3.53.100 Exemptions.
This section applies only to the gross receipts tax imposed in ACC 3.53.040(A).
A. Adult Family Homes. This chapter does not apply to adult family homes as defined in ACC 3.53.020(A) that are licensed or specifically exempt from licensing under DSHS rules.
B. Daycare Provided by Churches. This chapter shall not apply to amounts derived by a church that is exempt from property tax under RCW 84.36.020 from the provision of care for children for periods of less than 24 hours.
C. Child Care Resource and Referral Services by Nonprofit Organizations. This chapter does not apply to nonprofit organizations in respect to amounts derived from the provision of child care resource and referral services.
D. Nonprofit Organizations That Are Guarantee Agencies, Issue Debt, or Provide Guarantees for Student Loans. This chapter does not apply to gross income received by nonprofit organizations exempt from federal income tax under 26 USC §501(c)(3), as hereafter amended, that:
1. Are guarantee agencies under the federal guaranteed student loan program or that issue debt to provide or acquire student loans; or
2. Provide guarantees for student loans made through programs other than the federal guaranteed student loan program.
E. Nonprofit Organizations – Credit and Debt Services. This chapter does not apply to nonprofit organizations in respect to amounts derived from provision of the following services:
1. Presenting individual and community credit education programs including credit and debt counseling;
2. Obtaining creditor cooperation allowing a debtor to repay debt in an orderly manner;
3. Establishing and administering negotiated repayment programs for debtors; or
4. Providing advice or assistance to a debtor with regard to subsection (E)(1), (E)(2), or (E)(3) of this subsection.
F. Certain Fraternal and Beneficiary Organizations. This chapter shall not apply to fraternal benefit societies or fraternal fire insurance associations, as described in RCW Title 48; nor to beneficiary corporations or societies organized under and existing by virtue of RCW Title 24, if such beneficiary corporations or societies provide in their bylaws for the payment of death benefits. This exemption is limited, however, to gross income from premiums, fees, assessments, dues or other charges directly attributable to the insurance or death benefits provided by such societies, associations, or corporations.
G. Certain Corporations Furnishing Aid and Relief. This chapter shall not apply to the gross sales or the gross income received by corporations which have been incorporated under any act of the Congress of the United States and whose principal purposes are to furnish volunteer aid to members of the armed forces of the United States and also to carry on a system of national and international relief and to apply the same in mitigating the sufferings caused by pestilence, famine, fire, floods, and other national calamities and to devise and carry on measures for preventing the same.
H. Community Services Provided by DSHS. This chapter shall not apply to the first $2,000,000 in gross taxable income received from DSHS by a business or organization otherwise subject to this chapter for the cost of care, maintenance, support and training of persons with developmental disabilities at nonprofit group training homes (as defined by Chapter 71A.22 RCW), or to the business activities of nonprofit organizations from the operation of community services. For the purposes of this subsection, “the operation of community services” means performance of business activities of any kind on or off the premises of such nonprofit organizations which are performed for the primary purpose of:
1. Providing gainful employment or rehabilitation services to the handicapped as an interim step in the rehabilitation process for those who cannot be readily absorbed in the competitive labor market or during such time as employment opportunities for them in the competitive labor market do not exist; or
2. Providing evaluation and work adjustment services for handicapped individuals.
I. Investments – Dividends From Subsidiary Corporations. This chapter shall not apply to amounts derived by persons, other than those engaging in banking, loan, security or other financial businesses, from investments or the use of money as such, and also amounts derived as dividends by a parent from its subsidiary corporations.
J. The city of Auburn is exempt from the tax levied by this chapter.
K. Gross Receipts Taxed Under Other Sections of This Code. This chapter shall not apply to:
1. Any person in respect to a business activity with respect to which tax liability is specifically imposed under the provisions of Chapter 3.88 ACC, Utility Services; or
2. Any person in respect to a business activity with respect to which tax liability is specifically imposed under the provisions of Chapter 3.80 ACC, Gambling Activities.
L. Credit Unions. This chapter shall not apply to the gross income of credit unions organized under the laws of this state, any other state, or the United States.
M. International Banking Facilities. This chapter shall not apply to the gross receipts of an international banking facility. As used in this subsection, an “international banking facility” means:
1. A facility represented by a set of asset and liability accounts segregated on the books and records of a commercial bank whose principal office is located in this state, and which is incorporated and doing business under the laws of the United States or of this state;
2. A United States branch or agency of a foreign bank;
3. An Edge corporation organized under 12 USC §§611 through 631; or
4. An agreement corporation having an agreement or undertaking with the Board of Governors of the Federal Reserve System under 12 USC §§601 through 604a, that includes only international banking facility time deposits as defined in 12 C.F.R. §204.8(a)(2) and international banking facility extensions of credit as defined in 12 C.F.R. §204.8(a)(3).
N. Insurance Business. This chapter shall not apply to amounts received by any person who is an insurer or their appointed insurance producer upon which a tax based on gross premiums is paid to the state pursuant to RCW 48.14.020; and provided further, that the provisions of this subsection shall not exempt any bonding company from tax with respect to gross income derived from the completion of any contract as to which it is a surety, or as to any liability as successor to the liability of the defaulting contractor.
O. Farmers – Agriculture. This chapter shall not apply to any farmer in respect to amounts received from selling fruits, vegetables, berries, butter, eggs, fish, milk, poultry, meats or any other agricultural product that is raised, caught, produced or manufactured by such persons.
P. Athletic Exhibitions. This chapter shall not apply to any person in respect to the business of conducting boxing contests and sparring or wrestling matches and exhibitions for the conduct of which a license must be secured from the State Boxing Commission.
Q. Racing. This chapter shall not apply to any person in respect to the business of conducting race meets for the conduct of which a license must be secured from the Washington State Horse Racing Commission.
R. Ride Sharing. This chapter does not apply to any funds received in the course of commuter ride sharing or ride sharing for persons with special transportation needs in accordance with RCW 46.74.010.
S. Employees. This chapter shall not apply to any person in respect to the person’s employment in the capacity as an employee or servant as distinguished from that of an independent contractor. For the purposes of this subsection, the definition of “employee” shall include those persons defined as employees in 26 USC §3121(d), as now enacted or hereafter amended. A booth renter as defined in RCW 82.04.360(3) is an independent contractor for purposes of this chapter.
T. Amounts Derived From Sale of Real Estate. This chapter shall not apply to gross proceeds derived from the sale of real estate. This, however, shall not be construed to allow an exemption of amounts received as commissions from the sale of real estate, nor as fees, handling charges, discounts, interest or similar financial charges resulting from, or relating to, real estate transactions. This chapter shall also not apply to amounts received for the rental of real estate if the rental income is derived from a contract to rent for a continuous period of 30 days or longer.
U. Mortgage Brokers’ Third-Party Provider Services Trust Accounts. This chapter shall not apply to amounts received from trust accounts to mortgage brokers for the payment of third-party costs if the accounts are operated in a manner consistent with RCW 19.146.050 and any rules adopted by the Director of Financial Institutions.
V. Amounts Derived From Manufacturing, Selling or Distributing Motor Vehicle Fuel. This chapter shall not apply to manufacturing, selling or distributing motor vehicle fuel, as the term “motor vehicle fuel” is defined in RCW 82.38.020 and exempt under RCW 82.38.280; provided, that any fuel not subjected to the state fuel excise tax, or any other applicable deduction or exemption, will be taxable under this chapter.
W. Amounts Derived From Liquor, and the Sale or Distribution of Liquor. This chapter shall not apply to liquor as defined in RCW 66.04.010 and exempt in RCW 66.08.120.
X. Casual and Isolated Sales. This chapter shall not apply to the gross proceeds derived from casual or isolated sales.
Y. Accommodation Sales. This chapter shall not apply to sales for resale by persons regularly engaged in the business of making retail sales of the type of property so sold to other persons similarly engaged in the business of selling such property where:
1. The amount paid by the buyer does not exceed the amount paid by the seller to the vendor in the acquisition of the article; and
2. The sale is made as an accommodation to the buyer to enable the buyer to fill a bona fide existing order of a customer or is made within 14 days to reimburse in kind a previous accommodation sale by the buyer to the seller.
Z. Real Estate Brokers and Associated Brokers, Agents, or Salesmen. This chapter does not apply to that portion of a real estate commission assigned to another brokerage office pursuant to the division of revenue between the originating brokerage office and a cooperating brokerage office on a particular transaction. Each brokerage office shall pay the tax upon its respective revenue share of the transaction. Furthermore, where a brokerage office has paid the business and occupation tax on the gross commission earned by that brokerage office, associate brokers, salesmen or agents within the same office shall not be required to pay the tax upon their share of the commission from the same transaction.
AA. Taxes Collected as Trust Funds. This chapter shall not apply to amounts collected by the taxpayer from third parties to satisfy third party obligations to pay taxes such as the retail sales tax, use tax, and admission tax.
BB. Health Maintenance Organization, Health Care Service Contractor, Certified Health Plan. This chapter does not apply to any health maintenance organization, health care service contractor, or certified health plan with respect to premiums or prepayments that are taxable under RCW 48.14.0201. However, per RCW 48.14.0201(7), this exemption is not intended to, and shall not, impair the city’s ability to impose a tax hereunder upon the health care services directly delivered by the employees of a health maintenance organization under Chapter 48.46 RCW.
CC. Nonprofit Hospital.
1. This chapter shall not apply to nonprofit hospitals (as “hospital” is defined in ACC 3.53.020(Y)) to the extent that the nonprofit hospital’s annual net operating income is less than $10,000,000. For purposes of this subsection, “net operating income” shall mean income in an amount equal to:
a. The organization’s aggregate gross revenue generated from operating activities and services, less –
b. Uncollectable debts and uncompensated services, and less –
c. Total expenses related to operating activities.
Capital expenditures, debt service and noncash charges, such as depreciation of assets or amortization of financing costs, shall not be included in the calculation of net operating income.
2. Nonprofit hospitals exceeding $10,000,000 in net operating income are not eligible for the exemptions within this subsection.
DD. County, City, Town, School District, or Fire District Activity. This chapter shall not apply to any county, city, town, school district, or fire district activity, regardless of how financed, other than a utility or enterprise activity as defined by the State Auditor pursuant to RCW 35.33.111 and 36.40.220 and upon which the tax imposed pursuant to this chapter had previously applied. Nothing contained in this section shall limit the authority of the city to authorize the imposition of such tax prospectively upon such activities as the city shall specifically designate.
EE. This chapter shall not apply to the gross income received by the United States or any instrumentality thereof, or by the state of Washington or any municipal subdivision thereof; provided, however, that the exemption contained in this subsection shall only apply to gross income which the city is prohibited from taxing pursuant to the terms of any federal or state law.
FF. This chapter shall not apply to any person conducting business in an area that becomes a part of the city by annexation in accordance with Chapter 35.10 or 35.13 RCW after this chapter’s effective date. The exemption provided in this subsection shall expire at the end of the calendar quarter three years after the date of such annexation.
GG. On and after January 1, 2024, and until January 1, 2034, this chapter shall not apply to income received by any person for engaging in any activities described in RCW 82.04.759. (Ord. 6898 § 1 (Exh. A), 2023; Ord. 6860 § 1 (Exh. A), 2022; Ord. 6845 § 1, 2021; Ord. 6814 § 1 (Exh. A), 2021.)