BILL REQ. #:  H-2545.1 

Read first time 04/07/11.   Referred to Committee on Ways & Means.

     AN ACT Relating to taxpayer accountability by requiring a net benefit to the state in order to claim the benefit of a tax expenditure; and amending RCW 82.32.585 and 82.32.534.

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

Sec. 1   RCW 82.32.585 and 2010 c 114 s 102 are each amended to read as follows:
     (1)(a) Every person claiming a tax ((preference)) expenditure that requires a survey under this section must file a complete annual survey with the department.
     (i) Except as provided in (a)(ii) of this subsection, the survey is due by April 30th of the year following any calendar year in which a person becomes eligible to claim the tax ((preference)) expenditure that requires a survey under this section.
     (ii) If the tax ((preference)) expenditure is a deferral of tax, the first survey must be filed by April 30th of the calendar year following the calendar year in which the investment project is certified by the department as operationally complete, and a survey must be filed by April 30th of each of the seven succeeding calendar years.
     (b) The department may extend the due date for timely filing of annual surveys under this section as provided in RCW 82.32.590.
     (2)(a) The survey must include the amount of the tax ((preference)) expenditure claimed for the calendar year covered by the survey.
     (b) The survey must also include the following information for employment positions in Washington, not to include names of employees, for the year that the tax ((preference)) expenditure was claimed:
     (i) The number of total employment positions;
     (ii) Full-time, part-time, and temporary employment positions as a percent of total employment;
     (iii) The number of employment positions according to the following wage bands: Less than thirty thousand dollars; thirty thousand dollars or greater, but less than sixty thousand dollars; and sixty thousand dollars or greater. A wage band containing fewer than three individuals may be combined with another wage band; and
     (iv) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.
     (c) For persons claiming the tax ((preference)) expenditure provided under chapter 82.60 or 82.63 RCW, the survey must also include the number of new products or research projects by general classification, and the number of trademarks, patents, and copyrights associated with activities at the investment project.
     (d) For persons claiming the credit provided under RCW 82.04.4452, the survey must also include the qualified research and development expenditures during the calendar year for which the credit was claimed, the taxable amount during the calendar year for which the credit was claimed, the number of new products or research projects by general classification, the number of trademarks, patents, and copyrights associated with the research and development activities for which the credit was claimed, and whether the tax ((preference)) expenditure has been assigned, and who assigned the credit. The definitions in RCW 82.04.4452 apply to this subsection (2)(d).
     (e) If the person filing a survey under this section did not file a survey with the department in the previous calendar year, the survey filed under this section must also include the employment, wage, and benefit information required under (b)(i) through (iv) of this subsection for the calendar year immediately preceding the calendar year for which a tax ((preference)) expenditure was claimed.
     (3) As part of the annual survey, the department may request additional information necessary to measure the results of, or determine eligibility for, the tax ((preference)) expenditure.
     (4) All information collected under this section, except the amount of the tax ((preference)) expenditure claimed, is deemed taxpayer information under RCW 82.32.330. Information on the amount of tax ((preference)) expenditure claimed is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request, except as provided in subsection (5) of this section. If the amount of the tax ((preference)) expenditure claimed as reported on the survey is different than the amount actually claimed or otherwise allowed by the department based on the taxpayer's excise tax returns or other information known to the department, the amount actually claimed or allowed may be disclosed.
     (5) Persons for whom the actual amount of the tax reduced or saved is less than ten thousand dollars during the period covered by the survey may request the department to treat the amount of the tax reduction or savings as confidential under RCW 82.32.330.
     (6)(a) Except as otherwise provided by law, if a person claims a tax ((preference)) expenditure that requires an annual survey under this section but fails to submit a complete annual survey by the due date of the survey or any extension under RCW 82.32.590, the department must declare the amount of the tax ((preference)) expenditure claimed for the previous calendar year to be immediately due. If the tax ((preference)) expenditure is a deferral of tax, twelve and one-half percent of the deferred tax is immediately due. If the economic benefits of the deferral are passed to a lessee, the lessee is responsible for payment to the extent the lessee has received the economic benefit.
     (b)(i) If a person claims a tax expenditure that does not produce a net benefit to the state each year, the department must declare the amount of the tax expenditure claimed for the previous calendar year to be immediately due and payable.
     (ii) The amount otherwise due and payable under (b)(i) of this subsection may be waived if the failure to produce a net benefit to the state was the result of circumstances beyond the control of the taxpayer.
     (iii) If the tax expenditure is a deferral of tax, twelve and one-half percent of the deferred tax is immediately due.
     (iv) If the economic benefits of the deferral are passed to a lessee, the lessee is responsible for payment to the extent the lessee has received the economic benefit.
     (c) The department must assess interest, but not penalties, on the amounts due under this subsection. The interest must be assessed at the rate provided for delinquent taxes under this chapter, retroactively to the date the tax ((preference)) expenditure was claimed, and accrues until the taxes for which the tax ((preference)) expenditure was claimed are repaid. Amounts due under this subsection are not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (7) The department must use the information from this section to determine the net benefit to the state of any individual's tax expenditure for purposes of subsection (6)(b) of this section.
     (8) The department must use the information from this section to prepare summary descriptive statistics by category. No fewer than three taxpayers may be included in any category. The department must report these statistics to the legislature each year by October 1st.
     (((8))) (9) For the purposes of this section:
     (a) "Person" has the meaning provided in RCW 82.04.030 and also includes the state and its departments and institutions.
     (b) "Tax ((preference)) expenditure" has the meaning ((provided)) as "tax preference" in RCW 43.136.021 and includes only the tax ((preferences)) expenditures requiring a survey under this section.
     (c) "Net benefit to the state" means the amount of economic benefit to the state in jobs created or retained, if the stated legislative intent of the tax expenditure was job creation or retention, plus the amount of increased economic activity directly related to the tax expenditure claimed, measured by the amount of taxes paid by the increased economic activity claimed, minus the annual amount of taxpayer savings.
     (i) For purposes of this subsection (9)(c), the amount of economic benefit to the state in jobs created or retained must be measured by state and local taxes paid by an employee, which must be calculated as a percentage of the annual wage for each employment position as follows:
     (A) For an annual wage of less than twenty thousand dollars, the percentage is 17.3 percent;
     (B) For an annual wage of more than twenty thousand dollars and less than thirty-seven thousand dollars, the percentage is 12.7 percent;
     (C) For an annual wage of more than thirty-seven thousand dollars and less than sixty-two thousand dollars, the percentage is 11.2 percent;
     (D) For an annual wage of more than sixty-two thousand dollars and less than ninety-nine thousand dollars, the percentage is 9.5 percent; and
     (E) For an annual wage of more than ninety-nine thousand dollars, the percentage is 7.6 percent.
     (ii) For purposes of this subsection (9)(c), the amount of increased economic activity directly related to the tax expenditure claimed must be measured by the increased taxes paid by the taxpayer annually on the activity directly related to the tax expenditure minus the annual amount of taxpayer savings.

Sec. 2   RCW 82.32.534 and 2010 c 114 s 103 are each amended to read as follows:
     (1)(a) Every person claiming a tax ((preference)) expenditure that requires a report under this section must file a complete annual report with the department. The report is due by April 30th of the year following any calendar year in which a person becomes eligible to claim the tax ((preference)) expenditure that requires a report under this section. The department may extend the due date for timely filing of annual reports under this section as provided in RCW 82.32.590.
     (b) The report must include information detailing employment, wages, and employer-provided health and retirement benefits for employment positions in Washington for the year that the tax ((preference)) expenditure was claimed. However, persons engaged in manufacturing commercial airplanes or components of such airplanes may report employment, wage, and benefit information per job at the manufacturing site for the year that the tax ((preference)) expenditure was claimed. The report must not include names of employees. The report must also detail employment by the total number of full-time, part-time, and temporary positions for the year that the tax ((preference)) expenditure was claimed.
     (c) Persons receiving the benefit of the tax ((preference)) expenditure provided by RCW 82.16.0421 or claiming any of the tax ((preferences)) expenditures provided by RCW 82.04.2909, 82.04.4481, 82.08.805, 82.12.805, or 82.12.022(5) must indicate on the annual report the quantity of product produced in this state during the time period covered by the report.
     (d) If a person filing a report under this section did not file a report with the department in the previous calendar year, the report filed under this section must also include employment, wage, and benefit information for the calendar year immediately preceding the calendar year for which a tax ((preference)) expenditure was claimed.
     (2) As part of the annual report, the department may request additional information necessary to measure the results of, or determine eligibility for, the tax ((preference)) expenditure.
     (3) Other than information requested under subsection (2) of this section, the information contained in an annual report filed under this section is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (4)(a) Except as otherwise provided by law, if a person claims a tax ((preference)) expenditure that requires an annual report under this section but fails to submit a complete report by the due date or any extension under RCW 82.32.590, the department must declare the amount of the tax ((preference)) expenditure claimed for the previous calendar year to be immediately due and payable.
     (b)(i) If a person claims a tax expenditure that does not produce a net benefit to the state each year, the department must declare the amount of the tax expenditure claimed for the previous calendar year to be immediately due and payable.
     (ii) The amount otherwise due and payable under (b)(i) of this subsection may be waived if the failure to produce a net benefit to the state was the result of circumstances beyond the control of the taxpayer.
     (c) The department must assess interest, but not penalties, on the amounts due under this subsection. The interest must be assessed at the rate provided for delinquent taxes under this chapter, retroactively to the date the tax ((preference)) expenditure was claimed, and accrues until the taxes for which the tax ((preference)) expenditure was claimed are repaid. Amounts due under this subsection are not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (5) The department must use the information from this section to determine the net benefit to the state of any individual's tax expenditure for purposes of subsection (4)(b) of this section.
     (6) The department must use the information from this section to prepare summary descriptive statistics by category. No fewer than three taxpayers may be included in any category. The department must report these statistics to the legislature each year by October 1st.
     (((6))) (7) For the purposes of this section:
     (a) "Net benefit to the state" has the same meaning as provided in RCW 82.32.585.
     (b) "Person" has the meaning provided in RCW 82.04.030 and also includes the state and its departments and institutions.
     (((b))) (c) "Tax ((preference)) expenditure" has the meaning ((provided)) as "tax preference" in RCW 43.136.021 and includes only the tax ((preferences)) expenditures requiring a survey under this section.