HB 2482 — Reinstating semiconductor tax incentives.

ENGROSSEDH-2851.1 SUBSTITUTE HOUSE BILL 2482 State of Washington 68th Legislature 2024 Regular Session By House Finance (originally sponsored by Representatives Harris, Santos, and Stonier)Stonier READRead FIRSTfirst TIMEtime 02/05/24.01/26/24.

Referred to Committee on Finance.

1 ESHBHB 2482 (i) "Commercial operation" means the same as "commencement of commercial production" as used in RCW 82.08.965.

(iii) "Significant" means the combined investment of new buildings and new machinery and equipment in the buildings, at the commencement of commercial production, will be at least ((one billion dollars)) $500,000,000.$1,000,000,000.

2 ESHBHB 2482 NEW SECTION.

(4) AnyThis person who has claimed the preferential rate under this section mustexpires reimburseJanuary the1, department2034, forunless 50 percent of the amountcontingency of the tax preference under this section if the number of persons employed by the person claiming the tax preference is less than 90 percent of the person's three-year employment average for the three years immediately preceding the year in whichRCW the82.32.790(2) preferentialoccurs. rate is claimed.

(5) This section expires January 1, 2034, unless the contingency in RCW 82.32.790(2) occurs.

p.(3) A person reporting under the tax rate provided in this section must file a complete annual tax performance report with the department under RCW 82.32.534.

3 ESHB 2482 (3) A person reporting under the tax rate provided in this section must file a complete annual tax performance report with the department under RCW 82.32.534.

(5) AnyThis person who has claimed the exemption under this section mustexpires reimburseJanuary the1, department((2024)) for2034, 50unless percent of the amountcontingency of the tax preference under this section if the number of persons employed by the person claiming the tax preference is less than 90 percent of the person's three-year employment average for the three years immediately preceding the year in whichRCW the82.32.790(2) exemptionoccurs. is claimed.

(6)p. This section expires January 1, ((2024)) 2034, unless the contingency in RCW 82.32.790(2) occurs.

3 HB 2482 Sec.

(c) In those situations where a production building in existence on the effective date of this section will be phased out of operation, during which time employment at the new building at the same site is increased, the person is eligible for credit for p.employment at the existing building and new building, with the limitation that the combined eligible employment not exceed full employment at the new building.

4 ESHB 2482 employment at the existing building and new building, with the limitation that the combined eligible employment not exceed full employment at the new building.

The department must assess interest, but not penalties, on the taxes for which the personp. is not eligible.

4 HB 2482 person is not eligible.

(7) AnyPursuant personto whoRCW has82.32.790, claimed the credit under this section mustis reimbursecontingent theon department for 50 percent of the amountsiting ofand thecommercial taxoperation preference under this section if the number of personsa employedsignificant bysemiconductor themicrochip personfabrication claimingfacility the tax preference is less than 90 percent of the person's three-year employment average for the three years immediately preceding the year in which the creditstate isof claimed.Washington.

(8) PursuantThis tosection RCWexpires 82.32.790,January this1, section((2024)) is2034, contingentunless on the sitingcontingency and commercial operation of a significant semiconductor microchip fabrication facility in theRCW state82.32.790(2) ofoccurs. Washington.

(9) This section expires January 1, ((2024)) 2034, unless the contingency in RCW 82.32.790(2) occurs.

p.(1) The tax levied by RCW 82.08.020 does not apply to charges made for labor and services rendered in respect to the constructing of new buildings used for the manufacturing of semiconductor materials, to sales of tangible personal property that will be incorporated as an ingredient or component of such buildings during the course of the constructing, or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b).

5 ESHB 2482 (1) The tax levied by RCW 82.08.020 does not apply to charges made for labor and services rendered in respect to the constructing of new buildings used for the manufacturing of semiconductor materials, to sales of tangible personal property that will be incorporated as an ingredient or component of such buildings during the course of the constructing, or to labor and services rendered in respect to installing, during the course of constructing, building fixtures not otherwise eligible for the exemption under RCW 82.08.02565(2)(b).

(b)p. Before commencing commercial production at a new facility the manufacturer or processor for hire must meet with the department to review projected employment levels in the new buildings.

5 HB 2482 (b) Before commencing commercial production at a new facility the manufacturer or processor for hire must meet with the department to review projected employment levels in the new buildings.

p.(3) If the employment requirement is not met for any one calendar year, one-eighth of the exempt sales and use taxes will be due and payable by April 1st of the following year.

6 ESHB 2482 (3) If the employment requirement is not met for any one calendar year, one-eighth of the exempt sales and use taxes will be due and payable by April 1st of the following year.

(7)p. Pursuant to RCW 82.32.790, this section is contingent on the siting and commercial operation of a significant semiconductor microchip fabrication facility in the state of Washington.

6 HB 2482 (7) Pursuant to RCW 82.32.790, this section is contingent on the siting and commercial operation of a significant semiconductor microchip fabrication facility in the state of Washington.

For the purposes of this section, p."semiconductor materials" has the same meaning as provided in ((RCW 82.04.240(2))) section 2 of this act.

7 ESHB 2482 "semiconductor materials" has the same meaning as provided in ((RCW 82.04.240(2))) section 2 of this act.

(3) AnyPursuant personto whoRCW has82.32.790, claimed the exemption under this section mustis reimbursecontingent theon department for 50 percent of the amountsiting ofand thecommercial taxoperation preference under this section if the number of personsa employedsignificant bysemiconductor themicrochip personfabrication claimingfacility the tax preference is less than 90 percent of the person's three-year employment average for the three years immediately preceding the year in which the exemptionstate isof claimed.Washington.

(4) PursuantThis tosection RCWexpires 82.32.790,January this1, section((2024)) is2034, contingentunless on the sitingcontingency and commercial operation of a significant semiconductor microchip fabrication facility in theRCW state82.32.790(2) ofoccurs. Washington.

(5) This section expires January 1, ((2024)) 2034, unless the contingency in RCW 82.32.790(2) occurs.

(2)p. The eligibility requirements, conditions, and definitions in RCW 82.08.965 apply to this section, including the filing of a complete annual tax performance report with the department under RCW 82.32.534.

7 HB 2482 (2) The eligibility requirements, conditions, and definitions in RCW 82.08.965 apply to this section, including the filing of a complete annual tax performance report with the department under RCW 82.32.534.

p.Sec.

8 ESHB 2482 Sec.

(3) AnyPursuant personto whoRCW has82.32.790, claimed the exemption under this section mustis reimbursecontingent theon department for 50 percent of the amountsiting ofand thecommercial taxoperation preference under this section if the number of personsa employedsignificant bysemiconductor themicrochip personfabrication claimingfacility the tax preference is less than 90 percent of the person's three-year employment average for the three years immediately preceding the year in which the exemptionstate isof claimed.Washington.

(4) PursuantThis tosection RCWexpires 82.32.790,January this1, section((2024)) is2034, contingentunless on the sitingcontingency and commercial operation of a significant semiconductor microchip fabrication facility in theRCW state82.32.790(2) ofoccurs. Washington.

(5) This section expires January 1, ((2024)) 2034, unless the contingency in RCW 82.32.790(2) occurs.

(1) Machinery and equipment exempt under RCW 82.08.02565 or 82.12.02565 used in manufacturing semiconductor materials at a building exempt from sales and use tax and in compliance with the employment requirement under RCW 82.08.965 and 82.12.965 are exempt from property taxation.