BILL REQ. #:  S-0819.1 

Read first time 02/25/13.   Referred to Committee on Ways & Means.

     AN ACT Relating to providing a business and occupation tax exemption for amounts received by hotel management companies for covered employee costs; 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) This chapter does not apply to amounts received by a hotel management company from a hotel owner for covered employee costs.
     (2) For the purposes of this section, the following definitions apply:
     (a) "Covered employee" means a person who meets all of the following conditions:
     (i) The person has an employment relationship with a hotel management company providing hotel operations, management, and/or promotional services to a hotel owner;
     (ii) The person works primarily at a hotel or associated facility of the hotel owner; and
     (iii) The person's duties primarily consist of activities that directly or indirectly support the operations, management, and/or promotion of the hotel and associated facilities, including without limitation renting property units, operating and maintaining the hotel and associated facilities, collecting fees, and hotel and facilities promotion.
     (b) "Covered employee costs" means the actual cost of wages and salaries, benefits, workers' compensation, payroll taxes, withholding, or other assessments paid to or on behalf of a covered employee by the hotel management company pursuant to a hotel management services agreement, including without limitation, all amounts paid in cash or in kind by the hotel management company (i) that are treated for tax purposes as constituting wages or fringe benefits of a covered employee, (ii) that are contributions to pensions plans for the benefit of a covered employee, (iii) that are contributions to insurance plans for the benefit of a covered employee, and (iv) that are payments required under collective bargaining agreements for the benefit of a covered employee. For purposes of this section only, covered employee costs also include taxes or other governmental assessments imposed on the hotel management company as a result of the employment of a covered employee.
     (c) "Hotel management services agreement" means a contract by and between a hotel owner and a hotel management company under which:
     (i) The services provided to the hotel owner primarily relate to the operations, management, and/or promotion of the hotel or associated facilities including, without limitation, marketing and reservations, recruitment and supervision of persons operating the hotel and facilities, centralized services generally supportive of the hotel and facilities, or any other activity that directly or indirectly supports the operations, management, and/or promotion of the hotel and associated facilities;
     (ii) The covered employee costs are funded by the hotel owner through a separate account used exclusively to fund covered employee costs and, at the option of the hotel owner, other costs associated with the operation of the hotel, which account is in the name of, and under the taxpayer identification number of, the hotel owner, but for which the hotel management company may have signing authority;
     (iii) The hotel management company is required to pay the covered employee costs and must use the funds in the account established under (c)(ii) of this subsection to either make such payments or recover the costs of making such payments; and
     (iv) The hotel management company does not receive any markup calculated with respect to the amount of the covered employee costs paid into the account established under (c)(ii) of this subsection.
     (d) "Hotel management company" means any person engaged in the business of providing operations, management, and/or promotional services under a hotel management services agreement and:
     (i) More than fifty percent of the employees providing services at a hotel and associated facilities of the hotel owner are covered employees; and
     (ii) The hotel management company is not providing staffing services as defined under RCW 82.04.540(3)(h).
     (e) "Hotel owner" means any person that owns or leases a hotel, as well as any asset management company acting on behalf of such a person.