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House of Representatives P.O. Box 40600 Office of Program Research Olympia WA 98504-0600 Finance Committee Phone 360-786-7100
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HB 2519
Bill Analysis
January 27, 2000
Brief Description: Simplifying the excise tax code.
Bill Sponsors: Representatives Lovick, Fortunato, Dunshee, Thomas, Haigh and Kenney; by request of Department of Revenue.
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Brief Summary of Bill
CAllows the department of revenue to disclose tax owed on properties involved in real estate transactions;
CMakes deadlines for remitting state 911 taxes the same as the deadlines for remitting other excise taxes;
CPermits the department of revenue to assess and collect unpaid watercraft excise taxes;
CSpecifies that a change in ownership does not affect the deferral of sales and use taxes on facilities constructed under various tax incentive programs; and
CStates that Ahelp desk@ or software/programming businesses in rural counties that fail to file annual reports do not lose their eligibility for business & occupation tax credits.
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Staff: Linda Brooks, 786-7153.
Background:
Information Disclosure
When real estate transactions occur, a title company searches records to determine whether there are any liens, judgments, or warrants for unpaid taxes filed against a property. A title company obtains this information from court documents and other legal records, because the department of revenue (DOR) is generally prohibited from disclosing information about taxpayers. Although the DOR may disclose the name of a taxpayer against whom a tax warrant for more than $5,000 has been filed, the DOR cannot disclose the actual amount of tax owed.
State 911 Taxes
The state imposes a 20-cent per month tax on each telephone switched access line to help fund enhanced 911 emergency services. Telephone companies collect these taxes for the state. The telephone companies must remit the tax revenues to the DOR by the last day of the following month.
Watercraft Excise Taxes
Owners of recreational boats pay a watercraft excise tax in lieu of property taxes. This tax is collected by the department of licensing. In 1999, the Legislature increased penalties on persons who avoid paying Washington taxes by registering their vehicles, aircraft, or watercraft in another state or nation. Although the department of licensing collects current taxes, licensing does not collect back taxes. Prior to the 1999 legislation, the DOR was authorized to collect unpaid back taxes, penalties, and interests.
Distressed Areas Tax Incentives
Washington has developed various tax incentives designed to assist in job creation or retention in rural counties. A business that constructs a manufacturing or research and development facility in a rural county may defer sales and uses taxes on materials and labor used in the construction. A business may also qualify for similar tax deferrals for facilities constructed in a community empowerment zone (CEZ) or a county containing a CEZ if the business hires residents of a CEZ to work at the new facility. A pro-rata share of the deferred taxes must be repaid if eligibility criteria are not met during an eight-year period following completion of a facility. After eight years, the deferred taxes are waived.
A manufacturing or research and development business that constructs a facility in a rural county, a CEZ, or a county containing a CEZ, may also qualify for business and occupation (B&O) tax credits. The amount of the credit depends on the amount of money invested in constructing a new facility, the number of jobs created, and the wages paid to new employees. For the purpose of administering these B&O tax credits, the department of labor and industries must certify wage and employment data to the department of revenue.