H-0614.1  _______________________________________________

                          HOUSE BILL 1155

          _______________________________________________

State of Washington      55th Legislature     1997 Regular Session

By Representatives Boldt, Mulliken, B. Thomas, Thompson and Dunn

Read first time 01/15/97.  Referred to Committee on Finance.

Providing for small business tax relief.

    AN ACT Relating to small business tax relief; amending RCW 82.04.4451; 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:

    Sec. 1.  RCW 82.04.4451 and 1994 sp.s. c 2 s 1 are each amended to read as follows:

    (1) In computing the tax imposed under this chapter, a credit is allowed against the amount of tax otherwise due under this chapter, as provided in this section.  The maximum credit for a taxpayer for a reporting period is ((thirty-five)) fifty dollars multiplied by the number of months in the reporting period, as determined under RCW 82.32.045.

    (2) When the amount of tax otherwise due under this chapter is equal to or less than the maximum credit, a credit is allowed equal to the amount of tax otherwise due under this chapter.

    (3) When the amount of tax otherwise due under this chapter exceeds the maximum credit, a reduced credit is allowed equal to twice the maximum credit, minus the tax otherwise due under this chapter, but not less than zero.

NEW SECTION. Sec. 2.  A new section is added to chapter 82.04 RCW to read as follows:

    (1) In computing the tax imposed under this chapter, a new business may claim a credit under this section or under RCW 82.04.4451, but may not claim a credit under both this section and RCW 82.04.4451.  A credit is allowed for a new business during its first thirty-six months of operation against the amount of tax otherwise due under this chapter, as provided in this section.  The maximum credit for a taxpayer for a reporting period is one hundred dollars multiplied by the number of months in the reporting period, as determined under RCW 82.32.045.

    (2) When the amount of tax otherwise due under this chapter is equal to or less than the maximum credit, a credit is allowed equal to the amount of tax otherwise due under this chapter.

    (3) When the amount of tax otherwise due under this chapter exceeds the maximum credit, a reduced credit is allowed equal to twice the maximum credit, minus the tax otherwise due under this chapter, but not less than zero.

    (4) 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 thirty-six months immediately preceding the date on 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.

NEW SECTION. Sec. 3.  This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and takes effect July 1, 1997.

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