Amendment to SB 6143-S.E2EFFECT:
Exclude the royalty tax 82.04.2907 from the minimum nexus apportionment changes. Require the Department ofRevenue to disregard abusive tax transactions.
On page 12, beginning on line 37, strike “
A new section is added to chapter82.32 RCW to read as follows:(1) The department must disregard, for tax purposes,abusive tax avoidance transactions. In disregarding anabusive tax avoidance transaction, the department may:(b) Disregard the form of a corporate or other entity, evenwhen legal formalities have been observed, when the form ofentity is used as part of an abusive tax avoidancetransaction;(c) Treat the tax effects of the transaction, plan, orarrangement according to its underlying substance ratherthan its form;(d) Treat a series of formally separate steps as a singletransaction;(e) Impute income to a taxpayer that provides services to arelated person and the consideration received for providingsuch services does not reflect fair market value; and(f) Take any other reasonable steps necessary to deny thetax benefit that would otherwise arise as a result of theabusive tax avoidance transaction.(2) For purposes of this section, "abusive tax avoidancetransaction" means the avoidance of any tax collected bythe department under the provisions of this chapter bymeans of a transaction, plan, or arrangement that lackseconomic substance.(3)(a) A transaction, plan, or arrangement will beconsidered as having economic substance only if thetransaction, plan, or arrangement changes in a meaningfulway, apart from its tax effects, the taxpayer's economicposition;(b) An objective of achieving favorable financialaccounting benefits arising from tax savings is not deemedto be a substantial nontax purpose for entering into atransaction, plan, or arrangement.(c) The burden is on the taxpayer to establish that atransaction, plan, or arrangement has economic substance.