Pandemic Darlings The pandemic economy, in original documents
Home Source documents Senate Bill Report SB 5138 — Eliminating a Business and Occupation Tax Deduction (As of January 19, 2021)

Senate Bill Report SB 5138 — Eliminating a Business and Occupation Tax Deduction (As of January 19, 2021)

Summary

Senate Bill Report SB 5138 as of January 19, 2021, for the Senate Committee on Business, Financial Services & Trade, on an act eliminating a business and occupation tax deduction for financial institutions to fund affordable housing. The brief summary states that the bill repeals the business and occupation tax deduction for interest on investments or loans secured by first mortgages or deeds of trust on non-transient residential properties for community banks. The background states that financial institutions are subject to the 1.5 percent service and other B&O tax rate. The summary of the bill states that beginning August 1, 2021, the deduction is repealed.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Issuer
Congressional materials
Document type
Report
Date
2021-01-21
Case
2021 01 21 A28239 D224923 Bill Report 5138 Sba Bfst 21

Cite this document

“Senate Bill Report SB 5138 — Eliminating a Business and Occupation Tax Deduction (As of January 19, 2021).” Original at app.leg.wa.gov, dated 2021-01-21. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2021-01-21-2021-01-21-a28239-d224923-bill-report-5138-sba-bfst-21/, SHA-256 874088540231176d12edb91434b4a761dfd4110a37a1925609503a599cc5d183.

Full text

                            SENATE BILL REPORT
                                  SB 5138

                                      As of January 19, 2021

Title: An act relating to eliminating a business and occupation tax deduction for financial
     institutions to fund affordable housing.

Brief Description: Eliminating a business and occupation tax deduction for financial
     institutions to fund affordable housing.

Sponsors: Senators Kuderer, Hasegawa, Das, Nguyen, Saldaña, Salomon and Wilson, C..

Brief History:
     Committee Activity: Business, Financial Services & Trade: 1/21/21.


                                     Brief Summary of Bill
           • Repeals the business and occupation tax deduction for interest on
             investments or loans secured by first mortgages or deeds of trust on non-
             transient residential properties for community banks.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Clinton McCarthy (786-7319)

     Background: Washington's major business tax is the business and occupation (B&O) tax.
     The B&O tax is imposed on the gross receipts of business activities conducted within the
     state, without any deduction for the costs of doing business. Businesses must pay the B&O
     tax even though they may not have any profits or may be operating at a loss.

     A taxpayer may have more than one B&O tax rate, depending on the types of activities
     conducted. Major B&O tax rates are 0.471 percent for retailing; 0.484 percent for
     manufacturing, wholesaling, and extracting; and 1.5 percent for services and for activities
     not classified elsewhere. Financial institutions are subject to the 1.5 percent service and
     other B&O tax rate.



     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                             SB 5138
     Entities engaged in banking, loan, security, or other financial businesses may deduct interest
     on investments or loans secured by mortgages or deeds of trust. This exemption is limited
     to community banks, which are located in less than ten states.

     Summary of Bill: Beginning August 1, 2021, the deduction of interest on investments or
     loans secured by first mortgages or deeds of trust for entities engaged in banking, loan,
     security, or other financial businesses is repealed. The statute that limited the deduction to
     community banks is also repealed. The interest and related fees would become fully
     taxable. By October 15, 2022, and each October 15th thereafter, the Department of
     Revenue is directed to estimate any increase in state general fund revenues as a result of
     repealing this deduction. After informing the state treasurer of any increase, the state
     treasurer must transfer that amount from the general fund into the housing trust fund
     beginning November 1, 2022, and by each November 1st thereafter. The Department of
     Revenue may not make any adjustments to the estimate after the state treasurer makes the
     fund transfer.

     Appropriation: None.

     Fiscal Note: Requested on January 14, 2021.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: The bill takes effect on August 1, 2021.




Senate Bill Report                             -2-                                         SB 5138

File and source

File
2021-01-21_a28239_d224923_bill-report-5138-sba-bfst-21.pdf
Size
7,068 bytes
SHA-256
874088540231176d12edb91434b4a761dfd4110a37a1925609503a599cc5d183
Our copy
2021-01-21_a28239_d224923_bill-report-5138-sba-bfst-21.pdf
Original
app.leg.wa.gov
Back to top