Bill Summary – FastDemocracy

H-0834.1
                           SUBSTITUTE HOUSE BILL 1182
     State of Washington         68th Legislature        2023 Regular Session
     By House Regulated Substances     &   Gaming   (originally   sponsored   by
     Representative Wylie)
     READ FIRST TIME 01/27/23.
      AN ACT Relating to providing a tax exemption for the first 20,000
  gallons of wine sold by a winery in Washington; reenacting and
  amending RCW 66.24.210; and creating a new section.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     Sec. 1. RCW 66.24.210 and 2016 c 235 s 12 and 2016 c 225 s 1 are
 each reenacted and amended to read as follows:
     (1) ((There)) Except as provided in (d) of this subsection, there
 is hereby imposed upon all wines except cider sold to wine
 distributors within the state a tax at the rate of twenty and one-
 fourth cents per liter. Any domestic winery or certificate of
 approval holder acting as a distributor of its own production must
 pay taxes imposed by this section. ((There)) Except as provided in
 (d) of this subsection, there is hereby imposed on all cider sold to
 wine distributors within the state a tax at the rate of three and
 fifty-nine one-hundredths cents per liter. However, wine sold or
 shipped in bulk from one winery to another winery is not subject to
 such tax.
     (a) The tax provided for in this section shall be collected by
 direct payments based on wine purchased by wine distributors.
     (b) Except as provided in subsection (7) of this section, every
 person purchasing wine under the provisions of this section must on
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 or before the twentieth day of each month report to the board all
 purchases during the preceding calendar month in such manner and upon
 such forms as may be prescribed by the board, and with such report
 must pay the tax due from the purchases covered by such report unless
 the same has previously been paid. Any such purchaser of wine whose
 applicable tax payment is not postmarked by the twentieth day
 following the month of purchase will be assessed a penalty at the
 rate of two percent a month or fraction thereof. The board may
 require that every such person shall execute to and file with the
 board a bond to be approved by the board, in such amount as the board
 may fix, securing the payment of the tax. If any such person fails to
 pay the tax when due, the board may suspend or cancel the license
 until all taxes are paid.
     (c) Any licensed retailer authorized to purchase wine from a
 certificate of approval holder with a direct shipment endorsement or
 a domestic winery must make monthly reports to the ((liquor and
 cannabis)) board on wine purchased during the preceding calendar
 month in the manner and upon such forms as may be prescribed by the
 board.
     (d) A winery's sale of the first 20,000 gallons of table wine or
 cider in a calendar year is:
     (i) Subject to tax at a rate of $0.0528 per liter for table wine
 or cider; and
     (ii) Not subject to any other taxes under this section on sales
 of the first 20,000 gallons of table wine or cider except for taxes
 imposed under subsection (3) of this section for the Washington wine
 commission.
     (e) Taxes collected pursuant to (d) of this subsection (1) must
 be deposited in the liquor revolving fund and are subject to the
 allocation to Washington State University in RCW 66.08.180(4).
     (2) ((An)) Except as provided in subsection (1)(d) of this
 section, an additional tax is imposed equal to the rate specified in
 RCW 82.02.030 multiplied by the tax payable under subsection (1) of
 this section. All revenues collected during any month from this
 additional tax must be transferred to the state general fund by the
 twenty-fifth day of the following month.
     (3) An additional tax is imposed on wines subject to tax under
 subsection (1) of this section, at the rate of one-fourth of one cent
 per liter for wine sold after June 30, 1987. After June 30, 1996,
 such additional tax does not apply to cider. An additional tax of
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 five one-hundredths of one cent per liter is imposed on cider sold
 after June 30, 1996. All revenues collected under this subsection (3)
 shall be disbursed quarterly to the Washington wine commission for
 use in carrying out the purposes of chapter 15.88 RCW.
     (4) ((An)) Except as provided in subsection (1)(d) of this
 section, an additional tax is imposed on all wine subject to tax
 under subsection (1) of this section. The additional tax is equal to
 twenty-three and forty-four one-hundredths cents per liter on
 fortified wine as defined in RCW 66.04.010 when bottled or packaged
 by the manufacturer, one cent per liter on all other wine except
 cider, and eighteen one-hundredths of one cent per liter on cider.
 All revenues collected during any month from this additional tax
 shall be deposited in the state general fund by the twenty-fifth day
 of the following month.
     (5)(a) ((An)) Except as provided in subsection (1)(d) of this
 section, an additional tax is imposed on all cider subject to tax
 under subsection (1) of this section. The additional tax is equal to
 two and four one-hundredths cents per liter of cider sold after June
 30, 1996, and before July 1, 1997, and is equal to four and seven
 one-hundredths cents per liter of cider sold after June 30, 1997.
     (b) All revenues collected from the additional tax imposed under
 this subsection (5) must be deposited in the state general fund.
     (6) For the purposes of this section, "cider" means table wine
 that contains not less than one-half of one percent of alcohol by
 volume and not more than eight and one-half percent of alcohol by
 volume and is made from the normal alcoholic fermentation of the
 juice of sound, ripe apples or pears. "Cider" includes, but is not
 limited to, flavored, sparkling, or carbonated cider and cider made
 from condensed apple or pear must.
     (7) For the purposes of this section, out-of-state wineries must
 pay taxes under this section on wine sold and shipped directly to
 Washington state residents in a manner consistent with the
 requirements of a wine distributor under subsections (1) through (4)
 of this section, except wineries shall be responsible for the tax and
 not the resident purchaser.
     (8) Notwithstanding any other provision of this section, any
 domestic winery or wine certificate of approval holder acting as a
 distributor of its own production that had total taxable sales of
 wine in Washington state of six thousand gallons or less during the
 calendar year preceding the date on which the tax would otherwise be
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 due is not required to pay taxes under this section more often than
 annually.
     NEW SECTION.   Sec. 2.   (1) This section is the tax preference
 performance statement for the tax preference contained in section 1,
 chapter . . ., Laws of 2023 (section 1 of this act). 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 provide tax relief to certain businesses or individuals.
     (3) It is the legislature's specific public policy objective to
 promote the development of small wineries. These small businesses
 face challenges entering the industry and it is the legislature's
 public policy objective to assist these wineries to grow and
 stabilize. Small wineries have faced significant challenges in recent
 years including the great recession, COVID-19 restrictions, impact of
 wildfire smoke, and weather challenges. Every year dozens of small
 wineries close their doors forever. The loss of these businesses
 means Washington loses not just the wine excise tax income from these
 wineries, but also the sales and use tax income, the business and
 occupation tax income, and the jobs, tourism opportunities, and
 community contributions these wineries would otherwise make.
     (4) The joint legislative audit and review committee must conduct
 an initial evaluation of the tax preference in this section by
 January 1, 2028. A final evaluation of the tax preference in this
 section must be conducted by January 1, 2033.
     (5) If the review finds that the: (a) Number of wineries
 producing less than 20,000 gallons per year going out of business is
 decreased; (b) number of wineries that were producing less than
 20,000 gallons per year in 2023 that are subsequently producing more
 than 20,000 gallons per year is increased; or (c) amount of sales and
 use tax collected by wineries has increased, then the legislature
 intends to extend the expiration date of this tax preference.
     (6) In order to obtain the data necessary to perform the review
 in subsection (5) of this section, the joint legislative audit and
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 review committee may refer to any data      collected   by   the   state,
 including the Washington wine commission.
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