SENATE BILL REPORT

SB 5557

BYSenators West, Owen, Deccio, Stratton, Garrett, Smitherman, Hayner and Sellar

Specifying liability for payment of business and occupation tax on insurance commissions.

Senate Committee on Ways & Means

Senate Hearing Date(s):March 6, 1987

Senate Staff:William Bafus (786-7437)

AS OF MARCH 5, 1987

BACKGROUND:

Chapter 82.04 RCW presently imposes a business and occupation tax equal to 1.1 percent of the gross business income from the licensed activities of "every person engaged within this state as an insurance agent, insurance broker, or insurance solicitor licensed under chapter 48.17 RCW."  In some cases, these persons work within the office or operation of another broker and may share commissions with that broker.  In such cases, it is possible that this shared income may be taxed twice.

SUMMARY:

Insurance brokers are subject to a 1.1 percent business and occupation tax on the gross commission income of their brokerage offices including that portion paid to agents, associate brokers or solicitors in the same office.  Agents, associate brokers or solicitors are not required to pay business and occupation taxes on commission income which has already been taxed under the previous provision.

Revenue:    yes

Fiscal Note:      available

Effective Date:An emergency is declared and the provisions of the bill take effect on July 1, 1987.