BILL REQ. #:  H-4309.1 

Read first time 01/20/2006.   Referred to Committee on Finance.

     AN ACT Relating to small business tax relief; amending RCW 82.32.045; adding a new section to chapter 82.04 RCW; creating a new section; repealing RCW 82.04.4451; and providing an effective date.

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

NEW SECTION.  Sec. 1   A new section is added to chapter 82.04 RCW to read as follows:
     (1) This chapter shall not apply to twenty-five thousand dollars of a person's gross income, gross proceeds of sales, value of products, or any combination thereof. The exemption provided by this section is available annually on a calendar year basis. Any person claiming an exemption under this section shall file returns even though no tax may be due and shall report the amount claimed as an exemption on the return as required by the department.
     (2) Any amount for which a credit is allowed under RCW 82.04.440 shall not be considered gross proceeds of sales or value of products for purposes of the exemption under this section.
     (3)(a) If a person claims the exemption under this section for a reporting period in which the person's taxable amount, after claiming the exemption, is greater than zero and the person is taxable on two or more activities that are taxed at different rates under this chapter, the exemption provided by this section applies first to the gross income, gross proceeds of sales, or value of products taxed at the highest rate, then to the gross income, gross proceeds of sales, or value of products taxed at the next highest rate, and so forth until the exemption is claimed in full.
     (b) For the purposes of this subsection, "taxable amount" means the amount subject to the tax imposed in this chapter required to be reported on the person's excise tax returns for the reporting period for which the exemption under this section is claimed, less any amount for which a credit is allowed under RCW 82.04.440.

Sec. 2   RCW 82.32.045 and 2003 1st sp.s. c 13 s 8 are each amended to read as follows:
     (1) Except as otherwise provided in this chapter, payments of the taxes imposed under chapters 82.04, 82.08, 82.12, 82.14, and 82.16 RCW, along with reports and returns on forms prescribed by the department, are due monthly within twenty days after the end of the month in which the taxable activities occur.
     (2) The department of revenue may relieve any taxpayer or class of taxpayers from the obligation of remitting monthly and may require the return to cover other longer reporting periods, but in no event may returns be filed for a period greater than one year. For these taxpayers, tax payments are due on or before the last day of the month next succeeding the end of the period covered by the return.
     (3) The department of revenue may also require verified annual returns from any taxpayer, setting forth such additional information as it may deem necessary to correctly determine tax liability.
     (4) Notwithstanding subsections (1) and (2) of this section, the department may relieve any person of the requirement to file returns if the following conditions are met:
     (a) The person's value of products, gross proceeds of sales, or gross income of the business, from all business activities taxable under chapter 82.04 RCW, ((is less than twenty-eight)) does not exceed twenty-five thousand dollars per year;
     (b) The person's gross income of the business from all activities taxable under chapter 82.16 RCW is less than twenty-four thousand dollars per year; and
     (c) The person is not required to collect or pay to the department of revenue any other tax or fee which the department is authorized to collect.

NEW SECTION.  Sec. 3   RCW 82.04.4451 (Credit against tax due--Maximum credit -- Table) and 1997 c 238 s 2 & 1994 sp.s. c 2 s 1 are each repealed.

NEW SECTION.  Sec. 4   The repealed section in section 3 of this act does not affect any rights, liabilities, obligations, or proceedings, incurred or instituted under the repealed section or rules or orders adopted by the department of revenue pursuant to that repealed section prior to the effective date of section 2 of this act.

NEW SECTION.  Sec. 5   This act takes effect January 1, 2007.