Z-409                 _______________________________________________

                                                   HOUSE BILL NO. 1025

                        _______________________________________________

State of Washington                              49th Legislature                              1985 Regular Session

By Representatives Silver, G. Nelson, Hastings, Brough, J. Williams, Sanders, Long, Isaacson, May and L. Smith; by Small Business Improvement Council request

Read first time 2/8/85 and referred to Committee on Trade & Economic Development.

AN ACT Relating to deferral of business and occupation taxes for new businesses; and adding new sections to chapter 82.04 RCW.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1.     (1) The department shall grant a deferral of taxes imposed under this chapter upon persons engaging in a new business which experiences a loss during any year of its first five years of operation.  Only those taxes that are based on activities of the new business may be deferred under this section.

          (2) Application for deferral shall be made to the department, in the form and manner prescribed by the department, before the end of the period for which the taxes are payable.  No tax may be deferred under this section until the department has issued an approval of the deferral.

          (3) For the purposes of this section:

          (a) "Loss" means a loss as defined by the Internal Revenue Code as of January 1, 1985, for federal income tax reporting purposes; and

          (b) "New business" means a sole proprietorship, partnership, or corporation located in this state which first registered, or which was first legally required to register, with the department after the effective date of this act.

          (4) For the purposes of this section and section 2 of this act, "year" means twelve calendar months.

NEW SECTION. Sec. 2.     Persons granted a tax deferral under section 1 of this act shall begin paying the deferred taxes three years after the year for which the loss was reported for federal income tax purposes.  The deferred taxes shall be in addition to the taxes otherwise imposed under this chapter during the deferral payment period.  Payment of the taxes deferred shall be made within five years according to the following schedule:

!tp1,2,2 !tj1!tcPERCENTAGE OF DEFERRED

!tlPAYMEN!ttT YEAR!tlTAX!tt DUE

!tl1!tl10%

!tl2!tl15%

!tl3!tl20%

!tl4!tl25%

!tl5!tl30%

          The department may approve an accelerated payment schedule upon request of the person who received the deferral.

NEW SECTION. Sec. 3.     The department shall adopt rules to implement sections 1 and 2 of this act including rules on the procedure to be followed and information required to be submitted to qualify for a deferral under section 1 of this act.  Copies of federal income tax forms as filed with the Internal Revenue Service, and as thereafter amended, shall be submitted as required by the department.

NEW SECTION. Sec. 4.     Sections 1 through 3 of this act are each added as new sections to chapter 82.04 RCW.