BP BHEAD INT H

AN ACT Relating to property tax deferral for distressed taxpayers; adding a new chapter to Title 84 RCW; creating a new section; prescribing penalties; providing an effective date; and declaring an emergency.

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

DISTRESSED PROPERTY TAXPAYER'S DEFERRAL PROGRAM

NEW SECTION. Sec. 1. FINDINGS AND INTENT. With the rapid rise in property values and the corresponding increases in property tax liability, it has become increasingly difficult for many homeowners to pay the increased taxes due on real property and they are being forced to either borrow money to pay the unexpected increases or to sell their residences because of an inability to pay the tax. The legislature intends to allow those homeowners whose property tax liability in any one year has exceeded four percent of their combined disposable income for that year to defer the amount of the real property taxes that exceeds four percent. This deferral program is intended to assist homeowners in maintaining their homes by easing the increases in tax and maintaining their dignity while still paying their appropriate share of the property tax burden.

NEW SECTION. Sec. 2. DEFINITIONS. Unless the context clearly requires otherwise, the definitions used in this section apply throughout this chapter.

(1) "Claimant" means a person who elects to defer payment of real property taxes by filing a claim to defer as provided in this chapter.

(2) "Combined disposable income" means the disposable income of the person claiming the exemption, plus the disposable income of his or her spouse, and the disposable income of each cotenant occupying the residence for the preceding calendar year.

(3) "Cotenant" means a person who resides with the claimant and who has an ownership interest in the real property.

(4) "Disposable income" means adjusted gross income as defined in the federal internal revenue code, as now or hereafter amended, plus all of the following items to the extent they are not included in or have been deducted from adjusted gross income:

(a) Capital gains, other than nonrecognized gain on the sale of a principal residence under section 1034 of the federal internal revenue code, or gain excluded from income under section 121 of the federal internal revenue code to the extent it is reinvested in a new principal residence;

(b) Amounts deducted for loss;

(d) Pension and annuity receipts;

(e) Military pay and benefits other than attendant-care and medical-aid payments;

(f) Veterans' benefits other than attendant-care and medical-aid payments;

(g) Federal social security act and railroad retirement benefits;

(h) Dividend receipts; and

(i) Interest received on state and municipal bonds.

(5) "Equity value" means the amount by which the true and fair market value of residence as determined from the records of the county assessor exceeds the total amount of any liens or other obligations against the real property.

(6) "Excess property taxes" and "excess property tax levies" mean a tax levy by or for a taxing district that is not subject to the aggregate limitation set forth in RCW 84.52.043 and 84.52.050.

(7) "Real property" has the same meaning as provided in RCW 84.04.090. In addition, "real property" includes a mobile home that has substantially lost its identity as a mobile unit by virtue of its being fixed in location upon land owned by the owner of the mobile home and placed on a foundation, posts or blocks, with fixed pipe, connections with sewer, water, or other utilities.

(8) "Real property taxes" means the total regular and excess property tax levies on property within this state as authorized by law.

(9) "Regular property taxes" and "regular property tax levies" have the same meaning as provided in RCW 84.04.140.

(10) "Residence" means a single-family dwelling unit whether the unit is separate or part of a multi-unit dwelling, including the land on which the dwelling stands not to exceed one acre. "Residence" also includes a share ownership in a cooperative housing association, corporation, or partnership if the person claiming exemption can establish that his or her share represents the specific unit or portion of the structure in which he or she resides. "Residence" also includes a single-family dwelling situated upon lands the fee of which is vested in the United States or an instrumentality of the United States including an Indian tribe or in the state of Washington, and notwithstanding RCW 84.04.080 or 84.04.090, such a residence is deemed real property.

NEW SECTION. Sec. 3. DEFERRAL AUTHORIZED. A claimant may apply to defer payment of that amount of real property taxes imposed that exceeds four percent of the claimant's combined disposable income up to a maximum dollar amount equal to fifty percent of the claimant's equity value in the property for which the deferral is requested.

NEW SECTION. Sec. 4. CONDITIONS OF DEFERRAL. The following conditions must be met in order to be eligible for the deferral program established in this chapter:

(1) The real property taxes must have been imposed upon a residence that was occupied by the claimant as a principal place of residence as of the first day of January of the year for which the deferral is claimed;

(2) The claimant must have owned, at the time of filing, in fee, as a life estate, or by contract purchase, the residence on which the property taxes have been imposed or if the claimant lives in a cooperative housing association, corporation, or partnership, the person must own a share in the cooperative representing the unit or portion of the structure in which he or she resides. For purposes of this subsection, a residence owned by a marital community or owned by cotenants is deemed to be owned by each spouse or cotenant, and a lease for life is deemed a life estate;

(3) The claimant must submit acceptable proof of his or her total combined disposable income for the year for which the deferral is claimed;

(4) The claimant must show adequate proof that there is in force fire and casualty insurance on the residence for which the deferral is claimed in an amount sufficient to protect the interest of the state in the claimant's equity value. If the claimant fails to or cannot maintain adequate fire and casualty insurance as required to protect the state's interest in the claimant's equity value, the amount deferred may not exceed eighty percent of the claimant's equity value in the land or lot only; and

(5) The claimant may not be receiving or applying for another exemption or deferral provided under this title.

NEW SECTION. Sec. 5. CLAIM TO DEFER REAL PROPERTY TAXES‑-NOTICE‑-FILING‑-CONTENTS‑-APPEAL. (1) The department and each local assessor shall publicize the eligibility requirements and manner of submitting a claim for a deferral under this chapter as the department or assessor deems appropriate. At a minimum, the department or the assessor shall provide notice of the availability of this deferral program, the method for making a deferral claim, the penalties for false claims or not reporting changes in status, and the availability of more detailed information on or with the property tax notices and revaluation notices for all residential real property.

(2) A written claim for the deferral of real property taxes as provided by this chapter:

(a) Must be made and filed annually by the claimant with the county assessor on forms adopted by the department and supplied by the county assessor;

(b) May not be granted for more than one tax year under any circumstances; and

(c) Must be filed no later than thirty days before the real property tax assessment is due. However, for good cause shown, the department may waive this requirement.

(3) The written claim for deferral of real property taxes must at a minimum contain the following information:

(a) The legal description of the residence for which the deferral is claimed;

(b) A list of all members of the claimant's household;

(d) Facts establishing the eligibility for deferral under this chapter; and

(e) Other relevant information required by rule adopted by the department.

(4) A claim and renewal for deferral under this chapter must be made and signed by the claimant or by the claimant's attorney in fact, subject to the penalties as provided in chapter 9.72 RCW for false swearing. If the residence of the person is under mortgage, contract of sale, or deed of trust requiring accumulation of reserves out of which the holder of the mortgage, contract of sale, or deed of trust is required to pay real property taxes, the holder of the mortgage, contract of sale, or deed of trust must cosign the claim for deferral before a notary public or the county assessor or his or her deputy in the county where the residence is located. If a claim for exemption is made by a person living in a cooperative housing association, corporation, or partnership, the claim must be made and signed by the claimant and by the authorized agent of the cooperative.

(5) If the claimant is unable to submit his or her own claim for deferral, the claim must be submitted by a duly authorized agent or by a guardian or other person charged with the care of the person or property of the claimant.

(6) A claim for deferral and a renewal application must be accompanied by documented verification of income as prescribed by this chapter and other documentation required by rule adopted by the department.

(7) A person signing a false claim with the intent to defraud or evade the payment of tax is guilty of the offense of perjury.

(8) The real property taxes of a cooperative housing association, corporation, or partnership must be reduced by the amount of tax deferral to which a claimant residing therein is entitled and the cooperative shall reduce any amount owed by the claimant to the cooperative by the exact amount of tax deferral.

(9) In January of each year, the county assessor shall send to each claimant who has been granted deferral of real property taxes for the previous year renewal forms and notice to renew.

(10) The county assessor shall determine if each claimant must be granted a deferral for each year claimed, but the claimant may appeal this determination to the county board of equalization, whose decision is final as to the deferral of that year.

NEW SECTION. Sec. 6. CEASING TO RESIDE PERMANENTLY ON PROPERTY SUBJECT TO DEFERRAL DECLARATION. If the claimant declaring his or her intention to defer real property taxes under this chapter ceases to reside permanently on the property for which the claim to defer is made between the date of filing the claim and December 15th of that year, the deferral otherwise allowable under this chapter may not be allowed on the tax roll. However, this section does not apply if the claimant dies, leaving a spouse or cotenant surviving, who is also eligible for the deferral provided in this chapter.

NEW SECTION. Sec. 7. LIEN OF STATE, MORTGAGE, CONTRACT OF SALE, OR DEED OF TRUST‑-PRIORITY‑-AMOUNT‑-INTEREST. (1) If a portion of a claimant's real property taxes is deferred under this chapter, the amount deferred and required to be paid under section 10 of this act becomes a lien in favor of the state upon the property for which the deferral is granted and has priority as provided in chapters 35.50 and 84.60 RCW. However, the interest of a mortgage, contract of sale, or deed of trust holder who is required to cosign a claim for deferral under section 5 of this act has priority to the deferred lien.

(2) The lien of the state may accumulate up to fifty percent of the amount of the claimant's equity value in the property for which the deferral is granted and must bear interest at the rate of twelve percent per year from the time the claim for deferral is granted until the obligation is paid.

(3) For a mobile home that is considered real property as provided in this title, the department of licensing shall show the state's lien on the certificate of ownership for the mobile home.

(4) For other real property, the department shall file a notice of the deferral and the state's lien with the county recorder or auditor.

NEW SECTION. Sec. 8. DUTIES OF THE COUNTY ASSESSOR. The county assessor shall:

(1) Immediately transmit one copy of a claim to defer real property taxes under this chapter to the department. The department may audit a claim and shall notify the assessor as soon as possible of a claim in which a factor appears to disqualify the claimant for the deferral sought;

(2) Compute the real property tax rates for the property located within the county as if a deferral provided by this chapter did not exist; and

(3) As soon as possible notify the department and the county treasurer of the amount of real property taxes deferred for that year.

NEW SECTION. Sec. 9. PAYMENTS TO COUNTIES. After receipt of the notification from the county assessor of the amount of real property taxes deferred under this chapter, the department shall pay, from amounts appropriated for that purpose, to the county treasurers an amount equivalent to the total amount so deferred on real property located within the county.

NEW SECTION. Sec. 10. WHEN DEFERRED REAL PROPERTY TAXES BECOME PAYABLE. A real property tax deferred under this chapter becomes due and payable together with interest as provided in section 7 of this act:

(1) Upon the sale of the property that has a deferred real property tax lien upon it;

(2) Upon the death of the claimant with an outstanding deferred real property tax lien. However, a surviving spouse or cotenant who remains eligible for a deferral under this chapter may elect to incur the real property tax lien which is then payable by that spouse or cotenant as provided in this section;

(3) Upon the condemnation of property with a deferred real property tax lien upon it by a public or private body exercising eminent domain power, except as otherwise provided in RCW 84.60.070;

(4) At the time the claimant ceases to reside permanently in the residence for which the deferral has been granted; or

(5) Upon the failure of a condition set forth in section 4 of this act.

NEW SECTION. Sec. 11. COLLECTION OF DEFERRED REAL PROPERTY TAXES. (1) The county treasurer shall collect all the amounts deferred together with interest under this chapter, in the manner provided for in chapter 84.56 RCW. For purposes of collection of deferred real property taxes, chapters 84.56, 84.60, and 84.64 RCW apply.

(2) When a deferred real property tax, together with interest, is collected the moneys must be credited to a special account in the county treasury. The county treasurer shall remit the amount of deferred real property tax together with interest to the department within thirty days from the date of collection.

(3) The department shall deposit the deferred real property taxes in the state general fund.

NEW SECTION. Sec. 12. ELECTION TO CONTINUE DEFERRAL BY SURVIVING SPOUSE OR COTENANT. (1) A surviving spouse of the claimant may elect to continue the property in its deferred tax status if the property is the residence of the spouse or cotenant of the claimant and the spouse or cotenant meets the requirements of this chapter.

(2) The election under this section to continue the property in its deferred status by the spouse or cotenant of the claimant must be filed in the same manner as an original claim for deferral is filed under this chapter, not later than ninety days from the date of the claimant's death. Thereupon, the property with respect to which the deferral of real property taxes is claimed continues to be treated as deferred property. When the property has been continued in its deferred status by the filing of the spouse or cotenant of the claimant of an election under this section, the spouse or cotenant of the claimant may continue the property in its deferred status in subsequent years by filing a claim under this chapter so long as the spouse or cotenant meets the qualifications set out in this section.

NEW SECTION. Sec. 13. PAYMENT OF PART OR ALL OF DEFERRED TAXES AUTHORIZED. A claimant may at any time pay a part or all of the deferred real property taxes, but the payment does not affect the deferred tax status of the property.

NEW SECTION. Sec. 14. COLLECTION OF PERSONAL PROPERTY TAXES NOT AFFECTED. This chapter is not intended to or may not be construed to prevent the collection, by foreclosure, of personal property taxes that become a lien against tax‑deferred property.

NEW SECTION. Sec. 15. FORMS AND RULES. The department shall devise the forms and adopt rules consistent with chapter 34.05 RCW and this chapter as are necessary or desirable to permit its effective administration.

NEW SECTION. Sec. 16. Sections 1 through 15 of this act shall constitute a new chapter in Title 84 RCW.

NEW SECTION. Sec. 17. PART HEADINGS AND CAPTIONS. Part headings and captions as used in this act constitute no part of the law.

NEW SECTION. Sec. 18. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 19. 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 July 1, 1995.