Notice of Introduction for House Bill 2322 - Update: 10 Year Analysis Complete

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UPDATE: The 10 year analysis for HB 2322, titled AN ACT Relating to creating a tax preference child care requirement, has been completed. The Office of Financial Management has identified this bill as requiring a ten-year projection of increased cost to the taxpayers or affected fee payers.

Ten-year projection:

Dept of Children, Youth, & Families:

Indeterminate impacts to the Fair Start for Kids Account, depending on number of employers making payment under Section 2(c) of the bill, and the amounts of deposits.

Department of Revenue:

CURRENT LAW:

There is no requirement to provide childcare, childcare reimbursements, or funding for the Fair Start for Kids Account for taxpayers benefitting from business and occupation (B&O) tax preferences.

PROPOSAL:

For B&O tax preferences enacted, expanded, or extended on or after January 1, 2025, taxpayers receiving the benefit of such preferences must provide childcare for children or wards of employees. 

Childcare may include:

- Maintenance or operation of a childcare center on-site at a discounted rate.

- Payments or reimbursements to employees for a minimum of 25% of childcare expenses.

- Paying into the Fair Start for Kids Account. Payments equal to 5% of annual total compensation, including benefits, of employees earning $250,000 or more. The payment must be made at the same time as filing the excise tax return.

If the employer has a collective bargaining agreement excluding childcare, the employer is exempt from the changes in this bill. 

The first time a taxpayer does not certify compliance with these requirements, the Department of Revenue (department) must assess 35% of the tax preference amount. Each additional violation results in an assessment of 50% of the preference amount. For tax deferrals, the assessment equals the amount of deferred tax divided by the number of years in the repayment period.

EFFECTIVE:

The bill takes effect 90 days after the final adjournment of the session.

ASSUMPTIONS:

- The department cannot determine the impacted taxpayers or the number of taxpayers impacted.

REVENUE ESTIMATES:

The revenue impact of this bill is indeterminate.

Ten-year projection prepared in consultation with the following agencies:

Department of Revenue
Dept of Children, Youth, & Families


Bill sponsors and contact information:




Legislative Bill Information Website: http://apps.leg.wa.gov/billinfo/

Initiative 960 Website: http://www.ofm.wa.gov/tax/default.asp