BILL REQ. #:  H-0631.2 

Read first time 01/20/2005.   Referred to Committee on Economic Development, Agriculture & Trade.

     AN ACT Relating to a job creation tax credit; adding a new section to chapter 82.04 RCW; and providing an expiration 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)(a) In computing the tax imposed under this chapter, an eligible person is allowed a credit against the tax due. The credit is equal to five hundred dollars per year for each qualified employment position created after the effective date of this section and maintained for a period of three consecutive years. A credit is earned for the calendar year the person is hired to fill the position, plus the two subsequent consecutive years, if the position is maintained for those two years.
     (b) Credit may not be taken for hiring of persons into positions that exist on the effective date of this section. Credit is authorized for new employees hired for new positions created on or after the effective date of this section. New positions filled by existing employees are eligible for the credit under this section only if the position vacated by the existing employee is filled by a newly hired employee.
     (c) If a position is filled before July 1st, it qualifies for the full yearly credit for that calendar year. If it is filled after June 30th, this position qualifies for half of the credit for that calendar year.
     (d) If a vacancy occurs in a qualified position, it must be filled within sixty consecutive days in order to qualify for the credit.
     (e) Credit may be accrued and carried over until it is used. No refunds may be granted for credits under this section.
     (f) No application is necessary for the tax credit. Persons taking the credit are subject to all of the requirements of chapter 82.32 RCW.
     (2) The employment security department shall provide to the department of revenue any information needed by the department of revenue to verify eligibility under this section.
     (3) If at any time the department finds that a person is not eligible for tax credit under this section or if a qualified position is eliminated without being filled for thirty-six consecutive months, the amount of taxes for which a credit has been used is immediately due. The department shall assess interest, but not penalties, on the credited taxes for which the person is not eligible. The interest shall be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, shall be assessed retroactively to the date the tax credit was taken, and shall accrue until the taxes for which a credit has been used are repaid.
     (4) A person claiming the credit shall agree to complete an annual report in a form prescribed by the department, which shall include:
     (a) The number of total employment positions;
     (b) The number of qualified positions;
     (c) The amount of the credit claimed;
     (d) The number of employment positions according to the following wage bands: Less than thirty thousand dollars; thirty thousand dollars or greater, but less than sixty thousand dollars; and sixty thousand dollars or greater. A wage band containing fewer than three individuals may be combined with another wage band;
     (e) The number of employment positions that have employer-provided medical, dental, and health benefits; and
     (f) Any additional information the department finds necessary to measure the results of the tax credit program.
     The report is due by March 31st following any year in which a tax credit under this section is taken. This information shall be subject to the confidentiality provisions of RCW 82.32.330 and may not be disclosed to the public.
     (5) A person that no longer qualifies as an eligible person in calendar year two or three shall continue to receive the maximum allowable credit for qualified employment positions created prior to the date that they no longer qualified as an eligible person.
     (6) The department shall use the information from subsection (4) of this section to study the tax credit program authorized under this section. The department shall report to the appropriate committees of the legislature on the effectiveness of this tax credit in job creation, net jobs created for Washington residents, and company growth by December 1, 2011.
     (7) The definitions in this subsection apply throughout this section, unless the context clearly requires otherwise.
     (a) "Eligible person" means a person as defined in RCW 82.04.030, who is a "small business" as defined in RCW 19.85.020; and who offers a health care plan to all employees.
     (b) "Qualified employment position" means a permanent full-time employee who is paid at least one and one-half times the minimum wage. "Full time" means a position for at least thirty-five hours a week. If an employee is either voluntarily or involuntarily separated from employment, the employment position is considered filled on a full-time basis if the employer is either training or actively recruiting a replacement employee.
     (8) This section expires January 1, 2013.