H-1028.1  _______________________________________________

                          HOUSE BILL 1488

          _______________________________________________

State of Washington      54th Legislature     1995 Regular Session

By Representatives Chappell, Morris, Mastin, Brumsickle, Schoesler, Regala, Kessler, Grant, Basich, Sheldon, Campbell, Hatfield, Scott, Kremen, Wolfe, Patterson and Costa

Read first time 01/27/95.  Referred to Committee on Trade & Economic Development.

Providing a tax exemption for new small businesses.

    AN ACT Relating to business and occupation tax exemption for new small businesses; and adding a new section to chapter 82.04 RCW.

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) This chapter does not apply to a new business, with less than twenty employees, during the first sixty months of operation of the business.  During the next sixty months of operation of the business, the business is exempt from taxes due under this chapter according to the following schedule:

Year Exemption

               6                       50%

               7                       40%

               8                       30%

               9                       20%

               10                      10%

               after 10                0%

    The business is not eligible for the exemption under this section after the one hundred twentieth month of operation.

    (2) As used in this section:

    (a) "New business" means a business that obtained or was required to obtain a registration certificate under RCW 82.32.030 for the first time during the calendar year for which exemption is first claimed under this chapter.

    (b) "New business" does not include:

    (i) A business that has been restructured, reorganized, or transferred, unless the majority of the activities to be conducted after restructuring, reorganization, or transferral are significantly different from the activities previously conducted;

    (ii) A new branch location or other facility except by an existing out-of-state entity first doing business in this state;

    (iii) A business that is substantially similar to a business currently operated, or operated within the past five years, by the same principals.

    The department may require a new business to certify its status as part of its master business application, or with the first tax return claiming exemption under this section.

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