BILL REQ. #:  S-4203.1 

Read first time 01/15/08.   Referred to Committee on Economic Development, Trade & Management.

     AN ACT Relating to improving the effectiveness of tax incentives for eligible business projects in rural counties and community empowerment zones; amending RCW 82.62.030 and 82.60.049; and providing an effective date.

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

Sec. 1   RCW 82.62.030 and 2007 c 485 s 3 are each amended to read as follows:
     (1)(a) A person shall be allowed a credit against the tax due under chapter 82.04 RCW as provided in this section. The credit shall equal: (i) Four thousand dollars for each qualified employment position with wages and benefits greater than forty thousand dollars annually that is directly created in an eligible business project and (ii) two thousand dollars for each qualified employment position with wages and benefits less than or equal to forty thousand dollars annually that is directly created in an eligible business project.
     (b) For purposes of calculating the amount of credit under (a) of this subsection with respect to qualified employment positions as defined in RCW 82.62.010(8)(a)(ii):
     (i) In determining the number of qualified employment positions, a fractional amount is rounded down to the nearest whole number; and
     (ii) Wages and benefits for each qualified employment position shall be equal to the quotient derived by dividing: (A) The sum of the wages and benefits earned for the four consecutive full calendar quarter period for which a credit under this chapter is earned by all of the person's new seasonal employees hired during that period; by (B) the number of qualified employment positions plus any fractional amount subject to rounding as provided under (b)(i) of this subsection. For purposes of this chapter, a credit is earned for the four consecutive full calendar quarters after the calendar quarter during which the first qualified employment position is filled.
     (2) The department shall keep a running total of all credits allowed under this chapter during each fiscal year. The department shall not allow any credits which would cause the total to exceed ((seven)) ten million ((five hundred thousand)) dollars in any fiscal year. If all or part of an application for credit is disallowed under this subsection, the disallowed portion shall be carried over to the next fiscal year. However, the carryover into the next fiscal year is only permitted to the extent that the cap for the next fiscal year is not exceeded.
     (3) No recipient may use the tax credits to decertify a union or to displace existing jobs in any community in the state.
     (4) The credit may be used against any tax due under chapter 82.04 RCW, and may be carried over until used. No refunds may be granted for credits under this section.

Sec. 2   RCW 82.60.049 and 2004 c 25 s 5 are each amended to read as follows:
     (1) For the purposes of this section:
     (a) "Eligible area" also means a designated community empowerment zone approved under RCW 43.31C.020 or a county containing a community empowerment zone.
     (b) "Eligible investment project" also means an investment project in an eligible area as defined in this section.
     (2) In addition to the provisions of RCW 82.60.040, the department shall issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW, on each eligible investment project that is located in an eligible area, if the applicant establishes that at the time the project is operationally complete:
     (a) The applicant will hire at least one qualified employment position for each ((seven)) two million two hundred fifty thousand dollars of investment for which a deferral is requested; and
     (b) The positions will be filled by persons who at the time of hire are residents of the community empowerment zone. As used in this subsection, "resident" means the person makes his or her home in the community empowerment zone. A mailing address alone is insufficient to establish that a person is a resident for the purposes of this section. The persons must be hired after the date the application is filed with the department.
     (3) All other provisions and eligibility requirements of this chapter apply to applicants eligible under this section.
     (4) The qualified employment position must be filled by the end of the calendar year following the year in which the project is certified as operationally complete. If a person does not meet the requirements for qualified employment positions by the end of the second calendar year following the year in which the project is certified as operationally complete, all deferred taxes are immediately due.

NEW SECTION.  Sec. 3   This act takes effect July 1, 2008.