Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-20 - Excise tax rules › Section 458-20-240A - Manufacturer's new employee tax credits-Applications filed prior to July 1, 2010

Current through Register Vol. 24-14, July 15, 2024
(1)
Introduction.
Chapter 82.62 RCW provides business and occupation
			 (B&O) tax credits to certain persons engaged in manufacturing and research
			 and development activities. These credits are intended to stimulate the economy
			 by creating employment opportunities in specific rural counties and community
			 empowerment zones of this state. The credits are as much as $4,000 per
			 qualified employment position. This rule explains the eligibility requirements
			 and application procedures for this program. It is important to note that an
			 application for the tax credits must be submitted to the department of revenue
			 before the actual hiring of qualified employment positions. See subsection (6)
			 of this rule for additional information regarding this application requirement.
			 This tax credit program is a companion to the tax deferral program under
			 chapter 82.60 RCW; however, the eligible geographic areas in the two programs
			 are not identical.
The department of employment security and the department of
				commerce administer programs for rural counties and job training. These
				agencies should be contacted directly for information concerning those
				programs.
(2)
Who is
			 eligible for these tax credits?
Subject to certain qualifications, an
			 applicant (person applying for a tax credit under chapter 82.62 RCW) who is
			 engaged in an eligible business project is entitled to the tax credits provided
			 by chapter 82.62 RCW.
(a)
What is an
			 eligible business project?
An "eligible business project" means
			 manufacturing, commercial testing, or research and development activities
			 conducted by an applicant in an eligible area at a specific facility, subject
			 to the restriction noted in the following paragraph. An "eligible business
			 project" does not include any portion of a business project undertaken by a
			 light and power business or any portion of a business project creating
			 employment positions outside an eligible area.
To be considered an "eligible business project," the
				applicant's number of average full-time qualified employment positions at the
				specific facility must be at least 15 percent greater in the calendar year for
				which credit is being sought than the number of positions at the same facility
				in the immediately preceding calendar year. Subsection (4) of this rule
				explains how to determine whether this threshold is satisfied.
(b)
What is an eligible
			 area?
As noted above, the facility must be located in an eligible area
			 to be considered an eligible business project. An "eligible area" is:
(i) A rural county, which is a county with
			 fewer than 100 persons per square mile or, on and after April 1, 2004, a county
			 smaller than 225 square miles, as determined annually by the office of
			 financial management and published by the department of revenue effective for
			 the period of July 1st through June 30th (see
			 RCW
			 82.62.010(3)) ; or
(ii) A community empowerment zone (CEZ). CEZ
			 means an area meeting the requirements of
			 RCW
			 43.31C.020 and officially designated by the
			 director of the department of commerce.
(iii)
How to determine whether an area
			 is an eligible area.
Rural county designation information can be
			 obtained from the office of financial management internet website at
			 www.ofm.wa.gov/popden/rural.htm. The department has instituted a geographic
			 information system (GIS) to assist taxpayers in determining taxing jurisdiction
			 boundaries, local tax rates, and a mapping and address lookup system to
			 determine whether a specific address is within a CEZ. The system is available
			 on the department's internet website at
www.dor.wa.gov
.
(c)
What are manufacturing and research
			 and development activities?
Manufacturing or research and development
			 activities must be conducted at the facility to be considered an eligible
			 business project.
(i)
Manufacturing.
"Manufacturing" has the meaning given in
			 RCW
			 82.04.120. In addition, for the purposes of
			 chapter 82.62 RCW "manufacturing" also includes computer programming, the
			 production of computer software, other computer-related services, but only when
			 the computer-related services are performed by a manufacturer as defined under
			 RCW
			 82.04.110 and contribute to the production of
			 a new, different, or useful substance or article of tangible personal property
			 for sale; and the activities performed by research and development laboratories
			 and commercial testing laboratories. (Chapter 16, Laws of 2010.)
(ii)
Research and development.
"Research and development" means the development, refinement, testing,
			 marketing, and commercialization of a product, service, or process before
			 commercial sales have begun. "Commercial sales" does not include sales of
			 prototypes or sales for market testing if the total gross receipts from such
			 sales of the product, service, or process do not exceed $1,000,000.
(iii)
Computer-related services.
"Computer-related services" for the purposes of chapter 82.62 RCW, the
			 definition of "manufacturing" means services that are connected with or
			 interact directly in the manufacture of computer hardware or software or the
			 programming of the manufactured hardware. "Computer-related services" includes
			 the manufacture of hardware such as chips, keyboards, monitors, and any other
			 hardware, and the components of these items. "Computer-related services" also
			 includes creating operating systems and software that will be copied and sold
			 as canned software. The activities performed by the manufacturer to test,
			 correct, revise, or upgrade software or hardware before they are approved for
			 sale to the consumer are considered computer-related services.
			 "Computer-related services" does not include services such as information
			 services.