This bill amends RCW 43.06.523 to authorize the governor to negotiate and enter into compacts with federally recognized tribes located in Washington that allocate portions of state sales tax, state use tax, and specified state business and occupation (B&O) tax revenue from transactions sourced to a tribal compact covered area. The governor may delegate negotiation authority to the Department of Revenue except for terms concerning a compacting tribe’s qualified capital investment. The Department of Revenue may begin administering the act on or after July 1, 2027, and the act applies to compacts or compact amendments with an effective date on or after January 1, 2028. The statute creates a detailed revenue-sharing and administration framework: it defines “qualified transaction,” “state sales tax,” “state use tax,” “compact covered area,” “compacting tribe,” and other terms; requires compacts to provide tribes with certain shares (including 100% of certain B&O tax revenues and the first $500,000 per year of combined state sales and use tax, with specified percentage shares for amounts over that cap tied to “new development” and completion of a qualified capital investment); requires the Department of Revenue to perform tax administration and collection for qualified transactions (without charging tribes for those services, though the department may seek appropriations); requires monthly payments to tribes within 60 days after the department receives tax amounts; and provides that refunds or credits issued to taxpayers for amounts previously paid to a tribe are charged back to the tribe. Compacts must include procedures for determining completion of a qualified capital investment, verifying compliance, dispute resolution (including nonjudicial processes), confidentiality consistent with RCW 82.32.330, and an agreement that the compact resolves covered disputes between the tribe and state or local taxing authorities while in effect. The act preserves local taxing authority under specified RCW chapters and titles, protects funds dedicated for performance audits under RCW 43.09.475 from reduction by compact payments, and ties sourcing of qualified transactions to RCW 82.32.730. No new criminal penalties or changes to existing penalties are specified in the provided text; the changes are procedural and substantive tax-allocation provisions. Important definitions and provisions are incomplete in the extracted text: the full definition of “qualified capital investment” and other parts of subsection (10) were cut off, and some preceding text is missing, so other details of eligibility, calculation, or related provisions may be absent from this summary.

If enacted, eligible tribes can negotiate compacts that will redirect specified portions of state sales, use, and certain B&O tax revenues from qualified sales inside a tribe’s covered area to the tribe, with a guaranteed first $500,000 per year of combined state sales and use tax and further shares that increase if the tribe completes a negotiated “qualified capital investment” or after certain years. The Department of Revenue will administer and collect the taxes, must start administering no earlier than July 1, 2027 for compacts effective on or after January 1, 2028, and must pay tribes monthly (within 60 days) without charging tribes for those services; however, the compacting tribe would be charged back for any refunds or credits the department later issues to taxpayers. This will most directly affect compacting tribes (new revenue and potential incentive to make qualifying investments), taxpayers and businesses operating in the compact areas (their state tax dollars may be allocated to a tribe rather than to the state in some cases), and the Department of Revenue (new administrative duties and possible need for legislative appropriations to cover costs). Important details that determine who benefits most and how much money shifts are missing from the provided text: the full definition of “qualified capital investment” and some parts of the “qualified transaction” rules are incomplete, so it is unclear exactly which projects, transactions, or timeframes will qualify and how compact negotiation tradeoffs will play out.