(1) In computing tax there may be deducted from the measure of tax, amounts that a qualified employer of record engaged in providing paymaster services receives from an affiliated business to cover employee costs of a qualified employee. However, no exclusion is allowed under this section for any employee costs incurred in connection with a contractual obligation of the taxpayer to provide services, including staffing services as defined in RCW 82.04.540. (2) The definitions in this subsection apply throughout this section unless the context clearly requires otherwise. (a) "Affiliated" has the same meaning as provided in RCW 82.32.655(7). (b) "Employee costs" are the actual cost of wages and salaries, benefits, workers' compensation, payroll taxes, withholding, or other assessments paid to or on behalf of an employee. (c) "Functional employment relationship" means having control over the work schedule and activities of the employees and control over all employment decisions such as salary, discipline, hiring, or layoffs. (d) "Paymaster services" means providing payroll and related human resource services. (e) "Qualified employee" means an employee with whom the affiliated business has a functional employment relationship. Neither the employer of record, nor any other affiliate, may have a functional employment relationship with the employee. (f) "Qualified employer of record" is a person who: (i) Has no functional employment relationship with a qualified employee; and (ii) Has no contractual liability with a qualified employee for the employee costs. A qualified employer of record may have statutory or common law liability to the qualified employees or to third parties for employee costs. (3) RCW 82.32.805(1) does not apply to the deduction authorized in this section. [ 2013 2nd sp.s. c 13 s 102.]
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