SB 6012 — Promoting renewable energy through modifying tax incentives.

ENGROSSEDS-3662.3SENATE SUBSTITUTE SENATE BILL 6012State of Washington66th Legislature2019 Regular SessionBySenateSessionBySenators Ways & Means (originally sponsored by Senators Hawkins and Palumbo)READPalumboAN FIRST TIME 04/22/19.AN ACT Relating to promoting renewable energy through modifying tax incentives;

addingamending aRCW new82.08.962, section82.12.962, toand chapter82.14.455; 82.08 RCW;

addingcreating a new sectionsection; to chapter 82.12 RCW;

creatingand newproviding sections;expiration dates.BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:Sec.

providing an effective date;

and providing expiration dates.BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:NEW SECTION.  Sec.

(1)RCW This82.08.962 sectionand is2018 c 164 s 5 are each amended to read as follows:(1)(a) ((Except as provided in RCW 82.08.963,))Purchasers who have paid the tax preferenceimposed performanceby statementRCW for82.08.020 on machinery and equipment used directly in generating electricity using fuel cells, wind, water, sun, biomass energy, tidal or wave energy, geothermal resources, or technology that converts otherwise lost energy from exhaust, as the principal source of power, or to sales of or charges made for labor and useservices taxrendered exemptionsin containedrespect to installing such machinery and equipment, are eligible for an exemption as provided in sectionsthis 2section, but only if the purchaser develops with such machinery, equipment, and 3,labor chaptera .facility capable of generating not less than one thousand watts of electricity.(b) Beginning on July 1, 2011, through January 1, ((2020))2030, the amount of the exemption under this subsection (1) is equal to seventy-five percent of the state and local sales tax paid.

.,The Lawspurchaser ofis 2020eligible (sectionsfor 2an andexemption 3under this subsection (1)(b) in the form of a remittance.(2) For purposes of this act).section and RCW 82.12.962, the following definitions apply:(a) "Biomass energy" includes:

This(i) performanceBy-products statementof ispulping onlyand intendedwood tomanufacturing beprocess; used for subsequent evaluation of these tax preferences.

It(ii) isanimal notwaste; intended to create a private right of action by any party or be used to determine eligibility for preferential tax treatment.(2) The legislature categorizes these sales and use tax exemptions as ones 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 encourage hydroelectric facilities to install oil-free adjustable blade hubs to reduce oil spills by reducing the price differential between oil-free systems and traditional oil-operated mechanisms.(4) If a review finds that a majority of new or replacement turbines incorporate oil-free adjustable blade hubs, and oil-free systems continue to cost more than traditional systems, then the legislature intends to extend the expiration date of these tax preferences.(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 must incorporate data provided by public utility districts and businesses operating hydroelectric facilities that claim the exemptions authorized in sections 2 and 3, chapter .

.,(iii) Lawssolid oforganic 2020fuels (sectionsfrom 2wood; and 3 of this act), as well as information provided by the department of revenue.NEW SECTION.  Sec.

(iv) forest or field residues;

(v) wooden demolition or construction debris;

(vi) food waste;

(vii) liquors derived from algae and other sources;

(viii) dedicated energy crops;

(ix) biosolids;

and (x) yard waste.

"Biomass energy" does not include wood pieces that have been treated with chemical preservatives such as creosote, pentachlorophenol, or copper-chrome-arsenic;

wood from old growth forests;

or municipal solid waste.(b) "Fuel cell" means an electrochemical reaction that generates electricity by combining atoms of hydrogen and oxygen in the presence of a catalyst.(c)(i) "Machinery and equipment" means fixtures, devices, and support facilities that are integral and necessary to the generation of electricity using fuel cells, wind, water, sun, biomass energy, tidal or wave energy, geothermal resources, or technology that converts otherwise lost energy from exhaust.(ii) "Machinery and equipment" does not include:

(A) Hand-powered tools;

(B) property with a useful life of less than one year;

(C) repair parts required to restore machinery and equipment to normal working order;

(D) replacement parts that do not increase productivity, improve efficiency, or extend the useful life of machinery and equipment;

(E) buildings;

or (F) building fixtures that are not integral and necessary to the generation of electricity that are permanently affixed to and become a physical part of a building.(3)(a) Machinery and equipment is "used directly" in generating electricity by wind energy, hydropower energy, solar energy, biomass energy, tidal or wave energy, geothermal resources, or technology that converts otherwise lost energy from exhaust if it provides any part of the process that captures the energy of the wind, water, sun, biomass energy, tidal or wave energy, geothermal resources, or technology that converts otherwise lost energy from exhaust, converts that energy to electricity, and stores, transforms, or transmits that electricity for entry into or operation in parallel with electric transmission and distribution systems.(b) Machinery and equipment is "used directly" in generating electricity by fuel cells if it provides any part of the process that captures the energy of the fuel, converts that energy to electricity, and stores, transforms, or transmits that electricity for entry into or operation in parallel with electric transmission and distribution systems.(4)(a) A purchaser claiming an exemption in the form of a remittance under subsection (1)(b) of this section must pay the tax imposed by RCW 82.08.020 and all applicable local sales taxes imposed under the authority of chapters 82.14 and 81.104 RCW.

The purchaser may then apply to the department for remittance in a form and manner prescribed by the department.

A purchaser may not apply for a remittance under this section more frequently than once per quarter.

The purchaser must specify the amount of exempted tax claimed and the qualifying purchases for which the exemption is claimed.

The purchaser must retain, in adequate detail, records to enable the department to determine whether the purchaser is entitled to an exemption under this section, including:

Invoices;

proof of tax paid;

and documents describing the machinery and equipment.(b) The department must determine eligibility under this section based on the information provided by the purchaser, which is subject to audit verification by the department.

The department must on a quarterly basis remit exempted amounts to qualifying purchasers who submitted applications during the previous quarter.(5) The exemption provided by this section expires September 30, 2017, as it applies to:

(a) Machinery and equipment that is used directly in the generation of electricity using solar energy and capable of generating no more than five hundred kilowatts of electricity;

or (b) sales of or charges made for labor and services rendered in respect to installing such machinery and equipment.(6) The exemption provided by this section for machinery and equipment used directly in generating electricity from water does not apply to local sales and use taxes imposed under chapter 82.14 RCW.(7) This section expires January 1, ((2020))2030.Sec.

ARCW new82.12.962 sectionand is2018 addedc to164 chapters 82.087 RCWare each amended to read as follows:(1)follows:(1)(a) The((Except as provided in RCW 82.12.963,))Consumers who have paid the tax imposed by RCW 82.08.02082.12.020 doeson notmachinery applyand to:(a)equipment Theused saledirectly ofin oil-freegenerating adjustableelectricity bladeusing hubsfuel forcells, hydroelectricwind, turbines;(b)water, Thesun, salebiomass energy, tidal or wave energy, geothermal resources, or technology that converts otherwise lost energy from exhaust, or to sales of or chargecharges made for labor and services rendered in respect to constructing,installing installing,such repairing,machinery altering,and cleaning,equipment, orare improvingeligible oil-freefor adjustablean bladeexemption hubsas forprovided hydroelectricin turbines;this section, but only if the purchaser develops with such machinery, equipment, and labor a facility capable of generating not less than one thousand watts of electricity.(b) Beginning on July 1, 2011, through January 1, ((2020))2030, the amount of the exemption under this subsection (1) is equal to seventy-five percent of the state and local sales tax paid.

and(c) The saleconsumer ofis tangibleeligible personalfor propertyan thatexemption willunder becomethis asubsection component(1)(b) in the form of oil-freea adjustableremittance.(2)(a) bladeA hubsperson forclaiming hydroelectrican turbinesexemption duringin the courseform of constructing,a installing,remittance repairing,under altering,subsection cleaning,(1)(b) orof improvingthis oil-freesection adjustablemust bladepay hubsthe fortax hydroelectricimposed turbines.(2)(a)by TheRCW exemption82.12.020 underand thisall sectionapplicable islocal inuse taxes imposed under the formauthority of achapters remittance82.14 and applies81.104 onlyRCW. to the state sales tax.

AThe personconsumer claimingmay anthen exemptionapply fromto state tax in the formdepartment offor a remittance underin thisa sectionform must pay all state and localmanner salesprescribed andby usethe taxes.department.