BILL REQ. #:  H-1768.2 

Read first time 02/20/2003.   Referred to Committee on Finance.

     AN ACT Relating to the business and occupation tax credit for small businesses; amending RCW 82.04.4451; and providing an effective date.

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

Sec. 1   RCW 82.04.4451 and 1997 c 238 s 2 are each amended to read as follows:
     (1) In computing the tax imposed under this chapter, a credit is allowed against the amount of tax otherwise due under this chapter, as provided in this section.
     (a) If the taxpayer is not eligible under (b) of this subsection, the maximum credit for a taxpayer for a reporting period is thirty-five dollars multiplied by the number of months in the reporting period, as determined under RCW 82.32.045.
     (b)(i) If the amount of wages paid by the taxpayer in the twelve-month period that ends with the reporting period is at least ten percent greater than the amount of wages paid by the taxpayer in the twelve-month period that precedes the twelve-month period that ends with the reporting period, the maximum credit for a taxpayer for a reporting period is one hundred five dollars multiplied by the number of months in the reporting period, as determined under RCW 82.32.045.
     (ii) No credit may be taken under this subsection (1)(b):
     (A) Following the two-year period after which the credit under this subsection (1)(b) was first taken;
     (B) If the taxpayer is a business that has been restructured, reorganized, or transferred, unless the majority of the activities to be conducted after restructuring, reorganization, or transferral are significantly different from the activities previously conducted; or
     (C) If the taxpayer is a business that is substantially similar to a business currently operated, or operated within the past five years, by the same principals.
     (2) When the amount of tax otherwise due under this chapter is equal to or less than the maximum credit, a credit is allowed equal to the amount of tax otherwise due under this chapter.
     (3) When the amount of tax otherwise due under this chapter exceeds the maximum credit, a reduced credit is allowed equal to twice the maximum credit, minus the tax otherwise due under this chapter, but not less than zero.
     (4) The department may prepare a tax credit table consisting of tax ranges using increments of no more than five dollars and a corresponding tax credit to be applied to those tax ranges. The table shall be prepared in such a manner that no taxpayer will owe a greater amount of tax by using the table than would be owed by performing the calculation under subsections (1) through (3) of this section. A table prepared by the department under this subsection shall be used by all taxpayers in taking the credit provided in this section.

NEW SECTION.  Sec. 2   This act takes effect January 1, 2004.