HOUSE BILL REPORT

                  HB 2116

             As Reported By House Committee On:

                           Finance

Title:  An act relating to an exception due to good cause for late payment of property taxes.

Brief Description:  Allowing an exception due to good cause for late payment of property taxes.

Sponsors:  Representatives Dyer, Ballasiotes, Hankins, Lisk, D. Schmidt, Cooke, Crouse, Hymes, Lambert, Huff, Foreman, Horn, Pennington, Elliot, L. Thomas, Mulliken, Blanton, Cairnes, Johnson, Buck, Skinner, Pelesky, Reams, Clements, Mitchell, McMorris, Robertson, Sherstad, Hargrove, Backlund, D. Sommers, B. Thomas, Schoesler, Honeyford, McMahan, Talcott, Smith, Goldsmith, Dickerson, Romero, Koster, Carrell, Delvin, Basich, Campbell, Sheahan, Quall, Morris, Fuhrman, Carlson, Hickel, Thompson, Stevens, Costa and Benton.

Brief History:

  Committee Activity:

Finance:  1/25/96, 1/31/96 [DPS].

HOUSE COMMITTEE ON FINANCE

Majority Report:  The substitute bill be substituted therefor and the substitute bill do pass.  Signed by 12 members:  Representatives B. Thomas, Chairman; Carrell, Vice Chairman; Boldt, Vice Chairman; Morris, Ranking Minority Member; Dickerson, Assistant Ranking Minority Member; Hymes; Mason; Mulliken; Pennington; Schoesler; Sheldon and Van Luven.

Staff:  Cheri Keller (786-7093).

Background:  Property taxes apply to the assessed value of all taxable property, which includes all real and personal property located within the state, unless specifically exempted.  Real property includes land, structures, and certain equipment affixed to the structures; personal property includes machinery, supplies, certain utility property (e.g., dams), and other items which are movable.

The county assessor determines the assessed value of each property and the amount of tax due for each property.  The county treasurer prepares an annual statement of taxes due which is sent to owners in mid-February.  Owners must pay at least one-half of the tax by April 30 and the remainder by October 31.  The treasurer receives the payments and distributes the funds to the accounts of the appropriate taxing districts.

If payment is not received by the due dates, certain penalties apply.  A penalty of 3 percent is added to the entire year's tax if the first half-payment is not received by May 31, and 8 percent is added if the tax remains delinquent on November 30.  All delinquencies are assessed interest at the rate of 12 percent per annum.  If the taxes remain unpaid for three years, the county may commence foreclosure proceedings to sell the property.

Summary of Substitute Bill:  No interest or penalties may be assessed on a delinquent property tax payment if the tax is paid within one month of the due date, if the taxpayer requests the waiver in writing, and one or more of the following events or circumstances exist.

!Death of the taxpayer or the taxpayer's immediate family, within 30 days of the due date.  Immediate family is defined as spouse, children, parents, or persons living in the same household.

!Incorrect written advice regarding payment of property taxes received from county treasurer's staff, county assessor's staff, or staff of the county property tax adviser.

!Natural disaster such as flood or earthquake that prevented timely payment.  The natural disaster declaration must be made by the Governor of the state and applies only to those counties listed in the declaration.  The county legislative authority must recognize the disaster by resolution and define the area of the county that will qualify for the waiver.  The waiver may apply only to owner-occupied improved properties and mobile homes.

!Delay or loss related to the delivery of the tax payment by the postal service and documented by the postal service.

Substitute Bill Compared to Original Bill:  The substitute bill stipulates that the waiver request must be made in writing.  Serious illness is removed as one of the conditions which would allow late payment with no penalty.  A death in the family must occur within 30 days of the tax due date to be grounds for payment with no penalty.  Immediate family is defined.  A natural disaster that prevented timely payment must be officially declared by the Governor and the county legislative authority to qualify for a waiver.  A waiver based on natural disaster applies only to owner-occupied improved properties and mobile homes.

Appropriation:  None.

Fiscal Note:  Available.

Effective Date of Substitute Bill:  Ninety days after adjournment of session in which bill is passed.

Testimony For:  (in favor of substitute bill)  County treasurers run into these scenarios all the time.  We try to use common sense in the administration of our office and sometimes write off these penalties.  We try to apply the law with consistency and fairness.  Conditions with appearances of favoritism cause problems.  This bill would help us deal with these scenarios with a higher degree of precision.

Testimony Against:  None.

Testified:  Rose Bowman, Lewis County Treasurer; and Michael Murphy, Thurston County Treasurer.