BILL REQ. #:  H-4200.1 

Read first time 01/15/08.   Referred to Committee on Community & Economic Development & Trade.

     AN ACT Relating to creating a business and occupation tax credit for qualified employer payments on student loans; reenacting and amending RCW 82.32.590 and 82.32.600; adding a new section to chapter 82.04 RCW; adding a new section to chapter 82.32 RCW; creating a new section; and providing an expiration date.

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

NEW SECTION.  Sec. 1   It is the intent of the legislature to support a vibrant economy through a well-trained, highly skilled workforce. It is also the intent of the legislature to ensure that individuals who receive high level training in Washington remain in the state upon graduation. Further, in order for Washington businesses to prosper in a highly competitive global economy, businesses must have the necessary tools and talent, and it is the intent of the legislature to help businesses meet these needs.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.04 RCW to read as follows:
     (1) In computing the tax imposed under this chapter, a credit is allowed to qualified employers for student loan payments made on behalf of qualified employees.
     (2) The credit is equal to the amount of federal or Washington state student loan payments, which came due and were paid by a qualified employer on behalf of a qualified employee in a calendar year. The maximum credit that may be earned is:
     (a) Two thousand dollars for each qualified employee to whom the qualified employer pays annual wages and benefits of forty thousand dollars or less; or
     (b) Four thousand dollars for each qualified employee to whom the qualified employer pays annual wages and benefits of more than forty thousand dollars.
     (3) The credit under this section may be used against taxes due under this chapter and a credit earned during one calendar year may be carried over to be credited against taxes incurred in a subsequent calendar year. A person is not eligible to receive a credit under this section if the person is receiving a "tax preference," as defined in RCW 43.136.021, under any other provision of law for the same employment position. No refunds may be granted for credits under this section.
     (4)(a) The legislature finds that accountability and effectiveness are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources, the legislature needs information to evaluate whether the stated goals of legislation were achieved. A person taking a credit under this section must make an annual survey to the department as provided in section 3 of this act.
     (b) The goals of the tax credit authorized under this section are to support a vibrant economy through a well-trained, highly skilled workforce and ensure that individuals who receive high level training in Washington remain in the state upon graduation.
     (5) As used in this section:
     (a) "Qualified employee" means an employee who:
     (i) Resides and is employed in Washington;
     (ii) Has been employed by the qualified employer for at least twelve consecutive months and, during that time, has worked at least thirty-five hours per week or four hundred fifty-five hours per quarter or one thousand eight hundred twenty hours per year, exclusive of overtime;
     (iii) Attended for at least two years and, within the past five years, earned a bachelor or a graduate degree from one of Washington's state universities, regional universities, or the state college, as defined in RCW 28B.10.016;
     (iv) Was a resident student as defined in RCW 28B.15.012 during the entire period of attendance at the Washington university, regional university, or state college; and
     (v) Has federal, Washington state, or a combination of federal and Washington state, student loan debt with a total loan principal amount of ten thousand dollars or more.
     (b) "Qualified employer" means a person, as defined in RCW 82.04.030, employing fifty or fewer employees.
     (6) Transfer of ownership of the qualified employer does not affect credit eligibility. However, the credit is available to the successor only if the successor is a qualified employer and the other eligibility conditions of this section are met.
     (7) No application is necessary for the tax credit. The person must keep records necessary for the department to verify eligibility under this section.
     (8) 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 claimed are immediately due. The department must assess interest, but not penalties, on the tax credit for which the person is not eligible. The interest must be assessed at the rate provided for delinquent taxes under chapter 82.32 RCW, must be assessed retroactively to the date the tax credit was taken, and must accrue until the taxes for which a credit has been used are repaid.
     (9) This section expires January 1, 2011. A credit may be claimed under this section on or after January 1, 2011, for any credit earned during a reporting period ending before January 1, 2011.

NEW SECTION.  Sec. 3   A new section is added to chapter 82.32 RCW to read as follows:
     (1) Each person claiming a tax preference that requires a survey under this section must report information to the department by filing a complete annual survey. The survey is due by March 31st of the year following any calendar year in which the tax preference is taken. The department may extend the due date for timely filing of annual surveys under this section as provided in RCW 82.32.590. The survey must include the amount of the tax preference taken. The survey must also include the following information for employment positions in Washington:
     (a) The number of total employment positions;
     (b) Full-time, part-time, and temporary employment positions as a percent of total employment;
     (c) The number of employment positions according to the following wage bands: Less than thirty thousand dollars; thirty thousand dollars or greater, but less than sixty thousand dollars; and sixty thousand dollars or greater. A wage band containing fewer than three individuals may be combined with another wage band; and
     (d) The number of employment positions that have employer-provided medical, dental, and retirement benefits, by each of the wage bands.
     (2) The department may request additional information necessary to measure the results of, or determine eligibility for, the tax preference, to be submitted at the same time as the survey.
     (3) All information collected under this section, except the amount of the tax preference taken, is deemed taxpayer information under RCW 82.32.330. Information on the amount of tax preference taken is not subject to the confidentiality provisions of RCW 82.32.330. If the amount of the tax preference taken as reported on the survey is different than the amount actually taken or otherwise allowed by the department based on the taxpayer's excise tax returns or other information known to the department, the amount actually taken or allowed may be disclosed.
     (4) If a person fails to submit an annual survey under this section by the due date of the report or any extension under RCW 82.32.590, the department must declare the amount of the tax preference taken for the previous calendar year to be immediately due and payable. The department must assess interest, but not penalties, on the amounts due under this section. The interest must be assessed at the rate provided for delinquent taxes under this chapter, retroactively to the date the credit was claimed, and must accrue until the taxes for which the credit was claimed are repaid. This information is not subject to the confidentiality provisions of RCW 82.32.330.
     (5) The department must use the information from this section to prepare summary descriptive statistics by category. No fewer than three taxpayers must be included in any category. The department must report these statistics to the legislature each year by September 1st.
     (6) For the purposes of this section, "tax preference" has the meaning provided in RCW 43.136.021 and includes only the tax preferences requiring a survey under this section.

Sec. 4   RCW 82.32.590 and 2006 c 354 s 17, 2006 c 300 s 10, 2006 c 177 s 8, 2006 c 112 s 7, and 2006 c 84 s 7 are each reenacted and amended to read as follows:
     (1) If the department finds that the failure of a taxpayer to file an annual survey or annual report under RCW 82.04.4452, 82.32.5351, 82.32.650, 82.32.635, 82.32.640, 82.32.630, 82.32.610, section 3 of this act, or 82.74.040 by the due date was the result of circumstances beyond the control of the taxpayer, the department shall extend the time for filing the survey or report. Such extension shall be for a period of thirty days from the date the department issues its written notification to the taxpayer that it qualifies for an extension under this section. The department may grant additional extensions as it deems proper.
     (2) In making a determination whether the failure of a taxpayer to file an annual survey or annual report by the due date was the result of circumstances beyond the control of the taxpayer, the department shall be guided by rules adopted by the department for the waiver or cancellation of penalties when the underpayment or untimely payment of any tax was due to circumstances beyond the control of the taxpayer.

Sec. 5   RCW 82.32.600 and 2007 c 54 s 23 and 2007 c 54 s 22 are each reenacted and amended to read as follows:
     (1) Persons required to file annual surveys or annual reports under RCW 82.04.4452 or 82.32.5351, 82.32.610, 82.32.630, 82.32.635, 82.32.640, section 3 of this act, or 82.74.040 must electronically file with the department all surveys, reports, returns, and any other forms or information the department requires in an electronic format as provided or approved by the department. As used in this section, "returns" has the same meaning as "return" in RCW 82.32.050.
     (2) Any survey, report, return, or any other form or information required to be filed in an electronic format under subsection (1) of this section is not filed until received by the department in an electronic format.
     (3) The department may waive the electronic filing requirement in subsection (1) of this section for good cause shown.