BILL REQ. #:  H-3691.1 

Prefiled 1/6/2006. Read first time 01/09/2006.   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; providing an effective date; 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, subject to the statewide cap in (f) of this subsection. The credit is equal to four hundred fifty dollars per year for each qualified employment position created in Washington after the effective date of this section and maintained for a period of three consecutive years. The maximum credit that can be claimed under this section for each qualified employment position is one thousand three hundred fifty dollars.
     (b) Credit may not be claimed for hiring of persons into employment positions that exist on the effective date of this section. Credit is authorized for new employees hired for new 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 employee.
     (c) A credit is earned for the calendar year the person is hired to fill the position. If a qualified employment 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 employment position, it must be filled within sixty consecutive days in order to maintain eligibility 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) The total amount of new credits authorized per year statewide for newly created qualified positions is seven million five hundred thousand dollars. The credits are awarded on a first-come basis based on the date of the application by the qualified employer. This cap does not include credits earned in previous calendar years and carried over into subsequent calendar years.
     (g) An application must be electronically filed with the department within ninety days of the filing of the qualified employment position in order to claim the credit. The department must notify all applicants within thirty days of application submission if the statewide yearly cap has been reached.
     (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) 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)(a) A person claiming the credit shall file a complete annual survey in the form prescribed by the department which shall include the following information for employment in Washington:
     (i) The number of total employment positions;
     (ii) The number of qualified employment positions;
     (iii) The amount of the credit claimed;
     (iv) Full-time, part-time, and temporary employment positions as a percent of total employment;
     (v) The number of employment positions that have employer-provided medical, dental, and retirement benefits; and
     (vi) Any additional information the department finds necessary to determine eligibility and to measure the results of the tax credit program.
     (b) The annual survey is due by March 31st following any year in which a tax credit under this section is claimed. This information shall be subject to the confidentiality provisions of RCW 82.32.330.
     (c) If a person fails to file an annual survey as required under this subsection (4) with the department by the due date, the department shall declare the amount of taxes against which the credit was claimed under this section during the calendar year preceding the due date of the annual survey to be immediately due and payable. 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 the 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 against which a credit has been claimed are repaid.
     (5) If at any time the department finds that a qualified employment position is not filled for three years or is no longer a qualified employment position, the amount of taxes for which a credit has been claimed is immediately due and payable. 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 the 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 against which a credit has been claimed are repaid.
     (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, 2014.
     (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:
     (i) Who has twenty or fewer employees in the preceding calendar year;
     (ii) Whose full-time employment positions in Washington are greater in the calendar year for which the credit is being claimed than the applicant's full-time employment positions in Washington in the preceding calendar year; and
     (iii) Who files taxes electronically with the department.
     (b) "Employee" means a full-time, part-time, or temporary employee covered by Title 50 RCW for whom the eligible person is making contributions.
     (c) "Full-time employee" means an employee who is required to work at least thirty-five hours a 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, for the purpose of providing for its employees or their beneficiaries, through the purchase of insurance or otherwise, health care services. For the purposes of this section, "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 permanent full-time employee who is paid at least one and one-half times the state minimum wage and for whom the business offers a health care plan.
     (8) This section expires January 1, 2016.

NEW SECTION.  Sec. 2   This act takes effect July 1, 2006.