SENATE BILL REPORT
EHB 2096
As Reported by Senate Committee On:
Ways & Means, February 28, 2022
Title: An act relating to the working families' tax exemption, also known as the working families tax credit.
Brief Description: Concerning the working families' tax exemption, also known as the working families tax credit.
Sponsors: Representatives Thai, Frame, Berry, Sutherland, Kloba and Pollet; by request of Department of Revenue.
Brief History: Passed House: 2/12/22, 96-2.
Committee Activity: Ways & Means: 2/22/22, 2/28/22 [DP, DNP].
Brief Summary of Bill
  • Makes technical clarifications to the Working Families Tax Credit.
SENATE COMMITTEE ON WAYS & MEANS
Majority Report: Do pass.
Signed by Senators Rolfes, Chair; Frockt, Vice Chair, Capital; Robinson, Vice Chair, Operating & Revenue; Wilson, L., Ranking Member; Brown, Assistant Ranking Member, Operating; Billig, Braun, Carlyle, Conway, Dhingra, Gildon, Hasegawa, Hunt, Keiser, Mullet, Muzzall, Pedersen, Rivers, Van De Wege, Wagoner, Warnick and Wellman.
Minority Report: Do not pass.
Signed by Senators Schoesler, Assistant Ranking Member, Capital; Honeyford, Ranking Minority Member, Capital.
Staff: Alia Kennedy (786-7405)
Background:

The Working Families Tax Credit (WFTC) is a state program for low to moderate income families that offers a partial refund credit against sales and use taxes paid.  To be eligible for credit payments, a person must:

  • have filed a federal tax return;
  • meet the requirements for the federal Earned Income Tax Credit (EITC), or would meet the requirements for the EITC, but are filing with an Individual Taxpayer Identification Number;
  • be at least 25 and under 65 years of age, or have a qualifying child; and
  • have lived in Washington for more than 180 days.

 

The amount of the credit varies depending on the number of qualifying children and the filer's income level.  The minimum credit amount for all eligible persons that apply is $50.  The maximum credit amount for the WFTC is reduced by varying percentages at income levels based around the maximum adjusted gross income for the federal EITC, which changes annually.  The rates of credit reduction also vary based on the number of qualifying children.

 

To receive a credit, eligible persons must apply to the Department of Revenue (DOR).  DOR has authority to adopt rules necessary to implement and administer the program.
Summary of Bill:

The following technical corrections are made related to the WFTC program:

  • the word "exemption" is replaced with "credit";
  • the word "remittance" is replaced with "refund";
  • a needed reference to use tax statute is included;
  • references to titles within the federal internal revenue code are clarified;
  • a definition for the federal internal revenue code is added;
  • a definition for "Washington resident" is added, specifying that a person must physically reside in the state for at least 183 days during the year for which the credit is claimed, or be the spouse of someone who does;
  • it is specified that as refund amounts are adjusted for inflation, they will be rounded to the nearest $5;
  • fraudulent claims for the working families tax credit is added to the statutes identifying unlawful acts related to taxation that may be subject to penalties; and
  • other grammatical changes are made.
Appropriation: None.
Fiscal Note: Available.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Staff Summary of Public Testimony:

PRO:  This is agency request legislation that makes technical changes to the Working Families Tax Credit.  The small changes in this bill make a big impact on the ability to successfully implement the tax credit program. 
Persons Testifying: PRO: Steve Ewing, Department of Revenue.
Persons Signed In To Testify But Not Testifying: No one.