Taylor Pottschmidt AP Government Due 2/6/12

Employee Fee Cities Meeting

Washington State Department of Revenue held a meeting from 3:00 4:30 p.m. on January 12, 2012, in the IS or Information Services Building in Tumwater, Washington for the purpose of reviewing the different no-flat fee license models cities are using in relation to the tax simplification project. They reviewed the employees, square footage and gross receipts models used by cities to determine license fees. The first order of discussion was talking about the update of the BLS or the Business Licensing Service. Janet Shimabukuro provided an updates of DORs BLS efforts and analysis since May 2011. She discussed how they got many new items added to the BLS. Some of those new additions include a license document design, branded website at a new URL (business.wa.gov/BLS) and a new toll-free help line. She then discussed how BLS is adding cities and will add eCheck as a payment option and how they are continuing to survey existing city partners. The lack of Autofill was also discussed about applicant info to add employees, locations, etc. This was the biggest complaint of all city staff surveyed. They are planning on fixing this issue by web-based reports, using a web-based interface instead of the legacy mainframe system, new payment options, like eCheck, and by incorporating DORs GIS service into the BLS system for in/out city limits. BLS will also be coordinating with the Secretary of States office to make sure that corps/LLCs register. The Secretary of State is doing a match to look for consistency on business license applications. Also starting in December the Business Licensing Service is with Spokane

to be the first employee fee city to join BLS since inaugural city partners Richland and Bellevue. The Spokane foundation will help BLS work with more employee fee based cities. Last the Department of Revenue continues to work on moving the BLS mainframe legacy systems to DOR. This move is planned to be completed in spring of 2012, BLS will assess the needs to bring forth enhancements. Next the group reviewed the various definitions of employee currently used by cities. Employee means any person employed at any business location within the city and /or any person furnishing or performing services within the city including owners and all persons who are self-employed, regardless of wages or hours worked, in exchange for wages, salary and /or commission whether employed full-time, part-time, either permanently or temporarily, on the payroll of the business. The Department of Revenue felt like the definition of employee must be broad and in-line with the Employment Security (ESD) and Labor & Industries (LNI) definitions. Next the group discussed the various models used by cities to calculate the license fee. It was determined there are only a few models used with some kind of variation. The tree models that are the most popular are the Employee fee range fee is based on the number of employees and a table is used to determine the license fee. Another popular one is the Number of employees multiplied by a per employee fee and the FTE (full time equivalent) multiplied by a rate. In the general discussion many topics were discussed. First they discussed how the ability to collect and provide data will be critical because its used for all sorts of city enforcement and regulation applications for economic development efforts. In the future, DOR would like to add hoc and standard reporting for business classifications and NAICS codes and Home Occupations business codes for speed and postage cost issues. They then discussed how cash and receipting

issues would present problems that would persist with paper applications. Last it was discussed that having the ability to reconcile funds received directly to businesses paying the fees. Cities felt State Auditors Office would require this type of reconciliation. It is to note that BLS does provide partners with a report showing the total received and a breakdown by business name of the funds paid.