HB 2081 — Modifying business and occupation tax surcharges, rates, and the advanced computing surcharge cap, clarifying the business and occupation tax deduction for certain investments, and creating a temporary business and occupation tax surcharge on large companies.

(4) "Gross income of the business" does not include the monetary value or actual cost of any prizes that are awarded, amounts paid to players for winning wagers, accrual of prizes for progressive jackpot contests,p. or repayment of amounts used to seed guaranteed progressive jackpot prizes.

8 HB 2081 contests, or repayment of amounts used to seed guaranteed progressive jackpot prizes.

(i) 1.75((1.75)) percent2.1 forpercent; any person whose gross income of the business subject to the tax imposed under this subsection (2), for the immediately preceding calendar year, was equal to or greater than $1,000,000 and less than $5,000,000 unless:

(A) The person is affiliated with one or more(ii) other1.5 persons;percent for:

and (B) the aggregate gross income of the business subject to the tax imposed under this subsection (2) for all affiliated persons was greater than or equal to $5,000,000 for the immediately preceding calendar year;

((or)) (ii) 1.5 percent for:

(B) Any person whose gross income of the business subject to the tax imposed under this subsection (2), for the immediately preceding calendar year, was less than ((oneone million dollars))dollars, $1,000,000,unless p.(I) the person is affiliated with one or more other persons, and (II) the aggregate gross income of the business subject to the tax imposed under this subsection (2) for all affiliated persons was greater than or equal to one million dollars for the immediately preceding calendar year;

8 ESHB 2081 unless (I) the person is affiliated with one or more other persons, and (II) the aggregate gross income of the business subject to the tax imposed under this subsection (2) for all affiliated persons was greater than or equal to ((one million dollars)) $1,000,000 for the immediately preceding calendar year;

This subsection (2)(a)(ii)(C) must not be construed as modifying RCW 82.04.260(10);82.04.260(10).

(b) This subsection (2) includes, among others, and without limiting the scope hereof (whether or (iii)not 2.1title percent.to materials used in the performance of such business passes to another by accession, confusion or other than by outright sale), persons engaged in the business of rendering any type of service which does not constitute a "sale at retail" or a "sale at wholesale." The value of advertising, demonstration, and promotional supplies and materials furnished to an agent by his or her principal or supplier to be used for p.

(b)9 ThisHB subsection2081 (2) includes, among others, and without limiting the scope hereof (whether or not title to materials used in the performance of such business passes to another by accession, confusion or other than by outright sale), persons engaged in the business of rendering any type of service which does not constitute a "sale at retail" or a "sale at wholesale." The value of advertising, demonstration, and promotional supplies and materials furnished to an agent by his or her principal or supplier to be used for informational, educational, and promotional purposes is not considered a part of the agent's remuneration or commission and is not subject to taxation under this section.

(c) 14.3 percent of the revenues collected under (a)(i) and (iii) of this subsection (2) must be deposited into the workforce education investment account created in RCW 43.79.195.

(d)(i) To aid in the effective administration of this subsection (2), the department may require a person claiming to be subject to the 1.75((1.5 percentpercent)) tax rate under (a)(i) of this subsection (2) or the 1.5 percent tax rate under (a)(ii)(B) of this subsection (2) to identify all of the person's affiliates, including their department tax registration number or unified business identifier number, as may be applicable, or to certify that the person is not affiliated with any other person.

(ii) If the department establishes, by clear, cogent, and convincing evidence, that a person, with intent to evade the additional taxes due under either the 1.75((1.75 percentpercent)) tax rate in (a)(i) of this subsection (2) or the 2.1 percent tax rate in (a)(iii) of this subsection (2), failed to provide the department with complete and accurate information in response to a written request under (d)(i) of this subsection (2) within ((thirty))thirty 30 days of such p.request, the person is ineligible for the ((1.5 percent)) tax rate in (a)(ii) of this subsection (2) for the entire current calendar year and the following four calendar years.

9However, ESHBthe 2081department request,must waive the provisions of this subsection (2)(d)(ii) for any tax reporting period that the person is ineligibleotherwise eligible for the ((1.5 percentpercent)) tax rate in (a)(ii) of))of lesserthis applicablesubsection (2) if (A) the department has not previously determined that the person failed to fully comply with (d)(i) of this subsection (2), and (B) within thirty days of the notice of additional tax ratedue inas a result of the person's failure to fully comply with (d)(i) of this subsection (2) forthe department determines that the entireperson currenthas calendarcome yearinto andfull thecompliance followingwith four(d)(i) calendarof years.this subsection (2).

However,This the department must waive the provisions of this subsection (2)(d)(ii)(2)(d) forapplies anyonly taxwith reportingrespect periodto thatpersons theclaiming personentitlement isto otherwise eligible for the 1.75((1.5 percentpercent)) tax rate insolely (a)(i)by ofreason this subsection (2) or the 1.5 percent tax rate in (a)(ii) of this(a)(ii)(B) subsection (2) if (A) the department has not previously determined that the person failed to fully comply with (d)(i) of this subsection (2), and (B) within ((thirty)) 30 days of the notice of additional tax due as a result of the person's failure to fully comply with (d)(i) of this subsection (2) the department determines that the person has come into full compliance with (d)(i) of this subsection (2).

This(e) For the purposes of (a)(ii)(B) of this subsection (2)(d)(2), appliesif onlya withtaxpayer respectis subject to personsthe claimingreconciliation entitlementprovisions toof RCW 82.04.462(4), and calculates gross income of the 1.5business percentsubject to the tax rateimposed solelyunder bythis reasonsubsection of(2) (a)(ii)(B)for the immediately preceding calendar year, or aggregate gross income of the business subject to the tax imposed under this subsection (2).(2) for the p.

(e)10 ForHB the2081 purposes of (a)(i) or (ii)(B) of this subsection (2), if a taxpayer is subject to the reconciliation provisions of RCW 82.04.462(4), and calculates gross income of the business subject to the tax imposed under this subsection (2) for the immediately preceding calendar year, or aggregate gross income of the business subject to the tax imposed under this subsection (2) for the immediately preceding calendar year for all affiliated persons, based on incomplete information, the taxpayer must correct the reporting for the current calendar year when complete information for the immediately preceding calendar year is available.

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

10 ESHB 2081 (b) A person reporting under the tax rate provided in this subsection (3) must file a complete annual report with the department under RCW 82.32.534.

(3)p. The exemption under subsection (2) of this section applies only to persons primarily engaged in the business of providing child care.

11 HB 2081 (3) The exemption under subsection (2) of this section applies only to persons primarily engaged in the business of providing child care.

(2) If the persons described in subsection (1) of this section receive income from sources other than those described in subsection (1) of this section or provide services other than those named in p.subsection (1) of this section, that income and those services are subject to tax as otherwise provided in this chapter.

11 ESHB 2081 subsection (1) of this section, that income and those services are subject to tax as otherwise provided in this chapter.

as to such persons the amount of tax with respect to such business is equal to the value of the products manufactured or the gross proceeds derived fromp. such sales, multiplied by the rate of 0.138 percent.

12 HB 2081 from such sales, multiplied by the rate of 0.138 percent.

p.(ii) For the purposes of this subsection (1)(c), "dairy products" means:

12 ESHB 2081 (ii) For the purposes of this subsection (1)(c), "dairy products" means:

as to such persons the amount of tax with respect to such business is equal to the value of the products manufactured or the grossp. proceeds derived from such sales multiplied by the rate of 0.138 percent.

13 HB 2081 gross proceeds derived from such sales multiplied by the rate of 0.138 percent.

as to such persons the amount p.of tax with respect to such business is equal to the value of the peas split or processed, multiplied by the rate of 0.138 percent.

13 ESHB 2081 of tax with respect to such business is equal to the value of the peas split or processed, multiplied by the rate of 0.138 percent.

as to such persons the amount of the tax with respect to suchp. activities is equal to the gross income derived from such activities multiplied by the rate of 0.275 percent through June 30, 2019, and 0.9 percent beginning July 1, 2019.

14 HB 2081 such activities is equal to the gross income derived from such activities multiplied by the rate of 0.275 percent through June 30, 2019, and 0.9 percent beginning July 1, 2019.

Persons subject to taxation under this subsection are exempt from payment of taxes imposed by chapter 82.16 RCW for that portion of their business subject to taxation under this p.subsection.

14 ESHB 2081 subsection.

(8)(a)p. Upon every person engaging within this state in the business of disposing of low-level waste, as defined in RCW 70A.380.010;

15 HB 2081 (8)(a) Upon every person engaging within this state in the business of disposing of low-level waste, as defined in RCW 70A.380.010;

(10) Upon every person engaging within this state in business as a hospital, as defined in chapter 70.41 RCW, that is operated as a nonprofit corporation or by the state or any of its political p.subdivisions, as to such persons, the amount of tax with respect to such activities is equal to the gross income of the business multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5 percent thereafter.

15 ESHB 2081 subdivisions, as to such persons, the amount of tax with respect to such activities is equal to the gross income of the business multiplied by the rate of 0.75 percent through June 30, 1995, and 1.5 percent thereafter.

(B)p. Beginning January 1, 2027, 0.5 percent, subject to any reduction required under (e) of this subsection (11).

16 HB 2081 (B) Beginning January 1, 2027, 0.5 percent, subject to any reduction required under (e) of this subsection (11).

p.(A) The rate under RCW 82.04.250(1) on the business of making retail sales of tooling specifically designed for use in manufacturing commercial airplanes or components of such airplanes;

16 ESHB 2081 (A) The rate under RCW 82.04.250(1) on the business of making retail sales of tooling specifically designed for use in manufacturing commercial airplanes or components of such airplanes;

However, this requirement does not applyp. to persons reporting under the tax rate in (a)(iii) of this subsection (11), so long as that rate remains ((0.484)) 0.5 percent, or under any of the tax rates in (b)(ii)(A) and (B) of this subsection (11), so long as those tax rates remain the rate imposed pursuant to RCW 82.04.250(1) and ((0.484)) 0.5 percent, respectively.

17 HB 2081 apply to persons reporting under the tax rate in (a)(iii) of this subsection (11), so long as that rate remains ((0.484)) 0.5 percent, or under any of the tax rates in (b)(ii)(A) and (B) of this subsection (11), so long as those tax rates remain the rate imposed pursuant to RCW 82.04.250(1) and ((0.484)) 0.5 percent, respectively.

The effective date of the rates authorized under this subsection (11)(e) must occur on the first day of the next calendar quarter that is at least 60 days p.after the department receives the last of the two written notices pursuant to RCW 82.04.2602 (3) and (4).

17 ESHB 2081 after the department receives the last of the two written notices pursuant to RCW 82.04.2602 (3) and (4).

This subsection (11)(f)(ii) only appliesp. to the manufacturing or sale of commercial airplanes that are the basis of a siting of a significant commercial airplane manufacturing program in the state under RCW 82.32.850.

18 HB 2081 applies to the manufacturing or sale of commercial airplanes that are the basis of a siting of a significant commercial airplane manufacturing program in the state under RCW 82.32.850.

as to such persons the amount of tax with respect to the business is, in the case of extractors, equal to the value of products, including by-products, extracted, or in the case of extractors for hire, equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through p.June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2045.

18 ESHB 2081 June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2045.

as to such persons the amount of the tax with respect to the business is equal to the gross proceeds of sales of the timber, timber products, wood products, or products defined in RCW 19.27.570(1) multiplied by the ratep. of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2045.

19 HB 2081 rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2045.

p.(ii) "Paper and paper products" means products made of interwoven cellulosic fibers held together largely by hydrogen bonding.

19 ESHB 2081 (ii) "Paper and paper products" means products made of interwoven cellulosic fibers held together largely by hydrogen bonding.

(A)p. Logs, wood chips, sawdust, wood waste, and similar products obtained wholly from the processing of timber, short-rotation hardwoods as defined in RCW 84.33.035, or both;

20 HB 2081 (A) Logs, wood chips, sawdust, wood waste, and similar products obtained wholly from the processing of timber, short-rotation hardwoods as defined in RCW 84.33.035, or both;

(g) Nothing in this subsection (12) may be construed to affect the taxation of any activity defined as a retail sale in RCW p.82.04.050(2) (b) or (c), defined as a wholesale sale in RCW 82.04.060(2), or taxed under RCW 82.04.280(1)(g).

20 ESHB 2081 82.04.050(2) (b) or (c), defined as a wholesale sale in RCW 82.04.060(2), or taxed under RCW 82.04.280(1)(g).

or selling manufactured seafood products that remain in a raw, raw frozen, or raw salted state at the completion of the manufacturing, to purchasers who transport in the ordinaryp. course of business the goods out of this state;

21 HB 2081 ordinary course of business the goods out of this state;

Sellers must keep and preserve records for the period required by RCW 82.32.070 p.establishing that the goods were transported by the purchaser in the ordinary course of business out of this state or sold to a manufacturer for use as an ingredient or component in the manufacturing of a dairy product.

21 ESHB 2081 establishing that the goods were transported by the purchaser in the ordinary course of business out of this state or sold to a manufacturer for use as an ingredient or component in the manufacturing of a dairy product.

(d)(i) Beginning July 1, 2035, fruits or vegetables by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables, or selling at wholesale fruits or vegetables manufactured by the seller by canning, preserving, freezing, processing, or dehydrating fresh fruits or vegetables and sold to purchasers who transportp. in the ordinary course of business the goods out of this state;

22 HB 2081 transport in the ordinary course of business the goods out of this state;

For the purposes of this section, "wood biomass fuel" means a liquid or gaseous fuel that is produced from lignocellulosic feedstocks, including wood, forest, or field residue and dedicated energy crops, p.and that does not include wood treated with chemical preservations such as creosote, pentachlorophenol, or copper-chrome-arsenic.

22 ESHB 2081 and that does not include wood treated with chemical preservations such as creosote, pentachlorophenol, or copper-chrome-arsenic.

(b)p. Upon every person engaging within this state in the business of acting as a travel agent or tour operator and whose annual taxable amount for the prior calendar year from such business was more than $250,000;

23 HB 2081 (b) Upon every person engaging within this state in the business of acting as a travel agent or tour operator and whose annual taxable amount for the prior calendar year from such business was more than $250,000;

as to such persons the amount of tax with respect to such business is p.equal to the gross proceeds derived from such activities multiplied by the rate of 0.275 percent.

23 ESHB 2081 equal to the gross proceeds derived from such activities multiplied by the rate of 0.275 percent.

terminal stevedoring and incidental vessel services, including but not limited top. plugging and unplugging refrigerator service to containers, trailers, and other refrigerated cargo receptacles, and securing ship hatch covers.

24 HB 2081 to plugging and unplugging refrigerator service to containers, trailers, and other refrigerated cargo receptacles, and securing ship hatch covers.

as to such persons, the amount of the tax with respect to such licensed p.activities is equal to the gross income of such business multiplied by the rate of ((0.484)) 0.5 percent.

24 ESHB 2081 activities is equal to the gross income of such business multiplied by the rate of ((0.484)) 0.5 percent.

and (iii)(A)p. Beginning April 1, 2020, through December 31, 2026, 0.484 percent, subject to any reduction required under (e) of this subsection (11).

25 HB 2081 (iii)(A) Beginning April 1, 2020, through December 31, 2026, 0.484 percent, subject to any reduction required under (e) of this subsection (11).

(b) Beginning July 1, 2008, upon every person who is not eligible to report under the provisions of (a) of this subsection (11) and is engaging within this state in the business of manufacturing tooling specifically designed for use in manufacturing commercial airplanes or components of such airplanes, or making sales, at retail or wholesale, of such tooling manufactured by the seller, as to such persons the amount of tax with respect to such business is, in the case of manufacturers, equal to the value of the product manufactured and the gross proceeds of sales of the product manufactured, or in p.the case of processors for hire, be equal to the gross income of the business, multiplied by the rate of:

25 ESHB 2081 the case of processors for hire, be equal to the gross income of the business, multiplied by the rate of:

(d)(i)p. In addition to all other requirements under this title, a person reporting under the tax rate provided in this subsection (11) must file a complete annual tax performance report with the department under RCW 82.32.534.

26 HB 2081 (d)(i) In addition to all other requirements under this title, a person reporting under the tax rate provided in this subsection (11) must file a complete annual tax performance report with the department under RCW 82.32.534.

p.(e)(i) After March 31, 2021, the tax rates under (a)(iii) and (b)(ii) of this subsection (11) must be reduced to 0.357 percent provided the conditions in RCW 82.04.2602 are met.

26 ESHB 2081 (e)(i) After March 31, 2021, the tax rates under (a)(iii) and (b)(ii) of this subsection (11) must be reduced to 0.357 percent provided the conditions in RCW 82.04.2602 are met.

(ii) With respect to the manufacturing of commercial airplanes or making sales, at retail or wholesale, of commercial airplanes, this subsection (11) does not apply on and after July 1st of the year in which the department makes a determination that any final assembly or wingp. assembly of any version or variant of a commercial airplane that is the basis of a siting of a significant commercial airplane manufacturing program in the state under RCW 82.32.850 has been sited outside the state of Washington.

27 HB 2081 wing assembly of any version or variant of a commercial airplane that is the basis of a siting of a significant commercial airplane manufacturing program in the state under RCW 82.32.850 has been sited outside the state of Washington.

as to such persons the amount of tax with respect to the p.business is, in the case of extractors, equal to the value of products, including by-products, extracted, or in the case of extractors for hire, equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2045.

27 ESHB 2081 business is, in the case of extractors, equal to the value of products, including by-products, extracted, or in the case of extractors for hire, equal to the gross income of the business, multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2045.

as to such persons thep. amount of the tax with respect to the business is equal to the gross proceeds of sales of the timber, timber products, wood products, or products defined in RCW 19.27.570(1) multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2045.

28 HB 2081 the amount of the tax with respect to the business is equal to the gross proceeds of sales of the timber, timber products, wood products, or products defined in RCW 19.27.570(1) multiplied by the rate of 0.4235 percent from July 1, 2006, through June 30, 2007, and 0.2904 percent from July 1, 2007, through June 30, 2045.

p.(i) "Biocomposite surface products" means surface material products containing, by weight or volume, more than 50 percent recycled paper and that also use nonpetroleum-based phenolic resin as a bonding agent.

28 ESHB 2081 (i) "Biocomposite surface products" means surface material products containing, by weight or volume, more than 50 percent recycled paper and that also use nonpetroleum-based phenolic resin as a bonding agent.

"Timber" does not include Christmas trees thatp. are cultivated by agricultural methods or short-rotation hardwoods as defined in RCW 84.33.035.

29 HB 2081 that are cultivated by agricultural methods or short-rotation hardwoods as defined in RCW 84.33.035.

(f) Except for small harvesters as defined in RCW 84.33.035, a person reporting under the tax rate provided in this subsection (12) p.must file a complete annual tax performance report with the department under RCW 82.32.534.

29 ESHB 2081 must file a complete annual tax performance report with the department under RCW 82.32.534.

NEWPART SECTION.II SURCHARGE ON HIGH GROSSING BUSINESSES AND FINANCIAL INSTITUTIONS p.

30 HB 2081 NEW SECTION.

114.

A new section is added to chapter 82.32 RCW to read as follows:

The department must engage its business advisory council as well as a group of stakeholder taxpayers to recommend statutory and administrative changes to simplify tax compliance for taxpayers.

The recommendations should include ways to simplify online filing, the development of guidance materials to ease taxpayer compliance in reporting business activities accurately, and enhance the accessibility of information.

PART II SURCHARGE ON HIGH GROSSING BUSINESSES AND FINANCIAL INSTITUTIONS NEW SECTION.

Sec.

p.(3)(a) Any Washington taxable income subject to the tax in RCW 82.04.29004 is exempt from the surcharge imposed in this section.

30 ESHB 2081 (3)(a) Any Washington taxable income subject to the tax in RCW 82.04.29004 is exempt from the surcharge imposed in this section.

(iv) Any Washington taxable income subject to the tax rates in RCW 82.04.260(12) is exempt from the surcharge imposed in this section.

(v) Any Washington taxable income attributable to the wholesale or retail sale of petroleum products by a person who is both located in a state other than Washington and the owner of such materials processed for it in Washington by an affiliated processor for hire subject to the rate in RCW 82.04.280(1)(c), is exempt from the surcharge imposed in this section.

For the purposes of this subsection (3)(b)(v), the following definitions apply:

(A) "Affiliated" means a person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with another person;

(B) "Control" means the possession, directly or indirectly, of more than 50 percent of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting shares, by contract, or otherwise;

and (C) "Petroleum product" has the same meaning as in RCW 82.21.020.

(c) The surcharge imposed under this section does not apply to a person subject to the tax imposed pursuant to RCW 82.04.299.

p.

31 ESHB 2081 (d) The surcharge imposed under this section does not apply to taxable income for wholesale and retail transactions of fuel as defined in RCW 82.38.020.

(6) This section expires December 31, 2029.2030.

(b) Beginning October 1, 2025, in addition to any other taxes imposed under this chapter, an additional tax is imposed on specified financialp. institutions.

31 HB 2081 financial institutions.

(i) Any corporation or other business entity chartered under Titles 30A, 30B, 31, 32, and 33 RCW, or registered under the federal bank holding company act of 1956, as amended, or registered as a p.savings and loan holding company under the federal national housing act, as amended;

32 ESHB 2081 savings and loan holding company under the federal national housing act, as amended;

(viii)p. Any corporation or other business entity who receives gross income taxable under RCW 82.04.290, and whose voting interests are more than ((fifty)) 50 percent owned, directly or indirectly, by any person or business entity described in (d)(i) through (vii) of this subsection other than an insurance company liable for the insurance premiums tax under RCW 48.14.020 or any other company taxable under chapter 48.14 RCW;

32 HB 2081 (viii) Any corporation or other business entity who receives gross income taxable under RCW 82.04.290, and whose voting interests are more than ((fifty)) 50 percent owned, directly or indirectly, by any person or business entity described in (d)(i) through (vii) of this subsection other than an insurance company liable for the insurance premiums tax under RCW 48.14.020 or any other company taxable under chapter 48.14 RCW;

p.(B) For this classification to apply, the average of the gross income in the current tax year and immediately preceding two tax years must satisfy the more than ((fifty)) 50 percent requirement;

33 ESHB 2081 (B) For this classification to apply, the average of the gross income in the current tax year and immediately preceding two tax years must satisfy the more than ((fifty)) 50 percent requirement;

(e)(i) "Specified financial institution" means a financial institution that is a member of a consolidated financial institution group that reported on its consolidated financial statement for the previous calendar year annual net income of at least ((one billion dollars)) $1,000,000,000, not including net income attributable to noncontrolling interests, as the terms "net income" and "noncontrollingp. interest" are used in the consolidated financial statement.

33 HB 2081 "noncontrolling interest" are used in the consolidated financial statement.

p.PART III ADVANCED COMPUTING SURCHARGE Sec.

34 ESHB 2081 PART III ADVANCED COMPUTING SURCHARGE Sec.

(ii) Beginning January 1, 2026, the surcharge is equal to the gross income of the business subject to the tax under RCW 82.04.290(2), multiplied by the rate of 7.5five percent.

(b) Except as provided in (e) of this subsection (1), in no case will the combined surcharge imposed under this subsection (1) paid by allp. members of an affiliated group be more than ((nine million dollars)) $75,000,000 annually.

34 HB 2081 all members of an affiliated group be more than nine million dollars annually.

(ii) If the department establishes, by clear, cogent, and convincing evidence, that one or more members of an affiliated group, with intent to evade the surcharge under this subsection (1), failed to fully comply with this subsection (1)(e), the department must assess against that person, or those persons collectively, a penalty p.equal to ((fifty)) 50 percent of the amount of the total surcharge payable by all members of that affiliated group for the calendar year during which the person or persons failed to fully comply with this subsection (1)(e).

35 ESHB 2081 equal to ((fifty)) 50 percent of the amount of the total surcharge payable by all members of that affiliated group for the calendar year during which the person or persons failed to fully comply with this subsection (1)(e).

(iii)p. "Affiliated group" means a group of two or more persons that are affiliated with each other;

35 HB 2081 (iii) "Affiliated group" means a group of two or more persons that are affiliated with each other;

332(d)(1),332 (d)(1), shall not be considered a select advanced computing business.

A person that is primarily p.engaged in business as a "financial institution" as defined in RCW 82.04.29004, as that section existed on January 1, 2020, shall not be considered a select advanced computing business.

36 ESHB 2081 engaged in business as a "financial institution" as defined in RCW 82.04.29004, as that section existed on January 1, 2020, shall not be considered a select advanced computing business.

(b)p. The exemptions under this subsection (2) do not apply to amounts received by any member of an affiliated group other than the businesses described in (a) of this subsection.

36 HB 2081 (b) The exemptions under this subsection (2) do not apply to amounts received by any member of an affiliated group other than the businesses described in (a) of this subsection.

(4) BeginningThe indepartment fiscalhas year 2028, and each year thereafter, when the numberauthority ofto qualifieddetermine Washingtonthrough statean applicantsaudit exceedsor theother availableinvestigation enrollmentswhether by 100 at computer science engineering degree programs in four-year state universities, then a commensurateperson numberis ofsubject computerto science and engineering degree enrollments at those state universities must be automatically added and funded for the surcharge imposed underin this sectionsection. to accommodate the additional demand.

(5)PART TheIV departmentMODIFYING hasTHE theBUSINESS authorityAND toOCCUPATION determineTAX throughDEDUCTION anUNDER auditRCW or82.04.4281 otherNEW investigationSECTION. whether a person is subject to the surcharge imposed in this section.

PART IV p.

37 ESHB 2081 MODIFYING THE BUSINESS AND OCCUPATION TAX DEDUCTION UNDER RCW 82.04.4281 NEW SECTION.

To that end, the legislature directs the department of revenue to provide guidance on what constitutes income from personal investments that are not consideredp. engaging in business and thus not subject to the business and occupation tax.

37 HB 2081 considered engaging in business and thus not subject to the business and occupation tax.

p.(b) Amounts derived as dividends or distributions from the capital account by a parent from its subsidiary entities((;

38 ESHB 2081 (b) Amounts derived as dividends or distributions from the capital account by a parent from its subsidiary entities((;

and (b) Collective investment vehicles;vehicles.

(c)p. Retirement accounts and recipients of distributions therefrom, to that extent;

and38 (d)HB Family2081 investment(4) vehiclesThe andfollowing recipientsare ofnot distributionsdeductible therefrom,under tosubsection that(3)(b) extent.of this section:

(4) The following are not deductible under subsection (3)(b) of this section:

(5) The department must, consistent with the purpose of this section, adopt rules necessary to implement this section including, but not limited to, rules that provide examples of investment income p.from personal investments that is not eligible for a deduction under this section by virtue of it not being income from engaging in business and thus not taxable under this chapter.

39 ESHB 2081 from personal investments that is not eligible for a deduction under this section by virtue of it not being income from engaging in business and thus not taxable under this chapter.

(ii) A collective investment vehicle may take the form of a mutual fund, collective fund, and any similar investment vehicle whetherp. structured as a limited or general partnership, limited liability company, corporation, trust, or otherwise.

(c)39 "FamilyHB investment2081 vehicle"whether means:structured as a limited or general partnership, limited liability company, corporation, trust, or otherwise.

(i)(c) The"Investments" estateincludes, ofbut anyis decedent;not limited to, securities, trading account assets, federal funds, options, futures contracts, forward contracts, notional principal contracts, equities, foreign currency transactions, fixed income instruments, derivative instruments, and commodities.

(ii)(d) An"Lending interbusiness" vivosmeans a person engaged in the business of making secured or testamentaryunsecured trust,loans providedof thatmoney, theor grantorextending credit, and all(i) beneficiariesmore arethan eitherone-half members of the familyperson's asgross definedincome inis RCWearned 83.100.046,from orsuch nonprofitactivities organizations,and or(ii) both;more than one-half of the person's total expenditures are incurred in support of such activities.

(iii)(((c))) A(e) qualifiedThe tuitionterms program"loan" establishedand under"extension theof provisionscredit" do not include ownership of theor internaltrading revenuein codepublicly sectiontraded 529;debt instruments, or substantially equivalent instruments offered in a private placement.

or(((d))) (iv)(f) A"Nonprofit coverdellorganization" educationhas savings account established under the provisionssame ofmeaning theas internalin revenueRCW code82.04.3651. section 530.

(d)(g) "Internal"Security revenuebusiness" code" means thea Unitedperson, Statesother internalthan revenuean codeissuer, who is engaged in the business of 1986,effecting transactions in securities as amended,a broker, dealer, or broker-dealer, as those terms are defined in the securities act of JanuaryWashington, 1,chapter 2026,21.20 RCW, or suchthe p.federal securities act of 1933.

40"Security ESHBbusiness" 2081does subsequentnot dateinclude asany company excluded from the departmentdefinition mayof providebroker or dealer under the federal investment company act of 1940 or any entity that is not an investment company by rulereason consistentof withsections this3(c)(1) chapter.and 3(c)(3) through 3(c)(14) thereof.

(e) "Investments" includes, but is not limited to, securities, trading account assets, federal funds, options, futures contracts, forward contracts, notional principal contracts, equities, foreign currency transactions, fixed income instruments, derivative instruments, and commodities.

(f) "Lending business" means a person engaged in the business of making secured or unsecured loans of money, or extending credit, and (i) more than one-half of the person's gross income is earned from such activities and (ii) more than one-half of the person's total expenditures are incurred in support of such activities.

(((c))) (g) The terms "loan" and "extension of credit" do not include ownership of or trading in publicly traded debt instruments, or substantially equivalent instruments offered in a private placement.

(((d))) (h) "Nonprofit organization" has the same meaning as in RCW 82.04.3651.

(i) "Retirement account" means any qualified plan established under any of the provisions of sections 401 through 409, inclusive, of the internal revenue code.

(j) "Security business" means a person, other than an issuer, who is engaged in the business of effecting transactions in securities as a broker, dealer, or broker-dealer, as those terms are defined in the securities act of Washington, chapter 21.20 RCW, or the federal securities act of 1933.

"Security business" does not include any company excluded from the definition of broker or dealer under the federal investment company act of 1940 or any entity that is not an investment company by reason of sections 3 (c)(1) and 3(c)(3) through 3(c)(14) thereof.

If any provision of this act or its application to any person or circumstance is held invalid, the p.remainder of the act or the application of the provision to other persons or circumstances is not affected.

41p. ESHB 2081 remainder of the act or the application of the provision to other persons or circumstances is not affected.

40 HB 2081 NEW SECTION.

Sections 114, 201, 301, 401, and 402 of this act take effect January 1, 2026.

4241 ESHBHB 2081