PREPROPOSAL STATEMENT OF INQUIRY
Subject of Possible Rule Making: Part I of chapter 23, Laws of 2010 1st sp. sess. (2ESSB 6143) changed the apportionment and nexus requirements for apportionable activities, effective June 1, 2010.
Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 82.32.300 and 82.01.060(2).
Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: Part I of chapter 23, Laws of 2010 1st sp. sess. (2ESSB 6143) changed the apportionment and nexus requirements for apportionable activities, effective June 1, 2010. The department is considering the following new rules to explain how these requirements apply.
WAC 458-20-19401 Minimum nexus thresholds for apportionable activities, Washington's business and occupation (B&O) taxes may be imposed only if a business has substantial nexus with this state. This rule would explain the minimum nexus thresholds for the B&O taxation of businesses engaged in apportionable activities.
WAC 458-20-19402 Single factor receipts apportionment -- Generally, this rule would explain how gross income earned by businesses engaged in apportionable activities is apportioned. This rule would not apply to the apportionment of income of financial institutions taxable under RCW 82.04.290, which would be addressed in WAC 458-20-19404, nor that of royalty income earned from granting the right to use intangible property, which would be addressed in WAC 458-20-19403.
WAC 458-20-19403 Single factor receipts apportionment -- Royalties, this rule would address how gross income from royalties is apportioned when the business receives royalty payments from both within and outside the state.
WAC 458-20-19404 Financial institutions -- Income apportionment, this rule would address how gross income from engaging in business as a financial institution is apportioned when the financial institution engages in business both within and outside the state.
Process for Developing New Rule: Parties interested in this rule making may contact the individual listed below. The public may also participate by providing written comments throughout this rule making or giving oral testimony at the public meeting or public hearing.
Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication. Written comments may be submitted by mail, fax, or at the public meeting. Oral comments will be accepted at the public meeting. Please direct comments towards the emergency rule drafts (adopted under WSR 10-12-115 available for viewing and printing on our web site at http://dor.wa.gov/content/FindALawOrRule/RuleMaking/agenda.aspx). Written comments on the rules may be directed to Chris Coffman and Armikka Bryant, Interpretations and Technical Advice Division, P.O. Box 47453, Olympia, WA 98504-7453, e-mail ChrisC@dor.wa.gov and ArmikkaB@dor.wa.gov.
Public Meeting Location: Auditorium, Washington State Criminal Justice Training Commission, 19010 First Avenue South, Burien, WA 98148, on June 24, 2010. For WAC 458-20-19401, 458-20-19402, and 458-20-19403 the meeting will start at 9:30 a.m.; and for WAC 458-20-19404 the meeting will begin at 1:30 p.m.
Assistance for persons with disabilities: Contact Martha Thomas no later than ten days before the meeting date, TTY 1-800-451-7985 or (360) 725-7497.
June 2, 2010
Alan R. Lynn
Rules Coordinator