Source: http://lawfilesext.leg.wa.gov/Law/WSR/2006/22/06-22-064.htm
Timestamp: 2020-08-13 03:55:14
Document Index: 740067858

Matched Legal Cases: ['art 145', 'art 145', 'art 145', 'art 145', 'art 145', 'art 145']

WSR 06-22-064
[ Filed October 30, 2006, 12:25 p.m. ]
Preproposal statement of inquiry was filed as WSR 05-09-121.
Title of Rule and Other Identifying Information: WAC 458-20-268 Annual surveys for certain tax adjustments.
Hearing Location(s): Capital Plaza Building, 4th Floor, L&P Large Conference Room, 1025 Union Avenue S.E., Olympia, WA 98504, on December 6, 2006, at 10:00 a.m.
Date of Intended Adoption: December 13, 2006.
Submit Written Comments to: Allan C. Lau, P.O. Box 47453, Olympia, WA 98504-7453, e-mail AllanL@dor.wa.gov, fax (360) 586-5543, by December 6, 2006.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: In order to take certain tax credits, deferrals, and exemptions ("tax adjustments"), taxpayers must file an annual survey with the department of revenue (the "department") containing information about their business activities and employment. This rule explains the survey requirements for the various tax adjustments. This rule also explains who is required to file an annual survey, how to file a survey, and what information must be included in the survey.
The department is proposing this new rule to incorporate provisions of the following: (a) Chapter 2, Laws of 2004, (b) chapter 25, Laws of 2004, (c) chapter 513, Laws of 2005, (d) chapter 514, Laws of 2005, (e) chapter 112, Laws of 2006, (f) chapter 177, Laws of 2006, (g) chapter 178, Laws of 2006, (h) chapter 300, Laws of 2006, and (i) chapter 354, Laws of 2006. These provisions require completion of an annual survey by a person claiming the following tax adjustments:
• B&O tax credit for research and development spending under RCW 82.04.4452,
• Rural counties sales and use tax deferral under chapter 82.60 RCW,
• High technology sales and use tax deferral under chapter 82.63 RCW,
• Sales and use tax deferral for biotechnology product manufacturing under chapter 82.75 RCW,
• Sales and use tax deferral for dairy product manufacturing, seafood product manufacturing, and fresh fruit and vegetable processing under chapter 82.74 RCW,
• B&O tax exemption for dairy products under RCW 82.04.4268, seafood products under RCW 82.04.4269, and fruits and vegetables under RCW 82.04.4266,
• B&O tax credit for aerospace preproduction development under RCW 82.04.4487,
• Reduced B&O tax rate for certain FAR part 145 certificated repair stations under RCW 82.04.250(3),
• B&O tax credit for customized employment training under RCW 82.04.449, and
• Reduced B&O tax rates for timber products under RCW 82.04.260(12).
Reasons Supporting Proposal: To clarify the annual survey requirements.
Statute Being Implemented: RCW 82.04.4452, 82.60.070, 82.63.020, 82.74.040, 82.32.610, 82.32.630, 82.32.635, 82.32.640, 82.32.645, 82.32.050, 82.32.590, and 82.32.600.
Name of Agency Personnel Responsible for Drafting: Allan C. Lau, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 570-6134; Implementation: Alan R. Lynn, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 570-6125; and Enforcement: Janis P. Bianchi, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 570-6147.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The rule does not impose any new performance requirement or administrative burden on any small business not required by statute.
OTS-7732.7
(2) Who is required to file the annual survey? The following persons must file an annual survey:
(a) A person claiming the B&O tax credit provided by RCW 82.04.4452 for engaging in qualified research and development. A separate annual survey must be filed for each tax reporting account. If the person has assigned its entire B&O tax credit provided by RCW 82.04.4452 to another person, the assignor is not required to file an annual survey. In such an instance, the assignee of the B&O tax credit is required to file an annual survey. If the person has assigned a portion of its B&O tax credit to another person, both the assignor and the assignee are required to file an annual survey. Refer to WAC 458-20-24003 (Tax incentives for high technology businesses) for more specific information about this tax adjustment.
(b) An applicant for deferral of taxes under chapter 82.60 RCW for sales and use taxes on an eligible investment project in rural counties. Refer to WAC 458-20-24001 (Sales and use tax deferral -- Manufacturing and research/development activities in rural counties -- Applications filed after March 31, 2004) for more specific information about this tax adjustment.
(c) An applicant for deferral of taxes under chapter 82.63 RCW for sales and use taxes on an eligible investment project in high technology. Refer to WAC 458-20-24003 (Tax incentives for high technology businesses) for more specific information about this tax adjustment.
(d) An applicant for deferral of taxes under chapter 82.75 RCW for sales and use taxes on an eligible investment project in biotechnology products.
(e) A lessee of an eligible investment project under chapters 82.60, 82.63, and 82.75 RCW (as defined in RCW 82.60.020 (4)(b)(ii), 82.63.010 (7)(b), or 82.75.010 (5)(b)(ii)) who receives the economic benefit of the deferral and agrees in writing with the department to complete the annual survey. A lessor, by written contract, must agree to pass the economic benefit of the deferral to its lessee. The economic benefit of the deferral to the lessee must be no less than the amount of tax deferred by the lessor as evidenced by written documentation of any type, whether by payment, credit, or other financial arrangement between the lessor or owner of the qualified building and the lessee. An applicant who is a lessor of an eligible investment project that received a deferral of taxes under chapters 82.60, 82.63, and 82.75 RCW and who meets these requirements is not required to complete and file an annual survey.
(f) A person claiming the B&O tax exemption provided by RCW 82.04.4268 for dairy products, RCW 82.04.4269 for seafood products, and RCW 82.04.4266 for fruits and vegetables.
The first survey filed under this subsection must also include employment, wage, and benefit information for the twelve-month period immediately before first use of the B&O tax exemption. In order to meet this requirement, a person must complete a survey for the calendar year immediately preceding the first use of the B&O tax exemption.
(h) A lessee of an eligible investment project under chapters 82.74 RCW (as defined in RCW 82.74.010 (4)(b)) who receives the economic benefit of the deferral and agrees in writing with the department to complete the annual survey. A lessor, by written contract, must agree to pass the economic benefit of the deferral to its lessee. The economic benefit of the deferral to the lessee must be no less than the amount of tax deferred by the lessor as evidenced by written documentation of any type, whether by payment, credit, or other financial arrangement between the lessor or owner of the qualified building and the lessee. An applicant who is a lessor of an eligible investment project that received a deferral of taxes under chapter 82.74 RCW and who meets these requirements is not required to complete and file an annual survey. This tax adjustment is effective July 1, 2007.
(i) A person claiming the B&O tax credit provided by RCW 82.04.4487 for persons engaged in qualified preproduction development in the field of aeronautics. A separate annual survey must be filed for each tax reporting account. If the person has assigned its entire B&O tax credit provided by RCW 82.04.4487 to another person, the assignor is not required to file an annual survey. In such an instance, the assignee of the B&O tax credit is required to file an annual survey. If the person has assigned a portion of its B&O tax credit to another person, both the assignor and the assignee are required to file an annual survey.
(j) A person claiming the B&O tax rate provided by RCW 82.04.250(3) as FAR part 145 certificated repair stations.
(k) A person claiming the B&O tax credit provided by RCW 82.04.449 for customized employment training.
The first survey filed under this subsection must also include employment, wage, and benefit information for the twelve-month period immediately before first use of the B&O tax credit. In order to meet this requirement, a person must complete a survey for the calendar year immediately preceding the first use of the B&O tax credit.
(l) A person claiming the B&O tax rate provided by RCW 82.04.260(12) for timber products.
The first survey filed under this subsection must also include employment, wage, and benefit information for the twelve-month period immediately before first use of the B&O tax rate. In order to meet this requirement, a person must complete a survey for the calendar year immediately preceding the first use of the B&O tax rate.
(b) Electronic filing. A survey is filed electronically when the department receives the survey in an electronic format. The department may waive the electronic filing requirement for good cause shown. Any person not statutorily required to electronically file the survey has the option of filing the annual survey electronically.
(iv) B&O tax credit for qualified preproduction development in the field of aeronautics under RCW 82.04.4487 (subsection (2)(i) of this section);
(v) B&O tax rate for FAR part 145 certificated repair stations under RCW 82.04.250(3) (subsection (2)(j) of this section); and
(vi) B&O tax rate for timber products under RCW 82.04.260(12) (subsection (2)(l) of this section).
(c) How to obtain the form. The form may be filed electronically online or obtained by downloading it from the department's web site (www.dor.wa.gov). It may also be obtained from the department's district offices, by telephoning the telephone information center (800-647-7706), or by contacting the department's special programs division at:
(d) Due date. For persons claiming any B&O tax credit, tax exemption, or tax rate listed under this section, the survey must be filed or postmarked by March 31st following any calendar year in which the tax credit, tax exemption, or tax rate is claimed.
For applicants of any sales tax deferrals listed under this section, the survey must be filed or postmarked by March 31st of the year following the calendar year in which an eligible investment project is certified by the department as being operationally complete and each of the seven succeeding calendar years.
(i) Advanced Computing, Inc. qualifies for the B&O tax credit provided by RCW 82.04.4452 and applied it against taxes due in calendar year 2006. Advanced Computing, Inc. must electronically file an annual survey with the department by March 31, 2007.
(ii) In 1999, Biotechnology, Inc. applied for and received a sales and use tax deferral under chapter 82.63 RCW for an eligible investment project in qualified research and development. The investment project was certified by the department as being operationally complete in 2001. Biotechnology, Inc. must file its annual survey with the department for the 2005 calendar year by March 31, 2006. A survey is due from Biotechnology, Inc. by March 31st each following year, with its last survey due March 31, 2008.
(iii) Advanced Materials, Inc. has been conducting manufacturing activities in a building leased from Property Management Services since 2002. Property Management Services is a recipient of a deferral under chapter 82.60 RCW, and the building was certified by the department as operationally complete in 2002. In order to pass on the entire economic benefit of the deferral, Property Management Services charges Advanced Materials, Inc. $5,000 less in rent each year. Prior to the 2004 calendar year, Advanced Materials, Inc. is not required under chapter 82.60 RCW to file an annual survey. Advanced Materials, Inc., however, must file its annual survey with the department for the 2004 calendar year by March 31, 2005, assuming all the requirements of RCW 82.60.020 (4)(b)(ii) are met. A survey is due from Advanced Materials, Inc. by March 31st each following year, with its last survey due by March 31, 2009.
(iv) Fruit Canning, Inc. claims the B&O tax exemption provided in RCW 82.04.4266 for the gross proceeds of sales derived from the canning of fruit for the first time in 2006. Fruit Canning, Inc. must file two annual surveys with the department by March 31, 2007, one covering calendar year 2005 and one covering calendar year 2006. If Fruit Canning, Inc. claims the B&O tax exemption during subsequent years, it must file an annual survey for each of those years by March 31 of each following year.
(b) The number of new products or research projects by general classification;
(c) The number of trademarks, patents, and copyrights associated with activities at the investment project.
(e) Additional information the department requests that is necessary to measure the results of the tax adjustments.
(i) The department is required to report to the state legislature summary descriptive statistics by category and the effectiveness of the tax adjustments, such as job creation, company growth, and such other factors as the department selects or as the statutes identify. The department has included questions related to measuring these effects.
(a) The annual survey requires information on all full-time, part-time, and temporary employment positions located in Washington state on December 31st of the calendar year covered by the report. Total employment includes persons who are on leaves of absence such as sick leave, vacation, disability leave, jury duty, military leave, and workers compensation leave, regardless of whether those persons are receiving wages. Total employment does not include separation from employment such as layoffs or reductions in force. Vacant positions are not included in total employment.
(i) A full-time position is a position that requires the employee to work, excluding overtime hours, thirty-five hours per week for fifty-two consecutive weeks, four hundred fifty-five hours a quarter, or one thousand eight hundred twenty hours during a period of twelve consecutive months.
(iv) On November 1st, a Worldwide Materials engineer begins twelve weeks of family and medical leave. The engineer was expected to work forty hours a week for fifty-two consecutive weeks. While the engineer is on leave, Worldwide Materials hires a staffing company to furnish a worker to complete the engineer's projects. Worldwide Materials must report the engineer as a full-time position on the annual report. Worldwide Materials must also report the worker furnished by the staffing company as a temporary employment position and include the information as required in (b) of this subsection.
(10) Is the annual survey confidential? The annual survey is subject to the confidentiality provisions of RCW 82.32.330. However, information on the amount of tax adjustment taken is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request. More confidentiality provisions in regards to the annual surveys are as follows:
(a) Failure to timely file a complete annual survey subject to disclosure. If the following taxpayers fail to timely file a complete annual survey for claiming the tax adjustment, then the fact that such taxpayers fail to timely file a complete annual survey is not confidential:
(iii) Persons claiming the B&O tax credit provided by RCW 82.04.449 for customized employment training (RCW 82.32.650(5)).
(b) Amount reported in annual survey is different from the amount claimed or allowed. If the following taxpayers report the amount of the tax adjustment on the annual survey which is different than the amount actually claimed on the taxpayers' tax returns or otherwise allowed by the department, then the amount actually claimed or allowed may be disclosed:
(ii) Persons claiming the B&O tax credit provided by RCW 82.04.4487 for engaging in qualified preproduction development in the field of aeronautics (RCW 82.32.635 (2)(c));
(iii) Persons claiming the B&O tax rate provided by RCW 82.04.250(3) as FAR part 145 certificated repair stations (RCW 82.32.640 (2)(c)); and
(iv) Persons claiming the B&O tax rate provided by RCW 82.04.260(12) for timber products (RCW 82.32.630 (2)(d)).
(c) Tax adjustment is less than ten thousand dollars. If the tax adjustment of the following taxpayers is less than ten thousand dollars during the period covered by the annual survey, then such taxpayers may request the department to treat the tax adjustment as confidential under RCW 82.32.330. The request must be made for each survey in writing, dated and signed by the owner, corporate officer, partner, guardian, executor, receiver, administrator, or trustee of the business, and filed with the department's special programs division at the address provided above in subsection (3) of this section.
(i) Persons claiming the high technology B&O tax credit provided by RCW 82.04.4452 (RCW 82.04.4452 (6)(d)(ii));
(ii) Persons claiming the B&O tax credit provided by RCW 82.04.4487 for engaging in qualified preproduction development in the field of aeronautics (RCW 82.32.635 (2)(d));
(iii) Persons claiming the B&O tax rate provided by RCW 82.04.250(3) as FAR part 145 certificated repair stations (RCW 82.32.640 (2)(d)); and
(iv) Persons claiming the B&O tax rate provided by RCW 82.04.260(12) for timber products (RCW 82.32.630 (2)(e)).
(b) High technology business and occupation (B&O) tax credit. If a person claiming the B&O tax credit provided by RCW 82.04.4452 for persons engaged in qualified research and development fails to timely file a complete annual survey by the date due, the person is not eligible to take or assign the credit in the year the person failed to timely complete the annual survey. See RCW 82.04.4452. For example, if a person claims the credit in 2006 but fails to file a complete annual survey by March 31, 2007, then the person is not eligible to take or assign the credit in 2007. If a person claims the B&O tax credit during this period of ineligibility, the department will declare the amount of taxes for which the credit was claimed during the period of ineligibility to be immediately due and payable with interest and penalties, as provided in chapter 82.32 RCW.
(h) Business and occupation (B&O) tax credit for qualified preproduction development in the field of aeronautics under RCW 82.04.4487. If a person fails to timely file a complete annual survey for the B&O tax credit under RCW 82.04.4487 by the due date, the amount of tax credit claimed for the previous calendar year is immediately due and payable. See RCW 82.32.635. Interest, but not penalties, applies to the amounts due under this subsection. Interest is computed retroactively to the date the tax credit was claimed and accrues until the liability is paid in full.
A person is not required to file a complete annual survey under this subsection if the person is required to and timely files the annual report under RCW 82.32.545.
(i) Reduced business and occupation (B&O) tax rate for FAR part 145 certificated repair stations. If a person fails to timely file a complete annual survey for the reduced B&O tax rate under RCW 82.04.250(3) by the due date, the amount of tax reduced for the previous calendar year is immediately due and payable. See RCW 82.32.640. Interest, but not penalties, applies to the amounts due under this subsection. Interest is computed retroactively to the date the reduced taxes were due and accrues until the liability is paid in full.
If a person fails to file the survey by due date as the result of circumstances beyond the control of the taxpayer, the person may request a thirty-day extension of the due date. See WAC 458-20-228 for more information on circumstances beyond the control of the taxpayer. The request must be made in writing before the due date to the address provided in subsection (3)(c) of this section.
(j) Business and occupation (B&O) tax credit for customized employment training. If a person fails to timely file a complete annual survey for the B&O tax credit under RCW 82.04.449 by the due date, the amount of tax credit claimed for the previous calendar year is immediately due and payable. See RCW 82.32.650. Interest, but not penalties, applies to the amounts due under this subsection. Interest is computed retroactively to the date the tax credit was claimed and accrues until the liability is paid in full.
(k) Reduced business and occupation (B&O) tax credit for timber products. If a person fails to timely file a complete annual survey for the reduced B&O tax rate under RCW 82.04.260(12) by the due date, the amount of tax reduced for the previous calendar year is immediately due and payable. See RCW 82.32.630. Interest, but not penalties, applies to the amounts due under this subsection. Interest is computed retroactively to the date the reduced taxes were due and accrues until the liability is paid in full.