FINAL BILL REPORT

SHB 1089

                                   C 67 L 88

BYHouse Committee on Ways & Means/Revenue (originally sponsored by Representative Rust)

Prohibiting a business and occupation tax deduction for amounts received as compensation from public entities for services rendered as employee benefits.

House Committe on Ways & Means/Revenue

Senate Committee on Ways & Means

SYNOPSIS AS ENACTED

BACKGROUND:

Payments received from governments by a health or social welfare organization as compensation for health or social welfare services are exempt from the Business and Occupation tax (B&O).

In 1986 the Washington Supreme Court ruled that Group Health meets the statutory definition of a qualified health and social welfare organization.  As such, it does not have to pay B&O tax on amounts received from federal, state and local governments under employee benefit plans.

SUMMARY:

For Business and Occupation tax purposes, health or social welfare organizations may not deduct amounts received under an employee benefit plan.

VOTES ON FINAL PASSAGE:

      House 96   0

      Senate    48     0

EFFECTIVE:June 9, 1988