BILL REQ. #:  H-0800.5 



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HOUSE BILL 1801
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State of Washington59th Legislature2005 Regular Session

By Representatives Grant, Kretz, Linville, Orcutt, Morrell, Buri, Quall, Kristiansen, Holmquist, Cox, Hasegawa, McCune, Eickmeyer, Condotta, Dunn, Walsh, Haigh and Newhouse

Read first time 02/07/2005.   Referred to Committee on Economic Development, Agriculture & Trade.



     AN ACT Relating to a state real estate excise tax exemption for certain farm and agricultural land; amending RCW 82.45.100, 82.46.010, 82.46.070, and 82.46.075; adding a new section to chapter 82.45 RCW; adding a new section to chapter 82.46 RCW; creating a new section; providing an effective date; and declaring an emergency.

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

NEW SECTION.  Sec. 1   The legislature finds that agriculture is an integral part of Washington state history and agriculture has provided and continues to provide employment for many of Washington state citizens. The legislature also finds that providing targeted incentives to sellers of agricultural lands will allow new and existing small agricultural producers to purchase productive farm land. The legislature intends to provide such incentives through excise tax relief on sales of agricultural lands to new or existing small producers.

NEW SECTION.  Sec. 2   A new section is added to chapter 82.45 RCW to read as follows:
     (1) The tax imposed under this chapter does not apply to sales of farm and agricultural land, if the following conditions are met:
     (a) The sale is to a qualified purchaser; and
     (b) The farm and agricultural land is not converted to a different purpose or use within ten years of the sale.
     (2) If a person no longer meets the definition of qualified purchaser at any time during the ten years following the date of sale, the person shall pay the entire amount of taxes that would have been due at the time of sale if the exemption had not been claimed under this section. Interest shall be imposed from the date of sale to the time of payment in accordance with RCW 82.45.100(1)(b). Penalties shall be assessed on the person disqualified from the exemption according to the penalty rates in RCW 82.45.100(2). The due date for the purposes of calculating the penalty is July 1st of the year of disqualification. A person that no longer meets the definition of qualified purchaser because of acts or circumstances not attributable to the person, shall not pay the additional taxes, interest, or penalties.
     (3) A person claiming the exemption under this section shall include federal tax returns for the previous five calendar years with the real estate tax affidavit filed with the county treasurer.
     (4) For the purposes of this section, the following definitions apply:
     (a) "Farm and agricultural land" has the same meaning as in RCW 84.34.020(2)(a).
     (b) "Qualified purchaser" means a person who:
     (i) Is a farmer as defined in RCW 82.04.213;
     (ii) Has had average annual gross receipts from the sales of agricultural products of two hundred fifty thousand dollars or less for the five calendar years preceding the sale; and
     (iii) In conjunction with his or her family, provides a majority of the day-to-day labor for or management of the farm for at least ten years after the sale.

Sec. 3   RCW 82.45.100 and 1997 c 157 s 4 are each amended to read as follows:
     (1) Payment of the tax imposed under this chapter is due and payable immediately at the time of sale, and if not paid within one month thereafter shall bear interest from the time of sale until the date of payment.
     (a) Interest imposed before January 1, 1999, shall be computed at the rate of one percent per month.
     (b) Interest imposed after December 31, 1998, shall be computed on a monthly basis at the rate as computed under RCW 82.32.050(2). The rate so computed shall be adjusted on the first day of January of each year for use in computing interest for that calendar year. The department of revenue shall provide written notification to the county treasurers of the variable rate on or before December 1 of the year preceding the calendar year in which the rate applies.
     (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, as the case may be, within one month 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 two months 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 three months 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 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 be personally liable for the tax, along with any interest as provided in subsection (1) of this section, unless:
     (a) An instrument evidencing the sale 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 department of revenue in writing of the occurrence of the sale within thirty days following the date of the sale.
     (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 the additional amount found to be due plus interest and penalties as provided in subsections (1) and (2) of this section. The department shall notify the taxpayer by mail of the additional amount and the same shall become due and shall be paid within thirty days from the date of the notice, or within such further time as the department may provide.
     (5) No assessment or refund may be made by the department more than four years after the date of sale except upon a showing of:
     (a) Fraud or misrepresentation of a material fact by the taxpayer;
     (b) A failure by the taxpayer to record documentation of a sale or otherwise report the sale to the county treasurer; ((or))
     (c) A failure of the transferor or transferee to report the sale under RCW 82.45.090(2); or
     (d) Disqualification from the exemption in section 2 of this act
.
     (6) Penalties collected on taxes due under this chapter under subsection (2) of this section and RCW 82.32.090 (2) through (((6))) (7) shall be deposited in the housing trust fund as described in chapter 43.185 RCW.

Sec. 4   RCW 82.46.010 and 1994 c 272 s 1 are each amended to read as follows:
     (1) The legislative authority of any county or city shall identify in the adopted budget the capital projects funded in whole or in part from the proceeds of the tax authorized in this section, and shall indicate that such tax is intended to be in addition to other funds that may be reasonably available for such capital projects.
     (2) The legislative authority of any county or any city may impose an excise tax on each sale 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. The revenues from this tax shall be used by any city or county with a population of five thousand or less and any city or county that does not plan under RCW 36.70A.040 for any capital purpose identified in a capital improvements plan and local capital improvements, including those listed in RCW 35.43.040.
     After April 30, 1992, revenues generated from the tax imposed under this subsection in counties over five thousand population and cities over five thousand population that are required or choose to plan under RCW 36.70A.040 shall be used solely 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 April 30, 1992, may continue to be used for that purpose until the original debt for which the revenues were pledged is retired, or (b) committed prior to April 30, 1992, by such counties or cities to a project may continue to be used for that purpose until the project is completed.
     (3) In lieu of imposing the tax authorized in RCW 82.14.030(2), the legislative authority of any county or any city may impose an additional excise tax on each sale 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.
     (4) Unless otherwise provided in this chapter, 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.
     (5) Taxes imposed under this section shall comply with all applicable rules, regulations, laws, and court decisions regarding real estate excise taxes as imposed by the state under chapter 82.45 RCW.
     (6) As used in this section, "city" means any city or town and "capital project" means those public works projects of a local government for planning, acquisition, construction, reconstruction, repair, replacement, rehabilitation, or improvement of streets; roads; highways; sidewalks; street and road lighting systems; traffic signals; bridges; domestic water systems; storm and sanitary sewer systems; parks; recreational facilities; law enforcement facilities; fire protection facilities; trails; libraries; administrative and/or judicial facilities; river and/or waterway flood control projects by those jurisdictions that, prior to June 11, 1992, have expended funds derived from the tax authorized by this section for such purposes; and, until December 31, 1995, housing projects for those jurisdictions that, prior to June 11, 1992, have expended or committed to expend funds derived from the tax authorized by this section or the tax authorized by RCW 82.46.035 for such purposes.

Sec. 5   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 of real property in the county at a rate not to exceed one percent of the selling price. The proceeds of the tax shall be used exclusively for the acquisition and maintenance of conservation areas.
     Unless otherwise provided in this chapter, 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; 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 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.

Sec. 6   RCW 82.46.075 and 2002 c 343 s 1 are each amended to read as follows:
     (1) Subject to subsections (4) and (5) of this section, the legislative authority of any county may impose an additional excise tax on the purchase and sale of real property in the county at the rate of one-half of one percent of the selling price. The proceeds of the tax shall be used exclusively for the development of affordable housing including acquisition, building, rehabilitation, and maintenance and operation of housing for very low, low, and moderate-income persons and those with special needs.
     (2) Revenues generated from the tax imposed under this section shall be placed in an affordable housing account administered by the county. Disbursements from the account shall be made following a competitive grant and loan process. The county legislative authority shall determine a mechanism for receiving grant and loan applications, and criteria by which the applications shall be approved and funded. Eligible recipients of grants and loans from the account shall be private nonprofit, affordable housing providers, the housing authority for the county, or other housing programs conducted or funded by a public agency, or by a public agency in partnership with a private nonprofit entity.
     (3) Unless otherwise provided in this chapter, the taxes imposed under this section 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 that the tax shall be the obligation of both the purchaser and the seller, as determined by the county legislative authority, with at least one-half of the obligation being that of the purchaser. The county may enforce the obligation through an action of debt against the purchaser or seller or may foreclose the lien on the property in the same manner prescribed for the foreclosure of mortgages. The imposition of the tax is effective thirty days after the election at which the tax is authorized.
     (4)(a) No tax may be imposed under this section unless approved by a majority of the voters of the county voting, for a specified period and for a specified maximum rate. This vote must follow either:
     (i) The adoption of a resolution by the county legislative authority proposing this action; or
     (ii) The filing of a petition proposing this action with the county auditor, signed by county voters at least equal in number to ten percent of the total number of voters in the county who voted in the preceding general election.
     (b) 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 called for this purpose by the county legislative authority.
     (5) No tax may be imposed under this section unless the county imposes a tax under RCW 82.46.070 at the maximum rate and the tax was imposed by January 1, 2003.
     (6) A plan for the expenditure of the proceeds of the tax imposed by this section 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 at least one public hearing shall be held to obtain public comment. The proceeds of the tax shall be expended in conformance with this plan.

NEW SECTION.  Sec. 7   A new section is added to chapter 82.46 RCW to read as follows:
     The exemption in section 2 of this act is for the state real estate excise tax in chapter 82.45 RCW and does not extend to taxes imposed under this chapter.

NEW SECTION.  Sec. 8   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 takes effect July 1, 2005.

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