Bill Summary – FastDemocracy

H-1846.1
                                 HOUSE BILL 1677
     State of Washington         67th Legislature       2022 Regular Session
     By Representatives Abbarno, Corry, Boehnke, Klippert, Sutherland,
     MacEwen, Eslick, Chambers, Graham, Dufault, Gilday, Kraft, Jacobsen,
     Volz, Griffey, Steele, Young, and J. Johnson
     Prefiled 12/20/21.    Read first time 01/10/22.   Referred to Committee
     on Finance.
      AN ACT Relating to employer tax incentives for the support of
  veterans   and  military   families;  amending   RCW  82.04.4498   and
  82.16.0499; creating a new section; and providing expiration dates.
 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
     NEW SECTION.     Sec. 1.    The legislature recognizes that the
 impacts of the COVID-19 pandemic on veterans and military families
 have been especially hard. The legislature also finds that labor
 shortages are contributing to the ongoing supply chain disruptions
 facing many industries, and hiring incentives for veterans and their
 families can help our economy. The legislature intends to extend the
 expiration date for the tax incentive for hiring veterans, increase
 the value of the incentive, increase the statewide incentive cap, and
 expand   eligibility.   The  legislature  finds  that   concerns  for
 underemployment and unemployment of spouses is a major issue for
 active duty service members. Therefore, the legislature intends to
 expand eligibility for the previously existing unemployed veteran
 hiring tax credit to spouses of active duty military and veterans.
 The legislature finds that the current requirement that a veteran be
 unemployed for at least 30 days prior to hiring to be eligible for
 the tax credit can worsen economic hardship rather than expedite
 economic support, and creates unnecessary administrative complexity
                                       p. 1                          HB 1677
  that may hinder utilization of the incentive by employers. Therefore,
  the legislature intends for employers to be eligible for the tax
  credit regardless of the duration of unemployment.
     Sec. 2.   RCW 82.04.4498 and 2015 3rd sp.s. c 6 s 1002 are each
 amended to read as follows:
     (1) A person is allowed a credit against the tax due under this
 chapter as provided in this section. The credit equals twenty percent
 of wages and benefits paid to or on behalf of a qualified employee up
 to a maximum of ((one thousand five hundred dollars)):
     (a) $1,500 for each qualified employee hired on or after October
 1, 2016, but prior to July 1, 2022; or
     (b) $3,000 for each qualified employee hired on or after July 1,
 2022.
     (2) No credit may be claimed under this section until a qualified
 employee has been employed for at least two consecutive full calendar
 quarters.
     (3) Credits are available on a first-in-time basis. The
 department must keep a running total of all credits allowed under
 this section and RCW 82.16.0499 during each fiscal year. The
 department may not allow any credits that would cause the total
 credits allowed under this section and RCW 82.16.0499 to exceed
 ((five hundred thousand dollars)) $5,000,000 in any fiscal year. If
 all or part of a claim for credit is disallowed under this
 subsection, the disallowed portion is carried over to the next fiscal
 year. However, the carryover into the next fiscal year is only
 permitted to the extent that the cap for the next fiscal year is not
 exceeded. Priority must be given to credits carried over from a
 previous fiscal year. The department must provide written notice to
 any person who has claimed tax credits in excess of the limitation in
 this subsection. The notice must indicate the amount of tax due and
 provide that the tax be paid within thirty days from the date of the
 notice. The department may not assess penalties and interest as
 provided in chapter 82.32 RCW on the amount due in the initial notice
 if the amount due is paid by the due date specified in the notice, or
 any extension thereof.
     (4) The credit may be used against any tax due under this
 chapter, and may be carried over until used, except as provided in
 subsection (9) of this section. No refunds may be granted for credits
 under this section.
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     (5) If an employer discharges a qualified employee for whom the
 employer has claimed a credit under this section, the employer may
 not claim a new credit under this section for a period of one year
 from the date the qualified employee was discharged. However, this
 subsection (5) does not apply if the qualified employee was
 discharged for misconduct, as defined in RCW 50.04.294, connected
 with his or her work or discharged due to a felony or gross
 misdemeanor conviction, and the employer contemporaneously documents
 the reason for discharge.
     (6) Credits earned under this section may be claimed only on
 returns   filed  electronically   with  the   department  using   the
 department's online tax filing service or other method of electronic
 reporting as the department may authorize. No application is required
 to claim the credit, but the taxpayer must keep records necessary for
 the department to determine eligibility under this section including
 records establishing the person's status as a veteran and status as
 unemployed when hired by the taxpayer.
     (7) No person may claim a credit against taxes due under both
 this chapter and chapter 82.16 RCW for the same qualified employee.
     (8) The definitions in this subsection apply throughout this
 section unless the context clearly requires otherwise.
     (a)(i) "Qualified employee" means ((an unemployed)) a veteran,
 spouse of a veteran, or spouse of an active duty military member who
 is employed in a permanent full-time position for at least two
 consecutive   full   calendar  quarters.   For    seasonal  employers,
 "qualified employee" also includes the equivalent of a full-time
 employee in work hours for two consecutive full calendar quarters.
     (ii) For purposes of this subsection (8)(a), "full time" means a
 normal workweek of at least thirty-five hours.
     (b) (("Unemployed" means that the veteran was unemployed as
 defined in RCW 50.04.310 for at least thirty days immediately
 preceding the date that the veteran was hired by the person claiming
 credit under this section for hiring the veteran.
     (c))) "Veteran" means every person who has received an honorable
 discharge or received a general discharge under honorable conditions
 or is currently serving honorably, and who has served as a member in
 any branch of the armed forces of the United States, including the
 national guard and armed forces reserves.
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      (9) Credits allowed under this section can be earned for tax
  reporting periods through June 30, ((2022)) 2032. No credits can be
  claimed after June 30, ((2023)) 2033.
      (10) This section expires July 1, ((2023)) 2033.
     Sec. 3.   RCW 82.16.0499 and 2015 3rd sp.s. c 6 s 1003 are each
 amended to read as follows:
     (1) A person is allowed a credit against the tax due under this
 chapter as provided in this section. The credit equals twenty percent
 of wages and benefits paid to or on behalf of a qualified employee up
 to a maximum of ((one thousand five hundred dollars)):
     (a) $1,500 for each qualified employee hired on or after October
 1, 2016, but prior to July 1, 2022; or
     (b) $3,000 for each qualified employee hired on or after July 1,
 2022.
     (2) No credit may be claimed under this section until a qualified
 employee has been employed for at least two consecutive full calendar
 quarters.
     (3) Credits are available on a first-in-time basis. The
 department must keep a running total of all credits allowed under
 this section and RCW 82.04.4498 during each fiscal year. The
 department may not allow any credits that would cause the total
 credits allowed under this section and RCW 82.04.4498 to exceed
 ((five hundred thousand dollars)) $5,000,000 in any fiscal year. If
 all or part of a claim for credit is disallowed under this
 subsection, the disallowed portion is carried over to the next fiscal
 year. However, the carryover into the next fiscal year is only
 permitted to the extent that the cap for the next fiscal year is not
 exceeded. Priority must be given to credits carried over from a
 previous fiscal year. The department must provide written notice to
 any person who has claimed tax credits in excess of the limitation in
 this subsection. The notice must indicate the amount of tax due and
 provide that the tax be paid within thirty days from the date of the
 notice. The department may not assess penalties and interest as
 provided in chapter 82.32 RCW on the amount due in the initial notice
 if the amount due is paid by the due date specified in the notice, or
 any extension thereof.
     (4) The credit may be used against any tax due under this
 chapter, and may be carried over until used, except as provided in
                                     p. 4                          HB 1677
 subsection (9) of this section. No refunds may be granted for credits
 under this section.
     (5) If an employer discharges a qualified employee for whom the
 employer has claimed a credit under this section, the employer may
 not claim a new credit under this section for a period of one year
 from the date the qualified employee was discharged. However, this
 subsection (5) does not apply if the qualified employee was
 discharged for misconduct, as defined in RCW 50.04.294, connected
 with his or her work or discharged due to a felony or gross
 misdemeanor conviction, and the employer contemporaneously documents
 the reason for discharge.
     (6) Credits earned under this section may be claimed only on
 returns   filed  electronically   with  the   department  using   the
 department's online tax filing service or other method of electronic
 reporting as the department may authorize. No application is required
 to claim the credit, but the taxpayer must keep records necessary for
 the department to determine eligibility under this section including
 records establishing the person's status as a veteran and status as
 unemployed when hired by the taxpayer.
     (7) No person may claim a credit against taxes due under both
 chapter 82.04 RCW and this chapter for the same qualified employee.
     (8) The definitions in this subsection apply throughout this
 section unless the context clearly requires otherwise.
     (a)(i) "Qualified employee" means ((an unemployed)) a veteran,
 spouse of a veteran, or spouse of an active duty military member who
 is employed in a permanent full-time position for at least two
 consecutive   full   calendar  quarters.   For    seasonal  employers,
 "qualified employee" also includes the equivalent of a full-time
 employee in work hours for two consecutive full calendar quarters.
     (ii) For purposes of this subsection (8)(a), "full time" means a
 normal workweek of at least thirty-five hours.
     (b) (("Unemployed" means that the veteran was unemployed as
 defined in RCW 50.04.310 for at least thirty days immediately
 preceding the date that the veteran was hired by the person claiming
 credit under this section for hiring the veteran.
     (c))) "Veteran" means every person who has received an honorable
 discharge or received a general discharge under honorable conditions
 or is currently serving honorably, and who has served as a member in
 any branch of the armed forces of the United States, including the
 national guard and armed forces reserves.
                                     p. 5                          HB 1677
     (9) Credits allowed under this section can be earned for tax
 reporting periods through June 30, ((2022)) 2032. No credits can be
 claimed after June 30, ((2023)) 2033.
     (10) This section expires July 1, ((2023)) 2033.
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