BILL REQ. #:  S-1572.3 

READ FIRST TIME 02/11/09.   

     AN ACT Relating to providing a business and occupation tax credit for qualified employment positions; and adding a new section to chapter 82.04 RCW.

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 credit is allowed against the tax due under this chapter for new qualified employment positions created as provided in this section.
     (2) The credit equals:
     (a) Four thousand dollars for each qualified employment position with wages and benefits greater than forty thousand dollars annually, and for which the business offers a health care plan, that is directly created in an eligible business; or
     (b) Two thousand dollars for each qualified employment position with wages and benefits no less than one hundred fifty percent of the minimum wage and no more than forty thousand dollars annually, and for which the business offers a health care plan.
     (3) For purposes of calculating the amount of credit under subsection (2) of this section with respect to qualified employment positions, the following applies:
     (a) In determining the number of qualified employment positions, a fractional amount is rounded down to the nearest whole number; and
     (b) Wages and benefits for each qualified employment position are equal to the quotient derived by dividing:
     (i) The sum of the wages and benefits earned for the four consecutive full calendar quarters for which a credit under this section is earned by all of the person's new seasonal employees hired during that period; by
     (ii) The number of qualified employment positions plus any fractional amount subject to rounding as provided under (a) of this subsection.
     (4) For purposes of this section, a credit is earned for the four consecutive full calendar quarters after the calendar quarter during which the first qualified employment position is filled.
     (5) The department must keep a running total of all credits allowed under this section during each fiscal year. The department may not allow any credits which would cause the total to exceed five million dollars in any fiscal year. If all or part of an application for credit is disallowed under this subsection, the disallowed portion must 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.
     (6) No recipient may use the tax credits to decertify a union or to displace existing jobs in any community in the state.
     (7) The credit may be used against any tax due under this chapter, and may be carried over until used. No refunds may be granted for credits under this section.
     (8) Application for tax credits under this section must be made within ninety consecutive days after the first qualified employment position is filled. The application must be made to the department in a form and manner prescribed by the department. The application must contain information regarding the location of the business, the applicant's average employment, if any, at the facility for the four consecutive full calendar quarters immediately preceding the earlier of the calendar quarter during which the application required by this section is submitted to the department or the first qualified employment position is filled, estimated or actual new employment related to the business, estimated or actual wages of employees related to the business, estimated or actual costs, time schedules for completion and operation, and other information required by the department. The department must prescribe a method for calculating a seasonal employer's average employment levels. The department must rule on the application within sixty days.
     (9)(a) Each recipient must submit a report to the department by the last day of the month immediately following the end of the four consecutive full calendar quarters for which a credit under this section is earned. The report must contain information, as required by the department, from which the department may determine whether the recipient is meeting the requirements of this section. If the recipient fails to submit a report or submits an inadequate report, the department may declare the amount of taxes for which a credit has been used to be immediately assessed and payable. The recipient must keep records, such as payroll records showing the date of hire and employment security reports, to verify eligibility under this subsection (9).
     (b) If, on the basis of a report under this section or other information, the department finds that a business is not eligible for tax credit under this section for reasons other than failure to create the required number of qualified employment positions, the amount of taxes for which a credit has been used is immediately due.
     (c) If, on the basis of a report under this subsection (9) or other information, the department finds that a business has failed to create the specified number of qualified employment positions, the department must assess interest, but not penalties, on the credited taxes for which a credit has been used. The interest must be assessed at the rate provided for delinquent excise taxes, must be assessed retroactively to the date of the tax credit, and must accrue until the taxes for which a credit has been used are repaid.
     (10) The employment security department must make, and certify to the department, all determinations of employment and wages requested by the department under this section.
     (11) Applications, reports, and any other information received by the department under this section are not confidential and are subject to disclosure.
     (12) 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.
     (13) The following definitions apply throughout this section, unless the context clearly requires otherwise.
     (a) "Applicant" means a person applying for a tax credit under this section.
     (b) "Eligible business" means a business located within the state of Washington with ten or fewer employees.
     (c) "First qualified employment position" means the first qualified employment position filled for which a credit under this section is sought.
     (d) "Health care plan" means any "employee welfare benefit plan" as defined by the employee retirement income security act of 1974, Title 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)(i)(A) "Qualified employment position" means a permanent full-time employee employed in the eligible business in Washington during four consecutive full calendar quarters.
     (B) For seasonal employers, "qualified employment position" also includes the equivalent of a full-time employee in work hours for four consecutive full calendar quarters.
     (ii) For purposes of this subsection (13)(d), "full time" means a normal work week of at least thirty-five hours.
     (iii) Once a permanent, full-time employee has been employed, a position does not cease to be a qualified employment position solely due to periods in which the position goes vacant, as long as:
     (A) The cumulative period of any vacancies in that position is not more than one hundred twenty days in the four quarter period; and
     (B) During a vacancy, the employer is training or actively recruiting a replacement permanent, full-time employee for the position.
     (f) "Recipient" means a person receiving tax credits under this section.
     (g) "Seasonal basis" means a continuous employment period of less than twelve consecutive months, for the purposes of "seasonal employee" and "seasonal employer" under this section.
     (h) "Seasonal employee" means an employee of a seasonal employer who works on a seasonal basis.
     (i) "Seasonal employer" means a person who regularly hires more than fifty percent of its employees to work on a seasonal basis.
     (14) No applications may be accepted after June 30, 2011.

NEW SECTION.  Sec. 2   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.