H-0884.1  _______________________________________________

                          HOUSE BILL 2010

          _______________________________________________

State of Washington      57th Legislature     2001 Regular Session

By Representatives Cairnes, Van Luven, Conway, Santos, Buck and Kessler

Read first time 02/12/2001.  Referred to Committee on Finance.

Clarifying the tax deduction for government support for health and welfare services.

    AN ACT Relating to the business and occupation tax deduction for health or social welfare services; amending RCW 82.04.4297; creating new sections; and declaring an emergency.

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

NEW SECTION. Sec. 1.  The legislature finds that the deduction under the business and occupation tax statutes for compensation from public entities for health or social welfare services was intended to provide government with greater purchasing power when government provides financial support for the provision of health or social welfare services to benefited classes of persons, except when this financial support is extended pursuant to employee benefit plans.  The legislature also finds that the failure to define "employee benefits plan" has raised the question whether statutory benefits provided for the uniformed services of the United States are within the scope of amounts paid under employee benefit plans.  The legislature also finds that members of the uniformed services are not generally considered to be employees, and that the deduction's limitation with respect to employee benefit plans should be clarified to this effect.

    Sec. 2.  RCW 82.04.4297 and 1988 c 67 s 1 are each amended to read as follows:

    In computing tax there may be deducted from the measure of tax amounts received from the United States or any instrumentality thereof or from the state of Washington or any municipal corporation or political subdivision thereof as compensation for, or to support, health or social welfare services rendered by a health or social welfare organization or by a municipal corporation or political subdivision, except deductions are not allowed under this section for amounts that are received under an employee benefit plan.  For the purposes of this section, "employee benefit plan" does not include the military benefits program authorized in 10 U.S.C. Sec. 1071 et seq., as amended, or amounts payable pursuant thereto.

NEW SECTION. Sec. 3.  This act applies to all taxes collected after the effective date of this act, including taxes collected on reporting periods prior to the effective date of this act.

NEW SECTION. Sec. 4.  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 immediately.

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