SB 6424-S - DIGEST

(AS OF SENATE 2ND READING 3/4/04)

Finds that the issue of the taxability of staffing businesses has been the subject of considerable confusion and dispute by the staffing industry, the department of revenue, and the courts since the Washington supreme court issued its decision in Rho Company v. Department of Revenue in 1989. The court cleared up much of the confusion caused by the Rho decision in City of Tacoma v. The William Rogers Company, Inc., issued in December of 2002.

Declares that the legislature has determined that it is in the best interests of the state and the temporary staffing industry to alleviate the fiscal impact to the industry, and to fully resolve the issues of the classification and measure of the tax.

Finds that this can be achieved by lowering the rate of tax imposed on the gross income of a temporary staffing agency, which amount includes all wages, benefits, and costs paid to or for workers, and clarifying that persons providing retail services will be taxable under the retailing or wholesaling classification.

Provides that, absent a person's fraud or intentional misrepresentation of a material fact, no assessment for taxes imposed under chapters 82.08 and 82.12 RCW for staffing services, or related penalties or interest, may be made by the department against a person who in good faith: (1) Upon the effective date of this act, collects and remits to the department the applicable taxes imposed under chapters 82.08 and 82.12 RCW on sales made to consumers in this state; and

(2) For a period of at least thirty-six months from the effective date of this act, continues to collect and remit to the department the applicable taxes imposed under chapters 82.08 and 82.12 RCW on sales made to consumers in this state; provided however, that should the person quit doing business as a staffing service, then the thirty-six month period shall be reduced to the period that the person conducted business as a staffing service from the effective date of this act.