Kraft bill aims to update ‘outdated’ small business rules

Posted

The 2018 Washington state legislative session got underway last week and one of the first moves by local lawmakers came from Rep. Vicki Kraft, R-Vancouver. 

Kraft’s House Bill 2350 aims to change the business and occupation tax reporting frequency for small business owners. Kraft calls the current guidelines for monthly reporting, established by the Department of Revenue some 30 years ago, outdated. 

“Monthly tax reporting is time-consuming and costly for small businesses,” Kraft said in a news release. “When I came to Olympia, I made a commitment to reduce burdens on small businesses that stifle innovation and growth. This bill offers a solution that will have a big impact by lessening the administrative burdens many small business owners face.”

Kraft instead proposes that the reporting be done quarterly or annually. 

Reporting and payment requirements from department of revenues are based on a company’s annual business and operation tax obligation.

Currently, the threshold for monthly business and occupation reporting is $4,800 annual estimated tax liability. A service business with over $320,000 in gross receipts currently has to file monthly reports with department of revenue.

The last time the monthly filing threshold was reset was in 1990. A business with $4,800 in annual tax liability in that year, Kraft said, is equivalent to a business with about $10,000 in tax liability now. 



“Small businesses are a key driver of our state’s economic growth, so it’s vital we help them continue to grow and reach their full potential,” Kraft said. “By simply updating the department of revenue's tax liability reporting requirements, we can make a huge difference in the bottom line for many smaller companies in our state.”

If Kraft’s bill were to pass, the Department of Revenue’s tax liability amounts would instead be based on the current inflation rate and would allow for less frequent filing for smaller businesses.

The following criteria would apply: 

• Annual filing: tax liability is less than $10,000

• Quarterly filing: tax liability is at least $10,000, but less than $100,000

• Monthly filing: tax liability of $100,000 or more

Comments

No comments on this item Please log in to comment by clicking here