AN ACT
Relating to subjecting certain ownership changes to real estate excise
taxation; adding new sections to Title 82 RCW; creating a new section; and
declaring an emergency.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. (1)
The legislature finds that transfers of ownership of a corporation may be, in
some circumstances, essentially equivalent to the sale of real property held by
the corporation. The legislature further finds that all transfers of
possession or use of real property should be subject to the same excise tax
burdens.
(2)
The intent of this act is to apply an excise tax to transfers of corporate
ownership when the transfer of ownership is comparable to a sale of real
property. The excise tax imposed under this act is intended to be equivalent
in burden to the excise tax imposed on sales of real estate under chapter 82.45
RCW.
NEW
SECTION. Sec. 2. Unless
the context clearly requires otherwise, the definitions in this section apply
throughout this chapter.
(1)
"Ownership transfer" means a transfer or series of transfers in any
consecutive twelve-month period, for a valuable consideration, of ownership of
stock possessing more than fifty percent of the total combined voting power of
the issued and outstanding shares of each class of stock entitled to vote.
(2)
"Value of real property assets" means the true and fair value in
money, at the time an ownership transfer is completed, of any estate or
interest in real property located in this state.
NEW
SECTION. Sec. 3. (1)
An excise tax is imposed on each ownership transfer of a corporation, to be
paid by the corporation, at the rate of one and twenty-eight one-hundredths
percent of the value of the real property assets of the corporation.
(2)
Chapter 82.32 RCW applies to the tax imposed in this chapter. The tax due
dates, reporting periods, and return requirements applicable to chapter 82.04
RCW apply equally to the tax imposed in this chapter.
NEW
SECTION. Sec. 4. The
tax imposed in this chapter does not apply to ownership transfers:
(1)
When the taxpayer demonstrates by a preponderance of the evidence that the
primary intent of the ownership transfer is for purposes other than avoidance
of the tax imposed in chapter 82.45 RCW.
(2)
When the value of the real property assets of the corporation is less than
fifty percent of the true and fair value in money of all assets held by the
corporation at the time of the ownership transfer.
(3) Of
interests that are required to be registered with the federal securities and
exchange commission under the securities act of 1933 or the securities exchange
act of 1934.
(4) By
gift, devise, or inheritance.
(5)
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.
(6)
Solely for the purpose of securing a debt.
(7)
Upon execution of a judgment.
(8) To
a corporation that is wholly owned by the transferor and/or the transferor's
spouse or children. If such transferee corporation voluntarily transfers the
ownership interest, or the real property represented by the ownership interest,
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 (a) the transferor and/or the transferor's
spouse or children, (b) 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 (c) a corporation or partnership wholly owned by the original
transferor and/or the transferor's spouse or children, within five years after
the original transfer to which this exemption applies, excise taxes shall
become due and payable on the original transfer as otherwise provided by law.
NEW
SECTION. Sec. 5. Sections
2 through 4 of this act shall constitute a new chapter in Title 82 RCW.
NEW
SECTION. Sec. 6. 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.
