RCW 82.04.4452
Credit -- Research and development spending.
(Expires January 1, 2015.)
(1) In computing the tax imposed
under this chapter, a credit is allowed for each person whose
research and development spending during the year in which the
credit is claimed exceeds 0.92 percent of the person's taxable
amount during the same calendar year.
(2) The credit shall be calculated as follows:
(a) Determine the greater of the amount of qualified
research and development expenditures of a person or eighty
percent of amounts received by a person other than a public
educational or research institution in compensation for the
conduct of qualified research and development;
(b) Subtract 0.92 percent of the person's taxable amount
from the amount determined under (a) of this subsection;
(c) Multiply the amount determined under (b) of this
subsection by the following:
(i) For the period June 10, 2004, through December 31, 2006,
the person's average tax rate for the calendar year for which the
credit is claimed;
(ii) For the calendar year ending December 31, 2007, the
greater of the person's average tax rate for that calendar year
or 0.75 percent;
(iii) For the calendar year ending December 31, 2008, the
greater of the person's average tax rate for that calendar year
or 1.0 percent;
(iv) For the calendar year ending December 31, 2009, the
greater of the person's average tax rate for that calendar year
or 1.25 percent;
(v) For the calendar year ending December 31, 2010, and
thereafter, 1.50 percent.
For purposes of calculating the credit, if a person's
reporting period is less than annual, the person may use an
estimated average tax rate for the calendar year for which the
credit is claimed by using the person's average tax rate for each
reporting period. A person who uses an estimated average tax
rate must make an adjustment to the total credit claimed for the
calendar year using the person's actual average tax rate for the
calendar year when the person files its last return for the
calendar year for which the credit is claimed.
(3) Any person entitled to the credit provided in subsection
(2) of this section as a result of qualified research and
development conducted under contract may assign all or any
portion of the credit to the person contracting for the
performance of the qualified research and development.
(4) The credit, including any credit assigned to a person
under subsection (3) of this section, shall be claimed against
taxes due for the same calendar year in which the qualified
research and development expenditures are incurred. The credit,
including any credit assigned to a person under subsection (3) of
this section, for each calendar year shall not exceed the lesser
of two million dollars or the amount of tax otherwise due under
this chapter for the calendar year.
(5) For any person claiming the credit, including any credit
assigned to a person under subsection (3) of this section, whose
research and development spending during the calendar year in
which the credit is claimed fails to exceed 0.92 percent of the
person's taxable amount during the same calendar year or who is
otherwise ineligible, the department shall declare the taxes
against which the credit was claimed to be immediately due and
payable. The department shall assess interest, but not
penalties, on the taxes against which the credit was claimed.
Interest shall be assessed at the rate provided for delinquent
excise taxes under chapter 82.32 RCW, retroactively to the date
the credit was claimed, and shall accrue until the taxes against
which the credit was claimed are repaid. Any credit assigned to
a person under subsection (3) of this section that is disallowed
as a result of this section may be claimed by the person who
performed the qualified research and development subject to the
limitations set forth in subsection (4) of this section.
(6)(a) The legislature finds that accountability and
effectiveness are important aspects of setting tax policy. In
order to make policy choices regarding the best use of limited
state resources the legislature needs information on how a tax
incentive is used.
(b) A person claiming the credit shall file a complete
annual survey with the department. The survey is due by March
31st following any year in which a credit is claimed. The
department may extend the due date for timely filing of annual
surveys under this section as provided in RCW 82.32.590. The
survey shall include the amount of the tax credit claimed, the
qualified research and development expenditures during the
calendar year for which the credit is claimed, the taxable amount
during the calendar year for which the credit is claimed, the
number of new products or research projects by general
classification, the number of trademarks, patents, and copyrights
associated with the research and development activities for which
a credit was claimed, and whether the credit has been assigned
under subsection (3) of this section and who assigned the credit.
The survey shall also include the following information for
employment positions in Washington:
(i) The number of total employment positions;
(ii) Full-time, part-time, and temporary employment
positions as a percent of total employment;
(iii) The number of employment positions according to the
following wage bands: Less than thirty thousand dollars; thirty
thousand dollars or greater, but less than sixty thousand
dollars; and sixty thousand dollars or greater. A wage band
containing fewer than three individuals may be combined with
another wage band; and
(iv) The number of employment positions that have
employer-provided medical, dental, and retirement benefits, by
each of the wage bands.
(c) The department may request additional information
necessary to measure the results of the tax credit program, to be
submitted at the same time as the survey.
(d)(i) All information collected under this subsection,
except the amount of the tax credit claimed, is deemed taxpayer
information under RCW 82.32.330. Information on the amount of
tax credit claimed is not subject to the confidentiality
provisions of RCW 82.32.330 and may be disclosed to the public
upon request, except as provided in this subsection (6)(d). If
the amount of the tax credit as reported on the survey is
different than the amount actually claimed on the taxpayer's tax
returns or otherwise allowed by the department, the amount
actually claimed or allowed may be disclosed.
(ii) Persons for whom the actual amount of the tax credit
claimed on the taxpayer's returns or otherwise allowed by the
department is less than ten thousand dollars during the period
covered by the survey may request the department to treat the tax
credit amount as confidential under RCW 82.32.330.
(e) If a person fails to file a complete annual survey
required under this subsection with the department by the due
date or any extension under RCW 82.32.590, the person entitled to
the credit provided in subsection (2) of this section is not
eligible to claim or assign the credit provided in subsection (2)
of this section in the year the person failed to timely file a
complete survey.
(7) The department shall use the information from subsection
(6) of this section to prepare summary descriptive statistics by
category. No fewer than three taxpayers shall be included in any
category. The department shall report these statistics to the
legislature each year by September 1st.
(8) The department shall use the information from subsection
(6) of this section to study the tax credit program authorized
under this section. The department shall report to the
legislature by December 1, 2009, and December 1, 2013. The
reports shall measure the effect of the program on job creation,
the number of jobs created for Washington residents, company
growth, the introduction of new products, the diversification of
the state's economy, growth in research and development
investment, the movement of firms or the consolidation of firms'
operations into the state, and such other factors as the
department selects.
(9) For the purpose of this section:
(a) "Average tax rate" means a person's total tax liability
under this chapter for the calendar year for which the credit is
claimed divided by the taxpayer's total taxable amount under this
chapter for the calendar year for which the credit is claimed.
(b) "Qualified research and development expenditures" means
operating expenses, including wages, compensation of a proprietor
or a partner in a partnership as determined under rules adopted
by the department, benefits, supplies, and computer expenses,
directly incurred in qualified research and development by a
person claiming the credit provided in this section. The term
does not include amounts paid to a person other than a public
educational or research institution to conduct qualified research
and development. Nor does the term include capital costs and
overhead, such as expenses for land, structures, or depreciable
property.
(c) "Qualified research and development" shall have the same
meaning as in RCW 82.63.010.
(d) "Research and development spending" means qualified
research and development expenditures plus eighty percent of
amounts paid to a person other than a public educational or
research institution to conduct qualified research and
development.
(e) "Taxable amount" means the taxable amount subject to the
tax imposed in this chapter required to be reported on the
person's combined excise tax returns for the calendar year for
which the credit is claimed, less any taxable amount for which a
credit is allowed under RCW 82.04.440.
(10) This section expires January 1, 2015.
[2005 c 514 § 1003; 2004 c 2 § 2; 2000 c 103 § 7; 1997 c 7 § 4; 1994 sp.s. c 5 § 2.]
NOTES:
Retroactive application -- 2005 c 514 § 1003: "Section 1003 of this act applies retroactively to June 10, 2004." [2005 c 514 § 1311.]
Interest and penalties from additional tax under section
1003(9)(a), chapter 514, Laws of 2005 -- 2005 c 514: "(1) A person
who owes additional tax as a result of section 1003(9)(a),
chapter 514, Laws of 2005 is liable for interest, but not
penalties as provided in RCW 82.32.090 (1) and (2), if the entire
additional tax liability is paid in full to the department of
revenue before January 1, 2006. Interest shall be assessed at
the rate provided for delinquent excise taxes under chapter 82.32 RCW, retroactively to the date the credit was claimed, and shall
accrue until the additional tax is repaid.
(2) Persons who fail to repay the full amount of additional
tax owed as a result of section 1003(9)(a), chapter 514, Laws of
2005 before January 1, 2006, are subject to all applicable
penalties and interest as provided in chapter 82.32 RCW on the
additional tax owing after December 31, 2005.
(3) This section expires December 31, 2010." [2005 c 514 §
1004.]
Effective date -- 2005 c 514: See note following RCW 82.04.4272.
Part headings not law -- Severability -- 2005 c 514: See notes following RCW 82.12.808.
Savings -- Effective date -- 1997 c 7: See notes following RCW 82.04.255.
Findings -- Effective date -- 1994 sp.s. c 5: See RCW 82.63.005 and 82.63.900.
Additional reporting requirements: RCW 82.32.590 and 82.32.600.