BILL REQ. #:  S-3393.2 

Read first time 01/13/14.   Referred to Committee on Trade & Economic Development.

     AN ACT Relating to providing a property tax exemption for property held under lease, sublease, or lease-purchase by a nonprofit organization that provides job training, placement, or preemployment services; amending RCW 84.36.030 and 82.32.534; and creating new sections.

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

NEW SECTION.  Sec. 1   (1) The legislature finds that nonprofit organizations that provide job training, job placement, and preemployment services are an important part of the economy. The legislature further finds that property leased by a nonprofit organization for the provision of job training, placement, or preemployment services is subject to property tax while property owned by the organization and used for identical purposes is exempt from property tax.
     (2)(a) This subsection is the tax preference performance statement for the property tax exemption provided in RCW 84.36.030. The performance statement is only intended to be used for subsequent evaluation of the tax preference. It is not intended to create a private right of action by any party or be used to determine eligibility for preferential tax treatment.
     (b) The legislature categorizes this tax preference as one intended to accomplish the general purposes indicated in RCW 82.32.808(2) (c) and (d).
     (c) It is the legislature's specific public policy objective to remedy a structural inefficiency in the current tax code, and additionally, to provide an organization claiming the exemption under RCW 84.36.030(1)(d) with a greater amount of financial resources to dedicate to job training, education, and placement.
     (d) To measure the effectiveness of the exemption provided in this act in achieving the specific public policy objective described in (c) of this subsection, the joint legislative audit and review committee shall evaluate the following:
     (i) Changes in the number of people served by the organization's job training and education programs;
     (ii) Changes in the number of individuals placed into jobs who received job training or education assistance by the organization;
     (iii) Changes in the number of locations owned and leased by the organization providing job training or education programs.
     (e)(i) The information provided in the annual report submitted by the organization under RCW 82.32.534 is intended to provide the informational basis for the evaluation under (d) of this subsection.
     (ii) In addition to the data source described under (e)(i) of this subsection, the joint legislative audit and review committee may use any other data it deems necessary in performing the evaluation under (d) of this subsection.

Sec. 2   RCW 84.36.030 and 2006 c 305 s 1 are each amended to read as follows:
     The following real and personal property ((shall be)) are exempt from taxation:
     (1)(a) Property owned by nonprofit organizations or associations, organized and conducted for nonsectarian purposes, which shall be used for character-building, benevolent, protective or rehabilitative social services directed at persons of all ages.
     (b) The sale of donated merchandise ((shall)) is not ((be)) considered a commercial use of the property under this section if the proceeds are devoted to the furtherance of the purposes of the selling organization or association as specified in this subsection (1).
     (c) In a county with a population of less than twenty thousand, the rental or use of property, owned by a nonprofit organization or association described in (a) of this subsection, by a person, group, or organization in one of the following ways ((shall)) does not nullify the exemption:
     (i) The property may be rented or used for pecuniary gain or for business activities or by individuals, groups, and organizations for private purposes if the rental or use:
     (A) Does not exceed fifteen days each assessment year;
     (B) No comparable private for-profit facility exists within ten miles of the property that could be used for the same purpose for which the property is loaned or rented; and
     (C) All income from the rental or use of the exempt property is used for capital improvements to the exempt property, maintenance and operation of the exempt property, or for exempt purposes; or
     (ii) The property is rented or used by a nonprofit community group or other nonprofit organization that might not qualify for exemption if it owned the property as long as the rental or use of the property:
     (A) Does not exceed fifteen days each assessment year;
     (B) Does not result in pecuniary gain;
     (C) Does not involve business activities;
     (D) Is always for the general public good; and
     (E) All income from the rental or use of the exempt property is used for capital improvements to the exempt property, maintenance and operation of the exempt property, or for exempt purposes.
     (d) Property primarily used for providing job training, placement, or preemployment services or for supporting job training, placement, or preemployment services through the sale of donated goods as provided in (b) of this subsection (1) and which is leased by an organization or association which otherwise meets the requirements in this subsection (1) and is exempt from federal income taxation under 26 U.S.C. Sec. 501(c)(3) of the federal internal revenue code. To qualify for the exemption, the lease, sublease, or lease-purchase agreement must expressly require the organization or association which is lessee or sublessee to pay any property taxes for the leased or subleased property. An organization claiming an exemption under this subsection (1)(d) must file an annual report under RCW 82.32.534.
     (2) Property owned by any nonprofit church, denomination, group of churches, or an organization or association, the membership of which is comprised solely of churches or their qualified representatives, which is utilized as a camp facility if used for organized and supervised recreational activities and church purposes as related to such camp facilities. The exemption provided by this ((paragraph shall apply)) subsection applies to a maximum of two hundred acres of any such camp as selected by the church, including buildings and other improvements thereon.
     (3) Property, including buildings and improvements required for the maintenance and safeguarding of such property, owned by nonprofit organizations or associations engaged in character building of boys and girls under eighteen years of age, and used for such purposes and uses, provided such purposes and uses are for the general public good((: PROVIDED, That)). However, if existing charters provide that organizations or associations, which would otherwise qualify under the provisions of this ((paragraph)) subsection, serve boys and girls up to the age of twenty-one years, then such organizations or associations ((shall be)) are deemed qualified pursuant to this section.
     (4)(a) Property owned by all organizations and societies of veterans of any war of the United States, recognized as such by the department of defense, which ((shall have)) has national charters, and which ((shall have)) has for their general purposes and objects the preservation of the memories and associations incident to their war service and the consecration of the efforts of their members to mutual helpfulness and to patriotic and community service to state and nation. To be exempt such property must be used in such manner as may be reasonably necessary to carry out the purposes and objects of such societies.
     (b) The use of the property for pecuniary gain or for business activities, except as provided in this subsection (4), nullifies the exemption otherwise available for the property for the assessment year. The exemption is not nullified by:
     (i) The collection of rent or donations if the amount is reasonable and does not exceed maintenance and operation expenses.
     (ii) Fund-raising activities conducted by a nonprofit organization.
     (iii) The use of the property for pecuniary gain for periods of not more than fifteen days in a year.
     (c) An inadvertent use of the property in a manner inconsistent with the purpose for which exemption is granted, if the inadvertent use is not part of a pattern of use. A pattern of use is presumed when an inadvertent use is repeated in the same assessment year or in two or more successive assessment years.
     (5) Property owned by all corporations, incorporated under any act of congress, whose principal purposes are to furnish volunteer aid to members of the armed forces of the United States and also to carry on a system of national and international relief and to apply the same in mitigating the sufferings caused by pestilence, famine, fire, floods, and other national calamities and to devise and carry on measures for preventing the same.
     (6) Property owned by nonprofit organizations exempt from federal income tax under ((section)) 26 U.S.C. Sec. 501(c)(3) of the federal internal revenue code of ((1954)) 1986, as amended, that are guarantee agencies under the federal guaranteed student loan program or that issue debt to provide or acquire student loans.
     (7) To be exempt under this section, the property must be used exclusively for the purposes for which exemption is granted, except as provided in RCW 84.36.805.
     (8) For the purposes of this section, "general public good" means members of the community derive a benefit from the rental or use of the property by the nonprofit community group or organization.

Sec. 3   RCW 82.32.534 and 2010 c 114 s 103 are each amended to read as follows:
     (1)(a) Every person claiming a tax preference that requires a report under this section must file a complete annual report with the department. The report is due by April 30th of the year following any calendar year in which a person becomes eligible to claim the tax preference that requires a report under this section. The department may extend the due date for timely filing of annual reports under this section as provided in RCW 82.32.590.
     (b) The report must include information detailing employment, wages, and employer-provided health and retirement benefits for employment positions in Washington for the year that the tax preference was claimed. However, persons engaged in manufacturing commercial airplanes or components of such airplanes may report employment, wage, and benefit information per job at the manufacturing site for the year that the tax preference was claimed. The report must not include names of employees. The report must also detail employment by the total number of full-time, part-time, and temporary positions for the year that the tax preference was claimed.
     (c) Persons receiving the benefit of the tax preference provided by RCW 82.16.0421 or claiming any of the tax preferences provided by RCW 82.04.2909, 82.04.4481, 82.08.805, 82.12.805, or 82.12.022(5) must indicate on the annual report the quantity of product produced in this state during the time period covered by the report.
     (d) In lieu of the information required under (b) of this subsection (1), a person claiming an exemption under RCW 84.36.030(1)(d) must submit information in the report detailing:
     (i) The number of individuals receiving job training and education assistance during the year covered under the report;
     (ii) The number of individuals who gained employment through job training and education assistance provided by the person during the year covered by the report; and
     (iii) The number of locations in which the person operates and whether the facility at each location is owned or leased by the person.
     (e) If a person filing a report under this section did not file a report with the department in the previous calendar year, the report filed under this section must also include ((employment, wage, and benefit information)) the information required under this subsection for the calendar year immediately preceding the calendar year for which a tax preference was claimed.
     (2) As part of the annual report, the department may request additional information necessary to measure the results of, or determine eligibility for, the tax preference.
     (3) Other than information requested under subsection (2) of this section, the information contained in an annual report filed under this section is not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (4) Except as otherwise provided by law, if a person claims a tax preference that requires an annual report under this section but fails to submit a complete report by the due date or any extension under RCW 82.32.590, the department must declare the amount of the tax preference claimed for the previous calendar year to be immediately due and payable. The department must assess interest, but not penalties, on the amounts due under this subsection. The interest must be assessed at the rate provided for delinquent taxes under this chapter, retroactively to the date the tax preference was claimed, and accrues until the taxes for which the tax preference was claimed are repaid. Amounts due under this subsection are not subject to the confidentiality provisions of RCW 82.32.330 and may be disclosed to the public upon request.
     (5) The department must use the information from this section to prepare summary descriptive statistics by category. No fewer than three taxpayers may be included in any category. The department must report these statistics to the legislature each year by October 1st.
     (6) For the purposes of this section:
     (a) "Person" has the meaning provided in RCW 82.04.030 and also includes the state and its departments and institutions.
     (b) "Tax preference" has the meaning provided in RCW 43.136.021 and includes only the tax preferences requiring a survey under this section.

NEW SECTION.  Sec. 4   This act applies to taxes levied for collection in 2015 through 2024.