S-1346               _______________________________________________

                                                   SENATE BILL NO. 3873

                        _______________________________________________

State of Washington                              49th Legislature                              1985 Regular Session

By Senators Lee, Cantu, Hayner, McCaslin, Deccio, Zimmerman and Saling

Read first time 2/8/85 and referred to Committee on Ways and Means.

AN ACT Relating to business and occupation tax deferral; adding a new section to chapter 82.04 RCW; providing an effective date; and declaring an emergency.

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

NEW SECTION. Sec. 1.  A new section is added to chapter 82.04 RCW to read as follows:

          (1) The amount of tax imposed under this chapter on persons engaging in a new business which operates at a loss in any year of the first three years after registration under RCW 82.32.030 shall be deferred and paid as follows:

!tp1,1,1 !ixYEAR!sc ,1AFTER!tt!sc ,1REGISTRATION!tj1!tcPERCENTAGE!sc ,1OF!sc ,1DE!ttFERRED !sc ,1TAX!sc ,1PAID

!tl4!tr10%

!tl5!tr15%

!tl6!tr20%

!tl7!tr25%

!tl8!tr30%

          The deferred tax paid in the fourth through eighth year is in addition to the taxes otherwise imposed under this chapter for those years.  If a person receiving a tax deferral under this section ceases to engage in the business, all taxes deferred under this section shall be immediately due and payable.

          (2) To qualify for tax deferral under subsection (1) of this section, a person engaging in a new business shall apply to the department of revenue for deferral before the end of the period for which taxes are payable.  No tax may be deferred under this section until the person has been approved as eligible for deferral by the department.  No taxpayer may receive a deferral under this section on a taxable amount exceeding five million dollars during any three-year period.  The department shall determine whether or not a taxpayer is operating at a loss according to federal income tax rules.

          (3) For the purposes of this section:

          (a) "Year" means twelve calendar months.

          (b) "New business" means a sole proprietorship, partnership, or corporation which first registered with the department of revenue, or with a comparable agency in another state, within the three-year period prior to application for a tax deferral, but "new business" excludes branches and expansions of established businesses.

          (4) The department shall adopt rules to implement this section, including rules on the procedure to be followed and information required to be submitted to obtain a deferral under this section.

NEW SECTION. Sec. 2.     This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect July 1, 1985.