WSR 06-11-101



(Economic Services Administration)

[ Filed May 17, 2006, 4:32 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 05-21-094.

Title of Rule and Other Identifying Information: WAC 388-450-0080 What is self-employment income?

Hearing Location(s): Blake Office Park East, Rose Room, 4500 10th Avenue S.E., Lacey, WA (one block north of the intersection of Pacific Avenue S.E. and Alhadeff Lane, behind Goodyear Tire. A map or directions are available at or by calling (360) 664-6097, on June 27, 2006, at 10:00 a.m.

Date of Intended Adoption: Not earlier than June 28, 2006.

Submit Written Comments to: DSHS Rules Coordinator, P.O. Box 45850, Olympia, WA 98504, delivery 4500 10th Avenue S.E., Lacey, WA, e-mail, fax (360) 664-6185, by 5:00 p.m. on June 27, 2006.

Assistance for Persons with Disabilities: Contact Stephanie Schiller, DSHS Rules Consultant, by June 23, 2006, TTY (360) 664-6178 or phone (360) 664-6097 or by e-mail at

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Rule amendments are necessary to more clearly describe the criteria by which an individual's earned income is considered self-employment income for assistance programs. The proposed text will better describe when a person has an employer/employee relationship versus when that person is self-employed.

Reasons Supporting Proposal: Current descriptions of employer/employee relationships versus self-employment are vague and cause some confusion in application of the rule by department staff.

The proposed criteria are consistent with federal Internal Revenue Service and Social Security Administration descriptions, as well as state labor and industries statutes and division of child care and early learning statutes and policy.

The improved clarity and consistency with other standards will provide a better guideline for department staff who must apply the rule to client circumstances.

Statutory Authority for Adoption: RCW 74.04.050, 74.04.055, 74.04.057, 74.08.090.

Statute Being Implemented: RCW 74.04.050, 74.04.055, 74.04.057, 74.08.090.

Rule is not necessitated by federal law, federal or state court decision.

Name of Proponent: Department of social and health services, governmental.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Rebecca Henrie, 1009 College S.E., Lacey, WA 98504, (360) 725-4615.

No small business economic impact statement has been prepared under chapter 19.85 RCW. This proposed rule does not have an economic impact on small businesses; it only affects DSHS clients by outlining the rules clients must meet in order to be eligible for the department's cash assistance or food benefit programs.

A cost-benefit analysis is not required under RCW 34.05.328. These amendments are exempt as allowed under RCW 34.05.328 (5)(b)(vii) which states in-part, "[t]his section does not apply to....rules of the department of social and health services relating only to client medical or financial eligibility and rules concerning liability for care of dependents."

May 15, 2006

Andy Fernando, Manager

Rules and Policies Assistance Unit

AMENDATORY SECTION(Amending WSR 03-13-045, filed 6/11/03, effective 8/1/03)

WAC 388-450-0080   What is self-employment income?   This section applies to ((TANF/SFA, GA, RCA)) cash assistance, Basic Food, and medical programs for children, pregnant women and families.

(1) Self-employment income is income you earn from ((operating)) running a business, performing a service, selling items you make, or re-selling items to make a profit.

(2) You are self-employed if you earn income without having an employer/employee relationship with the person who pays you. This includes, but is not limited to, when:

(a) You have primary control of the way you do your work; or

(b) You report your income using IRS Schedule C, Schedule C-EZ, Schedule K-1, or Schedule SE.

(3) You usually have an employer/employee relationship when:

(a) The person you provide services for has primary control of how you do your work; or

(b) You get an IRS form W-2 to report your income.

(4) Your self-employment does not have to be a licensed business for your business or activity to qualify as self-employment. Some examples of self-employment include:

(a) Child care that requires a license under chapter 74.15 RCW;

(b) Driving a taxi cab;

(c) Farming/fishing;

(d) Odd jobs such as mowing lawns, house painting, gutter cleaning, or car ((maintenance)) care;

(e) ((Operating)) Running a lodging for roomers and/or boarders. Roomer income includes money paid to you for shelter costs by someone not in your assistance unit who lives with you ((if you)) when:

(i) ((Own)) You own or are buying your residence; or

(ii) You rent all or a part of your residence and the total rent you charge all others in your home is more than your total rent.

(f) ((Operating)) Running an adult family home;

(g) Providing services such as a massage therapist or a professional escort;

(h) Retainer fees to reserve a bed for a foster child;

(i) Selling ((self-produced or supplied items)) items you make or items that are supplied to you;

(j) Selling or donating your own biological products such as ((blood, plasma, eggs, sperm, or hair; and)) providing blood or reproductive material for profit;

(k) Working as ((a subcontractor)) an independent contractor; and

(l) Running a business or trade either on your own or in a partnership.

(((3))) (5) If you are an employee of a company or ((individual)) person who ((performs)) does the activities listed in subsection (2) above as a part of your job, we do not count the ((activity)) work you do as self-employment. ((If the person or company who pays you must report your income using IRS form W-2, you are an employee.

(4) Most)) (6) Self-employment income is ((considered)) counted as earned income as described in WAC 388-450-0030 except as described in subsection (7).

(((5))) (7) For ((TANF/SFA)) cash assistance and Basic Food there are special rules about renting or leasing out property or real estate that you own.

(a) We count the income you get as unearned income unless you spend at least twenty hours per week managing the property.

(b) For TANF/SFA, we count the income as unearned income unless the use of the property is a part of your approved individual responsibility plan.

[Statutory Authority: RCW 74.04.050, 74.04.055, 74.04.057, and 74.04.510. 03-13-045, 388-450-0080, filed 6/11/03, effective 8/1/03. Statutory Authority: RCW 74.08.090 and 74.04.510. 01-19-020, 388-450-0080, filed 9/11/01, effective 10/1/01; 99-16-024, 388-450-0080, filed 7/26/99, effective 9/1/99. Statutory Authority: RCW 74.04.050, 74.04.055, 74.04.057 and 74.08.090. 98-16-044, 388-450-0080, filed 7/31/98, effective 9/1/98.]

Washington State Code Reviser's Office