Chapter 82.82 RCW

COMMUNITY EMPOWERMENT ZONESTAX DEFERRAL PROGRAM

Sections

82.82.010Definitions.
82.82.020Application for deferralAnnual tax performance report.
82.82.030Deferral certificate.
82.82.040Repayment of deferred taxes.
82.82.050Qualified employment positionsRequirements.


Definitions.

The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Applicant" means a person applying for a tax deferral under this chapter.
(2) "Corporate headquarters" means a facility or facilities where corporate staff employees are physically employed, and where the majority of the company's management services are handled either on a regional or a national basis. Company management services may include: Accounts receivable and payable, accounting, data processing, distribution management, employee benefit plan, financial and securities accounting, information technology, insurance, legal, merchandising, payroll, personnel, purchasing procurement, planning, reporting and compliance, research and development, tax, treasury, or other headquarters-related services. "Corporate headquarters" does not include a facility or facilities used for manufacturing, wholesaling, or warehousing.
(3) "Department" means the department of revenue.
(4) "Eligible area" means a designated community empowerment zone approved under RCW 43.31C.020.
(5)(a) "Eligible investment project" means an investment project in a qualified building or buildings in an eligible area, as defined in subsection (4) of this section, which will have employment at the qualified building or buildings of at least three hundred employees in qualified employment positions, each of whom must earn for the year reported at least the average annual wage for the state for that year as determined by the employment security department.
(b) The lessor or owner of a qualified building or buildings is not eligible for a deferral unless:
(i) The underlying ownership of the building or buildings vests exclusively in the same person; or
(ii)(A) The lessor by written contract agrees to pass the economic benefit of the deferral to the lessee;
(B) The lessee that receives the economic benefit of the deferral agrees in writing with the department to complete the annual survey required under *RCW 82.82.020; and
(C) The economic benefit of the deferral passed to the lessee is no less than the amount of tax deferred by the lessor and is evidenced by written documentation of any type of payment, credit, or other financial arrangement between the lessor or owner of the qualified building and the lessee.
(6) "Investment project" means a capital investment of at least thirty million dollars in a qualified building or buildings including tangible personal property and fixtures that will be incorporated as an ingredient or component of such buildings during the course of their construction, and including labor and services rendered in the planning, installation, and construction of the project.
(7) "Manufacture" has the same meaning as provided in RCW 82.04.120.
(8) "Operationally complete" means a date no later than one year from the date the project is issued an occupancy permit by the local permit issuing authority.
(9) "Person" has the same meaning as provided in RCW 82.04.030.
(10) "Qualified building or buildings" means construction of a new structure or structures or expansion of an existing structure or structures to be used for corporate headquarters. If a building is used partly for corporate headquarters and partly for other purposes, the applicable tax deferral is determined by apportionment of the costs of construction under rules adopted by the department.
(11) "Qualified employment position" means a permanent full-time employee employed in the eligible investment project during the entire tax year. The term "entire tax year" means a full-time position that is filled for a period of twelve consecutive months. The term "full-time" means at least thirty-five hours a week, four hundred fifty-five hours a quarter, or one thousand eight hundred twenty hours a year.
(12) "Recipient" means a person receiving a tax deferral under this chapter.
(13) "Warehouse" means a building or structure, or any part thereof, in which goods, wares, or merchandise are received for storage for compensation.
(14) "Wholesale sale" has the same meaning as provided in RCW 82.04.060.

NOTES:

*Reviser's note: RCW 82.82.020 was amended by 2017 c 135 § 43, changing "annual survey" to "annual tax performance report," effective January 1, 2018.
Effective date2008 c 15: "This act takes effect July 1, 2009." [ 2008 c 15 § 10.]



Application for deferralAnnual tax performance report.

(1) Application for deferral of taxes under this chapter can be made at any time prior to completion of construction of a qualified building or buildings, but tax liability incurred prior to the department's receipt of an application may not be deferred. The application must be made to the department in a form and manner prescribed by the department. The application must contain information regarding the location of the investment project, the applicant's average employment in the state for the prior year, estimated or actual new employment related to the project, estimated or actual wages of employees related to the project, estimated or actual costs, time schedules for completion and operation, and other information required by the department. The department must rule on the application within sixty days.
(2) Applications for deferral of taxes under this section may not be made after December 31, 2020.
(3) Each recipient of a deferral of taxes under this chapter must file a complete annual tax performance report with the department under RCW 82.32.534. If the economic benefits of the deferral are passed to a lessee as provided in RCW 82.82.010(5), the lessee must file a complete annual tax performance report, and the applicant is not required to file the annual tax performance report.
(4) A recipient who must repay deferred taxes under RCW 82.82.040 because the department has found that an investment project is no longer an eligible investment project is no longer required to file annual tax performance reports under RCW 82.32.534 beginning on the date an investment project is used for nonqualifying purposes.

NOTES:

Effective date2017 c 135: See note following RCW 82.32.534.
ApplicationFindingIntent2010 c 114: See notes following RCW 82.32.534.
Effective date2008 c 15: See note following RCW 82.82.010.



Deferral certificate.

(1) The department must issue a sales and use tax deferral certificate for state and local sales and use taxes due under chapters 82.08, 82.12, and 82.14 RCW on each eligible investment project meeting the requirements of this chapter.
(2) No certificate may be issued for an investment project that has already received a deferral under chapter 82.60 or 82.63 RCW or this chapter, except that an investment project for qualified research and development that has already received a deferral may also receive an additional deferral certificate for adapting the investment project for use in pilot scale manufacturing.
(3) The department must keep a running total of all deferrals granted under this chapter during each fiscal biennium.
(4) The number of eligible investment projects for which the benefits of this chapter will be allowed is limited to two per biennium. The department must approve deferral certificates for completed applications on a first-in-time basis. During any biennium, only one deferral certificate may be issued per community empowerment zone.

NOTES:

Effective date2008 c 15: See note following RCW 82.82.010.



Repayment of deferred taxes.

(1) Except as provided in subsection (2) of this section and RCW 82.32.534, taxes deferred under this chapter need not be repaid.
(2)(a) If, on the basis of the tax performance report under RCW 82.32.534 or other information, the department finds that an investment project is no longer an "eligible investment project" under RCW 82.82.010 at any time during the calendar year in which the investment project is certified by the department as having been operationally completed, or at any time during any of the seven succeeding calendar years, a portion of deferred taxes are immediately due according to the following schedule:
Year in which use occurs
% of deferred taxes due
1
100%
2
87.5%
3
75%
4
62.5%
5
50%
6
37.5%
7
25%
8
12.5%
(b) If the economic benefits of the deferral are passed to a lessee as provided in RCW 82.82.010(5), the lessee is responsible for payment to the extent the lessee has received the economic benefit.
(3) The department must assess interest at the rate provided for delinquent taxes under chapter 82.32 RCW, but not penalties, retroactively to the date of deferral. The debt for deferred taxes will not be extinguished by insolvency or other failure of the recipient. Transfer of ownership does not terminate the deferral. The deferral is transferred, subject to the successor meeting the eligibility requirements of this chapter, for the remaining periods of the deferral.

NOTES:

Effective date2017 c 135: See note following RCW 82.32.534.
ApplicationFindingIntent2010 c 114: See notes following RCW 82.32.534.
Effective date2008 c 15: See note following RCW 82.82.010.



Qualified employment positionsRequirements.

The qualified employment positions must be filled by the end of the calendar year following the year in which the project is certified as operationally complete. If a recipient does not meet the requirements for qualified employment positions by the end of the second calendar year following the year in which the project is certified as operationally complete, all deferred taxes are immediately due.

NOTES:

Effective date2008 c 15: See note following RCW 82.82.010.