Preproposal statement of inquiry was filed as WSR 18-22-074.
Hearing Location(s): On February 13, 2019, at 10:00 a.m., Conference Room 114C, 6400 Linderson Way S.W., Tumwater, WA 98501.
Date of Intended Adoption: February 20, 2019.
Submit Written Comments to: Leslie Mullin, ITA Division, P.O. Box 47453, Olympia, WA 98504-7453, email LeslieMu@dor.wa.gov, fax 360-534-1606, by February 13, 2019.
Assistance for Persons with Disabilities: Contact Julie King or Renee Cosare, phone 360-704-5733 or 360-704-5734, TTY 800-833-6384.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposed new rule will incorporate legislation from SHB 1526, 2017 regular session (chapter 301, Laws of 2017) and provide guidance to senior citizen organizations that operate a multipurpose senior citizen center.
Reasons Supporting Proposal: The proposed new rule is necessary to explain the application process and various exemption requirements to senior citizen organizations.
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: Leslie Mullin, 6400 Linderson Way S.W., Tumwater, WA, 360-534-1589; Implementation and Enforcement: Randy Simmons, 6400 Linderson Way S.W., Tumwater, WA, 360-534-1605.
Erin T. Lopez
This rule explains the property tax exemption available under RCW 84.36.670
for the operation of a multipurpose senior citizen center.
(2) Definitions. For the purposes of this rule, the following definitions apply:
(a) "Assessment year" means the calendar year preceding the tax year in which real and personal property is listed and valued by the assessor.
(b) "Farmers market" means a regular assembly of vendors at a location for the main purpose of promoting the sale of agricultural products grown, raised, or produced in this state directly to the consumer.
(c) "Multipurpose senior citizen center" means a community facility that offers a broad spectrum of services to senior citizens, whether provided directly by the nonprofit senior citizen organization that owns the facility or by another person. These services may include health, social, nutritional, and educational services and recreational activities.
(d) "Senior citizen" means a person age sixty or older.
(e) "Senior citizen organization" means a private organization that:
(i) Has a mission, in whole or in part, to support senior citizens;
(ii) Is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code; and
(iii) Operates a multipurpose senior citizen center.
(f) "Tax year" means the year in which property taxes are due.
(g) "Thrift store" means a retail establishment that:
(i) Is operated by a senior citizen organization;
(ii) Is located on the same parcel of real property as the senior citizen organization's multipurpose senior citizen center, or on a contiguous parcel of real property; and
(iii) Sells goods including, but not limited to, donated goods, as part of the senior citizen organization's fund-raising efforts for the operation of its multipurpose senior citizen center and the provision of services and activities for senior citizens. If the establishment sells nondonated goods, its gross annual sales of nondonated goods cannot exceed ten percent of its total combined gross annual sales of all goods.
(3) Exemption availability.
(a) Qualifying use of exempt property. Real property that is located on one or more contiguous parcels and personal property owned by a senior citizen organization are exempt from property tax if the property is used for the actual operation of a multipurpose senior citizen center. Additionally, the following activities may be conducted at the senior citizen center:
(i) Loan or rental. The senior citizen center may be loaned or rented if the rent and donations received for the use of the center are reasonable and do not exceed the maintenance and operation expenses attributable to the portion of the property loaned or rented.
Example. A 501 (c)(3) nonprofit organization formed with the mission to support senior citizens owns real property that is used for the operation of a multipurpose senior citizen center. The center offers a broad spectrum of health, fitness, and nutrition services for senior citizens on a weekly basis and operates a thrift store. The thrift store is located within the senior citizen center, is open four days each week, and sells donated items as part of the organization's fund-raising efforts for the operation of the senior citizen center. The center may also be rented on weekends, for a reasonable fee that does not exceed the maintenance and operations expenses attributable to the rented property, to the public for events such as weddings and family reunions. Based on the information provided, the senior citizen center would qualify for the property tax exemption.
(ii) Fund-raising events. The exempt property may be used for fund-raising events and activities, including the operation of a farmers market or a thrift store, as defined in subsection (2) of this rule, with the purpose of providing financial support for the multipurpose senior citizen center or providing financial support for services and activities for senior citizens. If the exempt property is used to conduct a fund-raising event for purposes other than described in this subsection, then:
(A) The event or activity must be conducted by a nonprofit organization eligible for exemption under chapter 84.36
(B) The rent and donations received, if any, for the use of the senior citizen center are reasonable and do not exceed the maintenance and operation expenses attributable to the portion of the property loaned or rented.
(b) Inadvertent use of exempt property. An inadvertent use of the exempt property in a manner inconsistent with the purposes of this exemption does not nullify the exemption if the inadvertent use is not part of a pattern of use. A pattern of use is presumed when an inadvertent use is repeated in the same assessment year or in two or more successive years.
(c) The multipurpose senior citizen center must be available to all regardless of race, color, religion, creed, gender, gender expression, national origin, ancestry, the presence of any sensory, mental, or physical disability, marital status, sexual orientation, or honorably discharged veteran or military status.
(d) This exemption is not subject to the provisions of RCW 84.36.805
(4) Application and renewal.
This exemption is available beginning with property taxes levied in the 2017 assessment year (for collection in the 2018 tax year) through the 2026 assessment year (for collection in the 2027 tax year). RCW 82.32.805
(a) Initial application. In order to be considered timely, initial applications must be received on or before:
(i) March 31st for taxes to be collected in the following year; or
(ii) Within sixty days of either acquiring the property or converting the property to an exempt use, whichever is later.
(b) Retroactive application. Retroactive applications to claim the exemption for prior years will be accepted up to a maximum of three years from the date taxes were due on the property. The last day to file a retroactive application for this exemption is April 30, 2030, for taxes that were due in the 2027 tax year. The applicant must:
(i) Provide the department with acceptable proof that the property qualified for exemption during the pertinent assessment years; and
(ii) Pay the late filing penalties under RCW 84.36.825
(c) Renewal application. After the department approves an initial or retroactive application, the exemption applies for one year and must be renewed by March 31st of each year to exempt the property from taxes due the following year. See WAC 458-16-110 Applications—Who must file, initial applications, annual declarations, appeals, filing fees, penalties, and refunds, for more information about procedures property owners must follow to apply for and renew property tax exemptions.
(5) Loss of exemption.
If the property is no longer used for the actual operation of a multipurpose senior citizen center, it will lose the exemption for the remaining part of the assessment year. When the property no longer retains its exempt status, it will be 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. See RCW 84.40.360