BILL REQ. #:  Z-0391.1 

Read first time 01/26/2005.   Referred to Committee on Finance.

     AN ACT Relating to a property tax exemption for widows or widowers of honorably discharged veterans; amending RCW 84.36.379, 84.36.383, 84.36.385, 84.36.387, and 84.36.389; adding a new section to chapter 84.36 RCW; and creating a new section.

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

Sec. 1   RCW 84.36.379 and 2000 c 103 s 25 are each amended to read as follows:
     The legislature finds that the property tax exemption authorized by Article VII, section 10 of the state Constitution should be made available on the basis of a veteran's widow or widower or retired person's ability to pay property taxes. The legislature further finds that the best measure of a ((retired)) person's ability to pay taxes is that person's disposable income as defined in RCW 84.36.383.

NEW SECTION.  Sec. 2   A new section is added to chapter 84.36 RCW to read as follows:
     A person shall be exempt from any legal obligation to pay all or a portion of the amount of excess and regular real property taxes due and payable in the year following the year in which a claim is filed, and thereafter, in accordance with the following:
     (1) The property taxes must have been imposed upon a residence which was occupied by a veteran's widow or widower claiming the exemption as a principal place of residence as of the time of filing. Any person who sells, transfers, or is displaced from his or her residence may transfer his or her exemption status to a replacement residence, but no claimant shall receive an exemption on more than one residence in any year. Confinement of the person to a hospital or nursing home shall not disqualify the claim of exemption if:
     (a) The residence is temporarily unoccupied;
     (b) The residence is occupied by a person financially dependent on the claimant for support; or
     (c) The residence is rented for the purpose of paying nursing home or hospital costs;
     (2) The person claiming the exemption 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 person claiming the exemption lives in a cooperative housing association, corporation, or partnership, the person must own a share therein representing the unit or portion of the structure in which he or she resides. For purposes of this subsection, a residence owned by cotenants shall be deemed to be owned by each cotenant, and any lease for life shall be deemed a life estate;
     (3)(a) The person claiming the exemption must be:
     (i) Sixty-one years of age or older on December 31st of the year in which the exemption claim is filed, or must have been, at the time of filing, retired from regular gainful employment by reason of physical disability; and
     (ii) A widow or widower of a veteran who:
     (A) Died as a result of a service-connected disability;
     (B) Was rated as one hundred percent disabled by the United States veterans' administration for the ten years prior to his or her death;
     (C) Was a former prisoner of war as substantiated by the United States veterans' administration and was rated as one hundred percent disabled by the United States veterans' administration for one or more years prior to his or her death; or
     (D) Died in active training status as a member of the United States reserves or national guard;
     (b) The person claiming the exemption must not have remarried;
     (4) The amount of property taxes from which the person is exempt shall be calculated on the basis of disposable income, as defined in RCW 84.36.383. If the income of the person claiming exemption is reduced for two or more months of the assessment year due to substantial changes that are likely to continue for an indefinite period of time, the disposable income of the person shall be calculated by multiplying the average monthly disposable income of the person after such occurrences by twelve. If it is necessary to estimate income to comply with this subsection, the assessor may require confirming documentation of such income prior to May 31st of the year following application;
     (5)(a) A person who otherwise qualifies under this section and has a disposable income of thirty-two thousand dollars or less is exempt from all regular and excess property taxes on the first two hundred thousand dollars of assessed value;
     (b) A person who otherwise qualifies under this section and has a disposable income of forty thousand dollars or less but greater than thirty two thousand dollars is exempt from all regular and excess property taxes on the first one hundred fifty thousand dollars of assessed value;
     (c) A person who otherwise qualifies under this section and has a disposable income of fifty thousand dollars or less but greater than forty thousand dollars is exempt from all regular and excess property taxes on the first one hundred thousand dollars of assessed value; and
     (6) For a person who otherwise qualifies under this section and has a disposable income of fifty thousand dollars or less, the valuation of the residence shall be the assessed value of the residence on the later of January 1, 2001, or January 1st of the assessment year in which the person first qualifies under this section. If the person subsequently fails to qualify under this section only for one year because of high income, this same valuation shall be used upon requalification. If the person fails to qualify for more than one year in succession because of high income or fails to qualify for any other reason, the valuation upon requalification shall be the assessed value on January 1st of the assessment year in which the person requalifies. If the person transfers the exemption under this section to a different residence, the valuation of the different residence shall be the assessed value of the different residence on January 1st of the assessment year in which the person transfers the exemption.
     In no event may the valuation under this subsection be greater than the true and fair value of the residence on January 1st of the assessment year.
     This subsection does not apply to subsequent improvements to the property in the year in which the improvements are made. Subsequent improvements to the property shall be added to the value otherwise determined under this subsection at their true and fair value in the year in which they are made.

Sec. 3   RCW 84.36.383 and 2004 c 270 s 2 are each amended to read as follows:
     As used in RCW 84.36.381 through 84.36.389 and section 2 of this act, except where the context clearly indicates a different meaning:
     (1) The term "residence" means a single family dwelling unit whether such unit be separate or part of a multiunit dwelling, including the land on which such dwelling stands not to exceed one acre. The term shall also include 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 such structure in which he or she resides. The term shall also include a single family dwelling situated upon lands the fee of which is vested in the United States or any instrumentality thereof including an Indian tribe or in the state of Washington, and notwithstanding the provisions of RCW 84.04.080 and 84.04.090, such a residence shall be deemed real property.
     (2) The term "real property" shall also include a mobile home which has substantially lost its identity as a mobile unit 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, or other utilities. A mobile home located on land leased by the owner of the mobile home is subject, for tax billing, payment, and collection purposes, only to the personal property provisions of chapter 84.56 RCW and RCW 84.60.040.
     (3) "Department" means the state department of revenue.
     (4) "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 assessment year, less amounts paid by the person claiming the exemption or his or her spouse during the assessment year for:
     (a) Drugs supplied by prescription of a medical practitioner authorized by the laws of this state or another jurisdiction to issue prescriptions;
     (b) The treatment or care of either person received in the home or in a nursing home, boarding home, or adult family home; and
     (c) Health care insurance premiums for medicare under Title XVIII of the social security act.
     (5) "Disposable income" means adjusted gross income as defined in the federal internal revenue code, as amended prior to January 1, 1989, or such subsequent date as the director may provide by rule consistent with the purpose of this section, 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 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;
     (c) Amounts deducted for depreciation;
     (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.
     (6) "Cotenant" means a person who resides with the person claiming the exemption and who has an ownership interest in the residence.
     (7) "Disability" has the same meaning as provided in 42 U.S.C. Sec. 423(d)(1)(A) as amended prior to January 1, 2004, or such subsequent date as the director may provide by rule consistent with the purpose of this section.
     (8) "Veteran" has the same meaning as provided under RCW 41.04.005.

Sec. 4   RCW 84.36.385 and 2001 c 185 s 8 are each amended to read as follows:
     (1) A claim for exemption under RCW 84.36.381 or section 2 of this act as now or hereafter amended, shall be made and filed at any time during the year for exemption from taxes payable the following year and thereafter and solely upon forms as prescribed and furnished by the department of revenue. However, an exemption from tax under RCW 84.36.381 or section 2 of this act shall continue for no more than four years unless a renewal application is filed as provided in subsection (3) of this section. The county assessor may also require, by written notice, a renewal application following an amendment of the income requirements set forth in RCW 84.36.381 or section 2 of this act. Renewal applications shall be on forms prescribed and furnished by the department of revenue.
     (2) A person granted an exemption under RCW 84.36.381 or section 2 of this act shall inform the county assessor of any change in status affecting the person's entitlement to the exemption on forms prescribed and furnished by the department of revenue.
     (3) Each person exempt from taxes under RCW 84.36.381 ((in 1993 and thereafter,)) or section 2 of this act shall file with the county assessor a renewal application not later than December 31 of the year the assessor notifies such person of the requirement to file the renewal application.
     (4)(a) An application for exemption under section 2 of this act must be accompanied by the following documentation to substantiate the request for the exemption and any other documentation required by the county in which the exemption is sought:
     (i) The deceased veteran's DD 214 report of separation, or its equivalent, that must be under honorable conditions;
     (ii) A copy of the applicant's certificate of marriage to the deceased;
     (iii) A copy of the deceased veteran's death certificate; and
     (iv) A letter from the United States veterans' administration certifying that the death of the veteran meets the requirements of section 2(3) of this act.
     (b) The Washington state department of veterans affairs shall assist an eligible widow or widower in the preparation and submission of an application and the procurement of necessary substantiating documentation to satisfy the pertinent county assessor's or other designated official's requirements for obtaining the property tax exemption under section 2 of this act.
     (5) Beginning in 1992 and in each of the three succeeding years, the county assessor shall notify approximately one-fourth of those persons exempt from taxes under RCW 84.36.381 or section 2 of this act in the current year who have not filed a renewal application within the previous four years, of the requirement to file a renewal application.
     (((5))) (6) If the assessor finds that the applicant does not meet the qualifications as set forth in RCW 84.36.381 or section 2 of this act, as now or hereafter amended, the claim or exemption shall be denied but such denial shall be subject to appeal under the provisions of RCW 84.48.010(5) and in accordance with the provisions of RCW 84.40.038. If the applicant had received exemption in prior years based on erroneous information, the taxes shall be collected subject to penalties as provided in RCW 84.40.130 for a period of not to exceed three years.
     (((6))) (7) The department and each local assessor is hereby directed to publicize the qualifications and manner of making claims under RCW 84.36.381 through 84.36.389 and section 2 of this act, through communications media, including such paid advertisements or notices as it deems appropriate. Notice of the qualifications, method of making applications, the penalties for not reporting a change in status, and availability of further information shall be included on or with property tax statements and revaluation notices for all residential property including mobile homes, except rental properties.

Sec. 5   RCW 84.36.387 and 2003 c 53 s 408 are each amended to read as follows:
     (1) All claims for exemption shall be made and signed by the person entitled to the exemption, by his or her attorney in fact or in the event the residence of such person is under mortgage or purchase contract requiring accumulation of reserves out of which the holder of the mortgage or contract is required to pay real estate taxes, by such holder or by the owner, either before two witnesses or the county assessor or his or her deputy in the county where the real property is located: PROVIDED, That if a claim for exemption is made by a person living in a cooperative housing association, corporation, or partnership, such claim shall be made and signed by the person entitled to the exemption and by the authorized agent of such cooperative.
     (2) If the taxpayer is unable to submit his or her own claim, the claim shall be submitted by a duly authorized agent or by a guardian or other person charged with the care of the person or property of such taxpayer.
     (3) All claims for exemption and renewal applications shall be accompanied by such documented verification of income as shall be prescribed by rule adopted by the department of revenue.
     (4) Any person signing a false claim with the intent to defraud or evade the payment of any tax is guilty of perjury under chapter 9A.72 RCW.
     (5) The tax liability of a cooperative housing association, corporation, or partnership shall be reduced by the amount of tax exemption to which a claimant residing therein is entitled and such cooperative shall reduce any amount owed by the claimant to the cooperative by such exact amount of tax exemption or, if no amount be owed, the cooperative shall make payment to the claimant of such exact amount of exemption.
     (6) A remainderman or other person who would have otherwise paid the tax on real property that is the subject of an exemption granted under RCW 84.36.381 or section 2 of this act for an estate for life shall reduce the amount which would have been payable by the life tenant to the remainderman or other person to the extent of the exemption. If no amount is owed or separately stated as an obligation between these persons, the remainderman or other person shall make payment to the life tenant in the exact amount of the exemption.

Sec. 6   RCW 84.36.389 and 1979 ex.s. c 214 s 4 are each amended to read as follows:
     (1) The director of the department of revenue shall adopt such rules and regulations and prescribe such forms as may be necessary and appropriate for implementation and administration of this chapter subject to chapter 34.05 RCW, the administrative procedure act.
     (2) The department may conduct such audits of the administration of RCW 84.36.381 through 84.36.389 and section 2 of this act and the claims for exemption filed thereunder as it considers necessary. The powers of the department under chapter 84.08 RCW apply to these audits.
     (3) Any information or facts concerning confidential income data obtained by the assessor or the department, or their agents or employees, under subsection (2) of this section shall be used only to administer RCW 84.36.381 through 84.36.389 and section 2 of this act. Notwithstanding any provision of law to the contrary, absent written consent by the person about whom the information or facts have been obtained, the confidential income data shall not be disclosed by the assessor or the assessor's agents or employees to anyone other than the department or the department's agents or employees nor by the department or the department's agents or employees to anyone other than the assessor or the assessor's agents or employees except in a judicial proceeding pertaining to the taxpayer's entitlement to the tax exemption under RCW 84.36.381 through 84.36.389 and section 2 of this act. Any violation of this subsection is a misdemeanor.

NEW SECTION.  Sec. 7   This act applies to taxes levied for collection in 2006 and thereafter.