tax preference expiration—Exception—2022 c 161: "The automatic expiration date for tax preferences in RCW 82.32.805 does not apply to this act." [ 2022 c 161 s 11.]

catchline: Tax deferral certificates.


title: RCW 82.90.050

text:
(1) The recipient of a deferral certificate under RCW 82.90.040 must begin meaningful construction on an eligible investment project within one year of receiving a deferral certificate, unless construction was delayed due to circumstances beyond the recipient's control. Lack of funding is not considered a circumstance beyond the recipient's control.
(2) If the recipient does not begin meaningful construction on an eligible investment project within one year of receiving a deferral certificate, the deferral certificate issued under RCW 82.90.040 is invalid and taxes deferred under this chapter are due immediately.
(3) A recipient of a deferral certificate under RCW 82.90.040 must notify the department and update the information originally provided in the application if the solar canopy, at the time of completion, will produce an amount of electricity that is less than 85 percent of the nameplate capacity originally assumed.
(4) Each recipient of a deferral of taxes under this chapter must file a complete annual tax performance report with the department under RCW 82.32.534 for the year the solar canopy is certified as operationally complete and for the subsequent seven years. If the solar canopy ceases to be connected to the electrical grid, the annual tax performance report is no longer required beginning on the date the solar canopy was disconnected from the electrical grid.
[ 2022 c 161 s 5.]
Notes:
Tax preference performance statement—Automatic tax preference expiration—Exception—2022 c 161: See notes following RCW 82.90.040.


title: RCW 82.90.060

text:
(1) Except as otherwise provided in this chapter, the recipient of the deferral under this chapter must receive a reduction of the amount of state and local sales and use tax to be repaid under chapter 161, Laws of 2022 as follows:
(a) Fifty percent of the sales and use tax deferred, if the department of labor and industries certifies that the eligible investment project includes procurement from and contracts with women, minority, or veteran-owned businesses; procurement from and contracts with entities that have a history of complying with federal and state wage and hour laws and regulations; apprenticeship utilization; and preferred entry for workers living in the area where the eligible investment project is being constructed. In the event that an eligible investment project is built without one or more of these standards, and a project developer or its designated principal contractor demonstrates that it has made all good faith efforts to meet the standards but was unable to comply due to lack of availability of qualified businesses or local hires, the department of labor and industries may certify that the developer complied with one or more standards;
(b) Seventy-five percent of the sales and use tax deferred, if the department of labor and industries certifies that the eligible investment project complies with (a) of this subsection and compensates workers at prevailing wage rates as determined by the department of labor and industries; or
(c) One hundred percent of the sales and use tax deferred, if the department of labor and industries certifies that the eligible investment project is developed under a community workforce agreement or project labor agreement.
(2)(a) The department of labor and industries must adopt emergency and permanent rules to:
(i) Define and set minimum requirements for all labor standards identified in subsection (1) of this section as well as documentation requirements and a certification process. The certification process and timeline must be designed to prevent undue delay to project development; and
(ii) Set requirements for all good faith efforts under subsection (1)(a) and (b) of this section. Requirements for all good faith efforts must be designed to maximize the likelihood that the project is completed with the standards, and include: Proactive outreach to women, minority, and veteran-owned businesses; advertising in local community publications and publications appropriate to identified firms and with the office of minority and women's business enterprises; participating in community job fairs, conferences, and trade shows; and other measures.
(b) The standards for procurement from and contracts with women or minority-owned businesses under subsection (1)(a) of this section must include a requirement that the recipient of the deferral consult with the office of minority and women's business enterprises to develop a plan to meet the standards or good faith efforts. The requirements for good faith efforts must include the office of minority and women's business enterprises review to determine compliance with the plan.
(c) The labor standard for procurement from and contracts with veteran-owned businesses under subsection (1)(a) of this section must include a requirement that the recipient of the deferral consult with the department of veterans affairs to develop a plan to meet the standards or good faith efforts. The requirements for good faith efforts must include the department of veterans affairs review to determine compliance with the plan.
(d) The department of labor and industries must consult with the office of minority and women's business enterprises, the department of veterans affairs, and the Washington apprenticeship and training council in setting standards and good faith efforts.
[ 2022 c 161 s 6.]
Notes:
Tax preference performance statement—Automatic tax preference expiration—Exception—2022 c 161: See notes following RCW 82.90.040.

catchline: Tax reduction—Rules.


title: RCW 82.90.070

text:
(1) Except as otherwise provided in this chapter, the recipient must begin paying the deferred taxes in the second year after the date certified by the department as the date on which the eligible investment project has been operationally completed. The first payment of 12.5 percent of the deferred taxes is due on December 31st of the second calendar year after the certified date, with subsequent annual payments of 12.5 percent of the deferred taxes due on December 31st for each of the following seven years.
(2) The department may authorize an accelerated repayment schedule upon request of the recipient.
(3) If the investment project is not operationally complete within two calendar years from the issuance of the tax deferral certificate, or if, on the basis of the tax performance report under RCW 82.32.534 or other information, the department finds that an investment project is not connected to the electrical grid and producing solar energy at any time during the calendar year in which the investment project is certified by the department as having been operationally completed, or at any time during any of the seven succeeding calendar years, a portion of deferred taxes is immediately due according to the following schedule:
Year in which
use occurs
Percent of deferred taxes due
1
100
2
100
3
87.5
4
75
5
62.5
6
50
7
37.5
8
25
9
12.5
(4) The department must assess interest at the rate provided for delinquent taxes, but not penalties, retroactively to the date of deferral for a recipient who must repay deferred taxes under this chapter because the department has found that an investment project is not eligible for tax deferral. The debt for deferred taxes is not extinguished by insolvency or other failure of the recipient.
(5) Transfer of ownership does not terminate the deferral. The deferral is transferred, subject to the successor meeting the eligibility requirements of this chapter, for the remaining periods of the deferral.
[ 2022 c 161 s 7.]
Notes:
Tax preference performance statement—Automatic tax preference expiration—Exception—2022 c 161: See notes following RCW 82.90.040.


title: RCW 82.90.080

text:
A lessor or owner of an eligible investment project is not eligible for a deferral under this chapter unless:
(1) The underlying ownership of the qualified solar canopy vests exclusively in the same person; or
(2)(a) The lessor by written contract agrees to pass the economic benefit of the deferral to the lessee;
(b) The lessee that receives the economic benefit of the deferral agrees in writing with the department to complete the annual tax performance report required under RCW 82.32.534; and
(c) The economic benefit of the deferral passed to the lessee is no less than the amount of tax deferred by the lessor and is evidenced by written documentation of any type of payment, credit, or other financial arrangement between the lessor or owner of the eligible investment project and the lessee.
[ 2023 c 374 s 20; 2022 c 161 s 8.]
Notes:
Tax preference performance statement—Automatic tax preference expiration—Exception—2022 c 161: See notes following RCW 82.90.040.


title: RCW 82.90.900

text:
This act takes effect July 1, 2022.
[ 2022 c 161 s 12.]

catchline: Effective date—2022 c 161.


title: RCW 82.92.005

text:
The legislature finds that:
(1) Many cities in Washington are actively planning for growth under the growth management act, chapter 36.70A RCW;
(2) The construction industry provides living wage jobs for families across Washington;
(3) In the current economic climate, the creation of additional affordable housing units is essential to the economic health of our cities and our state;
(4) It is critical that Washington state promote its cities and its property owners that will provide affordable housing;
(5) A meaningful, fair, and predictable economic incentive should be created to stimulate the redevelopment of underdeveloped property in targeted urban areas through a limited sales and use tax deferral program as provided by this chapter;
(6) This limited tax deferral will help the owners of underdeveloped property achieve the highest and best use of land and enable cities to more fully realize their planning goals; and
(7) Data regarding the number of additional affordable units created due to the limited tax deferral will be evaluated to determine if this tool could be used to increase affordable housing in other areas of the state.
[ 2022 c 241 s 1.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Findings.


title: RCW 82.92.007

text:
It is the purpose of this chapter to encourage the redevelopment of underdeveloped land in targeted urban areas, thereby increasing affordable housing, employment opportunities, and helping accomplish the other planning goals of Washington cities. The legislative authorities of cities to which this chapter applies may authorize a sales and use tax deferral for an investment project within the city if the legislative authority of the city finds that there are significant areas of underdeveloped land and a lack of affordable housing in areas proximate to the land. If a conditional recipient maintains the property for qualifying purposes for at least 10 years, deferred sales and use taxes need not be repaid.
[ 2022 c 241 s 2.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Purpose.


title: RCW 82.92.010

text:
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Affordable homeownership housing" means housing intended for owner occupancy to low or moderate-income households whose monthly housing costs, including utilities other than telephone, do not exceed 30 percent of the household's monthly income.
(2) "Affordable rental housing" means housing for very low or low-income households whose monthly housing costs, including utilities other than telephone, do not exceed 30 percent of the household's monthly income.
(3) "Applicant" means an owner of underdeveloped property.
(4) "City" means a city with a population of at least 135,000 and not more than 250,000 at the time the city initially establishes the program under this section.
(5) "Conditional recipient" means an owner of underdeveloped land granted a conditional certificate of program approval under this chapter, which includes any successor owner of the property.
(6) "County median price" means the most recently published quarterly data of median home prices by the Washington center for real estate research.
(7) "Eligible investment project" means an investment project that is located in a city and receiving a conditional certificate of program approval.
(8) "Fair market rent" means the estimates of 40th percentile gross rents for standard quality units within counties as published by the federal department of housing and urban development.
(9) "Governing authority" means the local legislative authority of a city having jurisdiction over the property for which a deferral may be granted under this chapter.
(10) "Household" means a single person, family, or unrelated persons living together.
(11)(a) "Initiation of construction" means the date that a building permit is issued under the building code adopted under RCW 19.27.031 for construction of the qualified building, if the underlying ownership of the building vests exclusively with the person receiving the economic benefit of the deferral.
(b) "Initiation of construction" does not include soil testing, site clearing and grading, site preparation, or any other related activities that are initiated before the issuance of a building permit for the construction of the foundation of the building.
(c) If the investment project is a phased project, "initiation of construction" applies separately to each phase.
(12) "Investment project" means an investment in multifamily housing, including labor, services, and materials incorporated in the planning, installation, and construction of the project. "Investment project" includes investment in related facilities such as playgrounds and sidewalks as well as facilities used for business use for mixed-use development.
(13) "Low-income household" means a single person, family, or unrelated persons living together whose adjusted income is more than 50 percent but is at or below 80 percent of the median family income adjusted for family size, for the county, city, or metropolitan statistical area, where the project is located, as reported by the United States department of housing and urban development.
(14) "Moderate-income household" means a single person, family, or unrelated persons living together whose adjusted income is more than 80 percent but is at or below 115 percent of the median family income adjusted for family size, for the county, city, or metropolitan statistical area, where the project is located, as reported by the United States department of housing and urban development.
(15) "Multifamily housing" means a building or a group of buildings having two or more dwelling units not designed or used as transient accommodations and not including hotels and motels. Multifamily units may result from new construction or rehabilitation or conversion of vacant, underutilized, or substandard buildings to multifamily housing.
(16) "Owner" means the property owner of record.
(17) "Underdeveloped property" means land used as a surface parking lot for parking of motor vehicles off the street or highway, that is open to public use with or without charge, as of June 9, 2022.
(18) "Very low-income household" means a single person, family, or unrelated persons living together whose adjusted income is at or below 50 percent of the median family income adjusted for family size, for the county, city, or metropolitan statistical area, where the project is located, as reported by the United States department of housing and urban development.
[ 2022 c 241 s 3.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Definitions.


title: RCW 82.92.020

text:
(1) For the purpose of creating a sales and use tax deferral program under this chapter, the governing authority must adopt a resolution of intention to create a sales and use tax deferral program as generally described in the resolution. The resolution must state the time and place of a hearing to be held by the governing authority to consider the creation of the tax deferral program and may include such other information pertaining to the creation of the deferral program as the governing authority determines to be appropriate to apprise the public of the action intended. However, the resolution must provide information pertaining to:
(a) The application process;
(b) The approval process;
(c) The appeals process for applications denied approval; and
(d) Additional requirements, conditions, and obligations that must be followed postapproval of an application.
(2) The governing authority must give notice of a hearing held under this chapter by publication of the notice once each week for two consecutive weeks, not less than seven days, nor more than 30 days before the date of the hearing in a paper having a general circulation in the city. The notice must state the time, date, place, and purpose of the hearing.
(3) Following the hearing or a continuance of the hearing, the governing authority may authorize the creation of the program.
[ 2022 c 241 s 4.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Requirements for governing authorities.


title: RCW 82.92.030

text:
An owner of underdeveloped property seeking a sales and use tax deferral under this chapter on an investment project must complete the following procedures:
(1) The owner must apply to the city on forms adopted by the governing authority. The application must contain the following:
(a) Information setting forth the grounds supporting the requested deferral including information indicated on the application form or in the guidelines;
(b) A description of the investment project and site plan, and other information requested;
(c) A statement of the expected number of affordable housing units to be created;
(d) A statement that the applicant is aware of the potential tax liability involved if the investment project ceases to be used for eligible uses under this chapter;
(e) A statement that the applicant is aware that the investment project must be completed within three years from the date of approval of the application;
(f) A statement that the applicant is aware that the governing authority or the city official authorized by the governing authority may extend the deadline for completion of construction or rehabilitation for a period not to exceed 24 consecutive months; and
(g) A statement that the applicant would not have built in this location but for the availability of the tax deferral under this chapter;
(2) The applicant must verify the application by oath or affirmation; and
(3) The application must be accompanied by the application fee, if any, required under this chapter. The duly authorized administrative official or committee of the city may permit the applicant to revise an application before final action by the duly authorized administrative official or committee of the city.
[ 2022 c 241 s 5.]
Notes:
Tax preference performance statement—2022 c 241: "(1) This section is the tax preference performance statement for the tax preference contained in chapter 241, Laws of 2022. This performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or to be used to determine eligibility for preferential tax treatment.
(2) The legislature categorizes this tax preference as one intended to induce certain designated behavior by taxpayers, as indicated in RCW 82.32.808(2)(a).
(3) It is the legislature's specific public policy objective to expand affordable housing options for very low to moderate-income households, specifically in underdeveloped urban areas.
(4)(a) To measure the effectiveness of the tax preference in this act, the joint legislative audit and review committee must evaluate the number of increased housing units on underdeveloped property. If a review finds that the number of affordable housing units has not increased, then the legislature intends to repeal this tax preference.
(b) The review must be provided to the fiscal committees of the legislature by December 31, 2030.
(5) In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any available data source, including data collected by the department under section 10 of this act." [ 2022 c 241 s 15.]

catchline: Requirements for applicants.


title: RCW 82.92.040

text:
The duly authorized administrative official or committee of the city may approve the application and grant a conditional certificate of program approval if it finds that:
(1)(a) The investment project is set aside primarily for multifamily housing units and the applicant commits to renting or selling at least 50 percent of the units as affordable rental housing or affordable homeownership housing to very low, low, and moderate-income households. In a mixed-use project, only the ground floor of a building may be used for commercial purposes with the remainder dedicated to multifamily housing units;
(b) At least 50 percent of the investment project set aside for multifamily housing units will be rented at a price at or below fair market rent for the county or sold at a price at or below county median price; and
(c) The applicant commits to any additional affordability and income eligibility conditions adopted by the local government under this chapter not otherwise inconsistent with this chapter;
(2) The investment project is, or will be, at the time of completion, in conformance with all local plans and regulations that apply at the time the application is approved;
(3) The investment project will occur on land that constitutes underdeveloped property;
(4) The area where the investment project will occur is located within an area zoned for residential or mixed uses;
(5) The terms and conditions of the implementation of the development meets the requirements of this chapter and any requirements of the city that are not otherwise inconsistent with this chapter;
(6) The land where the investment project will occur was not acquired through a condemnation proceeding under Title 8 RCW; and
(7) All other requirements of this chapter have been satisfied as well as any other requirements of the city that are not otherwise inconsistent with this chapter.
[ 2022 c 241 s 6.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Conditional certification.


title: RCW 82.92.050

text:
(1) The duly authorized administrative official or committee of the city must approve or deny an application filed under this chapter within 90 days after receipt of the application.
(2) If the application is approved, the city must issue the applicant a conditional certificate of program approval. The certificate must contain a statement by a duly authorized administrative official of the governing authority that the investment project as described in the application will comply with the required criteria of this chapter.
(3) If the application is denied by the city, the city must state in writing the reasons for denial and send the notice to the applicant at the applicant's last known address within 10 days of the denial.
(4) Upon denial by the city, an applicant may appeal the denial to the city's governing authority or a city official designated by the city to hear such appeals within 30 days after receipt of the denial. The appeal before the city's governing authority or designated city official must be based upon the record made before the city with the burden of proof on the applicant to show that there was no substantial evidence to support the city's decision. The decision of the city on the appeal is final.
[ 2022 c 241 s 7.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Approval of applications—Appeals.


title: RCW 82.92.060

text:
The governing authority may establish an application fee. This fee may not exceed an amount determined to be required to cover the cost to be incurred by the governing authority in administering the program under this chapter. The application fee must be paid at the time the application for program approval is filed.
[ 2022 c 241 s 8.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Application fee.


title: RCW 82.92.070

text:
(1) Within 30 days of the issuance of a certificate of occupancy for an eligible investment project, the conditional recipient must file with the city the following:
(a) A description of the work that has been completed and a statement that the eligible investment project qualifies the property for a sales and use tax deferral under this chapter;
(b) A statement of the new affordable housing to be offered as a result of the new construction; and
(c) A statement that the work has been completed within three years of the issuance of the conditional certificate of program approval.
(2) Within 30 days after receipt of the statements required under subsection (1) of this section, the city must determine and notify the conditional recipient as to whether the work completed and the affordable housing to be offered are consistent with the application and the contract approved by the city, and the investment project continues to qualify for a tax deferral under this chapter. The conditional recipient must notify the department within 30 days from receiving the city's determination to schedule an audit of the deferred taxes. The department must determine the amount of sales and use taxes qualifying for the deferral. If the department determines that purchases were not eligible for deferral it must assess interest, but not penalties, on the nonqualifying amounts.
(3) The city must notify the conditional recipient within 30 days that a tax deferral under this chapter is denied if the city determines that:
(a) The work was not completed within three years of the application date;
(b) The work was not constructed consistent with the application or other applicable requirements;
(c) The affordable housing units to be offered are not consistent with the application and criteria of this chapter; or
(d) The owner's property is otherwise not qualified for a sales and use tax deferral under this chapter.
(4) If the city finds that the work was not completed within the required time period due to circumstances beyond the control of the conditional recipient and that the conditional recipient has been acting and could reasonably be expected to act in good faith and with due diligence, the governing authority may extend the deadline for completion of the work for a period not to exceed 24 consecutive months.
(5) The city's governing authority may enact an ordinance to provide a process for a conditional recipient to appeal a decision by the city that the conditional recipient is not entitled to a deferral of sales and use taxes. The conditional recipient may appeal a decision by the city to deny a deferral of sales and use taxes in superior court under RCW 34.05.510 through 34.05.598, if the appeal is filed within 30 days of notification by the city to the conditional recipient.
(6) A city denying a conditional recipient of a sales and use tax deferral under subsection (3) of this section must notify the department and taxes deferred under this chapter are immediately due and payable, subject to any appeal by the conditional recipient. The department must assess interest at the rate provided for delinquent taxes and penalties retroactively to the date of deferral. A debt for deferred taxes will not be extinguished by insolvency or other failure of the recipient.
[ 2022 c 241 s 9.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Certificate of occupancy—Process after issuance.


title: RCW 82.92.080

text:
(1) Thirty days after the anniversary of the date of issuance of the certificate of occupancy and each year thereafter for 10 years, the conditional recipient must file with a designated authorized representative of the city an annual report indicating the following:
(a) A statement of the affordable housing units constructed on the property as of the anniversary date;
(b) A certification by the conditional recipient that the property has not changed use;
(c) A description of changes or improvements constructed after issuance of the certificate of occupancy; and
(d) Any additional information requested by the city.
(2) The conditional recipient of a deferral of taxes under this chapter must file a complete annual tax performance report with the department pursuant to RCW 82.32.534 beginning the year the certificate of occupancy is issued and each year thereafter for 10 years.
(3) A city that issues a certificate of program approval under this chapter must report annually by December 31st of each year, beginning in 2022, to the department of commerce. The report must include the following information:
(a) The number of program approval certificates granted;
(b) The total number and type of new buildings constructed;
(c) The number of affordable housing units resulting from the new construction; and
(d) The estimated value of the sales and use tax deferral for each investment project receiving a program approval and the total estimated value of sales and use tax deferrals granted.
[ 2022 c 241 s 10.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Annual report by conditional recipient—Annual tax performance report—Report by city.


title: RCW 82.92.090

text:
(1) A conditional recipient must submit an application to the department before initiation of the construction of the investment project. In the case of an investment project involving multiple qualified buildings, applications must be made for, and before the initiation of construction of, each qualified building. The application must be made to the department in a form and manner prescribed by the department. The application must include a copy of the conditional certificate of program approval issued by the city, estimated construction costs, time schedules for completion and operation, and any other information required by the department. The department must rule on the application within 60 days.
(2) The department must provide information to the conditional recipient regarding documentation that must be retained by the conditional recipient in order to substantiate the amount of sales and use tax actually deferred under this chapter.
(3) The department may not accept applications for the deferral under this chapter after June 30, 2032.
(4) The application must include a waiver by the conditional recipient of the four-year limitation under RCW 82.32.100.
(5) This section expires July 1, 2032.
[ 2022 c 241 s 11.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Application to department. (Expires July 1, 2032.)


title: RCW 82.92.100

text:
(1) After receiving the conditional certificate of program approval issued by the city and provided to the department by the applicant, the department must issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible investment project.
(2) The department must keep a running total of all estimated sales and use tax deferrals provided under this chapter during each fiscal biennium.
(3) The deferral certificate is valid during active construction of a qualified investment project and expires on the day the city issues a certificate of occupancy for the investment project for which a deferral certificate was issued.
(4) This section expires July 1, 2032.
[ 2022 c 241 s 12.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Tax deferral certificates. (Expires July 1, 2032.)


title: RCW 82.92.110

text:
(1) If a conditional recipient voluntarily opts to discontinue compliance with the requirements of this chapter, the recipient must notify the city and department within 60 days of the change in use or intended discontinuance.
(2) If, after the department has issued a sales and use tax deferral certificate and the conditional recipient has received a certificate of occupancy, the city finds that a portion of an investment project is changed or will be changed to disqualify the recipient for sales and use tax deferral eligibility under this chapter, the city must notify the department and all deferred sales and use taxes are immediately due and payable. The department must assess interest at the rate provided for delinquent taxes and penalties retroactively to the date of deferral. A debt for deferred taxes will not be extinguished by insolvency or other failure of the recipient.
(3) This section does not apply after 10 years from the date of the certificate of occupancy.
[ 2022 c 241 s 13.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Discontinued compliance with program requirements—Payment of taxes, interest, and penalties.


title: RCW 82.92.120

text:
(1) Transfer of investment project ownership does not terminate the deferral. The deferral is transferred subject to the successor meeting the eligibility requirements of this chapter.
(2) The transferor of an eligible project must notify the city and the department of such transfer. The city must certify to the department that the successor meets the requirements of the deferral. The transferor must provide the information necessary for the department to transfer the deferral. If the transferor fails to notify the city and the department, all deferred sales and use taxes are immediately due and payable. The department must assess interest at the rate provided for delinquent taxes and penalties retroactively to the date of deferral.
[ 2022 c 241 s 14.]
Notes:
Tax preference performance statement—2022 c 241: See note following RCW 82.92.030.

catchline: Transfer of project ownership.


title: RCW 82.94.005

text:
(1) The legislature finds that there are counties in the state that face additional economic development challenges beyond the challenges faced by counties located in the central Puget Sound region. The legislature further finds that these regions do not experience the same degree of job growth and investment. The legislature further finds that, in some areas, increased economic development incentives are needed to help support economic growth and that a one-size-fits-all approach to economic development does not work for the diversity of the statewide economy. For these reasons, the legislature intends to establish a tax deferral program to be effective solely in certain targeted counties. The legislature declares that this limited program serves the vital public purpose of creating employment opportunities and generally spurring economic development in these counties of the state.
(2) The legislature also finds that chapter 257, Laws of 2022 is consistent with the Substitute House Bill No. 1170, the Washington BEST manufacturing act, enacted in 2021. The 2021 Washington BEST manufacturing act recognized that the state must retain and build on its leadership in the manufacturing and research and development sectors and also recognized that a thriving manufacturing and research sector are complimentary and should be promoted in every region of the state. Therefore, the legislature further finds the sales and use tax deferral program for manufacturing and research and development in chapter 257, Laws of 2022 is a critical tool and strategy to help achieve the goals expressed in the Washington BEST manufacturing act of doubling the state's manufacturing employment base, the number of small businesses, and the number of women and minority-owned manufacturing businesses in the next 10 years.
[ 2022 c 257 s 101.]

catchline: Findings—Intent.


title: RCW 82.94.010

text:
Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Applicant" means a person applying for a tax deferral under this chapter.
(2) "Department" means the department of revenue.
(3) "Eligible area" means a qualifying county.
(4)(a) "Eligible investment project" means an investment project that is located, as of the date the application required by RCW 82.94.020 is received by the department, in an eligible area as defined in subsection (3) of this section.
(b) "Eligible investment project" does not include any portion of an investment project undertaken by a light and power business as defined in RCW 82.16.010(4), other than that portion of a cogeneration project that is used to generate power for consumption within the manufacturing site of which the cogeneration project is an integral part, or investment projects that have already received deferrals under this chapter.
(5)(a) "Initiation of construction" means the date that a building permit is issued under the building code adopted under RCW 19.27.031 for:
(i) Construction of the qualified building, if the underlying ownership of the building vests exclusively with the person receiving the economic benefit of the deferral;
(ii) Construction of the qualified building, if the economic benefits of the deferral are passed to a lessee as provided in RCW 82.60.025; or
(iii) Tenant improvements for a qualified building, if the economic benefits of the deferral are passed to a lessee as provided in RCW 82.60.025.
(b) "Initiation of construction" does not include soil testing, site clearing and grading, site preparation, or any other related activities that are initiated before the issuance of a building permit for the construction of the foundation of the building.
(c) If the eligible investment project is a phased project, "initiation of construction" applies separately to each phase.
(6) "Investment project" means an investment in qualified buildings or qualified machinery and equipment, including labor and services rendered in the planning, installation, and construction of the project.
(7) "Manufacturing" means the same as defined in RCW 82.04.120. "Manufacturing" also includes:
(a) The activities performed by research and development laboratories and commercial testing laboratories; and
(b) The conditioning of vegetable seeds.
(8) "Meaningful construction" means an active construction site, where excavation of a building site, laying of a building foundation, or other tangible signs of construction are taking place and that clearly show a progression in the construction process at the location designated by the taxpayer in the application for deferral. Planning, permitting, or land clearing before excavation of the building site, without more, does not constitute "meaningful construction."
(9) "Person" has the meaning given in RCW 82.04.030.
(10) "Qualified buildings" means construction of new structures, and expansion or renovation of existing structures for the purpose of increasing floor space or production capacity used for manufacturing or research and development activities, including plant offices and warehouses or other facilities for the storage of raw material or finished goods if such facilities are an essential or an integral part of a factory, mill, plant, or laboratory used for manufacturing or research and development. If a building is used partly for manufacturing or research and development and partly for other purposes, the applicable tax deferral must be determined by apportionment of the costs of construction under rules adopted by the department.
(11) "Qualified machinery and equipment" means all new industrial and research fixtures, equipment, and support facilities that are an integral and necessary part of a manufacturing or research and development operation. "Qualified machinery and equipment" includes: Computers; software; data processing equipment; laboratory equipment; manufacturing components such as belts, pulleys, shafts, and moving parts; molds, tools, and dies; operating structures; and all equipment used to control or operate the machinery.
(12) "Qualifying county" means a county that has a population less than 650,000 at the time an application is submitted under RCW 82.94.020.
(13) "Recipient" means a person receiving a tax deferral under this chapter.
(14) "Research and development" means the development, refinement, testing, marketing, and commercialization of a product, service, or process before commercial sales have begun, but only when such activities are intended to ultimately result in the production of a new, different, or useful substance or article of tangible personal property for sale. As used in this subsection, "commercial sales" excludes sales of prototypes or sales for market testing if the total gross receipts from such sales of the product, service, or process do not exceed $1,000,000.
[ 2022 c 257 s 102.]


title: RCW 82.94.020

text:
(1) Application for deferral of taxes under this chapter must be made before initiation of the construction of the investment project or acquisition of equipment or machinery. The application must be made to the department in a form and manner prescribed by the department. The application must contain information regarding the location of the investment project, the applicant's average employment in the state for the prior year, estimated or actual new employment related to the project, estimated or actual wages of employees related to the project, estimated or actual costs, time schedules for completion and operation, and other information required by the department. The department must rule on the application within 60 days.
(2) The department may not accept applications for the deferral under this chapter after June 30, 2032.
(3) This section expires July 1, 2032.
[ 2022 c 257 s 103.]

catchline: Applications. (Expires July 1, 2032.)


title: RCW 82.94.030

text:
(1) The department must issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible investment project.
(2) The department must keep a running total of all deferrals granted under this chapter during each fiscal biennium. The amount of state and local sales and use taxes eligible for deferral under this chapter is limited to $400,000 per person.
(3) This section expires July 1, 2032.
[ 2022 c 257 s 104.]


title: RCW 82.94.040

text:
(1) The recipient of a deferral certificate under RCW 82.94.030 must begin meaningful construction on an eligible investment project within two years of receiving a deferral certificate, unless construction was delayed due to circumstances beyond the recipient's control. Lack of funding is not considered a circumstance beyond the recipient's control.
(2) If the recipient does not begin meaningful construction on an eligible investment project within two years of receiving a deferral certificate, the deferral certificate issued under RCW 82.94.030 is invalid and taxes deferred under this chapter are due immediately.
[ 2022 c 257 s 105.]

catchline: Requirements for recipients—Meaningful construction.


title: RCW 82.94.050

text:
(1)(a) Each recipient of a deferral of taxes granted under this chapter must file a complete annual tax performance report with the department under RCW 82.32.534 during the period covered by the schedule under subsection (2) of this section. If the economic benefits of the deferral are passed to a lessee as provided in RCW 82.94.070, the lessee must file a complete annual tax performance report, and the applicant is not required to file a complete annual tax performance report.
(b) The joint legislative audit and review committee, as part of its tax preference review process under chapter 43.136 RCW, must use the information reported on the annual tax performance report required by this section to study the tax deferral program authorized under this chapter. The committee must report to the legislature by December 1, 2030. The report must measure the effect of the program on job creation, the number of jobs created for residents of eligible areas, company growth, and such other factors as the committee selects.
(2)(a) Except as otherwise provided in this chapter, taxes deferred under this chapter need not be repaid.
(b) If the investment project is not operationally complete within five calendar years from the issuance of the tax deferral certificate, or if, on the basis of the tax performance report under RCW 82.32.534 or other information, the department finds that an investment project is used for purposes other than a qualified manufacturing or research and development operation at any time during the calendar year in which the investment project is certified by the department as having been operationally completed, or at any time during any of the seven succeeding calendar years, a portion of deferred taxes is immediately due according to the following schedule:
Year in which
use occurs
% of deferred taxes due
1
100%
2
87.5%
3
75%
4
62.5%
5
50%
6
37.5%
7
25%
8
12.5%
(c) If the economic benefits of the deferral are passed to a lessee as provided in RCW 82.94.070, the lessee is responsible for payment to the extent the lessee has received the economic benefit.
(3) A recipient who must repay deferred taxes under this section because the department has found that an investment project is not eligible for tax deferral under this chapter is no longer required to file annual tax performance reports under RCW 82.32.534 beginning on the date an investment project is used for nonqualifying purposes.
(4) The department must assess interest at the rate provided for delinquent taxes, but not penalties, retroactively to the date of deferral for a recipient who must repay deferred taxes under this section because the department has found that an investment project is not eligible for tax deferral. The debt for deferred taxes will not be extinguished by insolvency or other failure of the recipient. Transfer of ownership does not terminate the deferral. The deferral is transferred, subject to the successor meeting the eligibility requirements of this chapter, for the remaining periods of the deferral.
(5) Notwithstanding any other provision of this section or RCW 82.32.534, deferred taxes on the following need not be repaid:
(a) Machinery and equipment, and sales of or charges made for labor and services, which at the time of purchase would have qualified for exemption under RCW 82.08.02565; and
(b) Machinery and equipment which at the time of first use would have qualified for exemption under RCW 82.12.02565.
[ 2022 c 257 s 106.]

catchline: Annual tax preference performance report—Repayment of deferred taxes.