Title of Rule and Other Identifying Information: WAC 458-16A-135 Senior citizen, disabled person, and one hundred percent disabled veteran exemption -- Application procedures, explains when and how a senior citizen, disabled person, or one hundred percent disabled veteran may apply for a property tax exemption on that person's principal residence. WAC 458-16A-140 Senior citizen, disabled person, and one hundred percent disabled veteran exemption -- Exemption described -- Exemption granted -- Exemption denied -- Freezing property values, explains how county assessors process a claimant's application form and what happens when the exemption is granted or denied by the assessor.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: WAC 458-16A-135 and 458-16A-140 are being amended to conform to SSHB [2SHB] 3104 (chapter 6, Laws of 2008), SSB 5256 (chapter 182, Laws of 2008), SB 6338 (chapter 62, Laws of 2006), HB 1019 (chapter 248, Laws of 2005), SB 5034 (chapter 27, Laws of 2004), and SB 5758 (chapter 53, Laws of 2003). SSHB [2SHB] 3104 extended the rights and liabilities of spouses under RCW 84.36.381 to domestic partners. SSB 5256 changed the calculation for excluding veteran's benefits from the income calculation for the senior citizen, disabled person, and one hundred percent disabled veteran exemption. SB 6338 changed the definition of "residence" for purposes of the senior citizen, disabled person, and one hundred percent disabled veteran exemption. HB 1019 extended the former senior citizen and disabled person exemption to veterans of the armed forces of the United States with one hundred percent service connected disability. SB 5034 raised income and valuation limits for qualifying for the senior citizen and disabled person exemption; increased the circumstances under which claimants may qualify for the exemption without residing in their residences; added a definition for "disability"; and added additional deductions for the purpose of calculating "disposable income." SB 5758 clarified language related to gender and perjury in RCW 84.36.387.

     Copies of draft rules are available for viewing and printing on our web site at http://dor.wa.gov/content/FindALawOrRule/RuleMaking/agenda.aspx.

     Reasons Supporting Proposal: To recognize legislative changes since 2003.

     Statutory Authority for Adoption: RCW 84.36.383, 84.36.389, and 84.36.865.

     Statute Being Implemented: RCW 84.36.381 through 84.36.389.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Department of revenue, governmental.

     Name of Agency Personnel Responsible for Drafting: Marilou Rickert, 1025 Union Avenue S.E., Suite #544, Olympia, WA, (360) 570-6115; Implementation and Enforcement: Brad Flaherty, 1025 Union Avenue S.E., Suite #200, Olympia, WA, (360) 570-5860.

May 21, 2008

Alan R. Lynn

Rules Coordinator

OTS-1610.1

AMENDATORY SECTION(Amending WSR 03-09-002, filed 4/2/03, effective 5/3/03)

WAC 458-16A-135   Senior citizen ((and)), disabled person, and one hundred percent disabled veteran exemption -- Application procedures.   (1) Introduction. This rule explains when and how a senior citizen ((or)), disabled person, or one hundred percent disabled veteran may apply for a property tax exemption on that person's principal residence. RCW 84.36.381 through 84.36.389.

     (2) When to apply for the exemption. A claimant may first apply for the exemption in the calendar year that he or she meets the age ((or)), disability, or disabled veteran requirements for exemption of taxes due in the following year. If the claimant does not apply when he or she meets the age ((or)), disability, or disabled veteran requirements, then he or she may apply for the exemption in any subsequent year. The exemption may be claimed on his or her principal residence for previous years by applying with separate applications for each year. However, refunds based upon an exemption made in previous years may be refunded only for up to three years after the taxes were paid as provided in chapter 84.69 RCW.

     (3) Application required. A claimant must submit to the county assessor's office an application for exemption with supporting documents. If the claimant applies for more than one year when the application is first made, an application must be made for each year the claimant seeks the exemption.

     (4) Where to obtain the application form. A claimant may obtain the application form and the list of required supporting documents from the county assessor's office where his or her principal residence is located.

     (5) How to apply for the exemption. Applications and supporting documents are filed in person or by mail at the county assessor's office where the principal residence is located.

     (a) The application form. The county assessor designs the application form or adapts a master form obtained from the department. The county must obtain approval of the final form from the department before it may be distributed and used. The claimant must use an application form from the county where the principal residence is located and provide true and accurate information in the application.

     (b) Signatures. The signature must certify that under penalty of perjury under the laws of Washington the application is true and correct. The application must be signed, dated, and state the place (city, county, or address) where it was signed. The application must be signed by:

     (i) The claimant;

     (ii) The claimant's designated agent;

     (iii) The legal guardian for the claimant (if applicable); or

     (iv) If the property is subject to a deed of trust, mortgage, or purchase contract requiring an accumulation of reserves to pay property taxes, the lien holder; and

     (v) If the claimant resides in a cooperative housing unit or portion of a cooperative structure representing the claimant's ownership share in that cooperative, the authorized agent of the cooperative must also sign the application.

     (c) Perjury statement. The perjury statement certifying under the penalty of perjury that the application is true and correct must be placed upon the application immediately above a line for the signature. Any person signing a false claim with the intent to defraud or evade the payment of any tax ((commits)) is guilty of perjury under chapter 9A.72 RCW. If a person receives an exemption based on erroneous information, the assessor assesses any unpaid taxes with interest for up to three years. If a person receives an exemption based on erroneous information, and the person either provided that information with the intent to defraud or intentionally failed to correct that information, the assessor assesses any unpaid taxes with interest, for up to three years, with the one hundred percent penalty provided in RCW 84.40.130. RCW 84.36.385(5).

     (d) Cooperative agreement to reduce rent. A cooperative must also agree, in a statement attached to the application, to reduce amounts owed by the claimant to the cooperative by the amount of the tax exemption. The agreement must also state that when the exemption exceeds the amount owed to the cooperative, the cooperative must pay to the claimant any amount of the tax exemption remaining after this offsetting reduction. RCW 84.36.387(5).

     (e) Supporting documents. Unless the assessor determines that all or some of the supporting documents are not necessary, a claimant must present the documents listed below with his or her application. Except for affidavits, the assessor's office should not accept original documents from the claimant. If the assessor's office is presented with original documents (other than affidavits), they must make copies or note the information provided in the documents on a separate sheet and return these original documents to the claimant. The claimant submits the following documents with the application:

     (i) If the county records do not reflect the claimant as the property owner, copies of any legal instruments demonstrating the claimant's interest held in the property;

     (ii) Documents demonstrating that the property is the claimant's principal residence (i.e., copy of a driver's license and voter's registration card);

     (iii) Copies of legal identification showing the claimant's age (i.e., copy of a driver's license or birth certificate);

     (iv) If the claim is based upon a physical disability, either:

     (A) An affidavit from a licensed physician or certified physician's assistant (medical or osteopath doctor), a licensed or certified psychologist for disabling mental impairments, or a licensed podiatrist for disabling impairments of the foot, that states the claimant is unable to enter into regular gainful employment because of his or her ((physical)) disability and the expected term of the disability; or

     (B) Copies of a written acknowledgment or decision by the Social Security Administration or Veterans Administration that the claimant is permanently ((physically)) disabled;

     (v) If the claim is based upon the claimant's veteran status, copies of legal documents showing that the claimant is a veteran of the armed forces of the United States with one hundred percent service-connected disability as provided in 42 U.S.C. Sec. 423 (d)(1)(A) as amended prior to January 1, 2005;

     (vi) Copies of documents showing income earned or reported by the claimant, the claimant's spouse or domestic partner and any cotenants, even when the income is estimated (income information should be provided to the degree possible and then confirmed with supporting documents in the follow-up period), such proof shall include to the extent it is relevant:

     (A) If the claimant, the claimant's spouse or domestic partner, or any cotenants receive Social Security payments, a federal statement showing Social Security paid (generally, Form SSA-1099);

     (B) If the claimant, the claimant's spouse or domestic partner, or any cotenants receive railroad retirement benefits, a federal statement showing railroad retirement benefits paid (generally, Forms RRC-1099 and RRC 1099-R);

     (C) If the claimant, the claimant's spouse or domestic partner, or any cotenants file federal income tax returns, those returns with supporting forms, schedules, and, if specifically requested, worksheets for the deductions taken from gross income (generally, Form 1040 with its supporting forms and schedules);

     (D) If the claimant or the claimant's spouse or domestic partner has been in a nursing home, boarding home, or adult family home or has been receiving in-home care, copies of invoices (or an equivalent billing statement or payment statement) for nonreimbursed nursing home and in-home care;

     (E) If the claimant indicates that the ((claimant's and the claimant's spouse's)) nonreimbursed prescription drug((s)) expenses for the claimant and the claimant's spouse or domestic partner for the period under review exceeds five hundred dollars, copies of checks or other payment statements (i.e., pharmacy printout of payments for purchases) showing amounts paid for nonreimbursed prescription drug expenses;

     (F) Copies of documents showing premiums paid if the claimant or the claimant's spouse or domestic partner pays health care insurance premiums for Medicare under Title XVIII of the Social Security Act (i.e., 1099, or Medicare plan policy declaration);

     (G) If no federal returns were filed or received, the claimant must still provide copies of documents to demonstrate his or her income and the income of his or her spouse or domestic partner and any cotenants (i.e., federal income statements such as Form W-2 (wages), Form 1099-INT (interest), Form 1099-DIV (dividends), Form 1099-R (pension amounts), Form 1099-G (unemployment), or Form 1099-Misc. (contract income)). Even claimants who claim they have no federal income (or an inordinately small amount of federal income) must have income to maintain themselves and their residences. In these situations, the claimant must produce copies of documents demonstrating the source of the funds they are living on (i.e., checking account registers and bank statements) and the bills for maintaining the claimant and the residence (i.e., public assistance check stubs, utility invoices, cable TV invoices, check registers, bank statements, etc.); and

     (((vi))) (vii) Any other copies of documents the assessor requires in his or her discretion for the claimant to produce in order to demonstrate the claimant qualifies for the exemption.

     (f) Public disclosure of the application. The application form may not be disclosed. A copy of the application may be disclosed only if all income information on the form is obliterated so that it cannot be read. Except as required by law, no public disclosure may be made of the checklist of supporting documents or any supporting documents retained that concern the ((claimant's, the claimant's spouse's, or any cotenant's)) income of the claimant, the claimant's spouse or domestic partner, or any cotenant.

[Statutory Authority: RCW 84.36.383, 84.36.389, and 84.36.865. 03-09-002, § 458-16A-135, filed 4/2/03, effective 5/3/03.]

     (2) The exemption described. This property tax exemption reduces or eliminates property taxes on a senior citizen's ((or)), disabled person's, or one hundred percent disabled veteran's principal residence. Except for benefit charges made by a fire protection district, this exemption does not reduce or exempt an owner's payments for special assessments against the property. Local governments impose special assessments on real property because the real property is specially benefitted by improvements made in that area (e.g., local improvement district assessments for roads or curbs, surface water management fees, diking/drainage fees, weed control fees, etc.). All the property owners in that area share in paying for these improvements. The only exception related to this program is for benefit charges made by a fire protection district. Fire protection district benefit charges are reduced twenty-five, fifty, or seventy-five percent depending upon the combined disposable income of the claimant. RCW 52.18.090.

     (a) Excess levies. A qualifying claimant receives an exemption from excess levies on his or her principal residence.

     (b) Regular levies. Depending upon the claimant's combined disposable income, the exemption may also apply to all or a portion of the regular levies on the claimant's principal residence. Both the level of the claimant's combined disposable income and the assessed value of the home determine the amount of the regular levy exempted from property taxes. The exemption applies to all the regular and excess levies when the assessed value of the claimant's principal residence falls below the amount of exempt assessed value identified in RCW 84.36.381 (5)(b) and the claimant's combined disposable income is also below the levels set in that section.

     (c) Property taxes due. Generally the owner pays the property taxes on the principal residence and obtains directly the benefit of this exemption. If the claimant is not the property's owner, or is not otherwise obligated to pay the property taxes on the principal residence, but "owned" the principal residence for purposes of this exemption, the property owner that owes the tax must reduce any amounts owed to them by the claimant up to the amount of the tax exemption. If the amounts owed by the claimant to this property owner are less than the tax exemption, the owner must pay to the claimant in cash any amount of the tax exemption remaining after this offsetting reduction. RCW 84.36.387(6).

     (3) Processing exemption applications. County assessors process applications for the senior citizen ((or)), disabled person, or one hundred percent disabled veteran exemption. The assessors grant or deny the exemption based upon these completed applications.

     (a) Application review. The county assessor reviews a completed application and its supporting documents.

     The assessor:

     (i) Notes on a checklist for the claimant's file the supporting documents received;

     (ii) Reviews the supporting documents;

     (iii) Records relevant information from the supporting documents into the claimant's file. In particular, the assessor records into the file the claimant's age and a summary of the income information received; and

     (iv) After reviewing the supporting documents, must either destroy or return the supporting documents used to verify the claimant's age and income.

     (b) Incomplete applications. A county assessor may return an incomplete application or a duplicate application. An incomplete application may be missing:

     (i) Signatures;

     (ii) Information upon the form; or

     (iii) Supporting documents.

     Upon returning an incomplete application, the assessor should provide the claimant with a dated denial form listing the signatures, information, or documents needed to complete the application. The denial of an incomplete application may be appealed in the same manner as a denial of the exemption.

     (c) The assessor may accept any late filings for the exemption even after the taxes have been levied, paid, or become delinquent. An application filed for the exemption in previous years constitutes a claim for a refund under WAC 458-18-210.

     (4) Exemption timing if approved. Property taxes are reduced or eliminated on the claimant's principal residence for the year following the year the claimant became eligible for the program. When a late application is filed, the exemption may only result in:

     (a) A property tax refund for taxes paid within three years of the payment date; and

     (b) Relief from unpaid property taxes for previous years.

     (5) Exemption procedure when claim granted. When the exemption is granted, the county assessor:

     (a) Freezes the assessed value of the principal residence upon the assessment roll;

     (b) Determines the level of exemption the claimant qualifies for;

     (c) Notifies the claimant that the exemption has been granted;

     (d) Notifies the claimant of his or her duty to file timely renewal applications;

     (e) Notifies the claimant of his or her duty to file change of status forms when necessary;

     (f) Notifies the claimant of the need to reapply for the exemption if the claimant moves to a replacement residence;

     (g) Notifies the claimant that has supplied estimated income information whether or not follow-up income information is needed;

     (h) Places the claimant on a notification list for renewal of the exemption;

     (i) Places the claimant on a notification list if supporting documents are needed to confirm estimated income information prior to May 31st of the following year;

     (j) Exempts the residence from all or part of its property taxes; and

     (k) Provides the department with a recomputation of the assessed values for the immediately preceding year as a part of the annual recomputation process.

     (6) Exemption procedure when claim denied. The assessor denies the exemption when the claimant does not qualify. The assessor provides a dated denial form listing his or her reasons for this denial. A claimant may appeal the exemption's denial to the county board of equalization as provided for in WAC 458-14-056.

     (7) Freezing the property value. The assessor freezes the assessed value of the principal residence either on the latter of January 1, 1995, or January 1st of the year when a claimant first qualifies for the exemption. The assessor then tracks both the market value of the principal residence and its frozen value. The assessor provides both the principal residence's market value and its frozen value in the valuation notices sent to the owner.

     (a) Frozen values in counties using a cyclical revaluation plan. In counties using a cyclical revaluation plan, the assessor:

     (i) Revalues the principal residence, for property revalued in that assessment year, before the assessed value is frozen; or

     (ii) Freezes the principal residence's value at the most recent assessed value for property that is not revalued in that assessment year.

     The assessor continues to revalue the principal residence during the regular revaluation cycles to track the market value for the property.

     (b) Adding on improvement costs. The assessor adds onto the frozen assessed value the cost of any improvements made to the principal residence.

     (c) One-year gaps in qualification. If a claimant receiving the exemption fails to qualify for only one year because of high income, the previous frozen property value must be reinstated on January 1st of the following year when the claimant again qualifies for the program.

     (d) Moving to a new residence. If an eligible claimant moves, the county assessor freezes the assessed value of the new principal residence on January 1st of the assessment year in which the claimant transfers the exemption to the replacement residence.

[Statutory Authority: RCW 84.36.383, 84.36.389, and 84.36.865. 03-09-002, § 458-16A-140, filed 4/2/03, effective 5/3/03.]

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