AN
ACT Relating to international services; adding a new section to chapter 82.04
RCW; adding a new section to chapter 48.14 RCW; creating a new section; and
providing an effective date.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. It is
the intent of the legislature to attract and retain businesses that provide
professional services and insurance services to international customers. To
that end, the legislature finds that an incentive measured by a business's
growth in jobs is a meaningful method of attracting and retaining such
businesses. Therefore, the incentive in this act is specifically targeted at
"net new jobs." In addition, to further the impact and benefit of
this program, this incentive is limited to those urban areas of the state, both
in eastern Washington and western Washington, that are characterized by
unemployment and poverty. The legislature finds that providing this targeted
incentive will be of benefit to the state as a whole.
NEW
SECTION. Sec. 2. A
new section is added to chapter 82.04 RCW to read as follows:
(1)
Subject to the limits in this section, an eligible person is allowed a credit
against the tax due under this chapter. The credit is based on qualified
employment positions in eligible areas. The credit is available to persons who
are engaged in international services as defined in this section. In order to
receive the credit, the international service activities must take place at a
business within the eligible area.
(2)(a)
The credit shall equal three thousand dollars for each qualified employment
position created after the effective date of this act in an eligible area. A
credit is earned for the calendar year the person is hired to fill the
position, plus the four subsequent consecutive years, if the position is
maintained for those four years. (b) Credit may not be taken for hiring of
persons into positions that exist on the effective date of this act. Credit is
authorized for new employees hired for new positions created after the
effective date of this act. New positions filled by existing employees are
eligible for the credit under this section only if the position vacated by the
existing employee is filled by a new hire.
(c)
When a position is newly created, if it is filled before July 1st, this
position is eligible for the full yearly credit. If it is filled after June
30th, this position is eligible for half of the credit.
(d)
Credit may be accrued and carried over until it is used. No refunds may be
granted for credits under this section.
(3)
For the purposes of this section:
(a)
"Eligible area" means: (i) A community empowerment zone under RCW
43.63A.700; or (ii) a contiguous group of census tracts that meets the
unemployment and poverty criteria of RCW 43.63A.710 and is designated under
subsection (4) of this section;
(b)
"Eligible person" means a person, as defined in RCW 82.04.030, who in
an eligible area at a specific location is engaged in the business of providing
international services;
(c)(i)
"International services" means the provision of a service, as defined
under (c)(iii) of this subsection, that is subject to tax under RCW
82.04.290(2), and either:
(A)
Is for a person domiciled outside the United States; or
(B)
The service itself is for use primarily outside of the United States.
(ii)
"International services" excludes any service taxable under RCW
82.04.290(1).
(iii)
Eligible services are: Computer; data processing; information; legal;
accounting and tax preparation; engineering; architectural; business
consulting; business management; public relations and advertising; surveying;
geological consulting; real estate appraisal; or financial services. For the
purposes of this section these services mean the following:
(A)
"Computer services" are services such as computer programming, custom
software modification, customization of canned software, custom software
installation, custom software maintenance, custom software repair, training in
the use of software, computer systems design, and custom software update
services;
(B)
"Data processing services" are services such as word processing, data
entry, data retrieval, data search, information compilation, payroll
processing, business accounts processing, data production, and other
computerized data and information storage or manipulation. "Data
processing services" also includes the use of a computer or computer time
for data processing whether the processing is performed by the provider of the
computer or by the purchaser or other beneficiary of the service;
(C)
"Information services" are services such as electronic data retrieval
or research that entails furnishing financial or legal information, data or
research, internet service as defined in RCW 82.04.297, general or specialized
news, or current information;
(D)
"Legal services" are services such as representation by an attorney,
or other person when permitted, in an administrative or legal proceeding, legal
drafting, paralegal services, legal research services, and court reporting
services, arbitration, and mediation services;
(E)
"Accounting and tax preparation services" are services such as
accounting, auditing, actuarial, bookkeeping, or tax preparation services;
(F)
"Engineering services" are services such as civil, electrical,
mechanical, petroleum, marine, nuclear, and design engineering, machine designing,
machine tool designing, and sewage disposal system designing services;
(G)
"Architectural services" are services such as structural or landscape
design or architecture, interior design, building design, building program
management, and space planning services;
(H)
"Business consulting services" are services such as primarily
providing operating counsel, advice, or assistance to the management or owner
of any business, private, nonprofit, or public organization, including but not
limited to those in the following areas: Administrative management consulting;
general management consulting; human resource consulting or training;
management engineering consulting; management information systems consulting;
manufacturing management consulting; marketing consulting; operations research
consulting; personnel management consulting; physical distribution consulting;
site location consulting; economic consulting; motel, hotel, and resort
consulting; restaurant consulting; government affairs consulting; and lobbying;
(I)
"Business management services" are services such as administrative
management, business management, and office management. "Business
management services" does not include property management or property
leasing, motel, hotel, and resort management, or automobile parking management;
(J)
"Public relations and advertising services" are services such as
layout, art direction, graphic design, copy writing, mechanical preparation,
opinion research, marketing research, marketing, or production supervision;
(K)
"Surveying services" are services such as land surveying;
(L)
"Geological consulting services" are services rendered for the oil,
gas, and mining industry and other earth resource industries, and other
services such as soil testing;
(M)
"Real estate appraisal services" are services such as market
appraisal and other real estate valuation; and
(N)
"Financial services" are services such as banking, loan, security,
investment management, investment advisory, mortgage servicing, contract collection,
and finance leasing services, engaged in by financial businesses, or businesses
similar to or in competition with financial businesses; and
(d)
"Qualified employment position" means a permanent full-time position
to provide international services. If an employee is either voluntarily or
involuntarily separated from employment, the employment position is considered
filled on a full-time basis if the employer is either training or actively
recruiting a replacement employee.
(4)
By ordinance, the legislative authority of a city, or legislative authorities
of contiguous cities by ordinance of each city's legislative authority, with
population greater than eighty thousand, located in a county containing no
community empowerment zones as designated under RCW 43.63A.700, may designate a
contiguous group of census tracts within the city or cities as an eligible area
under this section. Each of the census tracts must meet the unemployment and
poverty criteria of RCW 43.63A.710. Upon making the designation, the city or
cities shall transmit to the department of revenue a certification letter and a
map, each explicitly describing the boundaries of the census tract. This
designation must be made by December 31, 1998.
(5)
No application is necessary for the tax credit. The person must keep records
necessary for the department to verify eligibility under this section. This
information includes:
(a)
Employment records for the previous six years;
(b)
Information relating to description of international service activity engaged
in at the eligible location by the person; and
(c)
Information relating to customers of international service activity engaged in
at that location by the person.
(6)
If at any time the department finds that a person is not eligible for tax
credit under this section, the amount of taxes for which a credit has been used
shall be immediately due. The department shall assess interest, but not
penalties, on the credited taxes for which the person is not eligible. The
interest shall be assessed at the rate provided for delinquent excise taxes
under chapter 82.32 RCW, shall be assessed retroactively to the date the tax
credit was taken, and shall accrue until the taxes for which a credit has been
used are repaid.
(7)
The employment security department shall provide to the department of revenue
such information needed by the department of revenue to verify eligibility
under this section.
NEW
SECTION. Sec. 3. A
new section is added to chapter 48.14 RCW to read as follows:
(1)
Subject to the limits in this section, an eligible person is allowed a credit
against the tax due under RCW 48.14.020. The credit is based on qualified
employment positions in eligible areas. The credit is available to persons who
are engaged in international insurance services as defined in this section. In
order to receive the credit, the international insurance services activities
must take place at a business within the eligible area.
(2)(a)
The credit shall equal three thousand dollars for each qualified employment
position created after the effective date of this act in an eligible area. A
credit is earned for the calendar year the person is hired to fill the
position, plus the four subsequent consecutive years, if the position is
maintained for those four years. (b) Credit may not be taken for hiring of
persons into positions that exist on the effective date of this act. Credit is
authorized for new employees hired for new positions created after the
effective date of this act. New positions filled by existing employees are
eligible for the credit under this section only if the position vacated by the
existing employee is filled by a new hire.
(c)
When a position is newly created, if it is filled before July 1st, this
position is eligible for the full yearly credit. If it is filled after June
30th, this position is eligible for half of the credit.
(d)
Credit may be accrued and carried over until it is used. No refunds may be
granted for credits under this section.
(3)
For the purposes of this section:
(a)
"Eligible area" means: (i) A community empowerment zone under RCW
43.63A.700; or (ii) a contiguous group of census tracts that meets the
unemployment and poverty criteria of RCW 43.63A.710 and is designated under
subsection (4) of this section;
(b)
"Eligible person" means a person, as defined in RCW 82.04.030, who in
an eligible area at a specific location is engaged in the business of providing
international insurance services;
(c)
"International insurance services" means a business that provides
insurance services related directly to the delivery of the service outside the
United States or on behalf of persons residing outside the United States; and
(d)
"Qualified employment position" means a permanent full-time position
to provide international insurance services. If an employee is either
voluntarily or involuntarily separated from employment, the employment position
is considered filled on a full-time basis if the employer is either training or
actively recruiting a replacement employee.
(4)
By ordinance, the legislative authority of a city with population greater than
eighty thousand, located in a county containing no community empowerment zones
as designated under RCW 43.63A.700, may designate a contiguous group of census
tracts within the city as an eligible area under this section. Each of the
census tracts must meet the unemployment and poverty criteria of RCW
43.63A.710. Upon making the designation, the city shall transmit to the
department of revenue a certification letter and a map, each explicitly
describing the boundaries of the census tract. This designation must be made
by December 31, 1998.
(5)
No application is necessary for the tax credit. The person must keep records
necessary for the department to verify eligibility under this section. This
information includes:
(a)
Employment records for the previous six years;
(b)
Information relating to description of international insurance services
activity engaged in at the eligible location by the person; and
(c)
Information relating to customers of international insurance services activity
engaged in at that location by the person.
(6)
If at any time the department finds that a person is not eligible for tax
credit under this section, the amount of taxes for which a credit has been used
shall be immediately due. The department shall assess interest, but not
penalties, on the credited taxes for which the person is not eligible. The
interest shall be assessed at the rate provided for delinquent excise taxes
under chapter 82.32 RCW, shall be assessed retroactively to the date the tax
credit was taken, and shall accrue until the taxes for which a credit has been
used are repaid.
(7)
The employment security department shall provide to the department of revenue
such information needed by the department of revenue to verify eligibility
under this section.
NEW SECTION. Sec. 4. This
act takes effect July 1, 1998.
