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Senate Bill Report — SB 6137, Cooperative Finance Organizations Tax Deduction (January 20, 2020)

Summary

A Senate Bill Report on SB 6137, as of January 20, 2020, from the Senate Committee on Financial Institutions, Economic Development & Trade. The bill would reauthorize the business and occupation tax deduction for cooperative finance organizations, and the sponsors listed include Senators Mullet, Becker and Conway. The background states that in 2013 the Legislature granted a business and occupation (B&O) tax deduction to nonprofit cooperative finance organizations for the proceeds of loans to rural electric cooperatives, and that the deduction expired on July 1, 2017. The summary of the bill states that the deduction for loan repayments is reauthorized and expires on January 1, 2030, and the bill takes effect on July 1, 2020.

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Issuer
Congressional materials
Document type
Report
Date
2020-01-21
Case
2020 01 21 A26305 D209460 Bill Report 6137 Sba Fiet

Cite this document

“Senate Bill Report — SB 6137, Cooperative Finance Organizations Tax Deduction (January 20, 2020).” Original at app.leg.wa.gov, dated 2020-01-21. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2020-01-21-2020-01-21-a26305-d209460-bill-report-6137-sba-fiet/, SHA-256 136a1101a0d338e51abc4c0acc459abbc15c1d23e54918288bd18aeb4deb459d.

Full text

                             SENATE BILL REPORT
                                   SB 6137

                                      As of January 20, 2020

Title: An act relating to reauthorizing the business and occupation tax deduction for cooperative
    finance organizations.

Brief Description: Reauthorizing the business and occupation tax deduction for cooperative
   finance organizations.

Sponsors: Senators Mullet, Becker, Conway, Warnick, King, Brown, Padden, Schoesler, Short
   and Zeiger.

Brief History:
   Committee Activity: Financial Institutions, Economic Development & Trade: 1/21/20.

                                      Brief Summary of Bill
          Ÿ Reauthorizes a business and occupation tax deduction for loan repayments
            received by cooperative finance organizations from rural electric
            cooperatives or governmental utility providers.


SENATE  COMMITTEE                  ON      FINANCIAL          INSTITUTIONS,           ECONOMIC
DEVELOPMENT & TRADE

    Staff: Clint McCarthy (786-7319)

    Background: Business and Occupation Tax. Washington's major business tax is the
    business and occupation (B&O) tax. The B&O tax is imposed on the gross receipts of
    business activities conducted within the state, without any deduction for the costs of doing
    business. Businesses must pay the B&O tax even though they may not have any profits or
    may be operating at a loss.

    A taxpayer may have more than one B&O tax rate, depending on the types of activities
    conducted. Major B&O tax rates are 0.471 percent for retailing; 0.484 percent for
    manufacturing, wholesaling, and extracting; and 1.5 percent for services and for activities not
    classified elsewhere. Several preferential rates also apply to specific business activities. In
    addition, a taxpayer may be eligible to utilize other tax preferences, including credits and
    deductions, to reduce their tax liability.
––––––––––––––––––––––
    This analysis was prepared by non-partisan legislative staff for the use of legislative
    members in their deliberations. This analysis is not a part of the legislation nor does it
    constitute a statement of legislative intent.

Senate Bill Report                              -1-                                          SB 6137
    Rural Electric Cooperatives. A rural electric cooperative is a nonprofit, customer-owned
    organization providing utility services to rural areas. The Washington Rural Electric
    Cooperative Association identifies 15 rural electric cooperatives in Washington. The
    cooperatives serve over 280,000 customers and offer electric service at cost. The rates and
    policies are set by locally elected boards of directors.

    Nonprofit Cooperative Finance Organizations. A cooperative finance organization is a
    nonprofit organization with the primary purpose to secure, provide, and arrange financing for
    rural electric cooperatives.

    Business and Occupation Tax Deduction. In 2013, the Legislature granted a B&O tax
    deduction to nonprofit cooperative finance organizations for the proceeds of loans to rural
    electric cooperatives or other nonprofit or governmental providers of utility services. The
    deduction expired on July 1, 2017.

    Summary of Bill: The B&O tax deduction for loan repayments received by cooperative
    finance organizations from rural electric cooperatives or other utility nonprofit or
    governmental utility providers is reauthorized.

    A tax preference performance statement is included, stating the Legislature intends to extend
    the expiration date of the deduction if at least one nonprofit cooperative financing
    organization takes advantage of the preference.

    The deduction expires on January 1, 2030.

    Appropriation: None.

    Fiscal Note: Available.

    Creates Committee/Commission/Task Force that includes Legislative members: No.

    Effective Date: The bill takes effect on July 1, 2020.




Senate Bill Report                              -2-                                      SB 6137

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