AN ACT Relating to providing tax relief to small businesses located in rural counties; adding a new section to chapter 82.04 RCW; creating a new section; providing an effective date; and providing an expiration date.

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

(2) The legislature categorizes the tax preference as one intended to provide relief to small businesses located in rural counties, as indicated in RCW 82.32.808(2)(e).

(3) It is the legislature's specific public policy objective to provide business and occupation tax relief to businesses located in rural counties with three hundred fifty or less employees.

(4) If a review finds that the unemployment rate in rural counties is higher than the unemployment rate of the Seattle-Bremerton-Tacoma combined metropolitan statistical area as defined by the United States department of labor, then the legislature intends for the legislative auditor to recommend extending the expiration date of the tax preference.

(5) In order to obtain the data necessary to perform the review in subsection (4) of this section, the joint legislative audit and review committee may refer to any available data source, and the employment security department is directed to cooperate with any requests for data pursuant to facilitating the review authorized in this section.

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

(1) A qualified small business is allowed a credit against the tax due under this chapter as provided in this section. The credit under this section equals five thousand dollars. Eligible small businesses may earn the credit under this section annually.

(2)(a) To claim a credit under this chapter, a person must electronically file with the department all applications, returns, forms, and any other information required by the department, in an electronic format as provided or approved by the department. Any application, 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. The department will rule on applications within sixty days.

(b) In determining the number of employment positions for purposes of qualifying for the tax credit under this section, a fractional full-time equivalent employment position is rounded up to the nearest whole number.

(c) The employment security department will make, and certify to the department, all determinations of employment requested by the department under this section.

(d) Applications, reports, and any other information received by the department under this chapter, except applications not approved by the department, are not confidential and are subject to disclosure.

(3) The department must keep a running total of all credits allowed under this chapter during each fiscal year.

(4) No recipient may use the tax credits under this section to decertify a union or to displace existing jobs in any community in the state.

(5)(a) Credits earned under this section may be claimed against taxes due for the calendar year in which the application is approved and may not exceed the amount of tax otherwise due under this chapter. No person may claim more than five thousand dollars of credit in any calendar year under this section, including credit carried over from a previous calendar year.

(b) Any amount of tax credit otherwise allowable under this section not claimed by the person in any calendar year may be carried over and claimed against the person's tax liability for the next succeeding calendar year. Any credit remaining unused in the next succeeding calendar year may be carried forward and claimed against the person's tax liability for the second succeeding calendar year; and any credit not used in that second succeeding calendar year may be carried over and claimed against the person's tax liability for the third succeeding calendar year, but may not be carried over for any calendar year thereafter.

(c) No refunds may be granted for any unused credits.

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

(a) "Eligible area" means a "rural county" as defined in RCW 82.14.370.

(b) "Qualified small business" means a person:

(i) Whose primary business location is within an eligible area; and

(ii) Who has no more than three hundred fifty total companywide employment positions at the time the application for the tax credit under this section is submitted to the department. Employment positions include employment positions located in the state or out of state. Employment positions do not include vacant employment positions.

(c) "Recipient" means a person receiving tax credits under this section.

(7) This section expires January 1, 2029.

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