Washington HB 1834: Concerning reconciliation returns for apportionable income.

Bill Text

AN ACT Relating to reconciliation returns for apportionable 1
income; amending RCW 82.04.462, 82.32.090, 82.32.105, and 82.45.100; 2
reenacting and amending RCW 82.45.150; and creating a new section.3
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:4
Sec. 1. RCW 82.04.462 and 2014 c 97 s 305 are each amended to 5
read as follows:6
(1) The apportionable income of a person within the scope of RCW 7
82.04.460(1) is apportioned to Washington by multiplying its 8
apportionable income by the receipts factor. Persons who are subject 9
to tax under more than one of the tax classifications enumerated in 10
RCW 82.04.460(4)(a) (i) through (x) must calculate a separate 11
receipts factor for each tax classification that the person is 12
taxable under.13
(2) For purposes of subsection (1) of this section, the receipts 14
factor is a fraction and is calculated as provided in subsections (3) 15
and (4) of this section and, for financial institutions, as provided 16
in the rule adopted by the department under the authority of RCW 17
82.04.460(2).18
(3)(a) The numerator of the receipts factor is the total gross 19
income of the business of the taxpayer attributable to this state 20
during the tax year from engaging in an apportionable activity. The 21
H-1216.1
HOUSE BILL 1834
State of Washington 68th Legislature 2023 Regular Session
By Representatives Walen, Springer, Orcutt, Stokesbary, Wylie, and
Barnard
Read first time 02/17/23. Referred to Committee on Finance.
p. 1 HB 1834

denominator of the receipts factor is the total gross income of the 1
business of the taxpayer from engaging in an apportionable activity 2
everywhere in the world during the tax year.3
(b) Except as otherwise provided in this section, for purposes of 4
computing the receipts factor, gross income of the business generated 5
from each apportionable activity is attributable to the state:6
(i) Where the customer received the benefit of the taxpayer's 7
service or, in the case of gross income from royalties, where the 8
customer used the taxpayer's intangible property. When a customer 9
receives the benefit of the taxpayer's services or uses the 10
taxpayer's intangible property in this and one or more other states 11
and the amount of gross income of the business that was received by 12
the taxpayer in return for the services received or intangible 13
property used by the customer in this state can be reasonably 14
determined by the taxpayer, such amount of gross income must be 15
attributed to this state.16
(ii) If the customer received the benefit of the service or used 17
the intangible property in more than one state and if the taxpayer is 18
unable to attribute gross income of the business under the provisions 19
of (b)(i) of this subsection (3), gross income of the business must 20
be attributed to the state in which the benefit of the service was 21
primarily received or in which the intangible property was primarily 22
used.23
(iii) If the taxpayer is unable to attribute gross income of the 24
business under the provisions of (b)(i) or (ii) of this subsection 25
(3), gross income of the business must be attributed to the state 26
from which the customer ordered the service or, in the case of 27
royalties, the office of the customer from which the royalty 28
agreement with the taxpayer was negotiated.29
(iv) If the taxpayer is unable to attribute gross income of the 30
business under the provisions of (b)(i), (ii), or (iii) of this 31
subsection (3), gross income of the business must be attributed to 32
the state to which the billing statements or invoices are sent to the 33
customer by the taxpayer.34
(v) If the taxpayer is unable to attribute gross income of the 35
business under the provisions of (b)(i), (ii), (iii), or (iv) of this 36
subsection (3), gross income of the business must be attributed to 37
the state from which the customer sends payment to the taxpayer.38
(vi) If the taxpayer is unable to attribute gross income of the 39
business under the provisions of (b)(i), (ii), (iii), (iv), or (v) of 40
p. 2 HB 1834

this subsection (3), gross income of the business must be attributed 1
to the state where the customer is located as indicated by the 2
customer's address: (A) Shown in the taxpayer's business records 3
maintained in the regular course of business; or (B) obtained during 4
consummation of the sale or the negotiation of the contract for 5
services or for the use of the taxpayer's intangible property, 6
including any address of a customer's payment instrument when readily 7
available to the taxpayer and no other address is available.8
(vii) If the taxpayer is unable to attribute gross income of the 9
business under the provisions of (b)(i), (ii), (iii), (iv), (v), or 10
(vi) of this subsection (3), gross income of the business must be 11
attributed to the commercial domicile of the taxpayer.12
(viii) For purposes of this subsection (3)(b), "customer" means a 13
person or entity to whom the taxpayer makes a sale or