PROPOSED RULES
Original Notice.
Preproposal statement of inquiry was filed as WSR 01-18-008 (WAC 458-16-165 only) and 01-17-120.
Title of Rule: Amendatory sections WAC 458-16-120 Appeals
((and notice of determination)), 458-16-130 Change in taxable
status of ((nongovernmental)) real property, 458-16-150 Cessation
of use -- Taxes collectible for prior years, and 458-16-165
Conditions under which nonprofit organizations, associations, or
corporations may obtain a property tax exemption.
Purpose: These rules explain how a determination made by the Department of Revenue regarding an exemption may be appealed; what occurs when a change in ownership or use of exempt property causes the property to lose its exempt status; the procedures used to place previously exempt, now taxable, property back on the tax rolls; and the supplemental conditions that most nonprofit entities must satisfy to obtain and retain a property tax exemption under chapter 84.36 RCW.
Statutory Authority for Adoption: RCW 84.36.865.
Statute Being Implemented: RCW 84.36.040, 84.36.042, 84.36.045, 84.36.046, 84.36.050, 84.36.385, 84.36.560, 84.36.570, 84.36.800, 84.36.805, 84.36.810, 84.36.812, 84.36.815, 84.36.825, 84.36.835, and 84.40.350 through 84.40.390.
Summary: WAC 458-16-120 outlines the appeal process used when an aggrieved party disagrees with a determination made by the department regarding an exemption. WAC 458-16-130 describes what occurs when taxable property becomes exempt and when exempt property becomes taxable. WAC 458-16-150 explains the process used when exempt property becomes taxable and the conditions under which taxes payable for prior years are collected. WAC 458-16-165 explains the conditions that most nonprofit entities or public hospital districts must satisfy in order to obtain and retain a property tax exemption in addition to the requirements of the underlying statute which confers an exemption.
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: The rules provide information about how a determination made by the department may be appealed to the Board of Tax Appeals. Furthermore, they explain the requirements that must be satisfied to obtain and retain a tax exemption. And finally, the rules explain how property may lose its exempt status and the tax consequences of such a change in taxable status. The department proposes to revise WAC 458-16-120, 458-16-130, 458-16-150, and 458-16-165 to incorporate the following legislative changes and to clarify existing practices and procedures in the administration of property tax and leasehold excise tax exemptions.
Several new property tax exemptions were enacted within the past few years. To the extent that statutory changes were made to RCW 84.36.800, 84.36.805 and 84.36.810, the corresponding rules need to incorporate the contents of the amended statutes.
| Chapter 143, Laws of 1997, authorized an exemption for nonprofit cancer center and clinics, codified as RCW 84.36.046. Chapter 143 also amended RCW 84.36.800, 84.36.805, and 84.36.810 to include the new exemption within the definitions and procedures set forth in these statutes. | |
| Chapter 202, Laws of 1998, enacted an new exemption for housing for the developmentally disabled, codified as RCW 84.36.042. Chapter 202 also amended RCW 84.36.800, 84.36.805, and 84.36.810 to include this new exemption. | |
| Chapter 139, Laws of 1999, authorized a new exemption for demonstration farms, codified as RCW 84.36.570. Chapter 139 also amended RCW 84.36.805 and 84.36.810 to include this new exemption. | |
| Chapter 203, Laws of 1999, created a new exemption for very
low-income housing, codified as RCW 84.36.560. Chapter 203
also amended RCW 84.36.805 and 84.36.810 to include this new
exemption. Similarly, technical corrections were made to a number of statutes in recent years. |
|
| Chapter 156, Laws of 1997, made technical corrections to RCW 84.36.800, 84.36.805, and 84.36.810. | |
| 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. Amendments of existing exemptions: |
|
| Chapter 184, Laws of 1998, amended RCW 84.36.045 to include leased property and RCW 84.36.805. | |
| Chapter 185, Laws of 2001, revised RCW 84.36.385 and 84.36.812 to include cross references to the Board of Equalization procedural statute, RCW 84.40.038. | |
| Chapter 7, Laws of 2001 1st special session, amended RCW 84.36.560 and 84.36.805 to make substantial changes to the exemption available to housing for very low-income households. | |
| 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. It 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 RCW 84.36.815 relating to the application process for property leased to public hospital districts. |
Proposal Changes the Following Existing Rules: WAC 458-16-120 was expanded to include more specific information about the process involved in appealing an exemption determination. WAC 458-16-130 includes information now provided in Property Tax Bulletin 91-5 "Taxation of real property exempt to taxable and property taxable to exempt" and explains how taxes are prorated when an exemption is cancelled. Legislative changes made to RCW 84.36.810 during the 1997, 1998, 1999, and 2001 sessions have been incorporated into WAC 458-16-130 and 458-16-150. WAC 458-16-165 now reflects the changes made to RCW 84.36.805 during the 1997, 1998, 1999, and 2001 legislative sessions. WAC 458-16-165 now also contains a list of exemption statutes to which the rule does not apply. Additionally, the examples regarding irrevocable dedication, and the section regarding property sold subject to an option to repurchase have been updated.
No small business economic impact statement has been prepared under chapter 19.85 RCW. A small business economic impact statement is not required because the rules and proposed amended amendments do not impose any requirement or burdens upon small business that are not already specifically required by statute.
RCW 34.05.328 does not apply to this rule adoption. These rules are interpretative rules 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-5216.2
AMENDATORY SECTION(Amending Order PT 81-7, filed 2/11/81)
WAC 458-16-120
Appeals ((and notice of determination)).
((The department of revenue shall review each completed
application and make a determination thereon, by August 1 or
within thirty days whichever is later.
Any property owner aggrieved by the department's denial of an exemption application may, within 30 days of notification thereof, petition the State Board of Tax Appeals at 1010 Cherry Street, Olympia, WA 98504 for review. Any county assessor who feels the department's determination of exemption is unwarranted may, within 30 days after receiving a copy of the notification, petition the state board of tax appeals for review. To determine whether an appeal taken to the board of tax appeals, is timely the period for giving notice of appeal shall commence on the third day following the day upon which the notice was placed in the mail. (WAC 456-08-003, Board of tax appeals)
Appeal forms shall be available at the board of tax appeals in Olympia and county auditor's offices except in King county where they are available at the office of the clerk of the county council. Appeals shall be filed with the board of tax appeals and, concurrently, a copy shall be filed with the department of revenue. The appellant shall prepare an original and three copies of the notice of appeal. They shall be distributed as follows:
(1) The original shall be filed with the board of tax appeals.
(2) One copy shall be filed with the department of revenue.
(3) If the property owner is the appellant, one copy of the notice must be filed with the assessor of the county in which the property is located. If the assessor is the appellant, one copy of the notice must be provided to the property owner.
(4) One copy of the notice shall be retained in the appellant's files.
The state board of tax appeals shall consider any appeals which are timely filed to determine (1) if the property is or is not entitled to an exemption, and (2) the amount or portion thereof.
Failure to timely file a claim for exemption is not subject to appeal.)) (1) Introduction. This rule outlines the appeal process an aggrieved party uses when the department issues a determination regarding a property tax exemption with which that party disagrees.
(2) Definitions. For purposes of this rule, the following definitions apply:
(a) "Appellant" means a person, natural or otherwise, who appeals any order or decision made by the department to the board of tax appeals.
(b) "Board" or "BTA" means the state board of tax appeals described in chapter 82.03 RCW and chapters 456-09 and 456-10 WAC.
(c) "Department" means the state department of revenue.
(d) "Formal hearing" means a proceeding before the BTA conducted in accordance with RCW 82.03.160, the Administrative Procedure Act (chapter 34.05 RCW), and chapter 456-09 WAC.
(e) "Informal hearing" means a proceeding before the BTA conducted in accordance with RCW 82.03.150 and chapter 456-10 WAC.
(3) General provisions - formal or informal hearing. Any nonprofit organization, association, or corporation, foreign national government, cemetery, soil and water conservation district, public hospital district, or county assessor may appeal a determination made by the department to the BTA. The duties, responsibilities, and jurisdiction of the BTA are outlined in chapter 82.03 RCW. RCW 82.03.140 allows the party appealing (appellant) to the BTA to request either a formal or informal hearing in its notice of appeal. If the appellant fails to specify the type of hearing requested in the notice, the BTA will conduct an informal hearing. The department also has the right to request a formal hearing after being notified that its determination has been appealed to the BTA.
(a) Formal hearings are usually requested by parties who wish to have a complete record of the appeal that may be used in a subsequent court appeal, if desired. Formal hearings are conducted in accordance with the Administrative Procedure Act, chapter 34.05 RCW.
(b) Informal hearings are requested by the majority of parties appearing before the BTA. Decisions entered in an informal appeal cannot be appealed to court.
(4) Where to obtain an appeal notice. A notice of appeal can be obtained from the BTA or downloaded from the internet site (http://bta.state.wa.us/), the department's property tax division, county auditor's offices, or the office of the clerk of the county council in King County.
(5) Deadline to appeal. A notice of appeal must be submitted to the BTA no later than thirty days after the postmark date on the department's notice of determination or the date on which the notice was given to the applicant, whichever is later. Appeals not timely filed will be dismissed. Likewise, appeals not properly filed may be dismissed if the appellant fails to substantially comply with WAC 456-09-320 or 456-10-320.
(6) Grounds for appeal. A party aggrieved by any of the following determinations made by the department may appeal it to the BTA:
(a) A determination denying an exemption on an initial application or renewal declaration;
(b) A determination exempting only a portion of the property from property tax;
(c) A property tax exemption is cancelled or removed, in whole or in part;
(d) The property tax exemption is cancelled or removed and back taxes are assessed in accordance with RCW 84.36.810 or 84.36.262; or
(e) An exemption application or renewal declaration is approved and the assessor of the county in which the property is located believes the exemption should not have been granted (see RCW 84.36.850).
[Statutory Authority: RCW 84.36.865. 81-05-017 (Order PT 81-7), 458-16-120, filed 2/11/81; Order PT 77-2, 458-16-120, filed 5/23/77; Order PT 76-2, 458-16-120, filed 4/7/76. Formerly WAC 458-12-147.]
OTS-5215.1
AMENDATORY SECTION(Amending WSR 94-07-008, filed 3/3/94,
effective 4/3/94)
WAC 458-16-130
Change in taxable status of
((nongovernmental)) real property.
(1) Introduction. ((This
section explains what occurs when a change in ownership or use of
real property owned or used by a nongovernmental entity causes
the property to either gain or lose its tax exempt status.
(2) Definitions. For purposes of this section, the following definitions apply:
(a) "Cessation of use" means that an owner or user of exempt real property has ceased to physically use the property for an exempt use. The term also refers to property that has lost its exempt status because it was transferred, loaned, or rented to an owner that is not entitled to an exemption.
(b) "Real property" means real property owned or used by a nongovernmental organization, association, corporation, or private individual.
(c) "Rollback" refers to the provisions of RCW 84.36.810 that make previously exempt property subject to back taxes and interest because of a change in ownership or a cessation of an exempt use unless the subject property has been exempt for at least ten years.
(3) Exempt to taxable status. A change in the ownership or use of real property that makes the property no longer exempt from taxation shall cause the real property to be assessed and taxed as of the date of the cessation of use or change of ownership, as provided in RCW 84.40.350 through 84.40.390. If the owner or new owner begins to use the property for an exempt use within one hundred twenty days of the date the previous exempt use ceased, the property will not be placed back on the tax assessment roll as of the date of cessation. However, if an agreement establishing an alternate exempt use has not been signed or an alternative exempt use has not been found within one hundred twenty days, the property will be placed back on the assessment roll and, if appropriate, the rollback provisions of RCW 84.36.810 will be applied as of the date the cessation of use occurred. All real property that is no longer exempt from taxation shall be subject to a pro rata share of taxes allocable for the remaining portion of the year in which the cessation of use or change in ownership occurred. If only a portion of the property no longer qualifies for tax exemption, only that portion shall be assessed and taxed.
(a) Real property changes from exempt to taxable status whenever the property:
(i) Is transferred through either sale, exchange, gift, or contract from tax exempt ownership to taxable ownership;
(ii) Is transferred through either sale, exchange, gift, or contract from tax exempt ownership to another nonprofit organization, association, or corporation that has not applied for a property tax exemption;
(iii) Is converted to a taxable use; or
(iv) When it otherwise loses its exempt status.
(b) Examples.
(i) Example 1. For five years, nonprofit "A" operates a rehabilitative social service facility and receives a property tax exemption for this property. Nonprofit "A" transfers this property to nonprofit "B," who continues to receive the exemption for this property. Two years after acquiring the property nonprofit "B" ceases to use the exempt property for an exempt purpose. One hundred days after the exempt activity ceased, nonprofit "B" sells the exempt property to XYZ Printing Company, a profit seeking business. This property became taxable at the time nonprofit "B" vacated the premises. The provisions of RCW 84.34.810 will be applied as of the date of the move.
(ii) Example 2. A nonprofit hospital owns and occupies a building for which it receives a property tax exemption. The hospital ceases to use the property on January 1, 1992, and does not intend to use or occupy the exempt property any longer. It intends to rent this property to another nonprofit organization and actively advertises and looks for such a tenant. On April 15, 1992, a nonprofit nursing home signs a lease agreement with the hospital to use and occupy the property for an exempt purpose effective June 1, 1992. In this instance, the property will not be subject to taxation for the interim period.
(c) The taxes owing when property changes from exempt to taxable ownership shall be prorated as of:
(i) The date the instrument of sale, exchange, gift, or contract is executed; or
(ii) The date the property is converted to a taxable use.
(d) When the status of real property changes from exempt to taxable, the rollback provisions of RCW 84.36.810 apply. Taxes are collected by the county treasurer in accordance with that statute if this property was previously exempt from ad valorem taxation under any of the following provisions:
(i) It was owned and used by:
(A) A nonprofit organization, association or corporation for character building, benevolent, protective, or rehabilitative social services (RCW 84.36.030);
(B) A nonprofit church, denomination, group of churches, or an organization or association, the membership of which is comprised solely of churches and/or their qualified representatives, as a church camp (RCW 84.36.030);
(C) An organization or society of veterans of any war of the United States (RCW 84.36.030);
(D) Corporations formed under an act of congress to furnish volunteer aid to members of the armed forces of the United States (RCW 84.36.030);
(E) Corporations formed under an act of congress to carry on a system of national and international relief to mitigate and to prevent suffering caused by pestilence, famine, fire, floods, and other national calamities (RCW 84.36.030);
(F) Nonprofit organizations exempt from federal income tax under section 501 (c)(3) of the Internal Revenue Code that are guarantee agencies under the federal guaranteed student loan program or guarantee agencies that issue debt to provide or acquire student loans (RCW 84.36.030);
(G) Nonprofit organizations, associations or corporations in connection with the operation of a public assembly hall, public meeting place, community meeting hall, or community celebration facility (RCW 84.36.037);
(H) Nonprofit organizations for solicitation or collection of gifts, donations, or grants for character building, benevolent, protective, or rehabilitative social services or for distribution to at least five other nonprofit organizations or associations that provide such social services (RCW 84.36.550);
(I) Associations maintaining and exhibiting art, scientific or historical collections for the benefit of the general public and not for profit (RCW 84.36.060);
(J) Fire companies for preventing and fighting fires (RCW 84.36.060); or
(K) Humane societies (RCW 84.36.060).
(ii) It was used by:
(A) Nonprofit day care centers (RCW 84.36.040);
(B) Free public libraries (RCW 84.36.040);
(C) Nonprofit orphanages (RCW 84.36.040);
(D) Nonprofit homes for the sick or infirm or nonprofit hospitals for the sick (RCW 84.36.040);
(E) Nonprofit outpatient dialysis facilities (RCW 84.36.040); or
(F) Nonprofit homes for the aging (RCW 84.36.041).
(iii) It was owned or used for nonprofit schools or colleges (RCW 84.36.050).
(iv) It was owned or leased, and used by:
(A) Nonprofit organizations providing emergency or transitional housing to low-income homeless persons or victims of domestic violence (RCW 84.36.043); or
(B) Associations engaged in the production and performance of musical, dance, artistic, dramatic, or literary works for the benefit of the general public and not for profit (RCW 84.36.060).
(e) When real property that was previously exempt under the provisions of RCW 84.36.260, that is, the property was used to conserve ecological systems, natural resources, or open space, becomes taxable, the rollback provisions of RCW 84.36.262 shall apply.
(4) Acquiring tax exempt status. Within sixty days of acquiring real property that may qualify for exemption, or within sixty days of converting real property to a use that may qualify for exemption, any nongovernmental organization, association, or corporation that wishes to have the property exempted from ad valorem taxation must file an application with the department of revenue relating to the subject property seeking either a new or continued exemption from property tax under the provisions of chapter 84.36 RCW. All applications must comply with the requirements set forth in WAC 458-16-110 and 458-16-111.
(a) If the application is approved, the property will be exempt from taxes payable the following year.
(b) If exempt property is transferred from one nonprofit organization, association, or corporation to another, the property shall continue to be exempt from taxation upon the timely receipt of the required application from the purchasing organization and after approval of this application.)) This rule explains what occurs when taxable property becomes exempt and when exempt property becomes taxable. It also describes how property will be treated when exempt use is pending.
(2) Definitions. For purposes of this rule, the following definitions apply:
(a) "Back taxes" means the property taxes that would have been paid but for the existence of the property tax exemption during the three years immediately preceding the cancellation or removal of the exemption or during the life of the exemption, whichever is less, plus interest at the same rate and computed in the same way as delinquent property taxes, see RCW 84.36.810. However, "back taxes" are calculated differently when an exemption is cancelled or removed from property owned by a not-for-profit foundation established for the exclusive support of an institution of higher education under RCW 84.36.050(2) or a nature conservancy under RCW 84.36.260. See RCW 84.36.810 (1)(b) and WAC 458-16-150 regarding not-for-profit foundations and RCW 84.36.262 and WAC 458-16-290 regarding nature conservancies for a more detailed explanation of the back taxes imposed on these entities.
(b) "Cessation of use" means that an owner or user of exempt real property has ceased to use the property for an exempt purpose. The term also refers to property that has lost its exempt status because it was sold, transferred, loaned, or rented to an owner or user that is not entitled to a property tax exemption under chapter 84.36 RCW.
(c) "Department" means the state department of revenue.
(d) "Real property" means real property, as defined in RCW 84.04.090, owned or used by a nongovernmental nonprofit organization, association, or corporation, a foreign national government, cemetery, soil and water conservation district, and public hospital district established under chapter 70.44 RCW.
(e) "Rollback" means the back taxes and interest imposed in accordance with RCW 84.36.810 because the exempt property lost its exempt status and is now taxable for property tax purposes. However, when an exemption granted to a nature conservancy under RCW 84.36.260 is cancelled or removed different rollback procedures are applied. See RCW 84.36.262 and WAC 458-16-290.
(3) Acquiring tax exempt status. Within sixty days of acquiring real property that may qualify for exemption or converting real property to a use that may qualify for exemption, any nongovernmental nonprofit organization, association, or corporation, foreign national government, cemetery, or public hospital district established under chapter 70.44 RCW that wants to obtain a property tax exemption for this property must file an application with the department. The applicant may file an application for either a new or continued exemption from property tax under chapter 84.36 RCW. All applications must comply with the requirements set forth in WAC 458-16-110.
(a) If an application for a new exemption is approved, the property will be exempt for taxes payable during the following calendar year. For example, a nonprofit hospital acquires a new building on February 10, 2001, converts it to an exempt use by April 1, 2001, and applies for a property tax exemption on April 14, 2001. If the application is approved, the property tax exemption will be effective for taxes payable in 2002.
(b) When exempt property is acquired by an entity that is eligible for a property tax exemption under chapter 84.36 RCW, the exempt status of the property will continue as long as the purchaser makes an application to continue the property tax exemption within sixty days of the date of acquisition and the application is subsequently approved by the department. For example, if a nonprofit home for the aging acquires exempt property from a nursing home, the exempt status of the propertywill not change as long as the home for the aging makes application to the department within sixty days of acquiring the nursing home and the application for exemption is later approved by the department.
(4) Exempt to taxable status - pro rata share of taxes for current tax year. Real property may lose its exempt status for a number of reasons; when this occurs the property tax exemption will be cancelled or removed. Once the exemption is cancelled or removed, the property becomes subject to the following year's taxes. The property will be assessed and taxed at its true and fair value as of the date of the cessation of use or the change of ownership occurred, as provided in RCW 84.40.350 through 84.40.390. Additionally, the treasurer of the county in which the property is located shall collect a pro rata portion of the taxes allocable to the remaining portion of the current tax year after the date the exemption is cancelled or removed. If only a portion of the property no longer qualifies for a tax exemption, the exempt status for only that portion of the property shall be cancelled and subjected to assessment and taxation during the current tax year.
(a) Real property changes from exempt to taxable status whenever the property is:
(i) Transferred as a result of a sale, exchange, gift, or contract from tax exempt to taxable ownership;
(ii) Transferred as a result of a sale, exchange, gift, or contract from tax exempt ownership to another nonprofit organization, association, or corporation that fails to apply for or has been denied a property tax exemption;
(iii) Converted to a taxable use; or
(iv) Loses its exempt status for some other reason.
(b) The rollback provisions of RCW 84.36.810 apply when the status of real property changes from exempt to taxable. See WAC 458-16-150 for specific information. However, the rollback provisions of RCW 84.36.262 apply when the property was exempt under RCW 84.36.260 for the conservation of ecological systems, natural resources, or open space. When property changes from exempt to taxable status, the taxes owing will be prorated as of:
(i) The date the instrument of sale, exchange, gift, or contract is executed; or
(ii) The date on which the property is converted to a taxable use.
(c) Example 1. For five years, nonprofit "A" operated a day care center and received a property tax exemption for this property. Nonprofit "A" transfers this property to nonprofit "B," a nonprofit hospital, that continues to receive a property tax exemption for this property. Two years after acquiring the property nonprofit "B" ceases to use the exempt property for an exempt purpose. One hundred days after the exempt activity ceased, nonprofit "B" sells the exempt property to XYZ Printing Company, a profit seeking business. The property became taxable and the provisions of RCW 84.34.810 will be applied as of the date "B" ceased to use the property for an exempt purpose.
(d) Example 2. A nonprofit shelter for low-income persons owned and occupied a building for which it received a property tax exemption. The shelter ceased to use the property on January 1, 2001, and had no intent to reoccupy the property. But it hoped to rent the property to another nonprofit organization for a tax exempt purpose and actively advertised and looked for such a tenant. On June 1, 2001, the nonprofit shelter, which had been unable to find a suitable tax exempt tenant for the property, signed a lease agreement with a for-profit business enterprise, which intended to use and occupy the property effective June 1, 2001. The rollback provisions of RCW 84.36.810 must be applied as of January 1, 2001.
(5) Change of ownership or use - exempt use pending. If the ownership of exempt property changes or the use of exempt property ceases but the owner of the property begins to use it for an exempt purpose within one hundred twenty days of the date the ownership changed or the previous exempt use ceased, the property will continue to be exempt from property tax. However, if an agreement establishing an alternate exempt use is not signed or an alternate exempt use is not found within one hundred twenty days, the property becomes taxable and is noted as such on the assessment roll as of the date the ownership changed or the exempt use ceased. Additionally, if appropriate, the rollback provisions of RCW 84.36.810 will be applied or RCW 84.36.262 if the exempt property was exempt as a nature conservancy. A pro rata share of taxes allocable for the remaining portion of the year in which the cessation of use or change in ownership occurred will be collected.
[Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, 458-16-130, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.389 and 84.36.865. 88-13-041 (Order PT 88-8), 458-16-130, filed 6/9/88. Statutory Authority: RCW 84.36.865. 85-05-025 (Order PT 85-1), 458-16-130, filed 2/15/85. Statutory Authority: RCW 84.36.389 and 84.36.865. 83-19-029 (Order PT 83-5), 458-16-130, filed 9/14/83. Statutory Authority: RCW 84.36.865. 81-21-009 (Order PT 81-13), 458-16-130, filed 10/8/81; 81-05-017 (Order PT 81-7), 458-16-130, filed 2/11/81; Order PT 77-2, 458-16-130, filed 5/23/77; Order PT 76-2, 458-16-130, filed 4/7/76. Formerly WAC 458-12-148.]
OTS-5218.2
AMENDATORY SECTION(Amending WSR 94-07-008, filed 3/3/94,
effective 4/3/94)
WAC 458-16-150
Cessation of use -- Taxes collectible for
prior years.
(1) Introduction. ((This section explains what
occurs when property loses its tax exempt status and is placed
back on the tax rolls, as well as the back taxes and interest
that are collected under the provisions of RCW 84.36.810 when an
exempt use ceases, unless the property has been exempt for more
than ten years or is otherwise exempt from the provisions of this
statute.
(2) Definitions. For purposes of this section, the following definitions apply:
(a) "Cessation of use" means that an owner or user of exempt real property has ceased to physically use the property for an exempt purpose. The term also refers to property that has lost its exempt status because it was transferred, loaned, or rented to an owner that is not entitled to an exemption.
(b) "Relocation of the activity" means that a portion or all of an exempt use has been relocated from the original site to a new location. The term shall not include undeveloped property of camp facilities.
(c) "Rollback" refers to the provisions of RCW 84.36.810 that make previously exempt property subject to back taxes and interest because of a cessation of an exempt use or a change in ownership unless the subject property has been exempt for at least ten years.
(3) Applicability of this section. In accordance with RCW 84.36.810, upon cessation of any exempt use the county treasurer shall collect all taxes that would have been paid if the property had not been exempt during the preceding three years, or for the life of the exemption, whichever is less, plus interest computed at the same rate and in the same manner as that upon delinquent property taxes. If the property has been exempt for more than ten years, this section is not applicable.
(a) When the status of real property changes from exempt to taxable, the rollback provisions of RCW 84.36.810 apply. Taxes are collected by the county treasurer in accordance with that statute if this property was previously exempt from ad valorem taxation under any of the following provisions:
(i) It was owned and used by:
(A) A nonprofit organization, association or corporation for character building, benevolent, protective, or rehabilitative social services (RCW 84.36.030);
(B) A nonprofit church, denomination, group of churches, or an organization or association, the membership of which is comprised solely of churches and/or their qualified representatives, as a church camp (RCW 84.36.030);
(C) An organization or society of veterans of any war of the United States (RCW 84.36.030);
(D) Corporations formed under an act of congress to furnish volunteer aid to members of the armed forces of the United States (RCW 84.36.030);
(E) Corporations formed under an act of congress to carry on a system of national and international relief to mitigate and to prevent suffering caused by pestilence, famine, fire, floods, and other national calamities (RCW 84.36.030);
(F) Nonprofit organizations exempt from federal income tax under section 501 (c)(3) of the Internal Revenue Code that are guarantee agencies under the federal guaranteed student loan program or guarantee agencies that issue debt to provide or acquire student loans (RCW 84.36.030);
(G) Nonprofit organizations, associations or corporations in connection with the operation of a public assembly hall, public meeting place, community meeting hall, or community celebration facility (RCW 84.36.037);
(H) Nonprofit organizations for solicitation or collection of gifts, donations, or grants for character building, benevolent, protective, or rehabilitative social services or for distribution to at least five other nonprofit organizations or associations that provide such social services (RCW 84.36.550);
(I) Associations maintaining and exhibiting art, scientific or historical collections for the benefit of the general public and not for profit (RCW 84.36.060);
(J) Fire companies for preventing and fighting fires (RCW 84.36.060); or
(K) Humane societies (RCW 84.36.060).
(ii) It was used by:
(A) Nonprofit day care centers (RCW 84.36.040);
(B) Free public libraries (RCW 84.36.040);
(C) Nonprofit orphanages (RCW 84.36.040);
(D) Nonprofit homes for the sick or infirm or nonprofit hospitals for the sick (RCW 84.36.040);
(E) Nonprofit outpatient dialysis facilities (RCW 84.36.040); or
(F) Nonprofit homes for the aging (RCW 84.36.041).
(iii) It was owned or used for nonprofit schools or colleges (RCW 84.36.050).
(iv) It was owned or leased, and used by:
(A) Nonprofit organizations providing emergency or transitional housing to low-income homeless persons or victims of domestic violence (RCW 84.36.043); or
(B) Associations engaged in the production and performance of musical, dance, artistic, dramatic, or literary works for the benefit of the general public and not for profit (RCW 84.36.060).
(b) This section applies only when the ownership of the property is transferred or when fifty-one percent or more of the area has lost its exempt status. For example, if a nonprofit school or college that owns or uses two hundred acres for educational purposes and is receiving a property tax exemption for this property transfers ten acres, the ten acres are subject to the rollback provisions set forth in subsection (3) of this section if the property has been exempt for less than ten years. The nonprofit school or college will continue to receive a property tax exemption for the remaining one hundred ninety acres as long as the exempt property is used for the exempt use.
(c) This additional tax shall not be imposed if the cessation of use results solely from any of the following:
(i) Transfer to a nonprofit organization, association, or corporation for a use that also qualifies for and is granted exemption under the provisions of chapter 84.36 RCW;
(ii) A taking through an exercise of the power of eminent domain;
(iii) A sale or transfer to an entity having the power of eminent domain in anticipation of the exercise of this power;
(iv) An official action by an agency of the state of Washington or by the county or city within which the exempt property is located that disallows the present exempt use of the property;
(v) A natural disaster (such as a flood, windstorm, earthquake, or other such calamity) that changes the use of the property;
(vi) Relocation of the activity and use of another location or site;
(vii) Cancellation of a lease on property previously exempt as:
(A) A nonprofit day care center;
(B) A library;
(C) An orphanage;
(D) A home for the sick or infirm;
(E) A hospital;
(F) An outpatient dialysis facility;
(G) A nonprofit home for the aging;
(H) A nonpermanent shelter for low-income homeless persons or victims of domestic violence; and
(I) An organization that either produces or performs, or both, musical, dance, artistic, dramatic, or literary works.
(viii) A change in the exempt portion of a home for the aging, as long as some portion of the home remains exempt; or
(ix) The conversion of a home for the aging from full exemption to a partial exemption or to taxable status for taxes payable in 1994, 1995, and 1996 (RCW 84.36.041).
(4) Duty to notify.
(a) An owner of exempt property who knows of or who has information regarding a change in the use of exempt property shall notify the department of revenue of this change. An owner of exempt property must also report the loan or rental of all or a portion of the exempt property since the loan or rental of exempt property may change its taxable status.
(b) Any other person who knows or has information regarding a change in use of exempt property shall notify the county assessor of any such change. The assessor, in turn, shall report this information to the department of revenue.
(c) After being notified about a change in use of exempt property, the department may physically inspect the property to determine if the reported change has taken place.
(d) After a change in use, the final determination of the taxable status of the subject property will be made by the department of revenue.
(5) Notice to owner. When it is determined that a change in use has occurred and the rollback provisions may apply, the department of revenue shall notify the current owner of exempt property and, in the case of a transfer, the previous legal owner of exempt property that the change in use changed the taxable status of the property and that the property may be subject to the rollback provisions set forth in subsection (3) of this section. The owner(s) of this property shall have thirty days from the date of the notice to submit any comments or information to the department as to why the rollback provisions should not be applied. The department shall then issue a final determination.
(6) County treasurer. Upon notification from the department of revenue that the exempt use of the property has ceased, the county treasurer shall compute and collect the taxes payable, including interest computed at the same rate and in the same manner as that upon delinquent property taxes. The interest collected shall be placed in the county current expense fund.)) This rule explains what occurs when property loses its tax exempt status and is placed back on the tax rolls. It also describes the back taxes and interest that are collected when an exempt use ceases, unless the property has been exempt for more than ten consecutive years or is otherwise exempt from the provisions of RCW 84.36.810. This rule does not apply to property that received an exemption as a nature conservancy under RCW 84.36.260; see RCW 84.36.262 and WAC 458-16-290 for more information about the collection of back taxes in this situation.
(2) Definitions. For purposes of this rule, the following definitions apply:
(a) "Back taxes" means the property taxes that would have been paid but for the existence of the property tax exemption during the three years immediately preceding the cancellation or removal of the exemption or during the life of the exemption, whichever is less, plus interest at the same rate and computed in the same way as delinquent property taxes. However, if the property was exempt under RCW 84.36.050(2), "back taxes" means the taxes that would have been collected but for the existence of the property tax exemption during the seven years immediately preceding the cancellation or removal of the exemption or during the life of the exemption, whichever is less.
(b) "Cessation of use" means that an owner or user of exempt real property has ceased to use the property for an exempt purpose. The term also refers to property that has lost its exempt status because it was transferred, loaned, or rented to an owner that is not entitled to an exemption.
(c) "Department" means the state department of revenue.
(d) "Relocation of the activity" means that a portion or all of an exempt use has been relocated from the original site to a new location. The term shall not include undeveloped property of camp facilities.
(e) "Rollback" means the back taxes and interest imposed in accordance with RCW 84.36.810 because the exempt property has lost its exempt status and is now taxable. However, when an exemption granted to a nature conservancy under RCW 84.36.260 is cancelled or removed different rollback procedures are applied, see RCW 84.36.262 and WAC 458-16-290.
(3) Applicability of this rule. Upon cessation of a use for which an exemption was granted under one of the statutes listed below and if directed to do so by the department, the county treasurer shall collect all taxes which would have been paid but for the existence of the property tax exemption. If the property was exempt for more than ten consecutive years, no back taxes or interest are due. Back taxes and interest will be collected only when ownership of property is transferred or when fifty-one percent or more of the total exempt property loses its exempt status.
(a) Generally applied rollback - three years of back taxes plus interest. When the status of real property changes from exempt to taxable, all taxes that would have been collected but for the existence of the exemption during the three preceding years, or the life of the exemption, whichever is less, plus interest at the same rate and computed in the same way as that upon delinquent property taxes are due. The rollback provisions of RCW 84.36.810 apply if the property was previously exempt from property tax under any of the following statutes:
| TYPE OF EXEMPT ORGANIZATION | AUTHORIZING STATUTE |
| A nonprofit character building, benevolent, protective, or rehabilitative social service organization, association or corporation | RCW 84.36.030 |
| A church camp owned by a nonprofit church, denomination, group of churches, or an organization or association, the membership of which is comprised solely of churches and/or their qualified representatives | RCW 84.36.030 |
| A nonprofit organization or association engaged in character building of boys and girls under eighteen years of age or to serve boys and girls up to twenty-one years if the charter of the nonprofit organization or association requires it | RCW 84.36.030 |
| An organization or society of veterans of any war of the United States | RCW 84.36.030 |
| Corporations formed under an act of Congress to furnish volunteer aid to members of the armed forces of the United States | RCW 84.36.030 |
| Corporations formed under an act of Congress to carry on a system of national and international relief to mitigate and to prevent suffering caused by pestilence, famine, fire, floods, and other national calamities | RCW 84.36.030 |
| Nonprofit organizations exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code that are guarantee agencies under the federal guaranteed student loan program or guarantee agencies that issue debt to provide or acquire student loans | RCW 84.36.030 |
| Nonprofit organizations, associations or corporations in connection with the operation of a public assembly hall, public meeting place, community meeting hall, or community celebration facility | RCW 84.36.037 |
| Nonprofit day care centers | RCW 84.36.040 |
| Free public libraries | RCW 84.36.040 |
| Nonprofit orphanages | RCW 84.36.040 |
| Nonprofit homes for the sick or infirm or nonprofit hospitals for the sick | RCW 84.36.040 |
| Nonprofit outpatient dialysis facilities | RCW 84.36.040 |
| Public hospital district established under chapter 70.44 RCW for hospital purposes | RCW 84.36.040 |
| Nonprofit homes for the aging | RCW 84.36.041 |
| A nonprofit organization, corporation, or association providing housing for low income eligible persons with developmental disabilities | RCW 84.36.042 |
| Nonprofit organizations providing emergency or transitional housing to low-income homeless persons or victims of domestic violence | RCW 84.36.043 |
| A nonprofit organization, corporation, or association in connection with a nonprofit cancer clinic or center | RCW 84.36.046 |
| Nonprofit schools or colleges | RCW 84.36.050 |
| Associations maintaining and exhibiting art, scientific or historical collections for the benefit of the general public and not for profit | RCW 84.36.060 |
| Associations engaged in the production and performance of musical, dance, artistic, dramatic, or literary works for the benefit of the general public and not for profit | RCW 84.36.060 |
| Fire companies for preventing and fighting fires | RCW 84.36.060 |
| Humane societies | RCW 84.36.060 |
| Nonprofit organizations created for the solicitation or collection of gifts, donations, or grants for character building, benevolent, protective, or rehabilitative social services or for the distribution of funds to at least five other nonprofit organizations or associations that provide such social services | RCW 84.36.550 |
| A nonprofit organization, corporation, or association providing rental housing for very low-income households | RCW 84.36.560 |
| A nonprofit organization, corporation, or association providing a demonstration farm with research and extension facilities, a public agricultural museum, and an educational tour site, which is used by a state university for agricultural research and education programs | RCW 84.36.570 |
(c) No rollback imposed. Back taxes and interest are not imposed if the cessation of use results solely from any of the following:
(i) Transfer to a nonprofit organization, association, or corporation for a use that also qualifies for and is granted exemption under the provisions of chapter 84.36 RCW;
(ii) A taking through an exercise of the power of eminent domain;
(iii) A sale or transfer to an entity having the power of eminent domain in anticipation of the exercise of this power;
(iv) An official action by an agency of the state of Washington or by the county or city within which the exempt property is located that disallows the present exempt use of the property;
(v) A natural disaster (such as a flood, windstorm, earthquake, or other such calamity) that changes the use of the property;
(vi) Relocation of the activity and use of another location or site except for undeveloped properties of camp facilities exempt under RCW 84.36.030. This exemption does not apply to property leased to a state institution of higher education and exempt under RCW 84.36.050(2);
(vii) Cancellation of a lease on property previously exempt as:
(A) A nonprofit day care center;
(B) A library;
(C) An orphanage;
(D) A home for the sick or infirm;
(E) A hospital;
(F) An outpatient dialysis facility;
(G) A nonprofit home for the aging;
(H) A nonpermanent shelter for low-income homeless persons or victims of domestic violence;
(I) An organization that either produces or performs, or both, musical, dance, artistic, dramatic, or literary works;
(J) Housing for low-income eligible persons with developmental disabilities;
(K) A nonprofit cancer clinic or center; or
(L) Rental housing for very low-income households.
(viii) A change in the exempt portion of a home for the aging that is partially exempt from property tax, as long as some portion of the home remains exempt.
(4) Duty to notify.
(a) An owner of exempt property who knows of or who has information regarding a change in the use of exempt property shall notify the department of this change. If any portion of the exempt property is loaned or rented, the owner is required to report this change to the department because the loan or rentalmay affect the taxable status of the property (see RCW 84.36.813).
(b) Any other person who knows or has information regarding a change in use of exempt property is to notify the county assessor of any such change. The assessor, in turn, is required to report this information to the department.
(c) The department may physically inspect exempt property after being notified about a change in the use or ownership of exempt property. It may also conduct physical inspections at any time that it deems necessary to ascertain the exempt use of the property; this may include routine inspections.
(d) The department will determine whether the property may retain its exempt status or whether it will become taxable after a change in use is reported.
(5) Notice to owner. The department must notify the current owner and, in the case of a transfer, the previous legal owner of the exempt property that the cessation of use of the property for an exempt purpose has changed the property's taxable status. The notice must address the applicability of the rollback provisions set forth in subsection (3) of this rule. Within thirty days of receiving this notice, the owner(s) may submit comments or information to the department as to why the exemption should not be removed or rollback provisions should not be applied. The department will then issue a final determination.
(6) County treasurer. The treasurer will compute and collect the back taxes and interest due when the department notifies the treasurer that the property tax exemption is to be cancelled or removed. The interest will be computed at the same rate and in the same manner as that upon delinquent property taxes. The back taxes collected are to be disbursed to the taxing districts impacted by the previous property tax exemption. The interest collected is to be placed in the county current expense fund.
[Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, 458-16-150, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.865. 86-12-034 (Order PT 86-2), 458-16-150, filed 5/30/86; 85-05-025 (Order PT 85-1), 458-16-150, filed 2/15/85. Statutory Authority: RCW 84.36.389 and 84.36.865. 83-19-029 (Order PT 83-5), 458-16-150, filed 9/14/83. Statutory Authority: RCW 84.36.865. 82-22-060 (Order PT 82-8), 458-16-150, filed 11/2/82; 81-05-017 (Order PT 81-7), 458-16-150, filed 2/11/81; Order PT 77-2, 458-16-150, filed 5/23/77; Order PT 76-2, 458-16-150, filed 4/7/76. Formerly WAC 458-12-151.]
OTS-5219.2
AMENDATORY SECTION(Amending WSR 98-18-006, filed 8/20/98,
effective 9/20/98)
WAC 458-16-165
Conditions under which nonprofit
organizations, associations, or corporations may obtain a
property tax exemption.
(1) Introduction. ((Nonprofit
organizations, associations, and corporations may obtain a
property tax exemption under the provisions of RCW 84.36.030,
84.36.035, 84.36.037, 84.36.040, 84.36.041, 84.36.043, 84.36.045,
84.36.046, 84.36.047, 84.36.050, 84.36.060, 84.36.350, 84.36.480,
84.36.550, and chapter 202, Laws of 1998. To be exempt from
property taxation, these nonprofit organizations, associations,
or corporations must also comply with the requirements contained
in RCW 84.36.805 and RCW 84.36.840. This section explains the
conditions and requirements set forth in RCW 84.36.805 and
84.36.840. Property exempt under RCW 84.36.030 is not subject to
the requirements of RCW 84.36.840.)) In order to receive the
property tax exemption authorized in chapter 84.36 RCW, most
nonprofit organizations, associations, and corporations must also
satisfy the conditions set forth in RCW 84.36.805 and 84.36.840.
This rule describes these conditions.
(2) Definitions. For purposes of this ((section)) rule, the
following definitions apply:
(a) "Department" means the state department of revenue. (b) "Maintenance and operation expenses" means items of expense allowed under generally accepted accounting principles to maintain and operate the loaned or rented portion of the exempt property.
(((b))) (c) "Revenue" means income received from the loan or
rental of exempt property when the income exceeds the amount of
maintenance and operation expenses attributable to the portion of
the property loaned or rented.
(((c))) (d) "Personal service contract" means a contract
between a nonprofit organization, association, or corporation and
an independent contractor under which the independent contractor
provides a service on the organization's, association's, or
corporation's tax exempt property. (See example contained in
subsection (((3))) (4)(c) of this ((section)) rule.)
(3) Applicability of this rule. This rule does not apply to exemptions granted to:
(a) Public burying grounds or cemeteries under RCW 84.36.020;
(b) Churches, parsonages, convents, and church grounds under RCW 84.36.020;
(c) Administrative offices of nonprofit recognized religious organizations under RCW 84.36.032;
(d) Water distribution property owned by a nonprofit corporation or cooperative association under RCW 84.36.250; or
(e) Property used for the conservation of ecological systems, natural resources, or open space by a nonprofit corporation or association under RCW 84.36.260.
(4) Exclusive use. ((Unless the applicable statute states
otherwise, the)) Exempt property ((shall)) must be exclusively
used for the actual operation of the activity for which the
nonprofit organization, association, or corporation ((applied
and)) or public hospital district established under chapter 70.44 RCW received the property tax exemption unless the authorizing
statute states otherwise. The ((amount of exempt)) property
exempted from taxation shall not exceed an area reasonably
necessary to facilitate the exempt purpose.
(a) Loan or rental of exempt property. As a general rule, the loan or rental of exempt property does not make it taxable if the rents or donations received for the use of the property are reasonable and do not exceed the maintenance and operation expenses attributable to the portion of the property loaned or rented and the property would be exempt from tax if owned by the organization to which it is loaned or rented. Property owned by organizations and societies of war veterans, public assembly halls, public meeting places, community meeting halls, and community celebration facilities are not subject to these limitations.
(i) Exception - loaned or rented for less than fifteen days. The status of exempt property will not be affected if:
(A) The property is loaned or rented for a period of fifteen consecutive days or less;
(B) The property is loaned or rented to another nonprofit
organization, association, or corporation or public hospital
district established under chapter 70.44 RCW that would qualify
for exemption if it owned the loaned or rented property((. This
limitation does not apply to exempt property owned by
organizations and societies of war veterans, public assembly
halls, public meeting places, community meeting halls, and
community celebration facilities)); and
(C) All income received from the rental is devoted exclusively to the exempt purpose of the nonprofit organization, association, or corporation or public hospital district established under chapter 70.44 RCW receiving the tax exemption.
(ii) Loaned or rented to produce income. If the lessor or
lessee of exempt property intends to produce income from exempt
property ((loaned or rented)), the property will lose its exempt
status. Property loaned or rented to produce income must be
segregated from ((exempt)) property used for exempt purposes.
However, property exempt under RCW 84.36.030(4) (an organization
or society of veterans of any war of the United States for
veterans) and RCW 84.36.037 (public assembly halls, public
meeting places, community meeting halls, and community
celebration facilities) may be loaned or rented:
(A) For pecuniary gain or to promote business activities for a maximum of seven days each assessment year; or
(B) In a county with less than ten thousand people, the property may be used to promote the following business activities: Dance lessons; art classes; or music lessons (see WAC 458-16-300 and 458-16-310).
(iii) Example. If a portion of a building owned by a
nonprofit hospital is rented to a ((pharmacy and the hospital
and/or the pharmacy intend to use this area to produce income))
sandwich shop, this portion of the hospital must be segregated
from the remainder of the building that is being used for exempt
hospital purposes. The portion of the building rented to the
((pharmacy)) sandwich shop is subject to property tax.
(b) Fund-raising activities. The use of exempt property for
fund-raising activities sponsored by an exempt organization,
association, or corporation or public hospital district
established under chapter 70.44 RCW does not ((subject the
property to taxation)) jeopardize the exemption if the
fund-raising activities are consistent with the purposes for
which the exemption was granted. The term "fund-raising" means
any revenue-raising activity limited to less than five days in
length that disburses fifty-one percent or more of the profits
realized from the activity to the exempt nonprofit
((organization, association, or corporation)) entity holding the
fund-raising event.
(i) Example 1. A nonprofit social service agency holds an art auction in the auditorium of its tax exempt facility to raise funds. The activity must be less than five days in length and fifty-one percent of the profits must be disbursed to the social service agency because the fund-raising activity is being held on exempt property.
(ii) Example 2. A nonprofit school has a magazine subscription drive to raise funds and the subscriptions are being sold door-to-door by students. There are no limitations on this fund-raising activity because the subscription drive is not being held on exempt property.
(c) Personal service contract - exempt programs. Programs provided under a personal service contract will not jeopardize the exemption if the following conditions are met:
(i) The program is compatible and consistent with the purposes of the exempt organization, association, or corporation;
(ii) The exempt organization, association, or corporation maintains separate financial records as to all receipts and expenses related to the program; and
(iii) A summary of all receipts and expenses of the program
are provided to the department ((of revenue)) upon request.
(iv) Example. A nonprofit school may decide to contract with a provider to offer aerobic classes to promote general health and fitness. All brochures and bulletins advertising these classes must show that the school is sponsoring the classes. Under the terms of the contract between the nonprofit school and the aerobic instructor, an independent contractor, the instructor must provide the classes for a predetermined fee. All fees collected from the participants of the classes must be received by the school; the school, in turn, will absorb all costs related to the classes.
(d) Personal service contract - nonexempt programs. Programs provided under a personal service contract (i) that require the contractor to reimburse the nonprofit organization for program expenses or (ii) in which the instructor is paid a fee based on the number of people who attend the program will be viewed as a rental agreement and will subject the property to property tax.
(4) Irrevocable dedication required. The property must be
irrevocably dedicated to the purpose for which the exemption was
granted. Upon the liquidation, dissolution, or abandonment by
((a)) an exempt nonprofit ((organization, association, or
corporation)) entity, the property ((shall)) must not directly or
indirectly benefit any shareholder or other individual except a
nonprofit organization, association, or corporation that would be
entitled to receive a property tax exemption if it applied for
it.
((
Exception:If, under the terms of a loan or rental agreement, a nonprofit organization, association, or corporation receives the
benefit of the property tax exemption, the property need not be irrevocably dedicated if it is loaned or rented to a
nonprofit organization, association, or corporation for use as:
(a) A nonprofit organization engaged in procuring, processing blood, plasma, or blood products (RCW 84.36.035);
(b) A nonprofit day care center (RCW 84.36.040);
(c) A library (RCW 84.36.040);
(d) An orphanage (RCW 84.36.040);
(e) A home for the sick or infirm (RCW 84.36.040);
(f) A hospital (RCW 84.36.040);
(g) An outpatient dialysis facility (RCW 84.36.040);
(h) A nonprofit home for the aging (RCW 84.36.041);
(i) A nonpermanent shelter to low-income homeless persons or victims of domestic violence (RCW 84.36.043);
(j) A nonprofit organization conducting medical research or training of medical personnel (RCW 84.36.045);
(k) A nonprofit cancer clinic or center (RCW 84.36.046);
(l) A facility used to produce or perform musical, dance, artistic, dramatic, or literary works (RCW 84.36.060); or
(m) Residential housing occupied by low-income developmentally disabled persons (chapter 202, Laws of 1998).))
Irrevocable dedication is not required if the property is
leased or rented to an entity qualified for a property exemption
under chapter 84.36 RCW. This exception only applies if the
lease or rental agreement requires the lessee nonprofit
organization, association, or corporation or public hospital
district established under chapter 70.44 RCW to receive the
benefit of the exemption.
(5) No discrimination allowed. The ((facilities located
on)) exempt property and the services offered ((on the exempt
property shall)) thereon must be available to all persons
regardless of race, color, national origin, or ancestry.
(6) Compliance with licensing or certification requirements.
A nonprofit ((organization, association, or corporation)) entity
or public hospital district established under chapter 70.44 RCW
seeking or receiving a property tax exemption ((shall)) must
comply with all applicable licensing and certification
requirements imposed by law or regulation.
(7) Property sold subject to an option to repurchase.
Property sold to a nonprofit ((organization, association, or
corporation subject to)) entity or public hospital district
established under chapter 70.44 RCW with an option to
((repurchase)) be repurchased by the seller ((shall not)) cannot
qualify for an exemption. This prohibition does not apply to
property sold to a nonprofit entity, as defined in RCW 84.36.560(7), by:
(a) A nonprofit as defined in RCW 84.36.800 that is exempt from income tax under section 501(c) of the federal Internal Revenue Code;
(b) A governmental entity established under RCW 35.21.660, 35.21.670, or 35.21.730;
(c) A housing authority created under RCW 35.82.030;
(d) A housing authority meeting the definition of RCW 35.82.210 (2)(a); or
(e) A housing authority established under RCW 35.82.300.
(8) Duty to produce financial records. In order to
determine whether ((an organization, association, or corporation
is exempt)) a nonprofit entity is entitled to receive a property
tax exemption under the provisions of chapter 84.36 RCW and
before the exemption is renewed each year, the ((organization,
association, or corporation)) entity claiming ((a property tax))
exemption ((shall file)) must submit a signed statement, made
under oath, with the department ((of revenue)). This sworn
statement must include a declaration that ((its)) the income,
receipts, and donations of the entity seeking the exemption have
been used to pay the actual expenses incurred to maintain and
operate the exempt facility or for its capital expenditures and
to no other purpose. ((This signed statement)) It shall also
include a statement listing the receipts and disbursements of the
organization, association, or corporation. This statement shall
be made on a form prescribed and furnished by the department.
(a) The provisions of this subsection do not apply to an
((organization, association, or corporation)) entity either
applying for or receiving an exemption under RCW 84.36.020 or
84.36.030.
(b) ((When an organization, association, or corporation is
currently receiving a property tax exemption,)) This signed
statement must be submitted on or before April 1 each year by any
entity currently receiving a tax exemption. If this statement is
not received on or before April 1, the department shall remove
the tax exemption from the property. However, the department
shall allow a reasonable extension of time for filing if the
exempt ((organization, association, or corporation)) entity has
submitted a written request for an extension on or before the
required filing date and for good cause.
(9) Caretaker's residence. If a nonprofit ((organization,
association, or corporation)) entity or public hospital district
established under chapter 70.44 RCW exempt from property tax
under chapter 84.36 RCW employs a caretaker to provide either
security or maintenance services and ((a)) the caretaker's
residence is located on exempt property, the residence may
qualify for exemption if the following conditions are met:
(a) The caretaker's duties include regular surveillance, patrolling the exempt property, and routine maintenance services;
(b) The nonprofit entity or the public hospital district established under chapter 70.44 RCW demonstrates the need for a caretaker at the facility;
(c) The size of the residence is reasonable and appropriate in light of the caretaker's duties and the size of the exempt property; and
(((c))) (d) The caretaker receives the use of the residence
as part of his or her compensation and does not pay rent. Reimbursement of utility expenses created by the caretaker's
presence are not rent.
[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, 458-16-165, 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, 458-16-165, filed 3/3/94, effective 4/3/94.]