AN ACT Relating to international services; adding a new section to chapter 82.04 RCW; adding a new section to chapter 48.14 RCW; and providing an effective date.

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) There may be credited against the tax imposed by this chapter, an amount equal to five percent of the qualified payroll, by a business that is:

(a) Located within a designated community empowerment zone; and

(b) Engaged in the business of providing selected international services.

(2) In order to claim the tax credit under this section the business must:

(a) Expend an amount, averaged over the most recent five-year period, equal or greater than twenty percent of the tax credit on training of empowerment zone employees;

(b) Provide internship positions in conjunction with a targeted program of study offered by a local institution of higher education or vocational-technical school designed to provide experience relevant to the activities of the business;

(c) Provide summer employment opportunities in conjunction with the local high schools, that is targeted to high school aged youth that reside within the community empowerment zone, and that is designed to provide experience relevant to the activities of the business; and

(d) Hire, over the most recent five-year period, at least twenty-five percent of the new employees located within the designated community empowerment zone from applicants who reside, at the time of application, in the designated community empowerment zone and continue to reside in the zone for five years after being hired. Employees who pay housing rent or mortgage payments in excess of one hundred twenty percent of the fair market rent, as determined under section 8 of the United States housing act of 1937, as amended (42 U.S.C. Sec. 1437f), shall not be considered as residing in the zone for purposes of this subsection (2)(d).

(3) A business may not use the tax credit to relocate existing jobs in a community in the state to the designated community empowerment zone.

(4) The annual credit allowed under this section shall be limited to the amount of tax imposed by this chapter.

(5) As used in this section and section 2 of this act:

(a) "Designated community empowerment zone" means a geographic area approved under RCW 43.63A.700;

(b) "Selected international services" means a business that:

(i) Provides any of the following services related directly to the delivery of the service outside the United States or on behalf of persons residing outside the United States: Computer; data processing; information; legal; accounting; tax preparation; design; engineering; architectural; business consulting; business management; public relations and advertising; surveying; geological consulting; real estate appraisal; and financial; and

(ii) Is subject to taxation under RCW 82.04.290(2); and

(c) "Qualified payroll" means the gross wages and benefits paid or accrued, with respect to each employee of the business that is directly involved in providing selected international services and was hired after the effective date of this act, during the first five years of such employee's employment within a designated community empowerment zone. Qualified payroll includes only payroll that exceeds the previous year's annual payroll by an amount in excess of the average growth rate in wages over the most recent five-year period. The average growth in wages shall be calculated using gross wages but not benefits.

NEW SECTION. Sec. 2. A new section is added to chapter 48.14 RCW to read as follows:

(1) There may be credited against the tax imposed under RCW 48.14.020, an amount equal to five percent of the qualified payroll, by a business that is:

(a) Located within a designated community empowerment zone; and

(b) Engaged in the business of providing selected international services.

(2) In order to claim the tax credit under this section the business must:

(a) Expend an amount, averaged over the most recent five-year period, equal or greater than twenty percent of the tax credit on training of empowerment zone employees;

(d) Hire, over the most recent five-year period, at least twenty percent of the total employees located within the designated community empowerment zone from applicants who reside, at the time of application, in the designated community empowerment zone.

(3) A business may not use the tax credit to relocate existing jobs in a community in the state to the designated community empowerment zone.

(4) The annual credit allowed under this section shall be limited to the amount of tax imposed by this chapter.

(5) As used in this section:

(a) "Designated community empowerment zone" has the same meaning as in section 1 of this act;

(b) "Selected international services" has the same meaning as in section 1 of this act; and

NEW SECTION. Sec. 3. This act takes effect January 1, 1999.