SENATE BILL REPORT

SB 5527

BYSenators Amondson and Craswell

Relating to business and occupation tax credits for new businesses.

Senate Committee on Economic Development & Labor

Senate Hearing Date(s):February 8, 1989

Senate Staff:Jack Brummel (786-7428)

AS OF FEBRUARY 7, 1989

BACKGROUND:

Businesses often operate with losses during their early years.  The Washington business and occupation tax is collected regardless of whether a business suffers a loss or makes a profit.  Advocates for new and small businesses have stated that this is an inequitable tax collection policy that can contribute to the high bankruptcy rate of new businesses.

SUMMARY:

Businesses experiencing a loss during any of their first five years may receive a credit for the amount of business and occupation taxes paid during that year.  Credits received may be applied to taxes due for more than one subsequent year.

The definitions of loss rely on the internal revenue code and depend on the nature of the business.

Appropriation:    none

Revenue:    yes

Fiscal Note:      requested February 7, 1989

Effective Date:June 1, 1989