This bill amends RCW 82.04.290 to change business and occupation tax rates and create a new low rate for a specific category of investment management services. It imposes a 0.275 percent tax rate on persons in Washington providing “qualifying international investment management services,” raises the general rate for other activities to 1.8 percent (replacing 1.75 percent), and establishes a 1.5 percent reduced rate for three groups: those subject to the surcharge under RCW 82.04.299, businesses whose gross income subject to this tax was under $1,000,000 in the prior calendar year (with affiliate aggregation rules), and hospitals as defined by RCW 70.41.020 (including certain chapter 71.12 facilities). Sixteen and two-thirds percent of revenue collected under the 1.8 percent rate must be deposited into the workforce education investment account. The existing 0.9 percent rate for persons performing aerospace product development for others is extended until July 1, 2040, and those persons must file a complete annual report under RCW 82.32.534. The bill also changes procedures and enforcement related to affiliate reporting and tax reconciliation. The department may require written or electronic identification of affiliates or a certification of no affiliates from those claiming the 1.5 percent rate. If the department, by clear, cogent, and convincing evidence, finds that a person intentionally evaded the higher tax rate by failing to provide complete and accurate affiliate information within 30 days of a request, that person is ineligible for the 1.5 percent rate for the current calendar year and the next four calendar years, subject to a limited waiver if the department has no prior finding of noncompliance and the taxpayer comes into full compliance within 30 days of notice. Taxpayers subject to reconciliation under RCW 82.04.462(4) must correct current-year reporting when complete information for the immediately preceding calendar year becomes available. The text also clarifies inclusion of persons rendering services that are not sales and excludes certain advertising, demonstration, and promotional supplies from agent remuneration for taxation. Legally, the bill is an amendment to existing statute RCW 82.04.290 that creates a new tax classification and changes tax rates, reporting procedures, and penalties for failure to supply affiliate information. Section 1 takes effect October 1, 2025. The extracted material does not identify which department is authorized to request affiliate information, and it does not define “qualifying international investment management services” or reproduce other referenced statutory definitions, so those specific details are not available in the provided text.

If enacted, this bill shifts business and occupation tax rates in a few targeted ways: it imposes a very low 0.275% rate for businesses that provide "qualifying international investment management services" (definition not provided in the facts), raises the general B&O tax rate slightly to 1.8% from 1.75% (with 16.67% of revenue from that increase earmarked for the workforce education investment account), keeps a 1.5% reduced rate for small businesses (under $1 million in taxable gross income), certain surcharge payers, and hospitals, and extends a 0.9% aerospace product development rate through July 1, 2040 while requiring annual reporting for those aerospace providers. Businesses that claim the 1.5% rate now face new paperwork and risk: the department (not named in the facts) can demand written or electronic affiliate information or a certification of none, must be answered within 30 days, and failure to provide complete information can lead to losing the 1.5% rate for the current year plus four more years if the department shows intent to evade, with limited waiver options if corrected promptly; taxpayers also must correct current-year reporting when prior-year information becomes available. The facts leave unclear which department enforces these rules and how "qualifying international investment management services" and "aerospace product development" are precisely defined, so some practical effects depend on those missing definitions.