Exempting salmon recovery grants from sales tax - 21-23 budget proposal
Prepared by the Department of Revenue
Summary of proposed legislation
This proposal would provide an exemption from sales tax for the receipt of qualifying salmon restoration grants that are deductible from the state business and occupation (B&O) tax under RCW 82.04.4339. The proposal further clarifies that the use of salmon restoration grant funds by the grantee to purchase tangible personal property or specified services would still be subject to sales tax.
This proposal also updates the B&O tax deduction in RCW 82.04.4339 for salmon restoration grants to include amounts received from federally recognized Indian tribes.
Current law
Grants are generally considered gross income of the business, and are subject to B&O tax or public utility tax, unless a specific exemption or deduction applies. Grants provided in exchange for retail goods or services may also be subject to retail sales tax.
RCW 82.04.4339 provides a B&O tax deduction to nonprofit organizations for salmon restoration grants received from the federal, state, or local government. However, there is no corresponding retail sales tax exemption.
Revenue impact
State government impact:
| FY 2022 | FY 2023 | FY2024 | FY 2025 | |
|---|---|---|---|---|
| GF-State Retail Sales Tax | (1,800,000) | (1,900,000) | (2,000,000) | (2,100,000) |
| Performance Audit | (3,000) | (3,000) | (3,000) | (3,000) |
| Fiscal Year Totals | ($1,803,000) | ($1,903,000) | ($2,003,000) | ($2,103,000) |
| Biennial Totals | ($3,706,000) | ($4,106,000) |
*The B&O tax impact from tribal grants is indeterminate, but likely minimally negative.
