BILL REQ. #:  H-4068.1 

Read first time 01/14/10.   Referred to Committee on Finance.

     AN ACT Relating to limiting penalties for failing to file an annual survey or annual report for tax incentives; amending RCW 82.04.4452, 82.32.535, 82.32.5351, 82.32.545, 82.32.560, 82.32.570, 82.32.590, 82.32.610, 82.32.620, 82.32.630, and 82.32.650; amending 2009 c 461 s 9 (uncodified); and providing a contingent effective date.

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

Sec. 1   RCW 82.04.4452 and 2005 c 514 s 1003 are each amended to read as follows:
     (1) In computing the tax imposed under this chapter, a credit is allowed for each person whose research and development spending during the year in which the credit is claimed exceeds 0.92 percent of the person's taxable amount during the same calendar year.
     (2) The credit ((shall be)) is calculated as follows:
     (a) Determine the greater of the amount of qualified research and development expenditures of a person or eighty percent of amounts received by a person other than a public educational or research institution in compensation for the conduct of qualified research and development;
     (b) Subtract 0.92 percent of the person's taxable amount from the amount determined under (a) of this subsection;
     (c) Multiply the amount determined under (b) of this subsection by the following:
     (i) For the period June 10, 2004, through December 31, 2006, the person's average tax rate for the calendar year for which the credit is claimed;
     (ii) For the calendar year ending December 31, 2007, the greater of the person's average tax rate for that calendar year or 0.75 percent;
     (iii) For the calendar year ending December 31, 2008, the greater of the person's average tax rate for that calendar year or 1.0 percent;
     (iv) For the calendar year ending December 31, 2009, the greater of the person's average tax rate for that calendar year or 1.25 percent;
     (v) For the calendar year ending December 31, 2010, and thereafter, 1.50 percent.
     For purposes of calculating the credit, if a person's reporting period is less than annual, the person may use an estimated average tax rate for the calendar year for which the credit is claimed by using the person's average tax rate for each reporting period. A person who uses an estimated average tax rate must make an adjustment to the total credit claimed for the calendar year using the person's actual average tax rate for the calendar year when the person files its last return for the calendar year for which the credit is claimed.
     (3) Any person entitled to the credit provided in subsection (2) of this section as a result of qualified research and development conducted under contract may assign all or any portion of the credit to the person contracting for the performance of the qualified research and development.
     (4) The credit, including any credit assigned to a person under subsection (3) of this section, ((shall)) must be claimed against taxes due for the same calendar year in which the qualified research and development expenditures are incurred. The credit, including any credit assigned to a person under subsection (3) of this section, for each calendar year shall not exceed the lesser of two million dollars or the amount of tax otherwise due under this chapter for the calendar year.
     (5) For any person claiming the credit, including any credit assigned to a person under subsection (3) of this section, whose research and development spending during the calendar year in which the credit is claimed fails to exceed 0.92 percent of the person's taxable amount during the same calendar year or who is otherwise ineligible, the department ((shall)) must declare the taxes against which the credit was claimed to be immediately due and payable. The department ((shall)) must assess interest, but not penalties, on the taxes against which the credit was claimed. Interest ((shall be)) is assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, retroactively to the date the credit was claimed, and ((shall)) accrues until the taxes against which the credit was claimed are repaid. Any credit assigned to a person under subsection (3) of this section that is disallowed as a result of this section may be claimed by the person who performed the qualified research and development subject to the limitations set forth in subsection (4) of this section.
     (6)(a) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.
     (b) A person claiming the credit ((shall)) must file a complete annual survey with the department. The survey is due by March 31st following any year in which a credit is claimed. The department may extend the due date for timely filing of annual surveys under this section as provided in RCW 82.32.590. The survey ((shall)) must include the amount of the tax credit claimed, the qualified research and development expenditures during the calendar year for which the credit is claimed, the taxable amount during the calendar year for which the credit is claimed, the number of new products or research projects by general classification, the number of trademarks, patents, and copyrights associated with the research and development activities for which a credit was claimed, and whether the credit has been assigned under subsection (3) of this section and who assigned the credit. The survey ((shall)) must also include the following information for employment positions in Washington:
     (i) The number of total employment positions;
     (ii) Full-time, part-time, and temporary employment positions as a percent of total employment;
     (iii) 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; and
     (iv) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.
     (c) The department may request additional information necessary to measure the results of the tax credit program, to be submitted at the same time as the survey.
     (d)(i) All information collected under this subsection, except the amount of the tax credit claimed, is deemed taxpayer information under RCW 82.32.330. Information on the amount of tax credit claimed is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request, except as provided in this subsection (6)(d). If the amount of the tax credit as reported on the survey is different than the amount actually claimed on the taxpayer's tax returns or otherwise allowed by the department, the amount actually claimed or allowed may be disclosed.
     (ii) Persons for whom the actual amount of the tax credit claimed on the taxpayer's returns or otherwise allowed by the department is less than ten thousand dollars during the period covered by the survey may request the department to treat the tax credit amount as confidential under RCW 82.32.330.
     (e) If a person fails to file a complete annual survey required under this subsection with the department by the due date or any extension under RCW 82.32.590, the person entitled to the credit provided in subsection (2) of this section is not eligible to claim or assign ninety percent of the credit provided in subsection (2) of this section in the year the person failed to timely file a complete survey.
     (7) The department ((shall)) must use the information from subsection (6) of this section to prepare summary descriptive statistics by category. No fewer than three taxpayers ((shall)) may be included in any category. The department shall report these statistics to the legislature each year by September 1st.
     (8) The department ((shall)) must use the information from subsection (6) of this section to study the tax credit program authorized under this section. The department ((shall)) must report to the legislature by December 1, 2009, and December 1, 2013. The reports ((shall)) must measure the effect of the program on job creation, the number of jobs created for Washington residents, company growth, the introduction of new products, the diversification of the state's economy, growth in research and development investment, the movement of firms or the consolidation of firms' operations into the state, and such other factors as the department selects.
     (9) For the purpose of this section:
     (a) "Average tax rate" means a person's total tax liability under this chapter for the calendar year for which the credit is claimed divided by the taxpayer's total taxable amount under this chapter for the calendar year for which the credit is claimed.
     (b) "Qualified research and development expenditures" means operating expenses, including wages, compensation of a proprietor or a partner in a partnership as determined under rules adopted by the department, benefits, supplies, and computer expenses, directly incurred in qualified research and development by a person claiming the credit provided in this section. The term does not include amounts paid to a person other than a public educational or research institution to conduct qualified research and development. Nor does the term include capital costs and overhead, such as expenses for land, structures, or depreciable property.
     (c) "Qualified research and development" ((shall have)) has the same meaning as in RCW 82.63.010.
     (d) "Research and development spending" means qualified research and development expenditures plus eighty percent of amounts paid to a person other than a public educational or research institution to conduct qualified research and development.
     (e) "Taxable amount" means the taxable amount subject to the tax imposed in this chapter required to be reported on the person's combined excise tax returns for the calendar year for which the credit is claimed, less any taxable amount for which a credit is allowed under RCW 82.04.440.
     (10) This section expires January 1, 2015.

Sec. 2   RCW 82.32.535 and 2003 c 149 s 11 are each amended to read as follows:
     (1) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.
     (2)(a) A person who reports taxes under RCW 82.04.240(2) or who claims an exemption or credit under RCW 82.04.426, 82.08.965, 82.12.965, 82.08.970, 82.12.970, 82.04.448, or 84.36.645, ((shall)) must make an annual report to the department detailing employment, wages, and employer-provided health and retirement benefits per job at the manufacturing site. The report ((shall)) may not include names of employees. The report ((shall)) must also detail employment by the total number of full-time, part-time, and temporary positions. The first report filed under this subsection ((shall)) must include employment, wage, and benefit information for the twelve-month period immediately before first use of a preferential tax rate under RCW 82.04.240(2), or tax exemption or credit under RCW 82.04.426, 82.08.965, 82.12.965, 82.08.970, 82.12.970, 82.04.448, or 84.36.645. The report is due by March 31st following any year in which a preferential tax rate under RCW 82.04.240(2) is used, or tax exemption or credit under RCW 82.04.426, 82.08.965, 82.12.965, 82.08.970, 82.12.970, 82.04.448, or 84.36.645 is taken. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (b) If a person fails to submit an annual report under (a) of this subsection the department shall declare ten percent of the amount of taxes exempted or credited for that year to be immediately due and payable. Excise taxes payable under this subsection are subject to interest, as provided under this chapter. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (3) By November 1st of the year occurring five years after *the effective date of this act, and November 1st of the year occurring eleven years after the effective date of this act, the fiscal committees of the house of representatives and the senate, in consultation with the department, shall report to the legislature on the effectiveness of chapter 149, Laws of 2003 in regard to keeping Washington competitive. The report ((shall)) must measure the effect of chapter 149, Laws of 2003 on job retention, net jobs created for Washington residents, company growth, diversification of the state's economy, cluster dynamics, and other factors as the committees select. The reports ((shall)) must include a discussion of principles to apply in evaluating whether the legislature should reenact any or all of the tax preferences in chapter 149, Laws of 2003.

Sec. 3   RCW 82.32.5351 and 2006 c 84 s 5 are each amended to read as follows:
     (1) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.
     (2)(a) A person who reports taxes under RCW 82.04.2404 or who claims an exemption or credit under RCW 82.08.9651 and 82.12.9651 ((shall)) must make a complete annual report to the department detailing employment, wages, and employer-provided health and retirement benefits per job at the manufacturing site. The report ((shall)) may not include names of employees. The report shall also detail employment by the total number of full-time, part-time, and temporary positions. The first report filed under this subsection ((shall)) must include employment, wage, and benefit information for the twelve-month period immediately before first use of a preferential tax rate under RCW 82.04.2404, or tax exemption or credit under RCW 82.08.9651 and 82.12.9651. The report is due by April 30th following any year in which a preferential tax rate under RCW 82.04.2404 is used, or tax exemption or credit under RCW 82.08.9651 and 82.12.9651 is taken. The department may extend the due date for timely filing annual reports under this section as provided in RCW 82.32.590. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (b) If a person fails to submit a complete annual report under (a) of this subsection by the due date of the report or any extension under RCW 82.32.590, the department ((shall)) must declare ten percent of the amount of taxes exempted or credited, or reduced in the case of the preferential business and occupation tax rate, for that year to be immediately due and payable. Excise taxes payable under this subsection are subject to interest but not penalties, as provided under this chapter. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (3) By November 1st of the year occurring five years after December 1, 2006, and November 1st of the year occurring eleven years after December 1, 2006, the fiscal committees of the house of representatives and the senate, in consultation with the department, ((shall)) must report to the legislature on the effectiveness of chapter 84, Laws of 2006 in regard to keeping Washington competitive. The report ((shall)) must measure the effect of chapter 84, Laws of 2006 on job retention, net jobs created for Washington residents, company growth, diversification of the state's economy, cluster dynamics, and other factors as the committees select. The reports ((shall)) must include a discussion of principles to apply in evaluating whether the legislature should reenact any or all of the tax preferences in chapter 84, Laws of 2006.

Sec. 4   RCW 82.32.545 and 2008 c 81 s 10 are each amended to read as follows:
     (1) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.
     (2)(a) A person who reports taxes under RCW 82.04.260(11), 82.04.250(3), or 82.04.290(3), or who claims an exemption or credit under RCW 82.04.4461, 82.08.980, 82.12.980, 82.29A.137, 84.36.655, and 82.04.4463 ((shall)) must make an annual report to the department detailing employment, wages, and employer-provided health and retirement benefits for employment positions in Washington. However, persons engaged in manufacturing commercial airplanes or components of such airplanes may report employment, wage, and benefit information per job at the manufacturing site. The report ((shall)) may not include names of employees. The report shall also detail employment by the total number of full-time, part-time, and temporary positions. The first report filed under this subsection ((shall)) must include employment, wage, and benefit information for the twelve-month period immediately before first use of a preferential tax rate under RCW 82.04.260(11), 82.04.250(3), or 82.04.290(3), or tax exemption or credit under RCW 82.04.4461, 82.08.980, 82.12.980, 82.29A.137, 84.36.655, and 82.04.4463, unless a survey covering this twelve-month period was filed as required by a statute repealed by chapter 81, Laws of 2008. The report is due by March 31st following any year in which a preferential tax rate under RCW 82.04.260(11), 82.04.250(3), or 82.04.290(3), is used, or tax exemption or credit under RCW 82.04.4461, 82.08.980, 82.12.980, 82.29A.137, 84.36.655, and 82.04.4463 is taken. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (b) If a person fails to submit an annual report under (a) of this subsection by the due date of the report, the department ((shall)) must declare ten percent of the amount of taxes exempted or credited, or reduced in the case of the preferential business and occupation tax rate, for that year to be immediately due and payable. Excise taxes payable under this subsection are subject to interest but not penalties, as provided under this chapter. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (3) By November 1, 2010, and by November 1, 2023, the fiscal committees of the house of representatives and the senate, in consultation with the department, ((shall)) must report to the legislature on the effectiveness of chapter 1, Laws of 2003 2nd sp. sess., chapter 177, Laws of 2006, and chapter 81, Laws of 2008 in regard to keeping Washington competitive. The report ((shall)) must measure the effect of these laws on job retention, net jobs created for Washington residents, company growth, diversification of the state's economy, cluster dynamics, and other factors as the committees select. The reports ((shall)) must include a discussion of principles to apply in evaluating whether the legislature should reenact any or all of the tax preferences in chapter 1, Laws of 2003 2nd sp. sess., chapter 177, Laws of 2006, and chapter 81, Laws of 2008.

Sec. 5   RCW 82.32.560 and 2009 c 434 s 2 are each amended to read as follows:
     (1) For the purposes of this section, "electrolytic processing business tax exemption" means the exemption and preferential tax rate under RCW 82.16.0421.
     (2) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources, the legislature needs information to evaluate whether the stated goals of legislation were achieved.
     (3) The goals of the electrolytic processing business tax exemption are:
     (a) To retain family wage jobs by enabling electrolytic processing businesses to maintain production of chlor-alkali and sodium chlorate at a level that will preserve at least seventy-five percent of the jobs that were on the payroll effective January 1, 2004; and
     (b) To allow the electrolytic processing industries to continue production in this state so that the industries will remain competitive and be positioned to preserve and create new jobs.
     (4)(a) A person who receives the benefit of an electrolytic processing business tax exemption ((shall)) must make an annual report to the department detailing employment, wages, and employer-provided health and retirement benefits per job at the manufacturing site. The report is due by March 31st following any year in which a tax exemption is claimed or used. The report ((shall)) may not include names of employees. The report ((shall)) must detail employment by the total number of full-time, part-time, and temporary positions. The report ((shall)) must indicate the quantity of product produced at the plant during the time period covered by the report. The first report filed under this subsection ((shall)) must include employment, wage, and benefit information for the twelve-month period immediately before first use of a tax exemption. Employment reports shall include data for actual levels of employment and identification of the number of jobs affected by any employment reductions that have been publicly announced at the time of the report. Information in a report under this section is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (b) If a person fails to submit an annual report under (a) of this subsection by the due date of the report, the department ((shall)) must declare ten percent of the amount of taxes exempted for that year to be immediately due and payable. Public utility taxes payable under this subsection are subject to interest but not penalties, as provided under this chapter. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (5) Pursuant to chapter 43.136 RCW, the citizen commission for performance measurement of tax preferences must schedule the electrolytic processing business tax exemption under RCW 82.16.0421 for a tax preference review by the joint legislative audit and review committee. In addition to any of the factors in RCW 43.136.055(1), the committee must also study and report on the effect of the incentive on job retention for Washington residents, and other factors as the committee selects. The report ((shall)) must also discuss expected trends or changes to electricity prices as they affect the industries that benefit from the incentives.

Sec. 6   RCW 82.32.570 and 2006 c 182 s 6 are each amended to read as follows:
     (1) For the purposes of this section, "smelter tax incentive" means the preferential tax rate under RCW 82.04.2909, or an exemption or credit under RCW 82.04.4481, 82.08.805, 82.12.805, or 82.12.022(5).
     (2) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information to evaluate whether the stated goals of legislation were achieved.
     (3) The goals of the smelter tax incentives are to retain family-wage jobs in rural areas by:
     (a) Enabling the aluminum industry to maintain production of aluminum at a level that will preserve at least 75 percent of the jobs that were on the payroll effective January 1, 2004, as adjusted for employment reductions publicly announced before November 30, 2003; and
     (b) Allowing the aluminum industry to continue producing aluminum in this state through 2012 so that the industry will be positioned to preserve and create new jobs when the anticipated reduction of energy costs occurs.
     (4)(a) An aluminum smelter receiving the benefit of a smelter tax incentive ((shall)) must make an annual report to the department detailing employment, wages, and employer-provided health and retirement benefits per job at the manufacturing site. The report is due by March 31st following any year in which a tax incentive is claimed or used. The report ((shall)) may not include names of employees. The report ((shall)) must detail employment by the total number of full-time, part-time, and temporary positions. The report ((shall)) must indicate the quantity of aluminum smelted at the plant during the time period covered by the report. The first report filed under this subsection ((shall)) must include employment, wage, and benefit information for the twelve-month period immediately before first use of a tax incentive. Employment reports ((shall)) must include data for actual levels of employment and identification of the number of jobs affected by any employment reductions that have been publicly announced at the time of the report. Information in a report under this section is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (b) If a person fails to submit an annual report under (a) of this subsection by the due date of the report, the department ((shall)) must declare ten percent of the amount of taxes exempted or credited, or reduced in the case of the preferential business and occupation tax rate, for that year to be immediately due and payable. Excise taxes payable under this subsection are subject to interest but not penalties, as provided under this chapter. This information is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (5) By December 1, 2007, December 1, 2010, and December 1, 2015, the fiscal committees of the house of representatives and the senate, in consultation with the department, ((shall)) must report to the legislature on the effectiveness of the smelter tax incentives under RCW 82.04.4482 and 82.16.0498. The reports ((shall)) must measure the effect of the tax incentives on job retention for Washington residents and any other factors the committees may select.

Sec. 7   RCW 82.32.590 and 2009 c 461 s 7 are each amended to read as follows:
     (1) If the department finds that the failure of a taxpayer to file an annual survey or annual report under RCW 82.04.4452, 82.32.5351, 82.32.650, 82.32.630, 82.32.610, 82.82.020, 82.32.632, or 82.74.040 by the due date was the result of circumstances beyond the control of the taxpayer, the department ((shall)) must extend the time for filing the survey or report. ((Such)) The extension ((shall)) must be for a period of thirty days from the date the department issues its written notification to the taxpayer that it qualifies for an extension under this section. The department may grant additional extensions as it deems proper.
     (2) In making a determination whether the failure of a taxpayer to file an annual survey or annual report by the due date was the result of circumstances beyond the control of the taxpayer, the department ((shall)) may be guided by rules adopted by the department for the waiver or cancellation of penalties when the underpayment or untimely payment of any tax was due to circumstances beyond the control of the taxpayer. The department must include the following as circumstances beyond the control of the taxpayer:
     (a) Failure to file the annual survey or annual report by the due date was the result of employee actions unknown to or beyond the control of the taxpayer; or
     (b) Failure to file the annual survey or annual report by the due date was the result of failure to receive notice from the department of the requirement to return an annual survey or annual report.

Sec. 8   RCW 82.32.610 and 2006 c 354 s 5 are each amended to read as follows:
     (1) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.
     (2) Each person claiming a tax exemption under RCW 82.04.4266, 82.04.4268, or 82.04.4269 ((shall)) must report information to the department by filing a complete annual survey. The survey is due by March 31st of the year following any calendar year in which a tax exemption under RCW 82.04.4266, 82.04.4268, or 82.04.4269 is taken. The department may extend the due date for timely filing of annual surveys under this section as provided in RCW 82.32.590. The survey ((shall)) must include the amount of tax exemption taken. The survey ((shall)) must also include the following information for employment positions in Washington:
     (a) The number of total employment positions;
     (b) Full-time, part-time, and temporary employment positions as a percent of total employment;
     (c) 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; and
     (d) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.
     The first survey filed under this subsection ((shall)) must also include information for the twelve-month period immediately before first use of a tax incentive.
     (3) The department may request additional information necessary to measure the results of the exemption program, to be submitted at the same time as the survey.
     (4) All information collected under this section, except the amount of the tax exemption taken, is deemed taxpayer information under RCW 82.32.330. Information on the amount of tax exemption taken is not subject to the confidentiality provisions of RCW 82.32.330.
     (5) If a person fails to submit an annual survey under subsection (2) of this section by the due date of the survey or any extension under RCW 82.32.590, the department shall declare ten percent of the amount of taxes exempted for the previous calendar year to be immediately due and payable. The department ((shall)) must assess interest, but not penalties, on the amounts due under this section. The amount due ((shall)) must be calculated using a rate of 0.138 percent. The interest ((shall be)) is assessed at the rate provided for delinquent taxes under this chapter, retroactively to the date the exemption was claimed, and ((shall)) accrues until the taxes for which the exemption was claimed are repaid. This information is not subject to the confidentiality provisions of RCW 82.32.330.
     (6) The department ((shall)) must use the information from this section to prepare summary descriptive statistics by category. No fewer than three taxpayers ((shall)) may be included in any category. The department ((shall)) must report these statistics to the legislature each year by September 1st.
     (7) The department ((shall)) must study the tax exemption authorized in RCW 82.04.4266, 82.04.4268, and 82.04.4269. The department ((shall)) must submit a report to the finance committee of the house of representatives and the ways and means committee of the senate by December 1, 2011. The report ((shall)) must measure the effect of the exemption on job creation, job retention, company growth, the movement of firms or the consolidation of firms' operations into the state, and such other factors as the department selects.

Sec. 9   RCW 82.32.620 and 2005 c 301 s 4 are each amended to read as follows:
     (1) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.
     (2)(a) A person who reports taxes under RCW 82.04.294 ((shall)) must make an annual report to the department detailing employment, wages, and employer-provided health and retirement benefits per job at the manufacturing site. The report ((shall)) may not include names of employees. The report shall also detail employment by the total number of full-time, part-time, and temporary positions. The first report filed under this subsection ((shall)) must include employment, wage, and benefit information for the twelve-month period immediately before first use of a preferential tax rate under RCW 82.04.294. The report is due by March 31st following any year in which a preferential tax rate under RCW 82.04.294 is used. This information is not subject to the confidentiality provisions of RCW 82.32.330.
     (b) If a person fails to submit an annual report under (a) of this subsection, the department ((shall)) must declare ten percent of the amount of taxes reduced for the previous calendar year to be immediately due and payable. Excise taxes payable under this subsection are subject to interest, but not penalties, at the rate provided for delinquent taxes, as provided under this chapter. The department ((shall)) must assess interest, retroactively to the date the preferential tax rate under RCW 82.04.294, was used. The interest ((shall be)) is assessed at the rate provided for delinquent excise taxes under this chapter, and ((shall)) accrues until the taxes for which the preferential tax rate was used are repaid. This information is not subject to the confidentiality provisions of RCW 82.32.330.

Sec. 10   RCW 82.32.630 and 2007 c 48 s 6 are each amended to read as follows:
     (1) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources, the legislature needs information on how a tax incentive is used.
     (2)(a) A person who reports taxes under RCW 82.04.260(12) ((shall)) must file a complete annual survey with the department. The survey is due by March 31st following any year in which a person reports taxes under RCW 82.04.260(12). The department may extend the due date for timely filing of annual surveys under this section as provided in RCW 82.32.590. The survey ((shall)) must include the amount of tax reduced under the preferential rate in RCW 82.04.260(12). The survey ((shall)) must also include the following information for employment positions in Washington:
     (i) The number of total employment positions;
     (ii) Full-time, part-time, and temporary employment positions as a percent of total employment;
     (iii) 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; and
     (iv) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.
     (b) The first survey filed under this subsection ((shall)) must include employment, wage, and benefit information for the twelve-month period immediately before first use of a preferential tax rate under RCW 82.04.260(12).
     (c) As part of the annual survey, the department may request additional information, including the amount of investment in equipment used in the activities taxable under the preferential rate in RCW 82.04.260(12), necessary to measure the results of, or determine eligibility for, the preferential tax rate in RCW 82.04.260(12).
     (d) All information collected under this section, except the amount of the tax reduced under the preferential rate in RCW 82.04.260(12), is deemed taxpayer information under RCW 82.32.330. Information on the amount of tax reduced is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request, except as provided in (e) of this subsection. If the amount of the tax reduced as reported on the survey is different than the amount actually reduced based on the taxpayer's excise tax returns or otherwise allowed by the department, the amount actually reduced may be disclosed.
     (e) Persons for whom the actual amount of the tax reduction is less than ten thousand dollars during the period covered by the survey may request the department to treat the amount of the tax reduction as confidential under RCW 82.32.330.
     (f) Small harvesters as defined in RCW 84.33.035 are not required to file the annual survey under this section.
     (3) If a person fails to submit a complete annual survey under subsection (2) of this section by the due date or any extension under RCW 82.32.590, the department ((shall)) must declare ten percent of the amount of taxes reduced under the preferential rate in RCW 82.04.260(12) for the period covered by the survey to be immediately due and payable. The department ((shall)) must assess interest, but not penalties, on the taxes. Interest ((shall be)) is assessed at the rate provided for delinquent excise taxes under this chapter, retroactively to the date the reduced taxes were due, and ((shall)) accrues until the amount of the reduced taxes is repaid.
     (4) The department ((shall)) must use the information from the annual survey required under subsection (2) of this section to prepare summary descriptive statistics by category. The department ((shall)) must report these statistics to the legislature each year by September 1st. The requirement to prepare and report summary descriptive statistics ((shall)) must cease after September 1, 2025.
     (5) By November 1, 2011, and November 1, 2023, the fiscal committees of the house of representatives and the senate, in consultation with the department, ((shall)) must report to the legislature on the effectiveness of the preferential tax rate provided in RCW 82.04.260(12). The report ((shall)) must measure the effect of the preferential tax rate provided in RCW 82.04.260(12) on job retention, net jobs created for Washington residents, company growth, and other factors as the committees select. The report ((shall)) must include a discussion of principles to apply in evaluating whether the legislature should continue the preferential tax rate provided in RCW 82.04.260(12).

Sec. 11   RCW 82.32.650 and 2006 c 112 s 6 are each amended to read as follows:
     (1) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources the legislature needs information on how a tax incentive is used.
     (2)(a) Each person claiming a tax credit under RCW 82.04.449 ((shall)) must report information to the department by filing a complete annual survey. The survey is due by March 31st of the year following any calendar year in which a tax credit under RCW 82.04.449 is taken. The department may extend the due date for timely filing of annual surveys under this section as provided in RCW 82.32.590. The survey ((shall)) must include the amount of tax credit taken. The survey ((shall)) must also include the following information for employment positions in Washington:
     (((a))) (i) The number of total employment positions;
     (((b))) (ii) Full-time, part-time, and temporary employment positions as a percent of total employment;
     (((c))) (iii) 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; and
     (((d))) (iv) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.
     (b) The first survey filed under this subsection ((shall)) must also include information for the twelve-month period immediately before first use of a tax incentive.
     (3) The department may request additional information necessary to measure the results of the credit program, to be submitted at the same time as the survey.
     (4) All information collected under this section, except the amount of the tax credit taken, is deemed taxpayer information under RCW 82.32.330. Information on the amount of tax credit taken is not subject to the confidentiality provisions of RCW 82.32.330.
     (5) If a person fails to submit an annual survey under subsection (2) of this section by the due date of the report or any extension under RCW 82.32.590, the department ((shall)) must declare ten percent of the amount of taxes credited for the previous calendar year to be immediately due and payable. The department ((shall)) must assess interest, but not penalties, on the amounts due under this section. The interest ((shall be)) is assessed at the rate provided for delinquent taxes under this chapter, retroactively to the date the credit was claimed, and ((shall)) accrues until the taxes for which the credit was claimed are repaid. This information is not subject to the confidentiality provisions of RCW 82.32.330.
     (6) The department ((shall)) must use the information from this section to prepare summary descriptive statistics by category. No fewer than three taxpayers ((shall)) may be included in any category. The department ((shall)) must report these statistics to the legislature each year by September 1st.
     (7) The department ((shall)) must study the tax credit authorized in RCW 82.04.449. The department ((shall)) must submit a report to the finance committee of the house of representatives and the ways and means committee of the senate by December 1, 2011. The report ((shall)) must measure the effect of the credit on job creation, job retention, company growth, the movement of firms or the consolidation of firms' operations into the state, and ((such)) other factors as the department selects.

Sec. 12   2009 c 461 s 9 (uncodified) is amended to read as follows:
     (1)(a) Section 2, chapter . . ., Laws of 2010 (section 2 of this act), section 3, chapter 461, Laws of 2009, section 7, chapter 300, Laws of 2006, and section 4, chapter 149, Laws of 2003 are contingent upon the siting and commercial operation of a significant semiconductor microchip fabrication facility in the state of Washington.
     (b) For the purposes of this section:
     (i) "Commercial operation" means the same as "commencement of commercial production" as used in RCW 82.08.965.
     (ii) "Semiconductor microchip fabrication" means "manufacturing semiconductor microchips" as defined in RCW 82.04.426.
     (iii) "Significant" means the combined investment of new buildings and new machinery and equipment in the buildings, at the commencement of commercial production, will be at least one billion dollars.
     (2) Chapter 149, Laws of 2003 takes effect the first day of the month in which a contract for the construction of a significant semiconductor fabrication facility is signed, as determined by the director of the department of revenue.
     (3)(a) The department of revenue must provide notice of the effective date of this act to affected taxpayers, the legislature, and others as deemed appropriate by the department.
     (b) If, after making a determination that a contract has been signed and chapter 149, Laws of 2003 is effective, the department discovers that commencement of commercial production did not take place within three years of the date the contract was signed, the department must make a determination that chapter 149, Laws of 2003 is no longer effective, and all taxes that would have been otherwise due are deemed deferred taxes and are immediately assessed and payable from any person reporting tax under RCW 82.04.240(2) or claiming an exemption or credit under section 2 or 5 through 10 , chapter 149, Laws of 2003. The department is not authorized to make a second determination regarding the effective date of chapter 149, Laws of 2003.