Engrossed House Bill 2487 amends Washington tax law in chapter 82.04 RCW by rewriting RCW 82.04.320, reenacting and amending RCW 82.04.299, adding several new sections, and repealing RCW 82.04.322. The bill narrows the application of chapter 82.04 to exclude insurance business that is directly subject to Washington insurance premium taxes and specifies that only the person who paid the insurance premium tax may claim the exemption. It creates a new workforce education investment surcharge on certain "select advanced computing businesses" with specified rates and annual caps, prescribes quarterly reporting and payment to the Department of Revenue, and directs that surcharge revenues be deposited into the workforce education investment account (RCW 43.79.195). The surcharge rates and caps include: 1.22% from April 1, 2020 through December 31, 2025 on certain gross income, 7.5% beginning January 1, 2026 on other specified gross income, a combined affiliated-group cap of $75,000,000 annually (or $25,000,000 where 50% or more of worldwide gross revenue was from insurance premiums), and specified exemptions for hospitals, certain provider clinics, insurers that pay premium taxes, and others identified in the bill. The bill also establishes tax-administration changes and temporary relief procedures. The Department of Revenue, in consultation with the Office of the Insurance Commissioner, must adopt rules and issue guidance to implement the changes. A new temporary provision allows the Department to waive penalties and interest under chapter 82.32 RCW and to offer a three-year repayment schedule for delinquent taxes derived from business gross income received between October 2, 2019 and March 31, 2026, provided taxpayers apply using a Department form by December 31, 2026 and comply with the repayment schedule; this waiver excludes penalties for evasion, negligence, and avoidance and expires January 1, 2029. The act also deems certain eligible captive insurers to have paid premium tax for periods before May 12, 2021 and exempts captive insurers affiliated with public institutions of higher education from chapter 82.04 tax when they are exempt from premium tax under RCW 48.201.040. The bill creates new enforcement and penalty rules for the surcharge and expands the Department’s disclosure and audit authority: the Department may require affiliated-group disclosure and may audit or investigate whether a person is subject to the surcharge. If the Department proves by clear, cogent, and convincing evidence that affiliated-group members intentionally failed to comply with disclosure requirements to evade the surcharge, it must assess a penalty equal to 50% of the total surcharge payable by all members for the calendar year of noncompliance; that 50% penalty is in lieu of and not in addition to the evasion penalty under RCW 82.32.090(7). Beginning in fiscal year 2028, the bill directs automatic funded increases in computer science and engineering enrollments at four-year state universities when qualified Washington applicants exceed available enrollments by specified amounts. Important operative details are missing from the provided text: the full text of subsection (1) referenced in enforcement provisions, the due date language for returns and payments under amended RCW 82.04.299, the text of Sections 2 and 5 beyond their retroactive dates, and the act’s effective date.

If enacted, insurers that already pay Washington insurance premium taxes will generally no longer be subject to the separate business and occupation tax rules in chapter 82.04 for their insurance business, and only the party that actually paid the premium tax can claim that exemption; certain specific cases (some annuities, assigned risk plan premiums, and a narrow premium-tax-exempt class under RCW 48.14.0201(6)) are carved out. Captive insurers tied to public colleges that are already exempt from premium tax would also be exempt from the chapter 82.04 tax. The Department of Revenue, working with the Office of the Insurance Commissioner, must write rules and guidance, and it will offer a temporary penalty-and-interest waiver plus a three-year repayment plan for delinquent tax on business income from October 2, 2019 through March 31, 2026 if taxpayers apply by December 31, 2026 (evasion and negligence penalties are excluded and the waiver authority expires January 1, 2029). Large technology companies that meet the bill’s “select advanced computing business” threshold (affiliated groups with over $25 billion worldwide revenue and at least one member doing advanced computing) will face a new workforce education investment surcharge that was 1.22% for the 2020–2025 period and becomes a 7.5% surcharge on specified gross income starting January 1, 2026, subject to combined caps ($75 million generally, $25 million if most group revenue came from insurance premiums). The Department can require disclosure of affiliated group membership, audit compliance, and impose a stiff 50% penalty of the group’s surcharge for intentional evasion instead of the usual evasion penalty. Hospitals, many primary-care provider clinics, insurers that pay premium taxes, and certain other health-related entities are exempt. Surcharge revenue will be deposited into the workforce education investment account and is intended to fund additional computer science and engineering enrollments at four-year state universities beginning fiscal year 2028 when demand exceeds capacity; however, some operative details and specific due dates for reporting are missing from the provided text.