BILL REQ. #:  H-0450.2 

Read first time 01/28/2005.   Referred to Committee on Economic Development, Agriculture & Trade.

     AN ACT Relating to a small business tax credit; 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:

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 six hundred fifty dollars for each qualified employment position created after the effective date of this section.
     (b) Credit may not be taken for hiring of persons into employment positions that exist on the effective date of this section. Credit is authorized for new employees hired for qualified employment positions created on or after the effective date of this section. New qualified employment positions filled by existing employees are eligible for the credit under this section only if the employment position vacated by the existing employee is filled by a new hire.
     (c) If a vacancy occurs in a qualified employment position, it must be filled within sixty consecutive days in order to maintain eligibility for the credit.
     (d) A credit is earned for the calendar year the qualified employment position is filled. Credit may be accrued and carried over until it is used. No refunds may be granted for credits under this section.
     (e) No application is necessary for the tax credit.
     (2) An eligible person claiming the credit must keep records necessary for the department to verify eligibility under this section, including employment records, health care benefits offered, and health care benefit costs.
     (3) A person claiming credit under chapter 82.62 RCW or RCW 82.04.44525 or 82.04.448 cannot claim a credit under this section.
     (4) The employment security department must provide to the department of revenue such information needed by the department of revenue to verify eligibility under this section.
     (5) If at any time the department finds that a person is not eligible for tax credit under this section, the amount of taxes against which a credit was claimed is immediately due and payable. The department shall assess interest, but not penalties, on the taxes against which the credit was claimed. Interest shall be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, retroactively to the date the credit was claimed, and shall accrue until the taxes against which a credit has been claimed are repaid.
     (6) 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 that has fifty or fewer employees and offers a health care plan to all of its full-time employees.
     (b) "Employee" means a full-time, part-time, or temporary employee covered by Title 50 RCW for whom the small business is making contributions.
     (c) "Full-time employee" means a person whose employer requires them to work thirty-five hours per week, four hundred fifty-five hours a quarter, or one thousand eight hundred twenty hours a year.
     (d) "Health care plan" means any "employee welfare benefit plan" as defined by the employee retirement income security act of 1974, 29 U.S.C. Sec. 1001 et seq. and any "health plan" or "health benefit plan" as defined in RCW 48.43.005, funded or established by an employer for the purpose of providing for its employees or their beneficiaries, through the purchase of insurance or otherwise, health care services. For purposes of this subsection "health care services" means services offered or provided by health care facilities and health care providers relating to the prevention, cure, or treatment of illness, injury, or disease.
     (e) "Qualified employment position" means a new position filled by a permanent full-time employee employed by an eligible person for at least twelve consecutive months and who is paid a wage of at least one and one-half times the state's minimum wage as it existed at the time of hire.

NEW SECTION.  Sec. 2   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, 2005.