DEPARTMENT OF REVENUE

[Filed January 15, 2020, 11:26 p.m.]

Title of Rule and Other Identifying Information: WAC 458-61A-113 Timber, standing.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: Updating WAC 458-61A-113, to reflect the real estate excise tax exemption for sales of standing timber taxable under RCW 82.04.260 (12)(d), provided in SHB 1513 (2007), codified in RCW 82.45.195.

Reasons Supporting Proposal: SHB 1513 (207 [2007]), codified in RCW 82.45.195, exempted the sale of standing timber from tax under chapter 82.45 RCW, in cases where the sale is taxable under RCW 82.04.260 (12)(d). WAC 458-61A-113 requires update to reflect this change.

Statutory Authority for Adoption: RCW 82.45.150, 82.32.300, and 82.01.060(2).

Statute Being Implemented: RCW 82.45.195.

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: Brenton Madison, 6400 Linderson Way S.W., Olympia, WA, 360-534-1583; Implementation and Enforcement: John Ryser, 6400 Linderson Way S.W., Olympia, WA, 360-534-1603.

This notice meets the following criteria to use the expedited adoption process for these rules:

Adopts or incorporates by reference without material change federal statutes or regulations, Washington state statutes, rules of other Washington state agencies, shoreline master programs other than those programs governing shorelines of statewide significance, or, as referenced by Washington state law, national consensus codes that generally establish industry standards, if the material adopted or incorporated regulates the same subject matter and conduct as the adopting or incorporating rule.

Explanation of the Reason the Agency Believes the Expedited Rule-Making Process is Appropriate: The rule follows the wording of the exemption provided in RCW 82.45.195. It does not include any new interpretations.

THIS RULE IS BEING PROPOSED UNDER AN EXPEDITED RULE-MAKING PROCESS THAT WILL ELIMINATE THE NEED FOR THE AGENCY TO HOLD PUBLIC HEARINGS, PREPARE A SMALL BUSINESS ECONOMIC IMPACT STATEMENT, OR PROVIDE RESPONSES TO THE CRITERIA FOR A SIGNIFICANT LEGISLATIVE RULE. IF YOU OBJECT TO THIS USE OF THE EXPEDITED RULE-MAKING PROCESS, YOU MUST EXPRESS YOUR OBJECTIONS IN WRITING AND THEY MUST BE SENT TO Brenton Madison, Department of Revenue, P.O. Box 47476, Olympia, WA 98504-7476, phone 360-534-1583, fax 360-534-1606, email BrentonM@dor.wa.gov, AND RECEIVED BY March 24, 2020.

AMENDATORY SECTION(Amending WSR 05-23-093, filed 11/16/05, effective 12/17/05)

WAC 458-61A-113Timber, standing.

(1) The real estate excise tax applies to the sale of timber if the ownership of the timber is transferred while the timber is standing. The tax applies to the sale of standing timber whether the sale is accomplished by deed or by contract. See also chapters 84.33 RCW and 458-40 WAC for specific regulations and rules regarding the taxation of timber and forest land.

(2) The grantor's irrevocable agreement to sell timber and pass ownership to it as it is cut is a taxable transaction if the total amount of the sale is specified in the original contract.

(3) A contract to transfer the ownership of timber after it has been cut and removed from land by the grantee is not a taxable transaction.

(4) A contract between a timber owner and a harvester ((when))under which the harvester provides the service of cutting the timber and transporting it to the mill is not subject to the real estate excise tax if the timber owner retains ownership of the timber until it is delivered to and purchased by the mill.

(5) Notwithstanding the above subsections, a sale of standing timber is exempt from real estate excise tax if the gross income from the sale is subject to business and occupation tax under RCW 82.04.260 (12)(d).