FIN 2017-07-18 COMPLETE AGENDA PACKET

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The cities of Seattle, Tacoma, Bellevue, and Everett have been working together since 2010 to simplify the process of local business licensing and B &O tax filing. In 2014 these cities signed an interlocal agreement to establish a "one-stop" system for tax payment and business license application filing to make it easier and more efficient for businesses to apply for local business licenses, and file local taxes, while the cities retain local control over local licensing, tax collection functions, and policies. This joint effort is to create an Internet website application gateway where tax collection and business licensing functions can be collectively administered, and where businesses operating in multiple cities can use a one - stop system for tax payment or local business license application filing. This website began operations in 2016 and is known as FileLocal. Local Tax and Licensing Simplification Task Force. The Legislature enacted Engrossed House Bill 2959 in 2015, directing the Department to lead a task force during the 2016 interim to evaluate and develop options to: (a) improve the local business licensing process; (b) examine the difference in nexus between the state and cities; (c) examine allocation and apportionment methods; (d) centralize B &O tax collection; and (e) share data between the Department and FileLocal. The task force consisted of the following nine members: two representatives from the Association of Washington Business (AWB); one representative of the National Federation of Independent Business (NFIB); one representative of the AWC; one representative from the Washington Retail Association (WRA); one representative from a Washington city or town that imposes a local B &O tax and has a population greater than 100,000; one representative from a Washington city or town that imposes a B &O tax and has a population of less than 100,000; one representative from FileLocal; and one representative from the Department who served as chair of the task force. In 2017 the task force prepared and presented a report for the Legislature that examined the differences in apportionment and nexus between state and local B &O taxes, and how these differences affect taxpayers and cities; evaluated additional or alternative options to improve the administration of local business tax and licensing; and provided recommendations for options evaluated by the task force. The task force provided recommendations on four of the five topics and did not provide a recommendation to centralize B &O tax collection. Summary of Engrossed Bill: All cities that require a general business license (license), unless otherwise exempted (partnering cities), are required to partner with the Department to issue and renew licenses through BLS. The Department must partner with all partnering cities by December 31, 2022, if specific funding is appropriated for that purpose. If specific funding is not appropriated, the Department must partner with at least six cities per year between January 1, 2018 and December 31, 2021. Between January 1, 2022 and December 31, 2027, the Department must partner with the remaining partnering cities. The Department may delay assuming the duties of issuing and renewing general business licenses if insufficient funds are appropriated for this purpose, the Department cannot ensure the BLS is adequately prepared to handle all general business licenses due to unforeseen House Bill Report - 3 - EHB 2005 17