Senate Bill Report SB 5689 (As of February 8, 2023)

Summary

A Senate Bill Report on SB 5689, as of February 8, 2023, describes a bill providing a sales and use tax exemption related to internet and telecommunications infrastructure projects involving a federally recognized Indian tribe, with Senators Stanford, Braun, Keiser, Rolfes and Saldaña named as sponsors. Its summary says the exemption covers building materials, telecommunications equipment, other personal property, labor and services used in a qualified infrastructure project that occurs in part in a distressed county located on the coast of Washington. It states that an exemption certificate expires when the project is certified complete or on December 31, 2028, whichever is first, and that the exemption provisions expire on December 31, 2029.

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Issuer: Congressional materials
Document type: Report
Date: 2023-02-09
Case: 2023 02 09 A30708 D252339 Bill Report 5689 Sba Bfgt 23

Cite this document

“Senate Bill Report SB 5689 (As of February 8, 2023).” Original at app.leg.wa.gov, dated 2023-02-09. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-02-09-2023-02-09-a30708-d252339-bill-report-5689-sba-bfgt-23/, SHA-256 49229f4bc9c29d522a34d47921a28f0bfcda29596c5a4846df15cc7d6299d474.

Full text

SENATE BILL REPORT
SB 5689

As of February 8, 2023

Title: An act relating to providing a sales and use tax exemption related to internet and
telecommunications infrastructure projects involving a federally recognized Indian tribe.

Brief Description: Providing a sales and use tax exemption related to internet and
telecommunications infrastructure projects involving a federally recognized Indian tribe.

Sponsors: Senators Stanford, Braun, Keiser, Rolfes and Saldaña.

Brief History:
Committee Activity: Business, Financial Services, Gaming & Trade: 2/09/23.

Brief Summary of Bill
• Provides a sales and use tax exemption for labor and materials used in
the construction of an Internet and telecommunications infrastructure
project.

SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE

Staff: Jeffrey Mitchell (786-7438)

Background: Retail Sales and Use Tax. Retail sales taxes are imposed on retail sales of
most articles of tangible personal property, digital products, and some services. A retail sale
is a sale to the final consumer or end user of the property, digital product, or service. If
retail sales taxes were not collected when the user acquired the property, digital products, or
services, then use taxes apply to the value of property, digital products, or services when
used in this state. The state, most cities, and all counties levy retail sales and use taxes. The
state sales and use tax rate is 6.5 percent. Local sales and use tax rates vary from 0.5 percent
to over 3 percent, depending on the location.

Construction services are generally considered a retail service and therefore subject to sales

This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.

Senate Bill Report -1- SB 5689
tax. Contractors must usually collect and remit retail sales tax on their total charges unless
a specific exemption applies. This taxable amount includes charges for permits and other
fees, labor, profit, materials and charges for subcontractors. Contractors performing retail
services must collect sales tax based on the tax rate of the jurisdiction in which they perform
their services.

Cable Landing Station. A cable landing station is a facility where one or more subsea
telecommunication cables make landfall and connect to land-based power and networking
infrastructure.

Tax Preference Performance Statement. State law provides for a range of tax preferences
that confer reduced tax liability upon a designated class of taxpayer. Tax preferences
include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits.
Currently, Washington has over 650 tax preferences, including a variety of sales and use tax
exemptions. Legislation that establishes or expands a tax preference must include a Tax
Preference Performance Statement that identifies the public policy objective of the
preference, as well as specific metrics that the Joint Legislative Audit and Review
Committee (JLARC) can use to evaluate the effectiveness of the preference. All new tax
preferences automatically expire after ten years unless an alternative expiration date is
provided.

Summary of Bill: A sales and use tax exemption is provided for building materials,
telecommunications equipment, or any other personal property used or incorporated into a
qualified infrastructure project as well as labor and services used in the construction of a
qualified infrastructure project or the installation of any equipment or other personal
property incorporated into a qualified infrastructure project. "Qualified infrastructure
project" means the construction of buildings and utilities related to the deployment of
modern global Internet and telecommunications infrastructure that occurs in part in a
distressed county located on the coast of Washington. The infrastructure may include, but is
not limited to, cable landing stations, data centers, communications hubs, buried utility
connections and extension, and any related equipment and buildings that will add
broadband capacity and infrastructure to the area.

A taxpayer must submit an application to the Department of Revenue to obtain an
exemption certificate. Only purchases on or after the date of issuance of the exemption
certificate qualify for the sales and use tax exemption. An exemption certificate expires on
the date the project is certified as complete by the qualified infrastructure project owner or
December 31, 2028, whichever is first. "Qualified infrastructure project owner" means a
federally recognized tribe and an indigenous-owned business entity that is deploying an
Internet and telecommunications infrastructure in at least one distressed county on the coast
of Washington.

The sales and use tax exemption provisions expire on December 31, 2029.

Senate Bill Report -2- SB 5689
The bill is exempt from the requirements of including a tax preference performance
statement and JLARC review.

Appropriation: None.

Fiscal Note: Requested on February 6, 2023.

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

Effective Date: Ninety days after adjournment of session in which bill is passed.

Senate Bill Report -3- SB 5689

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Original: app.leg.wa.gov