Two Bills that Tax Architects Introduced Yesterday

At noon yesterday, two bills were introduced that would cause severe difficulties for the profession. Parts of these bills make it expensive for firms to operate and pay their bills; while they also make firm employees personally liable for taxes if the firm fails! Then, without any public hearing or opportunity for public input, legislators rushed the bills through committee.

The first bill, Substitute House Bill 3191 (SHB 3191, part 12) will make it difficult for Washington firms to recruit and retain qualified employees by making firm officers and employees liable for unpaid taxes “regardless of fault or whether the individual was or should have been aware of the unpaid tax liability.”

Part 20 of this House bill increases the Business & Occupation (B&O) tax rate to 2.0% for environmental consulting services. Architects act as the prime consultant on design projects by bringing together different disciplines under a single contract to provide a complete set of services. It’s nearly impossible to separate out environmental consulting services from the other services provided in the contract.

The second bill, Substitute Senate Bill 6143 (SSB 6143, part 7) also creates new personal liability for corporate officers and key employees for unpaid taxes. Under current law, the state may go after business owners for unremitted sales tax but cannot go after employees who did not know or could not have known about the tax liabilities. This law changes that.

Part 20 of this Senate bill directly increases the B&O Tax rate for architecture firms to 1.75%. Architectural firms already pay the highest B&O tax rate of 1.5%. Increasing the tax burden on the service sector may bring unfortunate yet predictable results – architectural firms relocating out of state. This part also unfairly targets small firms as large multi-state firms already have the option to outsource projects; small and medium firms do not.

The AIA/WA is currently working to get harmful parts of these bills removed and to have legislators vote against them if they are not removed. You can find your legislator here, and let them know your concerns with SHB 3191 and SSB 6143.