S-3657

AN ACT Relating to the taxation of conveyances of real property; amending RCW 82.45.010, 82.45.020, 82.45.030, 82.45.032, 82.45.060, 82.45.070, 82.45.080, 82.45.090, 82.45.100, 82.45.150, 82.46.010, 82.46.035, 82.46.050, 82.46.070, 84.26.080, 84.33.120, 84.33.140, and 84.34.108; reenacting and amending RCW 82.46.040 and 82.46.060; adding new sections to chapter 82.45 RCW; adding a new section to chapter 82.46 RCW; repealing RCW 82.45.035, 82.45.105, 82.45.120, 82.45A.010, 82.45A.020, and 82.45A.030; prescribing penalties; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 82.45.010 and 1981 c 93 s 1 are each amended to read as follows:

(1) As used in this chapter, the term ((~~"sale" shall have its ordinary meaning and shall include any~~)) "conveyance"((,)) shall mean the grant, assignment, quitclaim, sale, or other transfer of the ownership of or title to real property((~~, including standing timber, or any estate or interest therein for a valuable consideration, and~~)). The term includes the grant, assignment, quitclaim, sale, or transfer of improvements constructed upon leased land.

(2)(a) The term "conveyance" also includes any contract for ((~~such conveyance,~~)) the grant, assignment, quitclaim, sale, or transfer((~~, and any lease with an option to purchase real property, including standing timber, or any estate or interest therein or other contract~~)) of real property where, under ((~~which~~)) the terms of the contract possession of the property is given to the ((~~purchaser~~)) contract vendee, or any other person ((~~by his~~)) at the vendee's direction, ((~~which~~)) and title to the property is retained by the vendor as security for the ((~~payment of the purchase price~~)) vendee's performance of the contract terms.

(b) The term "conveyance" also includes the transfer or acquisition within any twelve-month period of a controlling interest in any entity with an interest in real property located in this state. For purposes of this subsection, all acquisitions of persons acting in concert shall be aggregated for purposes of determining whether a transfer or acquisition of a controlling interest has taken place. The department of revenue shall adopt standards by rule to determine whether persons are acting in concert. In adopting a rule for this purpose, the department shall take into account the following:

(i) Persons shall be treated as acting in concert when they have a relationship one to another such that one person influences or controls the actions of another through common ownership; and

(ii) Where persons are not commonly controlled or owned, they shall be treated as acting in concert only when the unity with which the purchasers have negotiated and will consummate the transfer of ownership interests supports a finding that they are acting as a single entity. If the acquisitions are completely independent, with each purchaser buying without regard to the identity of the other purchasers, then the acquisitions are to be treated as separate acquisitions.

((The term shall not include a transfer by gift, devise, or inheritance, a transfer of any leasehold interest other than of the type mentioned above, a cancellation or forfeiture of a vendee's interest in a contract for the sale of real property, whether or not such contract contains a forfeiture clause, or deed in lieu of foreclosure of a mortgage or the assumption by a grantee of the balance owing on an obligation which is secured by a mortgage or deed in lieu of forfeiture of the vendee's interest in a contract of sale where no consideration passes otherwise or the partition of property by tenants in common by agreement or as the result of a court decree, any transfer, conveyance, or assignment of property or interest in property from one spouse to the other in accordance with the terms of a decree of divorce or in fulfillment of a property settlement agreement incident thereto, the assignment or other transfer of a vendor's interest in a contract for the sale of real property, even though accompanied by a conveyance of the vendor's interest in the real property involved, transfers by appropriation or decree in condemnation proceedings brought by the United States, the state or any political subdivision thereof, or a municipal corporation, a mortgage or other transfer of an interest in real property merely to secure a debt, or the assignment thereof, any transfer or conveyance made pursuant to an order of sale by the court in any mortgage or lien foreclosure proceeding or upon execution of a judgment, or deed in lieu of foreclosure to satisfy a mortgage, a conveyance to the federal housing administration or veterans administration by an authorized mortgagee made pursuant to a contract of insurance or guaranty with the federal housing administration or veterans administration, nor a transfer in compliance with the terms of any lease or contract upon which the tax as imposed by this chapter has been paid or where the lease or contract was entered into prior to the date this tax was first imposed, nor the sale of any grave or lot in an established cemetery, nor a sale by or to the United States, this state or any political subdivision thereof, or a municipal corporation of this state.

The term sale shall further not include a transfer to a corporation or partnership which is wholly owned by the transferor and/or the transferor's spouse or children: PROVIDED, That if thereafter such transferee corporation or partnership voluntarily transfers such real property, or such transferor, spouse, or children voluntarily transfer stock in the transferee corporation or interest in the transferee partnership capital, as the case may be, to other than (1) the transferor and/or the transferor's spouse or children, (2) a trust having the transferor and/or the transferor's spouse or children as the only beneficiaries at the time of the transfer to the trust, or (3) a corporation or partnership wholly owned by the original transferor and/or the transferor's spouse or children, within five years of the original transfer to which this exemption applies, excise taxes shall become due and payable on the original transfer as otherwise provided by law.))

(3) The term conveyance does not include the grant or transfer of an easement, leasehold, license, equitable servitude, option to purchase, or the execution or assignment of an agreement that obligates the owner of real property to sell, but does not effect a transfer of the possession of, title to, or ownership of the property.

Sec. 2. RCW 82.45.020 and 1980 c 154 s 1 are each amended to read as follows:

(1) As used in this chapter the term ((~~"seller,"~~)) "transferor," unless otherwise indicated by the context, shall mean any individual, receiver, assignee, trustee in bankruptcy, trust, estate, firm, copartnership, joint venture, club, company, joint stock company, business trust, municipal corporation, quasi municipal corporation, corporation, association, society, or any group of individuals acting as a unit, whether mutual, cooperative, fraternal, nonprofit or otherwise; but it shall not include the United States or the state of Washington.

(2) Unless otherwise defined in this chapter or unless the context requires otherwise, terms used in this chapter shall have the same meaning as in chapter 82.04 RCW.

Sec. 3. RCW 82.45.030 and 1969 ex.s. c 223 s 28A.45.030 are each amended to read as follows:

(1) As used in this chapter, the term ((~~"selling price" means the consideration, including~~)) "taxable value" means the true and fair value of the property conveyed. Where property has been conveyed in an arm's length transaction between unrelated persons for a valuable consideration, the taxable value shall be equal to the total consideration paid or contracted to be paid to the transferor, or another for the transferor's benefit.

(2) In the event the conveyance is a transfer of a controlling interest in an entity with an interest in real property located in this state, the taxable value shall be determined as follows:

(a) Where the controlling interest is acquired in an arm's-length transaction between unrelated persons for a valuable consideration, the taxable value shall be that proportion of the consideration paid or contracted to be paid to the transferor, or to another for the transferor's benefit, which is equal to the fair market value of the real property owned by the entity and located in Washington divided by the fair market value of all of the assets of the entity, exclusive of goodwill; or

(b) Where the controlling interest is acquired in a transaction other than as described in (a) of this subsection, the taxable value shall be equal to the true and fair value of the real property owned by the entity and located in this state. Where the true and fair value of the real property located in this state cannot reasonably be determined, the taxable value shall be determined according to subsection (4) of this section.

(3) For purposes of this section, total consideration paid, or contracted to be paid, includes money or anything of value, paid or delivered or contracted to be paid or delivered in return for the ((~~transfer of the real property or estate or interest in real property)) conveyance, and shall include the amount of any lien((, mortgage, contract indebtedness,~~)) or ((~~other~~)) incumbrance, either given to secure the purchase price, or any part thereof, or remaining unpaid on such property at the time of ((~~sale~~)) conveyance.

((~~The term~~)) Total consideration shall not include the amount of any outstanding lien or incumbrance in favor of the United States, the state, or a municipal corporation for ((~~the~~)) taxes, special benefits, or improvements.

(4) Under circumstances where the total consideration for the conveyance cannot be ascertained or the true and fair value of the property to be valued at the time of the conveyance cannot reasonably be determined, the market value assessment for the property maintained on the county property tax rolls at the time of the conveyance shall be used as the taxable value.

Sec. 4. RCW 82.45.032 and 1986 c 211 s 1 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Real estate" or "real property" means ((~~real property but includes~~)) any interest or estate, including a beneficial interest, in land or anything affixed to land, including standing timber, used mobile homes ((~~and~~)), used floating homes, and improvements upon leased land.

(2) "Used mobile home" means a mobile home which has been previously sold at retail and has been subjected to tax under chapter 82.08 RCW, or which has been previously used and has been subjected to tax under chapter 82.12 RCW, and which has substantially lost its identity as a mobile unit at the time of ((~~sale~~)) conveyance by virtue of its being fixed in location upon land owned or leased by the owner of the mobile home and placed on a foundation (posts or blocks) with fixed pipe connections with sewer, water, and other utilities.

(3) "Mobile home" means a mobile home as defined by RCW 46.04.302, as now or hereafter amended.

(4) "Used floating home" means a floating home in respect to which tax has been paid under chapter 82.08 or 82.12 RCW.

(5) "Floating home" means a building on a float used in whole or in part for human habitation as a single-family dwelling, which is not designed for self propulsion by mechanical means or for propulsion by means of wind, and which is on the property tax rolls of the county in which it is located.

NEW SECTION. Sec. 5. A new section is added to chapter 82.45 RCW to read as follows:

As used in this chapter, the term "controlling interest" has the following meaning:

(1) In the case of a corporation, either fifty percent or more of the total combined voting power of all classes of stock of the corporation entitled to vote, or fifty percent of the capital, profits, or beneficial interest in the voting stock of the corporation; and

(2) In the case of a partnership, association, trust, or other entity, fifty percent or more of the capital, profits, or beneficial interest in such partnership, association, trust, or other entity.

Sec. 6. RCW 82.45.060 and 1987 c 472 s 14 are each amended to read as follows:

((~~(1)~~)) There is imposed an excise tax upon each ((~~sale~~)) conveyance of real property located in this state at the rate of one and twenty-eight one-hundredths percent of the ((~~selling price~~)) taxable value of the property conveyed as determined under RCW 82.45.030. An amount equal to seven and seven-tenths percent of the proceeds of this tax remitted to the state treasurer shall be deposited in the public works assistance account created in RCW 43.155.050.

(((2) There is imposed an additional excise tax through June 30, 1989, upon each sale of real property at the rate of six one-hundredths of one percent of the selling price. The tax imposed under this subsection shall be deposited in the conservation area account under RCW 79.71.110.))

NEW SECTION. Sec. 7. A new section is added to chapter 82.45 RCW to read as follows:

The following conveyances are exempt from the tax imposed by this chapter:

(1) A transfer of property by gift to a family member or to an entity exempt from federal income tax under section 501(c) of the internal revenue code. For purposes of this section, "family member" means the transferor, the transferor's spouse, grandparents, parents, children, grandchildren, sisters, or brothers.

(2) A transfer of property by devise or inheritance.

(3) An assignment or transfer of property from one spouse to another to establish or separate community property in accordance with the terms of a community property agreement; or to separate community property in accordance with the terms of a decree of divorce or in fulfillment of a property settlement agreement incident to a decree of divorce.

(4) A physical partition of property by tenants in common by agreement or as the result of a court decree.

(5) The transfer of real property when it is to a corporation upon its organization solely in exchange for the stock or securities in the corporation, if immediately after such transfer the person or persons making such transfer own all of the stock or securities of the corporation.

(6) The transfer of real property when it is to a partnership upon its organization solely in exchange for the interests in the partnership, if immediately after the transfer the person or persons making such transfer own all of the capital and profit interests in the partnership.

(7) The transfer of real property, however effected, if it consists of a mere change in identity or form of ownership of the organization, where there is no change in beneficial ownership.

(8) The creation of a lien by means of a mortgage or deed of trust or the assignment of a mortgage or deed of trust.

(9) The assignment or other transfer of a vendor's interest in a contract for the sale of real property, even though accompanied by a conveyance of the vendor's interest in the real property involved.

(10) A release or satisfaction of mortgage or full reconveyance of the beneficiary's interest under a deed of trust.

(11) A deed given to the vendee under a real estate contract upon fulfillment of the contract terms.

(12) A transfer or conveyance made pursuant to an order of sale by a court in any mortgage or lien foreclosure proceeding or upon execution of a judgment.

(13) A transfer by a trustee under a power of sale contained in a deed of trust.

(14) A deed in lieu of foreclosure of a mortgage or deed of trust given to the mortgagee or trust deed beneficiary.

(15) A declaration of contract forfeiture or deed given by the vendee to the vendor upon, or in lieu of, forfeiture of a real estate contract.

(16) A transfer of a grave or cemetery lot in an established cemetery.

(17) A transfer by a trustee in bankruptcy or pursuant to a court approved plan of reorganization under chapter 11 or 12 of the bankruptcy code.

(18) A transfer by appropriation or decree in condemnation proceedings brought by the United States, the state of Washington or any of its political subdivisions, or a municipal corporation of this state.

(19) A transfer to the federal housing administration or the veteran's administration by an authorized mortgagee pursuant to a contract of insurance or guaranty with the federal housing administration or the veteran's administration.

(20) A transfer by a nominee to a third-party principal, provided that:

(a) The proper tax was paid on the transfer to the nominee;

(b) The third-party principal was in legal existence at the time of initial transfer;

(d) The subsequent transfer from the nominee to the third-party principal is not for a greater consideration than that of the initial acquisition.

(21) A transfer by the United States, the state of Washington or any of its political subdivisions, or a municipal corporation of this state.

Sec. 8. RCW 82.45.070 and 1969 ex.s. c 223 s 28A.45.070 are each amended to read as follows:

The tax ((~~herein provided for and any~~)) imposed by this chapter, along with interest ((~~or penalties thereon~~)) accruing as provided in RCW 82.45.100, shall be a specific lien upon each ((~~piece~~)) parcel of real property ((~~sold~~)) conveyed from the time of ((~~sale~~)) conveyance until the tax ((~~shall have~~)) has been paid, which lien may be enforced in the manner prescribed for the foreclosure of mortgages. The lien provided under this section shall be perfected without further act and shall have priority over any lien arising after the conveyance, other than a lien arising under RCW 84.60.010.

Sec. 9. RCW 82.45.080 and 1980 c 154 s 3 are each amended to read as follows:

The tax levied under this chapter shall be the obligation of the ((~~seller~~)) transferor and the department of revenue may, at the department's option, enforce the obligation through an action of debt against the ((~~seller~~)) transferor or the department may proceed in the manner prescribed for the foreclosure of mortgages ((~~and~~)). Resort to one course of enforcement shall not ((~~be an election not to pursue~~)) preclude the department from pursuing the other.

Sec. 10. RCW 82.45.090 and 1991 c 327 s 6 are each amended to read as follows:

(1) Except in the case of a conveyance of a beneficial interest in real property where no instrument evidencing the conveyance is recorded in the official real property records of the county in which the property is located, the tax imposed by this chapter shall be paid to and collected by the treasurer of the county ((~~within~~)) in which the property conveyed is located ((~~the real property which was sold, said~~)). In collecting the tax the treasurer ((~~acting~~)) shall act as agent for the state. The county treasurer shall cause a stamp evidencing satisfaction of the lien to be affixed to the instrument of ((~~sale or~~)) conveyance prior to its recording or to the real estate ((~~excise~~)) transfer tax affidavit in the case of sales of used mobile homes ((~~sales~~)) and used floating homes ((~~sales~~)). A receipt issued by the county treasurer for the payment of the tax imposed under this chapter shall be evidence of the satisfaction of the lien imposed hereunder and may be recorded in the manner prescribed for recording satisfactions of mortgages. No instrument ((~~of sale or conveyance~~)) evidencing a ((~~sale~~)) conveyance subject to the tax shall be accepted by the county auditor for filing or recording until the tax ((~~shall have~~)) has been paid and the ((~~stamp affixed thereto~~)) instrument has been stamped; in case the tax is not due on the ((~~transfer~~)) conveyance, the instrument shall not be so accepted until suitable notation of such fact has been made on the instrument by the treasurer.

(2) In the case of a conveyance of a beneficial interest in real property where no instrument is recorded in the official real property records of the county in which the property is located, the conveyance shall be reported to the department of revenue within five days from the date of the conveyance on such returns or forms and according to such procedures as the department may prescribe. Such forms or returns shall be signed by both the transferor and the transferee and shall be accompanied by payment of any tax due. Any person who intentionally makes a false statement on any return or form required to be filed with the department under this chapter shall be guilty of perjury.

Sec. 11. RCW 82.45.100 and 1988 c 286 s 5 are each amended to read as follows:

(1) The tax imposed under this chapter is due and payable immediately at the time of ((~~sale~~)) conveyance, and if not paid within thirty days thereafter shall bear interest at the rate of one percent per month from the time of ((~~sale~~)) conveyance until the date of payment.

(2) In addition to the interest described in subsection (1) of this section, if the payment of any tax is not received by the county treasurer or the department of revenue within thirty days of the date due, there shall be assessed a penalty of five percent of the amount of the tax; if the tax is not received within sixty days of the date due, there shall be assessed a total penalty of ten percent of the amount of the tax; and if the tax is not received within ninety days of the date due, there shall be assessed a total penalty of twenty percent of the amount of the tax. The payment of the penalty described in this subsection shall be collectible from the ((~~seller~~)) transferor only, and RCW 82.45.070 does not apply to the penalties described in this subsection.

(3) If the tax imposed under this chapter is not received by the due date, the transferee shall become personally liable for the tax, along with any interest as provided in subsection (1) of this section, unless:

(a) An instrument evidencing the conveyance is recorded in the official real property records of the county in which the property conveyed is located; or

(b) Either the transferor or transferee notifies the miscellaneous tax division of the department of revenue in writing of the occurrence of the conveyance within thirty days following the date of the conveyance.

(4) If upon examination of any affidavits or from other information obtained by the department or its agents it appears that all or a portion of the tax is unpaid, the department shall assess against the ((~~taxpayer~~)) transferor the additional amount found to be due plus interest and penalties as provided in subsections (1) and (2) of this section. If the department finds that all or any part of the deficiency resulted from an intent to evade the tax payable under this chapter, an additional penalty of fifty percent of the additional tax found to be due shall be added.

((~~(4)~~)) (5) No assessment or refund may be made by the department more than four years after the date of ((~~sale~~)) conveyance except upon a showing of fraud or of misrepresentation of a material fact by the ((~~taxpayer~~)) transferor or a failure by the ((~~taxpayer~~)) transferor to record documentation of a ((~~sale~~)) conveyance or otherwise report the ((~~sale~~)) conveyance to the county treasurer.

((~~(5)~~)) (6) Penalties collected pursuant to subsection (2) of this section shall be deposited in the housing trust fund as described in chapter 43.185 RCW.

Sec. 12. RCW 82.45.150 and 1981 c 167 s 1 are each amended to read as follows:

All of chapter 82.32 RCW, except RCW 82.32.030, 82.32.040, 82.32.050, 82.32.140, and 82.32.270 and except for the penalties and the limitations thereon imposed by RCW 82.32.090, applies to the tax imposed by this chapter, in addition to any other provisions of law for the payment and enforcement of the tax imposed by this chapter. The department of revenue shall by rule provide for the effective administration of this chapter. The rules shall ((~~also include a manual which defines transactions which are taxable under~~)) prescribe and furnish a real estate transfer tax affidavit form to be used by each county in the collection and reporting of the tax imposed by this chapter. The department of revenue shall annually conduct audits of transactions and affidavits filed under this chapter.

Sec. 13. RCW 82.46.010 and 1990 1st ex.s. c 17 s 36 are each amended to read as follows:

(1) The governing body of any county or any city may impose an excise tax on each ((~~sale~~)) conveyance of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-quarter of one percent of the ((~~selling price~~)) taxable value as defined in RCW 82.45.030. The revenues from this tax shall be used by the respective jurisdictions for local capital improvements, including those listed in RCW 35.43.040.

After July 1, 1990, revenues generated from the tax imposed under this subsection in counties and cities that are required or choose to plan under RCW 36.70A.040 shall be used primarily for financing capital projects specified in a capital facilities plan element of a comprehensive plan and housing relocation assistance under RCW 59.18.440 and 59.18.450. However, revenues (a) pledged by such counties and cities to debt retirement prior to July 1, 1990, may continue to be used for that purpose until all outstanding debt is retired, or (b) committed prior to July 1, 1990, by such counties or cities to a capital project may continue to be used for that purpose until the project is completed.

(2) In lieu of imposing the tax authorized in RCW 82.14.030(2), the governing body of any county or any city may impose an additional excise tax on each ((~~sale~~)) conveyance of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-half of one percent of the ((~~selling price~~)) taxable value as defined in RCW 82.45.030.

(3) Taxes imposed under this section shall be collected from persons who are taxable by the state under chapter 82.45 RCW upon the occurrence of any taxable event within the unincorporated areas of the county or within the corporate limits of the city, as the case may be.

(4) Taxes imposed under this section shall comply with all applicable rules, regulations, laws, and court decisions regarding real estate ((~~excise~~)) transfer taxes as imposed by the state under chapter 82.45 RCW.

(5) As used in this section, "city" means any city or town.

Sec. 14. RCW 82.46.035 and 1991 sp.s. c 32 s 33 are each amended to read as follows:

(1) The governing body of any county or any city that plans under RCW 36.70A.040(1) may impose an additional excise tax on each ((~~sale~~)) conveyance of real property in the unincorporated areas of the county for the county tax and in the corporate limits of the city for the city tax at a rate not exceeding one-quarter of one percent of the ((~~selling price~~)) taxable value as defined in RCW 82.45.030. Any county choosing to plan under RCW 36.70A.040(2) and any city within such a county may only adopt an ordinance imposing the excise tax authorized by this section if the ordinance is first authorized by a proposition approved by a majority of the voters of the taxing district voting on the proposition at a general election held within the district or at a special election within the taxing district called by the district for the purpose of submitting such proposition to the voters.

(2) Revenues generated from the tax imposed under subsection (1) of this section shall be used by such counties and cities solely for financing capital projects specified in a capital facilities plan element of a comprehensive plan.

(3) Revenues generated by the tax imposed by this section shall be deposited in a separate account.

(4) As used in this section, "city" means any city or town.

(5) When the governor files a notice of noncompliance under RCW 36.70A.340 with the secretary of state and the appropriate county or city, the county or city's authority to impose the additional excise tax under this section shall be temporarily rescinded until the governor files a subsequent notice rescinding the notice of noncompliance.

Sec. 15. RCW 82.46.040 and 1990 1st ex.s. c 17 s 39 and 1990 1st ex.s. c 5 s 4 are each reenacted and amended to read as follows:

Any tax imposed under this chapter ((~~or RCW 82.46.070~~)) and any interest or penalties thereon is a specific lien upon each piece of real property ((~~sold~~)) conveyed from the time of ((~~sale~~)) conveyance until the tax is paid, which lien may be enforced in the manner prescribed for the foreclosure of mortgages.

Sec. 16. RCW 82.46.050 and 1990 1st ex.s. c 17 s 40 are each amended to read as follows:

The taxes levied under this chapter are the obligation of the ((~~seller~~)) transferor and may be enforced through an action of debt against the ((~~seller~~)) transferor or in the manner prescribed for the foreclosure of mortgages. Resort to one course of enforcement is not an election not to pursue the other.

Sec. 17. RCW 82.46.060 and 1990 1st ex.s. c 17 s 41 and 1990 1st ex.s. c 5 s 5 are each reenacted and amended to read as follows:

Any taxes imposed under this chapter ((~~or RCW 82.46.070)) shall be paid to and collected by the treasurer of the county within which is located the real property which was ((sold~~)) conveyed. The treasurer shall act as agent for any city within the county imposing the tax. The county treasurer shall cause a stamp evidencing satisfaction of the lien to be affixed to the instrument of sale or conveyance prior to its recording or to the real estate ((~~excise~~)) transfer tax affidavit in the case of used mobile home ((~~sales~~)) conveyances. A receipt issued by the county treasurer for the payment of the tax imposed under this chapter ((~~or RCW 82.46.070~~)) shall be evidence of the satisfaction of the lien imposed in RCW 82.46.040 and may be recorded in the manner prescribed for recording satisfactions of mortgages. No instrument of sale or conveyance evidencing a ((~~sale~~)) conveyance subject to the tax may be accepted by the county auditor for filing or recording until the tax is paid and the stamp affixed thereto; in case the tax is not due on the transfer, the instrument shall not be accepted until suitable notation of this fact is made on the instrument by the treasurer.

Sec. 18. RCW 82.46.070 and 1990 1st ex.s. c 5 s 3 are each amended to read as follows:

(1) Subject to subsection (2) of this section, the legislative authority of any county may impose an additional excise tax on each ((~~sale~~)) conveyance of real property in the county at a rate not to exceed one percent of the ((~~selling price~~)) taxable value as defined in RCW 82.45.030. The proceeds of the tax shall be used exclusively for the acquisition and maintenance of conservation areas.

The taxes imposed under this subsection shall be imposed in the same manner and on the same occurrences, and are subject to the same conditions, as the taxes under chapter 82.45 RCW, except:

(a) The tax shall be the obligation of the ((~~purchaser~~)) transferee; and

(b) The tax does not apply to the acquisition of conservation areas by the county.

The county may enforce the obligation through an action of debt against the ((~~purchaser~~)) transferee or may foreclose the lien on the property in the same manner prescribed for the foreclosure of mortgages.

The tax shall take effect thirty days after the election at which the taxes are authorized.

(2) No tax may be imposed under subsection (1) of this section unless approved by a majority of the voters of the county voting thereon for a specified period and maximum rate after:

(a) The adoption of a resolution by the county legislative authority of the county proposing this action; or

(b) The filing of a petition proposing this action with the county auditor, which petition is signed by county voters at least equal in number to ten percent of the total number of voters in the county who voted at the last preceding general election.

The ballot proposition shall be submitted to the voters of the county at the next general election occurring at least sixty days after a petition is filed, or at any special election prior to this general election that has been called for such purpose by the county legislative authority.

(3) A plan for the expenditure of the excise tax proceeds shall be prepared by the county legislative authority at least sixty days before the election if the proposal is initiated by resolution of the county legislative authority, or within six months after the tax has been authorized by the voters if the proposal is initiated by petition. Prior to the adoption of this plan, the elected officials of cities located within the county shall be consulted and a public hearing shall be held to obtain public input. The proceeds of this excise tax must be expended in conformance with this plan.

(4) As used in this section, "conservation area" has the meaning given under RCW 36.32.570.

NEW SECTION. Sec. 19. A new section is added to chapter 82.46 RCW to read as follows:

(1) Any ordinance adopted by the governing body of any county, city, or town that is in effect on the effective date of this act and that imposes a tax authorized by RCW 82.46.010 as in effect before its amendment by chapter ..., Laws of 1992 (this act), shall, without further act of the governing body, be considered effective to impose the tax authorized under RCW 82.46.010 at the rate specified in the ordinance, until such time as the ordinance is otherwise amended or repealed.

(2) Any ordinance adopted by the governing body of any county, city, or town that is in effect on the effective date of this act and that imposes a tax as authorized by RCW 82.46.035 as in effect before its amendment by chapter ..., Laws of 1992 (this act), shall, without further act of the governing body or the voters of the county, city, or town adopting the ordinance, be considered effective to impose the tax authorized by RCW 82.46.035 at the rate specified in the ordinance, until such time as the ordinance is otherwise amended or repealed.

(3) Any ordinance adopted by the legislative authority of any county, city, or town that is in effect on the effective date of this act and that imposes a tax as authorized by RCW 82.46.070 as in effect before its amendment by chapter ..., Laws of 1992 (this act), shall, without further act of the legislative authority or the voters of the county, city, or town adopting the ordinance, be considered effective to impose the tax authorized by RCW 82.46.070 at the rate specified in the ordinance, until such time as the ordinance is otherwise amended or repealed.

Sec. 20. RCW 84.26.080 and 1986 c 221 s 6 are each amended to read as follows:

(1) When property has once been classified and valued as eligible historic property, it shall remain so classified and be granted the special valuation provided by RCW 84.26.070 for ten years or until the property is disqualified by:

(a) Notice by the owner to the assessor to remove the special valuation;

(b) Sale or transfer to an ownership making it exempt from property taxation; or

(c) Removal of the special valuation by the assessor upon determination by the local review board that the property no longer qualifies as historic property or that the owner has failed to comply with the conditions established under RCW 84.26.050.

(2) The sale or transfer to a new owner or transfer by reason of death of a former owner to a new owner does not disqualify the property from the special valuation provided by RCW 84.26.070 if:

(a) The property continues to qualify as historic property; and

(b) The new owner files a notice of compliance with the assessor of the county in which the property is located. Notice of compliance forms shall be prescribed by the state department of revenue and supplied by the county assessor. The notice shall contain a statement that the new owner is aware of the special valuation and of the potential tax liability involved when the property ceases to be valued as historic property under this chapter. The signed notice of compliance shall be attached to the real estate ((~~excise~~)) transfer tax affidavit provided for in RCW ((~~82.45.120~~)) 82.45.150. If the notice of compliance is not signed by the new owner and attached to the real estate ((~~excise~~)) transfer tax affidavit, all additional taxes calculated pursuant to RCW 84.26.090 shall become due and payable by the seller or transferor at time of sale. The county auditor shall not accept an instrument of conveyance of specially valued historic property for filing or recording unless the new owner has signed the notice of compliance or the additional tax has been paid.

(3) When the property ceases to qualify for the special valuation the owner shall immediately notify the state or local review board.

(4) Before the additional tax or penalty imposed by RCW 84.26.090 is levied, in the case of disqualification, the assessor shall notify the taxpayer by mail, return receipt requested, of the disqualification.

Sec. 21. RCW 84.33.120 and 1986 c 238 s 1 are each amended to read as follows:

(1) In preparing the assessment rolls as of January 1, 1982, for taxes payable in 1983 and each January 1st thereafter, the assessor shall list each parcel of forest land at a value with respect to the grade and class provided in this subsection and adjusted as provided in subsection (2) of this section and shall compute the assessed value of the land by using the same assessment ratio he applies generally in computing the assessed value of other property in his county. Values for the several grades of bare forest land shall be as follows.

LAND OPERABILITY VALUES

GRADE CLASS PER ACRE

--------------------------------------------------------------

1 $141

1 2 136

3 131

4 95

---------------------------------------------------------------

1 118

2 2 114

3 110

4 80

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1 93

3 2 90

3 87

4 66

---------------------------------------------------------------

1 70

4 2 68

3 66

4 52

---------------------------------------------------------------

1 51

5 2 48

3 46

4 31

---------------------------------------------------------------

1 26

6 2 25

3 25

4 23

---------------------------------------------------------------

1 12

7 2 12

3 11

4 11

---------------------------------------------------------------

8 1

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(2) On or before December 31, 1981, the department shall adjust, by rule under chapter 34.05 RCW, the forest land values contained in subsection (1) of this section in accordance with this subsection, and shall certify these adjusted values to the county assessor for his use in preparing the assessment rolls as of January 1, 1982. For the adjustment to be made on or before December 31, 1981, for use in the 1982 assessment year, the department shall:

(a) Divide the aggregate value of all timber harvested within the state between July 1, 1976, and June 30, 1981, by the aggregate harvest volume for the same period, as determined from the harvester excise tax returns filed with the department under RCW 82.04.291 and 84.33.071; and

(b) Divide the aggregate value of all timber harvested within the state between July 1, 1975, and June 30, 1980, by the aggregate harvest volume for the same period, as determined from the harvester excise tax returns filed with the department under RCW 82.04.291 and 84.33.071; and

(c) Adjust the forest land values contained in subsection (1) of this section by a percentage equal to one-half of the percentage change in the average values of harvested timber reflected by comparing the resultant values calculated under (a) and (b) of this subsection.

For the adjustments to be made on or before December 31, 1982, and each succeeding year thereafter, the same procedure shall be followed as described in this subsection utilizing harvester excise tax returns filed under RCW 82.04.291 and this chapter except that this adjustment shall be made to the prior year's adjusted value, and the five-year periods for calculating average harvested timber values shall be successively one year more recent.

(3) In preparing the assessment roll for 1972 and each year thereafter, the assessor shall enter as the true and fair value of each parcel of forest land the appropriate grade value certified to him by the department of revenue, and he shall compute the assessed value of such land by using the same assessment ratio he applies generally in computing the assessed value of other property in his county. In preparing the assessment roll for 1975 and each year thereafter, the assessor shall assess and value as classified forest land all forest land that is not then designated pursuant to RCW 84.33.120(4) or 84.33.130 and shall make a notation of such classification upon the assessment and tax rolls. On or before January 15 of the first year in which such notation is made, the assessor shall mail notice by certified mail to the owner that such land has been classified as forest land and is subject to the compensating tax imposed by this section. If the owner desires not to have such land assessed and valued as classified forest land, he shall give the assessor written notice thereof on or before March 31 of such year and the assessor shall remove from the assessment and tax rolls the classification notation entered pursuant to this subsection, and shall thereafter assess and value such land in the manner provided by law other than this chapter 84.33 RCW.

(4) In any year commencing with 1972, an owner of land which is assessed and valued by the assessor other than pursuant to the procedures set forth in RCW 84.33.110 and this section, and which has, in the immediately preceding year, been assessed and valued by the assessor as forest land, may appeal to the county board of equalization by filing an application with the board in the manner prescribed in subsection (2) of RCW 84.33.130. The county board shall afford the applicant an opportunity to be heard if the application so requests and shall act upon the application in the manner prescribed in subsection (3) of RCW 84.33.130.

(5) Land that has been assessed and valued as classified forest land as of any year commencing with 1975 assessment year or earlier shall continue to be so assessed and valued until removal of classification by the assessor only upon the occurrence of one of the following events:

(a) Receipt of notice from the owner to remove such land from classification as forest land;

(b) Sale or transfer to an ownership making such land exempt from ad valorem taxation;

(c) Determination by the assessor, after giving the owner written notice and an opportunity to be heard, that, because of actions taken by the owner, such land is no longer primarily devoted to and used for growing and harvesting timber;

(d) Determination that a higher and better use exists for such land than growing and harvesting timber after giving the owner written notice and an opportunity to be heard;

(e) Sale or transfer of all or a portion of such land to a new owner, unless the new owner has signed a notice of forest land classification continuance. The signed notice of continuance shall be attached to the real estate ((~~excise~~)) transfer tax affidavit provided for in RCW ((~~82.45.120~~)) 82.45.150, as now or hereafter amended. The notice of continuance shall be on a form prepared by the department of revenue. If the notice of continuance is not signed by the new owner and attached to the real estate ((~~excise~~)) transfer tax affidavit, all compensating taxes calculated pursuant to subsection (7) of this section shall become due and payable by the seller or transferor at time of sale. The county auditor shall not accept an instrument of conveyance of classified forest land for filing or recording unless the new owner has signed the notice of continuance or the compensating tax has been paid. The seller, transferor, or new owner may appeal the new assessed valuation calculated under subsection (7) of this section to the county board of equalization. Jurisdiction is hereby conferred on the county board of equalization to hear these appeals.

The assessor shall remove classification pursuant to subsections (c) or (d) above prior to September 30 of the year prior to the assessment year for which termination of classification is to be effective. Removal of classification as forest land upon occurrence of subsection (a), (b), (d), or (e) above shall apply only to the land affected, and upon occurrence of subsection (c) shall apply only to the actual area of land no longer primarily devoted to and used for growing and harvesting timber: PROVIDED, That any remaining classified forest land meets necessary definitions of forest land pursuant to RCW 84.33.100 as now or hereafter amended.

(6) Within thirty days after such removal of classification as forest land, the assessor shall notify the owner in writing setting forth the reasons for such removal. The owner of such land shall thereupon have the right to apply for designation of such land as forest land pursuant to subsection (4) of this section or RCW 84.33.130. The seller, transferor, or owner may appeal such removal to the county board of equalization.

(7) Unless the owner successfully applies for designation of such land or unless the removal is reversed on appeal, notation of removal from classification shall immediately be made upon the assessment and tax rolls, and commencing on January 1 of the year following the year in which the assessor made such notation, such land shall be assessed on the same basis as real property is assessed generally in that county. Except as provided in subsections (5)(e) and (9) of this section and unless the assessor shall not have mailed notice of classification pursuant to subsection (3) of this section, a compensating tax shall be imposed which shall be due and payable to the county treasurer thirty days after the owner is notified of the amount of the compensating tax. As soon as possible, the assessor shall compute the amount of such compensating tax and mail notice to the owner of the amount thereof and the date on which payment is due. The amount of such compensating tax shall be equal to:

(a) The difference, if any, between the amount of tax last levied on such land as forest land and an amount equal to the new assessed valuation of such land multiplied by the dollar rate of the last levy extended against such land, multiplied by

(b) A number, in no event greater than ten, equal to the number of years, commencing with assessment year 1975, for which such land was assessed and valued as forest land.

(8) Compensating tax, together with applicable interest thereon, shall become a lien on such land which shall attach at the time such land is removed from classification as forest land and shall have priority to and shall be fully paid and satisfied before any recognizance, mortgage, judgment, debt, obligation or responsibility to or with which such land may become charged or liable. Such lien may be foreclosed upon expiration of the same period after delinquency and in the same manner provided by law for foreclosure of liens for delinquent real property taxes as provided in RCW 84.64.050. Any compensating tax unpaid on its due date shall thereupon become delinquent. From the date of delinquency until paid, interest shall be charged at the same rate applied by law to delinquent ad valorem property taxes.

(9) The compensating tax specified in subsection (7) of this section shall not be imposed if the removal of classification as forest land pursuant to subsection (5) of this section resulted solely from:

(a) Transfer to a government entity in exchange for other forest land located within the state of Washington;

(b) A taking through the exercise of the power of eminent domain, or sale or transfer to an entity having the power of eminent domain in anticipation of the exercise of such power;

(c) Sale or transfer of land within two years after the death of the owner of at least a fifty percent interest in such land;

(d) A donation of development rights, or the right to harvest timber, to a government agency or organization qualified under RCW 84.34.210 and 64.04.130 for the purposes enumerated in those sections or the sale or transfer of fee title to a governmental entity or nonprofit nature conservancy corporation, as defined in RCW 64.04.130, exclusively for the protection and conservation of lands recommended for state natural area preserve purposes by the natural heritage council and natural heritage plan as defined in chapter 79.70 RCW: PROVIDED, That at such time as the land is not used for the purposes enumerated, the compensating tax specified in subsection (7) of this section shall be imposed upon the current owner.

(10) With respect to any land that has been designated prior to May 6, 1974, pursuant to RCW 84.33.120(4) or 84.33.130, the assessor may, prior to January 1, 1975, on his own motion or pursuant to petition by the owner, change, without imposition of the compensating tax provided under RCW 84.33.140, the status of such designated land to classified forest land.

Sec. 22. RCW 84.33.140 and 1986 c 238 s 2 are each amended to read as follows:

(1) When land has been designated as forest land pursuant to RCW 84.33.120(4) or 84.33.130, a notation of such designation shall be made each year upon the assessment and tax rolls, a copy of the notice of approval together with the legal description or assessor's tax lot numbers for such land shall, at the expense of the applicant, be filed by the assessor in the same manner as deeds are recorded, and such land shall be graded and valued pursuant to RCW 84.33.110 and 84.33.120 until removal of such designation by the assessor upon occurrence of any of the following:

(a) Receipt of notice from the owner to remove such designation;

(b) Sale or transfer to an ownership making such land exempt from ad valorem taxation;

(c) Sale or transfer of all or a portion of such land to a new owner, unless the new owner has signed a notice of forest land designation continuance. The signed notice of continuance shall be attached to the real estate ((~~excise~~)) transfer tax affidavit provided for in RCW ((~~82.45.120~~)) 82.45.150, as now or hereafter amended. The notice of continuance shall be on a form prepared by the department of revenue. If the notice of continuance is not signed by the new owner and attached to the real estate ((~~excise~~)) transfer tax affidavit, all compensating taxes calculated pursuant to subsection (3) of this section shall become due and payable by the seller or transferor at time of sale. The county auditor shall not accept an instrument of conveyance of designated forest land for filing or recording unless the new owner has signed the notice of continuance or the compensating tax has been paid. The seller, transferor, or new owner may appeal the new assessed valuation calculated under subsection (3) of this section to the county board of equalization. Jurisdiction is hereby conferred on the county board of equalization to hear these appeals;

(d) Determination by the assessor, after giving the owner written notice and an opportunity to be heard, that (i) such land is no longer primarily devoted to and used for growing and harvesting timber, (ii) such owner has failed to comply with a final administrative or judicial order with respect to a violation of the restocking, forest management, fire protection, insect and disease control and forest debris provisions of Title 76 RCW or any applicable regulations thereunder, or (iii) restocking has not occurred to the extent or within the time specified in the application for designation of such land.

Removal of designation upon occurrence of any of subsections (a) through (c) above shall apply only to the land affected, and upon occurrence of subsection (d) shall apply only to the actual area of land no longer primarily devoted to and used for growing and harvesting timber, without regard to other land that may have been included in the same application and approval for designation: PROVIDED, That any remaining designated forest land meets necessary definitions of forest land pursuant to RCW 84.33.100 as now or hereafter amended.

(2) Within thirty days after such removal of designation of forest land, the assessor shall notify the owner in writing, setting forth the reasons for such removal. The seller, transferor, or owner may appeal such removal to the county board of equalization.

(3) Unless the removal is reversed on appeal a copy of the notice of removal with notation of the action, if any, upon appeal, together with the legal description or assessor's tax lot numbers for the land removed from designation shall, at the expense of the applicant, be filed by the assessor in the same manner as deeds are recorded, and commencing on January 1 of the year following the year in which the assessor mailed such notice, such land shall be assessed on the same basis as real property is assessed generally in that county. Except as provided in subsection (5) of this section, a compensating tax shall be imposed which shall be due and payable to the county treasurer thirty days after the owner is notified of the amount of the compensating tax. As soon as possible, the assessor shall compute the amount of such compensating tax and mail notice to the owner of the amount thereof and the date on which payment is due. The amount of such compensating tax shall be equal to:

(a) The difference between the amount of tax last levied on such land as forest land and an amount equal to the new assessed valuation of such land multiplied by the dollar rate of the last levy extended against such land, multiplied by

(b) A number, in no event greater than ten, equal to the number of years for which such land was designated as forest land.

(4) Compensating tax, together with applicable interest thereon, shall become a lien on such land which shall attach at the time such land is removed from designation as forest land and shall have priority to and shall be fully paid and satisfied before any recognizance, mortgage, judgment, debt, obligation or responsibility to or with which such land may become charged or liable. Such lien may be foreclosed upon expiration of the same period after delinquency and in the same manner provided by law for foreclosure of liens for delinquent real property taxes as provided in RCW 84.64.050. Any compensating tax unpaid on its due date shall thereupon become delinquent. From the date of delinquency until paid, interest shall be charged at the same rate applied by law to delinquent ad valorem property taxes.

(5) The compensating tax specified in subsection (3) of this section shall not be imposed if the removal of designation pursuant to subsection (1) of this section resulted solely from:

(a) Transfer to a government entity in exchange for other forest land located within the state of Washington;

(b) A taking through the exercise of the power of eminent domain, or sale or transfer to an entity having the power of eminent domain in anticipation of the exercise of such power;

(c) Sale or transfer of land within two years after the death of the owner of at least a fifty percent interest in such land;

(d) A donation of development rights, or the right to harvest timber, to a government agency or organization qualified under RCW 84.34.210 and 64.04.130 for the purposes enumerated in those sections or the sale or transfer of fee title to a governmental entity or nonprofit nature conservancy corporation, as defined in RCW 64.04.130, exclusively for the protection and conservation of lands recommended for state natural area preserve purposes by the natural heritage council and natural heritage plan as defined in chapter 79.70 RCW: PROVIDED, That at such time as the land is not used for the purposes enumerated, the compensating tax specified in subsection (3) of this section shall be imposed upon the current owner.

Sec. 23. RCW 84.34.108 and 1989 c 378 s 35 are each amended to read as follows:

(1) When land has once been classified under this chapter, a notation of such designation shall be made each year upon the assessment and tax rolls and such land shall be valued pursuant to RCW 84.34.060 or 84.34.065 until removal of all or a portion of such designation by the assessor upon occurrence of any of the following:

(a) Receipt of notice from the owner to remove all or a portion of such designation;

(b) Sale or transfer to an ownership making all or a portion of such land exempt from ad valorem taxation;

(c) Sale or transfer of all or a portion of such land to a new owner, unless the new owner has signed a notice of classification continuance. The signed notice of continuance shall be attached to the real estate ((~~excise~~)) transfer tax affidavit provided for in RCW ((~~82.45.120~~)) 82.45.150, as now or hereafter amended. The notice of continuance shall be on a form prepared by the department of revenue. If the notice of continuance is not signed by the new owner and attached to the real estate ((~~excise~~)) transfer tax affidavit, all additional taxes calculated pursuant to subsection (3) of this section shall become due and payable by the seller or transferor at time of sale. The county auditor shall not accept an instrument of conveyance of classified land for filing or recording unless the new owner has signed the notice of continuance or the additional tax has been paid. The seller, transferor, or new owner may appeal the new assessed valuation calculated under subsection (3) of this section to the county board of equalization. Jurisdiction is hereby conferred on the county board of equalization to hear these appeals;

(d) Determination by the assessor, after giving the owner written notice and an opportunity to be heard, that all or a portion of such land is no longer primarily devoted to and used for the purposes under which it was granted classification.

(2) Within thirty days after such removal of all or a portion of such land from current use classification, the assessor shall notify the owner in writing, setting forth the reasons for such removal. The seller, transferor, or owner may appeal such removal to the county board of equalization.

(3) Unless the removal is reversed on appeal, the assessor shall revalue the affected land with reference to full market value on the date of removal from classification. Both the assessed valuation before and after the removal of classification shall be listed and taxes shall be allocated according to that part of the year to which each assessed valuation applies. Except as provided in subsection (5) of this section, an additional tax shall be imposed which shall be due and payable to the county treasurer thirty days after the owner is notified of the amount of the additional tax. As soon as possible, the assessor shall compute the amount of such an additional tax and the treasurer shall mail notice to the owner of the amount thereof and the date on which payment is due. The amount of such additional tax shall be equal to:

(a) The difference between the property tax paid as "open space land", "farm and agricultural land", or "timber land" and the amount of property tax otherwise due and payable for the seven years last past had the land not been so classified; plus

(b) Interest upon the amounts of such additional tax paid at the same statutory rate charged on delinquent property taxes from the dates on which such additional tax could have been paid without penalty if the land had been assessed at a value without regard to this chapter.

(4) Additional tax, together with applicable interest thereon, shall become a lien on such land which shall attach at the time such land is removed from current use classification under this chapter and shall have priority to and shall be fully paid and satisfied before any recognizance, mortgage, judgment, debt, obligation or responsibility to or with which such land may become charged or liable. Such lien may be foreclosed upon expiration of the same period after delinquency and in the same manner provided by law for foreclosure of liens for delinquent real property taxes as provided in RCW 84.64.050 now or as hereafter amended. Any additional tax unpaid on its due date shall thereupon become delinquent. From the date of delinquency until paid, interest shall be charged at the same rate applied by law to delinquent ad valorem property taxes.

(5) The additional tax specified in subsection (3) of this section shall not be imposed if the removal of designation pursuant to subsection (1) of this section resulted solely from:

(a) Transfer to a government entity in exchange for other land located within the state of Washington;

(b) A taking through the exercise of the power of eminent domain, or sale or transfer to an entity having the power of eminent domain in anticipation of the exercise of such power;

(c) Sale or transfer of land within two years after the death of the owner of at least a fifty percent interest in such land;

(d) A natural disaster such as a flood, windstorm, earthquake, or other such calamity rather than by virtue of the act of the landowner changing the use of such property;

(e) Official action by an agency of the state of Washington or by the county or city within which the land is located which disallows the present use of such land;

(f) Transfer to a church and such land would qualify for property tax exemption pursuant to RCW 84.36.020; or

(g) Acquisition of property interests by state agencies or agencies or organizations qualified under RCW 84.34.210 and 64.04.130 for the purposes enumerated in those sections: PROVIDED, That at such time as these property interests are not used for the purposes enumerated in RCW 84.34.210 and 64.04.130 the additional tax specified in subsection (3) of this section shall be imposed.

NEW SECTION. Sec. 24. The following acts or parts of acts are each repealed:

(1) RCW 82.45.035 and 1969 ex.s. c 223 s 28A.45.035;

(2) RCW 82.45.105 and 1969 ex.s. c 223 s 28A.45.105;

(3) RCW 82.45.120 and 1981 c 167 s 5, 1980 c 134 s 1, & 1969 ex.s. c 223 s 28A.45.120;

(4) RCW 82.45A.010 and 1991 sp.s. c 22 s 2;

(5) RCW 82.45A.020 and 1991 sp.s. c 22 s 3; and

(6) RCW 82.45A.030 and 1991 sp.s. c 22 s 4.

NEW SECTION. Sec. 25. This act is necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.