Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

Finance Committee

HB 2028

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Brief Summary of Bill

Provides a business and occupation tax deduction for amounts received by a nonprofit health or social welfare organization for providing chemical dependency services under a government funded program.
Extends the expiration date for the business and occupation tax for amounts received by a nonprofit health or social welfare organization or a behavioral health organization for providing mental health services under a government funded program from August 1, 2016 to January 1, 2020.

Background:

Washington's major business tax is the business and occupation (B&O) tax. The B&O tax is imposed on the gross receipts of business activities conducted within the state, without any deduction for the costs of doing business. The tax is imposed on the gross receipts from all business activities conducted within the state. Revenues are deposited in the State General Fund. There are several rate categories, and a business may be subject to more than one B&O tax rate, depending on the types of activities conducted. Current law authorizes multiple exemptions, deductions and credits to reduce the B&O tax liability for specific taxpayers and business industries.

Under current law, non-profit health or social welfare organizations and behavioral health organizations may qualify for a B&O tax deduction for amounts received for providing mental health services under a government-funded program (mental health services B&O deduction). This tax deduction is scheduled to expire on August 1, 2016.

Summary of Bill:

The mental health services B&O tax deduction is expanded, enabling non-profit health or social welfare organizations to qualify for a B&O tax deduction for amounts received for providing chemical dependency services under a government funded program. Chemical dependency means alcoholism, drug addition, or dependency on alcohol or more than one psychoactive chemicals. Chemical dependency program means expenditures and activities of the Department of Social and Health Services designed and conducted to prevent or treat alcoholism and other drug addiction, including reasonable administration and overhead.

The expiration date for the B&O tax deduction is extended from August 1, 2016 to January 1, 2020.