PROPOSED RULES
Original Notice.
Preproposal statement of inquiry was filed as WSR 01-17-120.
Title of Rule: WAC 458-16-110 Applications -- Who must file, initial applications, annual declarations, appeals, filing fees, penalties, and refunds.
Purpose: WAC 458-16-110 explains how to obtain and retain a property tax exemption and how a determination made by the Department of Revenue regarding an exemption may be appealed.
Statutory Authority for Adoption: RCW 84.36.865.
Statute Being Implemented: RCW 84.36.815, 84.36.820, 84.36.825, 84.36.830, 84.36.833, 84.36.840, and 84.36.850.
Summary: WAC 458-16-110 explains the application and renewal procedures involved in obtaining and retaining a property tax or lease hold excise tax exemption under chapter 84.36 RCW.
Reasons Supporting Proposal: To incorporate recent legislation (see Explanation of Rule below for a more complete explanation) and to clarify existing practices and procedures in the administration of property tax exemptions authorized in chapter 84.36 RCW.
Name of Agency Personnel Responsible for Drafting: Kim M. Qually, 1025 Union Avenue S.E., Suite #400, Olympia, WA, (360) 570-6113; Implementation and Enforcement: Sandy Guilfoil, 1025 Union Avenue S.E., Suite #200, Olympia, WA, (360) 570-5860.
Name of Proponent: Department of Revenue, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: WAC 458-16-110 describes how a property tax or leasehold excise tax exemption, set forth in chapter 84.36 RCW, is obtained and retained. These procedures apply to all entities and property owners who are required by statute to apply for either a property tax or leasehold excise tax exemption in order to receive such an exemption. Determinations made by the department may be appealed to the Board of Tax Appeals.
Sections 24 through 29, chapter 311, Laws of 1998, made technical corrections to RCW 84.36.800, 84.36.805, 84.36.810, 84.36.815, 84.36.825, and 84.36.835, respectively. Chapter 126, Laws of 2001, expanded the exemption available to hospitals to include property leased to public hospital districts under RCW 84.36.040 and to property owned by a nonprofit foundation but leased to institutions of higher education under RCW 84.36.050 (sections 1 and 2 respectively). Section 3 of this same chapter also amended RCW 84.36.810 relating to the back taxes that are collected when the exemption for leased property to institutions of higher education is cancelled and section 4 amended RCW 84.36.815 regarding the application exemption process for property leased to public hospital districts.
Proposal Changes the Following Existing Rules: The proposed WAC 458-16-110 incorporates statutory changes reflected in chapter 311, Laws of 1998, and chapter 126, Laws of 2001 (see above description). Also incorporated in this proposed rule are the contents of Property Tax Bulletin No. 91-2 "Cemeteries or burial grounds -- Annual application for exemption" and information regarding filing fees, penalties, and refunds that was previously provided in WAC 458-16-111 (repealed in 1998).
No small business economic impact statement has been prepared under chapter 19.85 RCW. Profit making businesses would not be affected by this rule. This rule does not impose any additional burden or responsibility upon a small business.
RCW 34.05.328 does not apply to this rule adoption. This rule is an interpretive rule as defined by RCW 34.05.328.
Hearing Location: Capital Plaza Building, 1025 Union Avenue S.E., 4th Floor, Large Conference Room, Olympia, WA, on December 12, 2001, at 10:30 a.m.
Assistance for Persons with Disabilities: Contact Sandy Davis no later than ten days before the hearing date, TDD 1-800-451-7985, or (360) 570-6175.
Submit Written Comments to: Kim M. Qually, Department of Revenue, P.O. Box 47467, Olympia, WA 98504-7467, fax (360) 664-0693, e-mail kimq@dor.wa.gov, by December 12, 2001.
Date of Intended Adoption: December 19, 2001.
November 2, 2001
Claire Hesselholt
Rules Manager
Legislation and Policy Division
OTS-5217.2
AMENDATORY SECTION(Amending WSR 98-18-006, filed 8/20/98,
effective 9/20/98)
WAC 458-16-110
Applications -- Who must file, initial
applications, annual declarations, appeals, filing fees,
penalties, and refunds.
(((1) Introduction. This section
explains the procedures property owners must follow to apply for
and to renew all real and personal property tax exemptions
provided under chapter 84.36 RCW for which the taxpayer must
apply in order to receive. It also specifies the fee that must
be submitted with an initial application or renewal declaration
for exemption, as well as the late filing penalty that is due
whenever an initial application or renewal declaration is
received after the filing deadline.
(2) Application required. All foreign national governments, cemeteries, nongovernmental nonprofit corporations, organizations, and associations, and soil and water conservation districts seeking exemption from property taxation under the provisions of chapter 84.36 RCW shall apply for exemption with the department of revenue. Unless otherwise exempted by law, no real or personal property shall be exempt from taxation until an application has been filed and an exemption has been granted.
(3) Where to obtain application forms. Applications for exemption may be obtained from any county assessor's office or the department of revenue.
(4) Initial applications. Generally, initial applications for exemption of real or personal property shall be filed with the department of revenue on or before March 31 to exempt the property from taxes due the following calendar year. However, an initial application may be filed after March 31st if the property is acquired for or converted to an exempt use after that date, if the property may qualify for exemption under one of the statutes contained in chapter 84.36 RCW, and if, following the acquisition or conversion of the property, an application for exemption is submitted within sixty days. If an initial application under these circumstances is not received within sixty days, the late filing penalty described in subsection (9) of this section will be imposed. All initial applications shall comply with the following:
(a) A filing fee of thirty-five dollars shall be submitted with each application.
(b) The application shall be made on a form prescribed by the department and signed by the applicant or the applicant's authorized agent.
(c) Each application for exemption of real property may include all property that is contiguous and part of a homogeneous unit. A separate application must be submitted for real property that is not both contiguous and part of a homogeneous unit. However, a separate application shall not be required for church property involving a noncontiguous parsonage or convent.
(i) Contiguous property means real property adjoining other real property, all of which is under the control of a single applicant even though the properties may be separated by public roads, railroads, rights of way, or waterways.
(ii) A homogeneous unit means one where the property is under the control of a single applicant and the operation and use of the property is integrated with and directly related to the exempt activity of the applicant.
(d) The application shall include copies of the articles of incorporation or association, or constitution or other establishing document, together with all current amendments thereto, showing nonprofit status and a copy of the bylaws of the nonprofit entity applying for exemption. The application shall also include a copy of any current letter from the Internal Revenue Service that grants the applicant exemption from paying federal income taxes, unless the nonprofit organization, association, or corporation is part of a larger organization, association, or corporation, like a church or the boy scouts, that has been issued a group 501 (c)(3) exemption ruling by or is otherwise exempt from filing with the Internal Revenue Service. If copies of these documents have previously been filed with the department and are still current, they do not have to be resubmitted.
(e) The application shall include an accurate map identifying by dimension the use or proposed use of all real property including buildings, building sites, parking areas, landscaping, vacant areas, and, if requested by the department, floor plans of multistoried buildings. This map will be used to determine whether the property is entitled to a total exemption or a partial exemption based upon the use of the total area.
(f) The application shall accurately describe the real and personal property for which exemption is sought. The application shall include a legal description of all real property, provide the county tax parcel number for each parcel of real property, and, if the property is owned by the applicant, a copy of the current deed relative to the real property.
(g) The application shall indicate whether any of the real or personal property included in the application is rented or loaned from or to others. If the property is rented or loaned, the applicant must include a copy of the rental agreement with the application and answer the following questions:
(i) Which property, in whole or in part, is rented or loaned;
(ii) The amount of the rent or other consideration received;
(iii) To whom or from whom the property is rented or loaned;
(iv) What use is being made of the property; and
(v) The monthly amount of operation and maintenance costs related to the rented or loaned property.
(5) Effective date of exemption. If the application for exemption is approved, the property shall be exempt from property taxes due the year immediately following the year the application was submitted. For example, if an application is submitted in 1995 and the property is eligible for exemption effective 1/1/95, the property will be exempt from taxes due in 1996. Applications for previous years may by submitted, up to a maximum of three years from the date the taxes were paid, if the applicant provides proof acceptable to the department that the property qualified for exemption in the assessment year prior to the tax year for which exemption is claimed and the initial filing fee and late filing penalties are paid.
(6) Annual renewal declaration. In order to retain a property tax exemption, each nonprofit entity (except nonprofit cemeteries) receiving an exemption shall annually file a renewal declaration with the department certifying that the use and exempt status of the real and personal property claimed as exempt has not changed. The declaration shall be on a form prescribed by the department and shall be in accordance with the following:
(a) The department shall annually on or before January 1 mail a renewal declaration to the owners of record of exempt property at their last known address.
(b) The renewal declaration shall be filed with the department no later than March 31, signed by the owner, and accompanied by a filing fee of eight dollars and seventy-five cents. This declaration shall include information regarding any change of use and a certification as to the truth and accuracy of the information listed. It shall be due on or before March 31 regardless of whether the department mailed the declaration to the owner.
(c) If the owner fails to file the renewal declaration by the due date, and after the department has mailed an additional notice to the owner at the owner's last known address, the department shall remove the exemption from the property and notify the assessor in the county where the property is located that the exemption is removed and that the property is to be placed back on the tax rolls.
(7) Failure to file annual renewal declaration. When the exemption has been removed as a result of an owner's failure to file an annual renewal declaration and the owner wishes to reapply for the property tax exemption:
(a) Within the same assessment year, the owner must complete and file an annual renewal form and pay any required late filing penalties; or
(b) Within a subsequent assessment year, the owner must file an initial application, pay the initial filing fee, and pay any required late filing penalties.
(8) Full payment of filing fees is required before an initial application or renewal declaration will be processed. The department will not process an application or a renewal form for a property tax exemption until all filing fees and penalties, if applicable, have been paid.
(9) Late filing penalty. When an initial application or renewal form is not submitted by the due date, a late filing penalty of ten dollars is due for every month, or portion thereof. This penalty is calculated from the date the filing was due up to the postmark date shown on the application or renewal declaration.
(10) Refund of filing fee or penalty. No filing fees or late filing penalty will be refunded after a determination on the application or renewal is issued by the department. However, filing fees and the late filing penalty will be refunded under the following circumstances:
(a) When a duplicate application or renewal form for exemption for the same property is filed for the same year;
(b) When an application or renewal form for exemption is received by the department and the department has no authority to grant the exemption requested; or
(c) When a written request to withdraw the application or renewal form for exemption is received before a determination has been issued by the department. The request to withdraw the application or renewal form must be signed by the owner or the owner's authorized agent.)) (1) Introduction. This rule explains the procedures property owners must follow to apply for and renew all real and personal property exemptions or leasehold excise tax exemptions under chapter 84.36 RCW for which the taxpayer must apply in order to receive. It also specifies the fee that must be submitted with each initial application or renewal declaration for exemption, as well as the late filing penalty that is due whenever an application or renewal declaration is received after the filing deadline.
(2) Application required. All foreign national governments, cemeteries, nongovernmental nonprofit corporations, organizations, or associations, soil and water conservation districts, and a public hospital district established under chapter 70.44 RCW seeking a property tax exemption or a leasehold excise tax exemption under chapter 84.36 RCW must submit an application for exemption and supporting documentation to the state department of revenue (department). Unless otherwise exempted by law, no real or personal property or leasehold interest is exempt from taxation until an application is submitted and an exemption is granted.
(3) Where to obtain application and annual renewal declaration forms. Applications for exemption may be obtained from any county assessor's office, the department's property tax division, or on the internet at http://dor.wa.gov/index.asp under Property Tax, "Forms." Annual renewal declaration forms are mailed by the department to all entities receiving a property tax or leasehold excise tax exemption. If such a form is not received in the mail, an annual renewal declaration may be obtained from the department's property tax division or an application form may be obtained and adapted for use as an annual renewal declaration.
(4) Initial application, filing deadlines, and other requirements. In general, initial applications for exemption must be filed with the department on or before March 31st to exempt the property from taxes due in the following year. However, an initial application may be filed after March 31st if the property is acquired or converted to an exempt use after that date, if the property may qualify for an exemption under chapter 84.36 RCW. In this situation, the application must be submitted within sixty days of acquisition or conversion of the property to an exempt use. If an initial application is not received within this sixty day period, the late filing penalty described in subsection (12) of this rule is imposed.
(a) The following requirements apply to all initial applications:
(i) A filing fee of thirty-five dollars must be submitted with each application for exemption. The department will not process any application unless this fee is paid;
(ii) The application must be made on a form prescribed by the department and signed by the applicant or the applicant's authorized agent;
(iii) One application can be submitted for all real property that is contiguous and part of a homogeneous unit. If exemption is sought for multiple parcels of real property, which are not contiguous nor part of a homogeneous unit, a separate application for each parcel must be submitted. However, multiple applications are not required for church property with a noncontiguous parsonage or convent.
(A) "Contiguous property" means real property adjoining other real property, all of which is under the control of a single applicant even though the properties may be separated by public roads, railroads, rights of way, or waterways.
(B) "Homogeneous unit" means the property is controlled by a single applicant and the operation and use of the property is integrated with and directly related to the exempt activity of the applicant.
(5) Documentation a nonprofit organization must submit with its application for exemption. Unless the following information was previously submitted to the department and it is still current, in addition to the application for exemption, a nonprofit organization, corporation, or association must also submit:
(a) Copies of the articles of incorporation or association, constitution, or other establishing documents, as well as all current amendments to these documents, showing nonprofit status;
(b) A copy of the bylaws of the nonprofit entity, if requested by the department;
(c) A copy of any current letter issued by the Internal Revenue Service that exempts the applicant from federal income taxes. This letter is not usually, but may be, required if the nonprofit entity applying for an exemption is part of a larger organization, association, or corporation, like a church or the Boy Scouts of America, that was issued a group 501(c)(3) exemption ruling by or is otherwise exempt from filing with the Internal Revenue Service; and
(d) The information required in subsection (6) of this rule.
(6) Other documentation a nonprofit entity, foreign national government, hospital owned and operated by a public hospital district, or soil and water conservation district must submit with its initial application for exemption. In addition to the initial application for exemption, a nonprofit entity, foreign national government, and public hospital district established under chapter 70.44 RCW, or soil and water conservation district must submit the following information regarding the real or personal property for which exemption is sought, unless it was previously submitted to the department and it is still current:
(a) An accurate description of the real and personal property;
(b) An accurate map identifying by dimension the use or proposed use of all real property that shows buildings, building sites, parking areas, landscaping, vacant areas, and if requested by the department, floor plans of the buildings. The map will be used to determine whether the property is entitled to a total or partial exemption based upon the use of the total area;
(c) A legal description of all real property, listing the county tax parcel number, and if the property is owned by the applicant, a copy of the current deed; and
(d) If the property is rented or loaned to or from another property owner, a copy of the rental agreement or other document explaining the terms of the lease or loan. This documentation must describe:
(i) What property is rented or loaned;
(ii) The amount of the rent or other consideration paid or received;
(iii) The name of the party from whom and the name of the party to whom the property is rented or loaned;
(iv) How the property is being used; and
(v) The monthly amount of maintenance and operation costs related to rented or loaned property if a nonprofit entity is claiming an exemption for property leased to another party.
(7) Department's review of the application and notice of its determination. Upon receipt of an application for exemption, the department will review the application and all supporting documentation. Additional information may be requested about the ownership and use of the property, if the department needs this information to determine if the exemption should be granted. An application for exemption is not considered complete until all required and requested information is received by the department.
(a) Physical inspection. The department will physically inspect the property as part of the application review process.
(b) Deadline. If a complete application is received by March 31st for that assessment year, the department will issue a determination about the application by August 1st. If a complete application is not received by March 31st, the determination will be made within thirty days of the date the complete application is received by the department or by August 1st, whichever is later.
(c) Notice to applicant. The department will mail a written determination about the exemption application to the applicant. An application may be approved or denied, in whole or in part. If the application is denied for any portion of the property covered by the application, the department must clearly explain its reason for denial in its written determination.
(d) Notice to assessor. Once the department makes its determination about the application for exemption, it will notify the assessor of the county in which the property is located about the determination made. In turn, the assessor takes appropriate action so that the department's determination is reflected on the county's assessment roll(s) for the years covered by the determination.
(8) Effective date of the exemption. If an application is approved, the property is exempt from property taxes due the year immediately following the year the application for exemption is submitted.
(a) For example, if an application for exemption is submitted to the department in 2000 and the application is approved in assessment year 2000, the property will be exempt from taxes due in 2001.
(b) Retroactive applications for exemption for previous years are accepted, up to a maximum of three years from the date taxes were paid on the property, if the applicant provides the department with acceptable proof that the property qualified for exemption during the pertinent assessment years and pays the initial application filing fee, renewal declaration fees, and late filing penalties.
(9) Annual renewal declaration. To retain a property tax exemption, each nonprofit entity (except nonprofit cemeteries), foreign national government, public hospital district, and soil and water conservation district receiving an exemption must annually submit a renewal declaration certifying that the use and exempt status of the real and personal property has not changed. The renewal declaration is a form prepared by the department.
(a) On or before January 1st each year, the department mails a renewal declaration to the entity receiving an exemption for the property at the entity's last known address. Within sixty days of changing its mailing address, the exempt entity must notify the department about the change.
(b) The renewal declaration, signed by the exempt entity or the exempt entity's authorized agent, and renewal fee of eight dollars and seventy-five cents must be submitted to the department no later than March 31st each year. The department will not process a renewal declaration unless this fee is paid.
(i) The renewal declaration must include information about any change of use of the exempt property and a certification as to the truth and accuracy of the information listed.
(ii) The renewal declaration is due on or before March 31st even if the department fails to mail the declaration to the exempt entity. If an exempt entity does not receive a renewal declaration, an application form may be submitted to the department to renew the exemption.
(c) If the renewal declaration and renewal fee are not received by March 31st, the department will mail a second notice to the exempt entity at the entity's last known mailing address. If the exempt entity fails to respond to the second notice, the department will remove the exemption from the property and notify the assessor of the county in which the property is located that the exemption has been cancelled.
(d) Real property, which was previously exempt from taxation, is assessed and taxed as provided in RCW 84.40.350 through 84.40.390 when it loses its exempt status.
(i) Property that no longer retains its exempt status is subject to a pro rata portion of the taxes allocable to the remaining portion of the year after the date the property lost its exempt status.
(ii) The assessor lists and assesses the property with reference to its true and fair value on the date the property lost its exempt status.
(iii) RCW 84.40.380 sets forth the dates upon which taxes are payable when property loses its exempt status. Taxes due and payable under RCW 84.40.350 through 84.40.390 constitute a lien on the property that attaches on the date the property loses its exempt status.
(10) Failure to submit an annual renewal declaration and reapplication for exemption. If property loses its exempt status because the annual renewal declaration and renewal fee were not submitted and subsequently the owner wishes to reapply for the property tax exemption:
(a) If the owner reapplies within the same assessment year during which the exemption is cancelled, the owner must submit the annual renewal declaration and pay the renewal fee and any required late filing penalties; or
(b) If the owner reapplies after the assessment year during which the exemption is cancelled, the owner must submit an initial application and pay the initial application fee, any unpaid renewal fees for the intervening years, and required late filing penalties.
(11) Initial application and renewal declaration procedures regarding cemeteries. There are several types of cemeteries. The initial application for exemption and renewal declaration procedures are specific as to the type of cemetery at issue.
(a) The assessor shall consider the following types of cemeteries exempt from property tax, no initial application or renewal declaration is required for:
(i) Cemeteries owned, controlled, operated, and maintained by a cemetery district authorized by RCW 68.52.090; or
(ii) Indian cemeteries, which are considered to be held by the tribe or held in trust for the tribe by the United States.
(b) An initial application is submitted to the department, but no renewal declaration is required, for:
(i) Family cemeteries;
(ii) Historical cemeteries;
(iii) Community cemeteries; and
(iv) Cemeteries belonging to nonprofit organizations, associations, or corporations.
(c) An initial application for exemption and a renewal declaration must be submitted by all for-profit cemeteries seeking a property tax exemption.
(12) Late filing penalty. When an initial application or renewal declaration is submitted after the due date, a late filing penalty of ten dollars is due for every month, or portion thereof. This penalty is calculated from the date the application or renewal declaration was due until the postmark date shown on the application or declaration or the date the application or declaration is given to the department.
(13) Refund of filing fee or penalty. No filing fees or late filing penalty are refunded after a determination on the application is issued by the department. However, filing fees and the late filing penalty will be refunded under the following circumstances:
(a) When a duplicate application or renewal declaration for the same property is submitted during the same calendar year;
(b) When an application or renewal declaration is received by the department and the department has no authority to grant the exemption requested; or
(c) When a written request to withdraw the application is received before the department issues a determination. The withdrawal request must be signed by the owner or the owner's authorized agent.
(14) Appeals. Any applicant that receives a negative determination from the department on either an initial application or a renewal declaration may appeal this determination to the state board of tax appeals (BTA). Similarly, any assessor who disagrees with the department's determination may appeal the determination to the BTA. See WAC 458-16-120 for specific information about the appeal process.
[Statutory Authority: RCW 84.36.865, 84.36.037, 84.36.805, 84.36.815, 84.36.825 and 84.36.840. 98-18-006, 458-16-110, filed 8/20/98, effective 9/20/98. Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, 458-16-110, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.865. 85-05-025 (Order PT 85-1), 458-16-110, filed 2/15/85; 81-05-017 (Order PT 81-7), 458-16-110, filed 2/11/81; Order PT 77-2, 458-16-110, filed 5/23/77; Order PT 76-2, 458-16-110, filed 4/7/76. Formerly WAC 458-12-146.]