BILL REQ. #:  H-0707.6 

Read first time 02/05/13.   Referred to Committee on Technology & Economic Development.

     AN ACT Relating to providing tax relief for new businesses in high growth business sectors; and adding a new section to chapter 82.04 RCW.

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) In computing tax under this chapter, a new business may deduct from the measure of the tax up to two million dollars in each calendar year.
     (2) For purposes of this section:
     (a) "New business" means a business that:
     (i) Obtained a registration certificate under RCW 82.32.030 within twenty-four months of the end of the current tax reporting period; and     
     (ii) Is engaged primarily in industrial machinery manufacturing; commercial and service industry machinery manufacturing; computer and electronic product manufacturing; software publishing; data processing, hosting, and related services; internet publishing and broadcasting and web search portals; computer systems design and related services; or research and development in physical, engineering, and life services.
     (b) "New business" does not include:
     (i) A business that has been restructured, reorganized, or transferred, for the primary purpose of claiming the deduction authorized under this section;
     (ii) A new branch location or other facility by an existing entity; or
     (iii) A business that is substantially similar to a business currently operated, or operated within the past five years, by the same principals.
     (3) A small new business must file an application, in a form and manner required by the department, before taking a deduction under this section. The department must rule on the application within twenty days.
     (4) A taxpayer filing on a monthly or quarterly basis may claim a deduction under this section for tax reporting periods beginning on or after July 1, 2013. Taxpayers paying on an annual basis may claim a deduction under this section for tax reporting periods beginning on or after January 1, 2013.
     (5) The legislature finds that accountability and the effectiveness of attempts to foster job creation and retention are important aspects of setting tax policy. In order to make policy choices regarding the best use of limited state resources, the legislature needs to know how the incentives are used, and the degree to which they meet the legislature's intent.
     (6) All persons claiming a tax credit under this section must provide the department of commerce with any data requested for reporting purposes under subsection (8) of this section. A taxpayer who does not comply with the reporting requirements under this section may not claim the credit. A taxpayer has ninety days from the time the department notifies the taxpayer of their noncompliance to conform with the requirements of this section. After such date, the taxpayer may not claim the credit authorized under this section.
     (7) By December 31st each year, beginning in 2014, and in compliance with RCW 43.01.036, the department of commerce must submit a report to the legislature that details the progress achieved in reaching the intended outcomes specified in this section.
     (8) The report to the legislature must include the following information:
     (a) The total number of businesses receiving the credit authorized under this section;
     (b) Capital investments of the taxpayer, both initial and ongoing;
     (c) The number of employees hired or retained by the taxpayer;
     (d) The number of employees employed full time or part time by the taxpayer;
     (e) The number of employees hired from Washington state, and the number hired elsewhere; and
     (f) The location of their businesses, by zip code.
     (9) The report to the legislature must also include:
     (a) How the industries eligible under this chapter are growing in comparison to other states and the nation;
     (b) Historic industry growth of eligible industries compared to growth in the year being reported; and
     (c) How eligible industries are growing in comparison to industries not eligible for tax credits under this chapter.