SENATE BILL REPORT

ESHB 1089

BYHouse Committee on Ways & Means/Revenue (originally sponsored by Representative Rust)

Prohibiting a business and occupation tax deduction for amounts received as compensation from public entities for services rendered as employee benefits.

House Committe on Ways & Means/Revenue

Senate Committee on Ways & Means

Senate Hearing Date(s):February 26, 1988; February 27, 1988

Majority Report:  Do pass.

      Signed by Senators McDonald, Chairman; Craswell, Vice Chairman; Bauer, Bluechel, Cantu, Deccio, Gaspard, Hayner, Johnson, Lee, Moore, Newhouse, Saling, Smith, Talmadge, Vognild, Williams, Wojahn, Zimmerman.

Senate Staff:Gary Benson (786-7715)

                  February 29, 1988

AS REPORTED BY COMMITTEE ON WAYS & MEANS, FEBRUARY 27, 1988

BACKGROUND:

Payments received from governments by a health or social welfare organization as compensation for health or social welfare services are exempt from the Business and Occupation tax (B&O).

In 1986 the Washington Supreme Court ruled that Group Health met the statutory definition of a qualified health and social welfare organization and that it was entitled to deduct for B&O tax purposes health insurance payments received from federal, state, and local governments.

SUMMARY:

For B&O tax purposes, health or social welfare organizations may not deduct amounts received under an employee benefit plan.

Appropriation:    none

Revenue:    yes

Fiscal Note:      available

Senate Committee - Testified: No one