BILL REQ. #:  S-4489.1 

READ FIRST TIME 02/11/14.   

     AN ACT Relating to tax credits for hiring individuals with developmental disabilities; adding a new section to chapter 82.04 RCW; creating a new section; and providing an effective date.

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

NEW SECTION.  Sec. 1   This section is the tax preference performance statement for the tax preference contained in section 2 of this act. This performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or be used to determine eligibility for preferential tax treatment.
     (1) The legislature categorizes this tax preference as one intended to induce certain designated behavior by taxpayers and create or retain jobs, as indicated in RCW 82.32.808(2) (a) and (c).
     (2) It is the legislature's specific public policy objective to provide employment for individuals with developmental disabilities. It is the legislature's intent to provide employers a credit against the business and occupation tax for hiring individuals with developmental disabilities which would reduce an employer's tax burden thereby inducing employers to hire and create jobs for individuals with developmental disabilities. Pursuant to chapter 43.136 RCW, the joint legislative audit and review committee must review the business and occupation tax credit established under section 2 of this act.
     (3) If a review finds that employment of individuals with developmental disabilities has increased by five percent since the enactment of this tax preference, then the legislature intends for the legislative auditor to recommend extending the expiration date of the tax preference.
     (4) In order to obtain the data necessary to perform the review in subsection (3) of this section, the joint legislative audit and review committee should refer to employment and wage data available from the department of social and health services, the employment security department, and other sources as needed.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.04 RCW to read as follows:
     (1)(a) In computing the tax imposed under this chapter, a person is allowed a credit against the tax due. The credit is equal to two hundred fifty dollars per calendar quarter for each full-time employment position filled by an individual with a developmental disability, and one hundred twenty-five dollars per calendar quarter for each part-time employment position filled by an individual with a developmental disability. The credit is earned for each calendar quarter the position is continuously maintained for the entire calendar quarter.
     (b) Credits are available on a first in-time basis. The department must maintain a running total of all credits claimed under this section during each calendar year. The department may not allow any credit, or portion thereof, which would cause the total amount of credit claimed by all persons under this section to exceed five hundred thousand dollars in any calendar year. The department must provide written notice to any person who has claimed tax credits in excess of the five hundred thousand dollar limitation in this subsection. The notice must indicate the amount of tax due and provide that the tax be paid within thirty days from the date of such notice. The notice must also advise the person that the unused credit can be claimed in the next calendar year, subject to the five hundred thousand dollar limit. The department may not assess penalties and interest as provided in chapter 82.32 RCW on the amount due in the initial notice, if the amount due is paid by the due date specified in the notice, or any extension thereof.
     (c)(i) A person may claim the credit under this section only against taxes originally due and reported to the department on or after the date that the employment position is filled by an individual with a developmental disability. If a person claims a credit for an employment position that is not continuously maintained for a full calendar quarter as required by this section, the person must repay the credit. However, if credit is claimed for filling a full-time employment position that was later converted to a part-time employment position before the credit was earned for a calendar quarter and that converted employment position was continuously filled by an individual with a developmental disability for the full calendar quarter, fifty percent of the credit claimed must be repaid.
     (ii) Taxes imposed under (c)(i) of this subsection are due by the due date of the person's next tax return for reporting the taxes due under this chapter.
     (iii) Except as otherwise provided in this subsection (1)(c)(iii), penalties and interest apply to taxes due under this subsection (1)(c) as provided in chapter 82.32 RCW. However, no penalties may be assessed on taxes due under this subsection (1)(c) if the person was initially eligible to claim the credit and such taxes are paid by the date due as provided in (c)(ii) of this subsection.
     (d) The amount of credit claimed for a reporting period may not exceed the tax otherwise due under this chapter for that reporting period. Persons unable to claim their credit, or any portion thereof, in the calendar year for which the credit was earned may carry the unused credit over to subsequent calendar years until used. However, the carryover into subsequent calendar years is only permitted to the extent that the five hundred thousand dollar limit for any calendar year is not exceeded. No refunds may be granted for credits under this section.
     (e) The department of social and health services must work with the department of revenue to develop a process to verify that an individual with a developmental disability has been hired into a position that qualifies for the credit provided in this section. Only those businesses that hire individuals that the department of social and health services has identified as developmentally disabled qualify for the credit.     
     (f) To claim a credit under this section, a person must comply with the electronic filing and payment requirements in RCW 82.32.080.
     (g) Credit is authorized only for an employee with a developmental disability hired for an employment position where the hiring takes place on or after July 1, 2014. Employment positions filled by existing employees are eligible for the credit under this section only if the position vacated by the existing employee is filled by a new hire, and both the existing employee and the new hire are individuals with a developmental disability.
     (h) A person may not claim the credit under this section if the person has claimed a credit against the tax due under this chapter, under any other provision of law, with respect to the same employment position.
     (2) The definitions in this subsection apply throughout this section.
     (a) "Calendar quarter" means a period of three consecutive calendar months ending on March 31st, June 30th, September 30th, or December 31st.
     (b) "Full-time" means at least thirty-five hours a week, four hundred fifty-five hours a quarter, or one thousand eight hundred twenty hours a year.
     (c) "Individual with a developmental disability" means an individual with a developmental disability as defined in RCW 71A.10.020.
     (d) "Part-time" means less than full-time.

NEW SECTION.  Sec. 3   This act takes effect July 1, 2014.