Working families' tax credit

AN ACT Relating to modifying the working families' tax credit by 1
enhancing collection services and increasing participation rates 2
through data-sharing agreements; amending RCW 82.08.0206; adding a 3
new section to chapter 74.09 RCW; and creating a new section.4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
Sec. 1. RCW 82.08.0206 and 2024 c 3 s 1 are each amended to read 6
as follows: 7
(1) A working families' tax credit, funded by sales and use tax 8
imposed, is provided to eligible low-income persons for calendar 9
years beginning on or after January 1, 2022. The credit is refundable 10
and is calculated as provided in this section. 11
(2) For purposes of the credit in this section, the following 12
definitions apply: 13
(a)(i) "Eligible low-income person" means an individual who:14
(A) Is eligible for the credit provided in Title 26 U.S.C. Sec. 15
32 of the internal revenue code; 16
(B) Properly files a federal income tax return for the prior 17
federal tax year, and was a Washington resident during the year for 18
which the credit is claimed; and 19
(C) Has paid either retail sales tax under this chapter or use 20
tax under chapter 82.12 RCW, or both. There is a rebuttable 21
Z-0068.2
HOUSE BILL 1224
State of Washington 69th Legislature 2025 Regular Session
By Representatives Thai, Entenman, Reed, Doglio, Ormsby, Bergquist,
and Hill; by request of Department of Revenue
Prefiled 01/09/25. Read first time 01/13/25. Referred to Committee
on Finance.
p. 1 HB 1224
presumption that a person paid either retail sales tax under this 1
chapter or use tax under chapter 82.12 RCW, or both, if they were a 2
Washington resident during the year for which the credit is claimed.3
(ii) "Eligible low-income person" also means an individual who 4
meets the requirements provided in (a)(i)(B) of this subsection and 5
would otherwise qualify for the credit provided in Title 26 U.S.C. 6
Sec. 32 of the internal revenue code except that one or any 7
combination of the following conditions apply: 8
(A) The individual filed a federal income tax return for the 9
prior federal tax year using a valid individual taxpayer 10
identification number in lieu of a social security number, and the 11
individual's spouse, if any, and all qualifying children, if any, 12
have a valid individual taxpayer identification number or a social 13
security number; or 14
(B) The individual filed their federal income tax return for the 15
prior federal tax year under the married filing separately status. 16
For purposes of the refund provided in this section, the special rule 17
for separated spouse under Title 26 U.S.C. Sec. 32 (d)(2)(B) of the 18
internal revenue code does not apply. 19
(b) "Income" means earned income as defined by Title 26 U.S.C. 20
Sec. 32 of the internal revenue code. 21
(c) "Individual" means an individual or an individual and that 22
individual's spouse if they file a federal joint income tax return.23
(d) "Internal revenue code" means the United States internal 24
revenue code of 1986, as amended, as of June 9, 2022, or such 25
subsequent date as the department may provide by rule consistent with 26
the purpose of this section. 27
(e) "Maximum qualifying income" means the maximum federally 28
adjusted gross income for the prior federal tax year.29
(f) "Qualifying child" means a qualifying child as defined by 30
Title 26 U.S.C. Sec. 32 of the internal revenue code, except the 31
child may have a valid individual taxpayer identification number in 32
lieu of a social security number. 33
(g) "Washington resident" means an individual who is physically 34
present and residing in this state for at least 183 days. "Washington 35
resident" also includes an individual who is not physically present 36
and residing in this state for at least 183 days but is the spouse of 37
a Washington resident. For purposes of this subsection, "day" means a 38
calendar day or any portion of a calendar day. 39
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(3)(a) Except as provided in (b) and (c) of this subsection, for 1
calendar year 2023 and thereafter, the working families' tax credit 2
refund amount for the prior calendar year is: 3
(i) $300 for eligible persons with no qualifying children;4
(ii) $600 for eligible persons with one qualifying child;5
(iii) $900 for eligible persons with two qualifying children; or6
(iv) $1,200 for eligible persons with three or more qualifying 7
children. 8
(b) Except as provided in (f) of this subsection, the refund 9
amounts provided in (a) of this subsection will be reduced, rounded 10
to the nearest dollar, as follows: 11
(i) For eligible persons with no qualifying children, beginning 12
at $2,500 of income below the federal phase-out income for the prior 13
federal tax year, by 18 percent per additional dollar of income until 14
the minimum credit amount as specified in (c) of this subsection is 15
reached. 16
(ii) For eligible persons with one qualifying child, beginning at 17
$5,000 of income below the federal phase-out income for the prior 18
federal tax year, by 12 percent per additional dollar of income until 19
the minimum credit amount as specified in (c) of this subsection is 20
reached. 21
(iii) For eligible persons with two qualifying children, 22
beginning at $5,000 of income below the federal phase-out income for 23
the prior federal tax year, by 15 percent per additional dollar of 24
income until the minimum credit amount as specified in (c) of this 25
subsection is reached. 26
(iv) For eligible persons with three or more qualifying children, 27
beginning at $5,000 of income below the federal phase-out income for 28
the prior federal tax year, by 18 percent per additional dollar of 29
income until the minimum credit amount as specified in (c) of this 30
subsection is reached. 31
(c) If the refund for an eligible person as calculated in this 32
section is greater than zero cents, but less than $50, the refund 33
amount is $50. 34
(d) The refund amounts in this section shall be adjusted for 35
inflation every year beginning January 1, 2024, based upon changes in 36
the consumer price index that are published by November 15th of the 37
previous year for the most recent 12-month period. The adjusted 38
refund amounts must be rounded to the nearest $5. 39
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(e) For purposes of this section, "consumer price index" means, 1
for any 12-month period, the average consumer price index for that 2
12-month period for the Seattle, Washington area for urban wage 3
earners and clerical workers, all items, compiled by the bureau of 4
labor statistics, United States department of labor.5
(f) The percentage rate of remittance reductions in (b) of this 6
subsection must be adjusted every year beginning January 1, 2023, 7
based on calculations by the department that result in the minimum 8
credit being received at the maximum qualifying income level.9
(4) The working families' tax credit shall be administered as 10
provided in this subsection. 11
(a) The refund paid under this section will be paid to eligible 12
filers who apply pursuant to this subsection. 13
(i) Application must be made to the department in a form and 14
manner determined by the department. If the application process is 15
initially done electronically, the department must provide a paper 16
application upon request. The application must include any 17
information and documentation as required by the department. The 18
department may use the information provided by the individual to 19
calculate the refund amount. Income reported on the application may 20
be rounded to the nearest dollar. 21
(ii) An individual applying for the credit under this section 22
must keep records necessary for the department to verify eligibility 23
under this section. Any information provided by the individual is 24
subject to audit verification by the department. 25
(iii) In addition to information provided on the application, the 26
department may verify that an individual qualifies as a Washington 27
resident through the use of automated verification tools or other 28
reasonable means. 29
(iv)(A) Except as provided in (a)(iv)(B) of this subsection (4), 30
application for a refund under this section must be made in the year 31
following the year for which the federal tax return was filed, but in 32
no case may any refund be provided for any period before January 1, 33
2022. 34
(B)(I) A person may apply for any refund for which they were 35
eligible but did not claim under (a)(iv)(A) of this subsection (4) 36
for up to three additional years. A person must complete an 37
application to claim this refund within the three calendar years 38
after the end of the calendar year in which the federal income tax 39
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return for that tax year was legally due for federal income tax 1
purposes, without regard to any federal extension. 2
(II) If a person seeks to increase the amount of a refund that 3
has been made under this subsection (4), the person must apply for 4
the amended refund within the nonclaims period established under RCW 5
82.32.060(1). 6
(v) A person may not claim a credit on behalf of a deceased 7
individual. No individual may claim a credit under this section for 8
any year in a disallowance period under Title 26 U.S.C. Sec. 32 (k)(1) 9
of the internal revenue code or for any year for which the individual 10
is ineligible to claim the credit in Title 26 U.S.C. Sec. 32 of the 11
internal revenue code by reason of Title 26 U.S.C. Sec. 32 (k)(2) of 12
the internal revenue code. 13
(b) The department shall protect the privacy and confidentiality 14
of personal data of refund recipients in accordance with chapter 15
82.32 RCW. 16
(c) The department shall, in conjunction with other agencies or 17
organizations, design and implement a public information campaign to 18
inform potentially eligible persons of the existence of, and 19
requirements for, the credit provided in this section.20
(d) The department must work with the internal revenue service of 21
the United States to administer the credit on an automatic basis as 22
soon as practicable. 23
(5) Receipt of a refund under this section may not be used in 24
eligibility determinations for any state income support programs or 25
in making public charge determinations. 26
(6) The department may adopt rules necessary to implement this 27
section. This includes establishing a date by which applications will 28
be accepted, with the aim of accepting applications as soon as 29
possible. 30
(7) The department must review the application and determine 31
eligibility for the working families' tax credit based on information 32
provided by the applicant and through audit and other administrative 33
records, including, when it deems it necessary, verification through 34
information from the internal revenue service of the United States, 35
other federal agencies, Washington state agencies, third-party 36
entities, or other persons. The department may accept a signed 37
attestation in a form and manner determined by the department from an 38
individual to presumptively validate that an individual meets all the 39
eligibility requirements as provided in this section. The signed 40
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attestation is subject to audit verification by the department to 1
validate an individual's eligibility for the working families' tax 2
credit. 3
(8) If, upon review of internal revenue service data or other 4
information obtained by the department, it appears that an individual 5
received a refund that the individual was not entitled to, or 6
received a larger refund than the individual was entitled to, the 7
department may ((assess)) issue an assessment against the individual 8
for the overpaid amount. The department may also ((assess such )) 9
issue an assessment for the overpaid amount against the individual's 10
spouse if the refund ((in question)) was based on both spouses filing 11
a joint federal income tax return for the year for which the refund 12
was claimed. 13
(a) Interest as provided under RCW 82.32.050 applies to 14
assessments authorized under this subsection (8) starting six months 15
after the date the department issued the assessment until the amount 16
due under this subsection (8) is paid in full to the department. 17
Except as otherwise provided in this subsection, penalties may not be 18
assessed on amounts due under this subsection. 19
(b) If an amount due under this subsection is not paid in full by 20
the date due, or the department issues a warrant for the collection 21
of amounts due under this subsection, the department may assess the 22
applicable penalties under RCW 82.32.090. Penalties under this 23
subsection (8)(b) may not be made due until six months after the 24
department's issuance of the assessment. 25
(c) If the department finds by clear, cogent, and convincing 26
evidence that an individual knowingly submitted, caused to be 27
submitted, or consented to the submission of, a fraudulent claim for 28
refund under this section, the department must assess a penalty of 50 29
percent of the overpaid amount. This penalty is in addition to any 30
other applicable penalties assessed in accordance with (((b) of)) 31
this subsection (8). If a penalty is assessed under this subsection 32
(8)(c), it, along with additional applicable penalties under RCW 33
82.32.090, are due in accordance with the applicable provisions of 34
chapter 82.32 RCW. The six-month time period for interest and 35
applicable penalties provided in (a) and (b) of this subsection, 36
respectively, do not apply when a penalty is assessed under this 37
subsection (8)(c). Interest, as provided under RCW 82.32.050, also 38
applies to any assessments to which this subsection (8)(c) applies 39
and must be computed starting from the last day of the month 40
p. 6 HB 1224
following the department's receipt of the working families' tax 1
credit application. 2
(9) If, within the period allowed for refunds under RCW 3
82.32.060, the department finds that an individual received a lesser 4
refund than the individual was entitled to, the department must remit 5
the additional amount due under this section to the individual.6
(10) Interest does not apply to refunds provided under this 7
section. 8
(11) Chapter 82.32 RCW applies to the administration of this 9
section. 10
NEW SECTION. Sec. 2. A new section is added to chapter 74.09 11
RCW to read as follows: 12
Subject to federal and state laws governing the disclosure of 13
confidential information, the department of revenue and the authority 14
shall enter into a memorandum of understanding to establish 15
information-sharing practices necessary to carry out the purpose of 16
RCW 82.08.0206. 17
NEW SECTION. Sec. 3. This act applies both prospectively and 18
retroactively to January 1, 2023.19
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