AN ACT Relating to a business and occupation tax credit for businesses that hire individuals with developmental disabilities; adding a new section to chapter 82.04 RCW; creating a new section; providing an effective date; providing an expiration date; and declaring an emergency.

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

(2) It is the specific public policy objective of this act to provide tax relief to those businesses that increase the opportunities of workers with developmental disabilities by employing such workers in their community. The legislature categorizes this tax preference as one intended to provide tax relief to certain businesses, as described in RCW 82.32.808 (2)(e).

(3) In order to obtain the necessary data to perform a review of this tax preference, persons using this preference must file an annual application with the department of revenue to be eligible to claim the preference.

(4) The joint legislative audit and review committee must review the tax preference provided in this act as part of its normal review process of tax preferences. The committee must specifically assess the number of employment positions filled by individuals with developmental disabilities using data provided by the department of revenue and estimate the cost per job based on the amount of credit taken by eligible persons.

NEW SECTION.  Sec. 2.  A new section is added to chapter 82.04 RCW to read as follows:

(1)(a) In computing the tax imposed under this chapter, a person is allowed a credit against the tax due. The credit is equal to one thousand dollars per calendar year for each full-time employment position filled by an individual with a developmental disability after the effective date of this section. A partial credit is allowed per calendar year for a part-time employment position filled by an individual with a developmental disability as follows:

(i) A credit equal to seven hundred fifty dollars for part-time positions between thirty and thirty-four hours per week;

(ii) A credit equal to five hundred dollars for part-time positions between twenty and twenty-nine hours per week;

(iii) A credit equal to two hundred fifty dollars for part-time positions between ten and nineteen hours per week;

(iv) There is no partial credit for any part-time position that is less than ten hours per week.

(b) A credit is earned for the calendar year the person is hired to fill the position. Additionally, a credit is earned for each calendar year the position is continuously maintained over the subsequent consecutive calendar years. If a position is filled before July 1st, this position is eligible for the full yearly credit. If it is filled on or after July 1st, this position is eligible for half of the credit.

(c) Credits are available on a first in-time basis. The department must maintain a running total of all credits claimed under this section during each calendar year. The department may not allow any credit, or portion thereof, which would cause the total amount of credit claimed under this section to exceed two million dollars in any calendar year. The department must provide written notice to any person who has claimed tax credits in excess of the two million dollar limitation in this subsection. The notice must indicate the amount of tax due and provide that the tax be paid within thirty days from the date of such notice. The notice must also advise the person that the unused credit can be claimed in the next calendar year, subject to the two million dollar limit. The department may not assess penalties and interest as provided in chapter 82.32 RCW on the amount due in the initial notice, if the amount due is paid by the due date specified in the notice, or any extension thereof.

(d) A person may claim the credit under this section only against taxes originally due and reported to the department on or after the date that the employment position is filled. The amount of credit claimed for a reporting period may not exceed the tax otherwise due under this chapter for that reporting period. Persons unable to claim their credit, or any portion thereof, in the calendar year for which the credit was earned may carry the unused credit over to subsequent calendar years until used. However, the carryover into subsequent calendar years is only permitted to the extent that the two million dollar limit for any calendar year is not exceeded. No refunds may be granted for credits under this section.

(e) An annual application must be filed electronically with the department to claim the credit. The application must include, but is not limited to, the following information:

(i) The number of full-time individuals with developmental disabilities hired in a given year;

(ii) The number of part-time individuals with developmental disabilities hired in a given year, categorized by the weekly hours worked in (a) of this subsection; and

(iii) Total hours worked by all individuals with developmental disabilities hired in a given year.

(f) To claim a credit under this section, a person must electronically file with the department all returns, forms, and any other information required by the department, in an electronic format as provided or approved by the department. Any return, form, or information required to be filed in an electronic format under this section is not filed until received by the department in an electronic format. As used in this subsection, "return" has the same meaning as "return" in RCW 82.32.050.

(g) A credit is authorized only for employees hired for full-time or part-time employment positions when the hiring takes place on or after July 1, 2015. Full-time or part-time employment positions filled by existing employees are eligible for the credit under this section only if the position vacated by the existing employee is filled by a new hire, and both the existing employee and the new hire are individuals with a developmental disability.

(h) A person may not claim the credit under this section if the person has claimed a credit against the tax due under this chapter, under any other provision of law, with respect to the same employment position.

(2) If at any time the department finds that a person is not eligible for the tax credit under this section for any reason, the amount of taxes for which a credit has been claimed for which the person was not eligible for the credit is immediately due. The department must assess interest, but not penalties, on the taxes for which the person is not eligible. The interest must be assessed at the rate provided for delinquent excise taxes under chapter 82.32 RCW, assessed retroactively to the date the tax credit was claimed, and must accrue until the taxes for which a credit has been used are repaid.

(3) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise.

(a) "Calendar year" means the twelve-month period beginning January 1st and ending the following December 31st.

(b) "Full-time" means at least thirty-five hours a week, four hundred fifty-five hours a quarter, or one thousand eight hundred twenty hours a year.

(c) "Full-time employment position" means a permanent full-time employee, who is employed for at least twelve consecutive months. Once a permanent full-time employee has been hired, a position does not cease to be a full-time employment position solely due to periods in which the position goes vacant, as long as:

(i) The cumulative period of any vacancies in that position is not more than one hundred twenty days in the fiscal year;

(ii) During a vacancy, the employer is training or actively recruiting a replacement; and

(iii) The vacancy is filled by a permanent full-time employee who is an individual with a developmental disability.

(d) "Individual with a developmental disability" means an individual with a developmental disability as defined in RCW 71A.10.020.

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