H-236                _______________________________________________

                                                   HOUSE BILL NO. 1188

                        _______________________________________________

State of Washington                               51st Legislature                              1989 Regular Session

By Representatives Sayan, Ballard, O'Brien, Ferguson, Hankins, Zellinsky, Day, Heavey, Jones, Basich, Leonard, Prentice, Crane, Wineberry, Rector, Rayburn, Winsley and Dellwo

Read first time 1/18/89 and referred to Committee on Revenue.

AN ACT Relating to tax credits for the employment of military reservists and Washington national guards; adding a new chapter to Title 82 RCW; and providing an effective date.

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

NEW SECTION. Sec. 1.     The legislature recognizes that businesses are economically impacted by employees who are called away from the job to fulfill reserve military commitments.  The legislature further finds that the military reserve and national guard forces provide a vital service in the defense of the United States of America; that the state of Washington shares in this commitment to the national defense; that a new state policy is necessary to mitigate the negative economic impacts of Washington businesses employing military reservists; and that policies providing businesses with incentives to keep and maintain employees who belong to the military reserve and national guard are essential.  For these reasons, the legislature hereby establishes a tax credit program to be available solely to Washington businesses which employ persons who are members of the military reserve or national guard.  The legislature declares that this limited program serves the vital public purpose of maintaining a strong national defense while working to mitigate some adverse economic impacts on Washington businesses.

NEW SECTION. Sec. 2.     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

          (1) "Department" means the department of revenue.

          (2) "Distressed county" means a county in which the average level of unemployment for the previous three years exceeds the state-wide average level of unemployment by twenty percent.

          (3) "Eligible employer" means a Washington business, organization, or entity that employs no more than two hundred fifty qualified employees and that is liable for taxes imposed under chapter 82.04 or 82.16 RCW.

          (4) "Person" has the meaning given in RCW 82.04.030.

          (5) "Qualified employee" means a permanent full-time employee, including sole proprietors and partners in a partnership, employed by an eligible employer within the physical boundaries of the state of Washington, which employee is also an active member of the United States military reserve or Washington national guard.

NEW SECTION. Sec. 3.     (1) A person shall be allowed a credit against the tax due under chapter 82.04 or 82.16 RCW in an amount equal to one hundred dollars for each qualified employee employed in a distressed county and fifty dollars for each qualified employee employed in any other county.

          (2) No recipient is eligible for tax credits in excess of two thousand five hundred dollars in any tax year.

          (3) No recipient may receive a tax credit on taxes which have not been paid during the taxable year.

NEW SECTION. Sec. 4.     Tax credits can be taken whenever an eligible employer employs a qualified employee for a period of one year.  The credit can be taken on the next tax return following the end of the one-year period.  An employer is eligible for only one credit for each qualified employee during the tax year.  A credit may be allowed for the same qualified employee but only in subsequent tax years.  Tax credits may be carried forward into the next tax year if an eligible employer does not have sufficient accrued tax liability in the current tax year.  If the recipient fails to meet any of the eligibility requirements imposed under this chapter, the department may declare the amount of taxes for which a credit has been taken to be immediately assessed and payable.

NEW SECTION. Sec. 5.     Eligible employers shall keep and maintain adequate records showing the name, date of first employment, date of termination, military reserve or national guard unit assigned, and any other information required by the department, on each qualified employee.

          The employment security department may, upon the request of the department, make and certify all determinations of employment under this chapter.

NEW SECTION. Sec. 6.     Chapter 82.32 RCW applies to the administration of this chapter.  The department may adopt such rules as are necessary to properly administer this chapter.

NEW SECTION. Sec. 7.     If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 8.  Sections 1 through 6 of this act shall constitute a new chapter in Title 82 RCW.

NEW SECTION. Sec. 9.     This act shall take effect January 1, 1990.