BILL REQ. #:  S-0248.1 

Read first time 01/10/2007.   Referred to Committee on Government Operations & Elections.

     AN ACT Relating to the exemption of fraternal organizations from property taxation; amending RCW 84.36.840; reenacting and amending RCW 84.36.805; 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:

NEW SECTION.  Sec. 1   A new section is added to chapter 84.36 RCW to read as follows:
     (1) All personal property owned or leased by a qualifying fraternal organization is exempt from taxation. If the personal property for which exemption is sought is leased, the benefit of the exemption must inure to the qualifying fraternal organization.
     (2) For the purposes of this section, the following definitions apply:
     (a) "Qualifying fraternal organization," except as provided in (b) of this subsection, means a nonprofit:
     (i) Fraternal beneficiary society, order, or association exempt from federal income tax under section 501(c)(8) of the internal revenue code; or
     (ii) Domestic fraternal society, order, or association exempt from federal income tax under section 501(c)(10) of the internal revenue code.
     (b) "Qualifying fraternal organization" does not include a separately organized insurance branch of a fraternal beneficiary society, order, or association when the insurance branch:
     (i) Does not itself operate under the lodge system but operates exclusively for the benefit of the members of a fraternal beneficiary society, order, or association that does operate under the lodge system; and
     (ii) Provides for the payment of life, sick, accident, or other benefits to the members of the fraternal beneficiary society, order, or association operating under the lodge system.

Sec. 2   RCW 84.36.805 and 2006 c 319 s 1 and 2006 c 226 s 3 are each reenacted and amended to read as follows:
     (1) In order to qualify for an exemption under this chapter, the nonprofit organizations, associations, or corporations must satisfy the conditions in this section.
     (2)(a) The property must be used exclusively for the actual operation of the activity for which exemption is granted, unless otherwise provided, and does not exceed an amount reasonably necessary for that purpose, except:
     (((a))) (i) The loan or rental of the property does not subject the property to tax if:
     (((i))) (A) The rents and donations received for the use of the portion of the property are reasonable and do not exceed the maintenance and operation expenses attributable to the portion of the property loaned or rented; and
     (((ii))) (B) Except for the exemptions under RCW 84.36.030(4), 84.36.037, 84.36.050, and 84.36.060(1) (a) and (b), the property would be exempt from tax if owned by the organization to which it is loaned or rented;
     (((b))) (ii) The use of the property for fund-raising activities does not subject the property to tax if the fund-raising activities are consistent with the purposes for which the exemption is granted.
     (b) This subsection does not apply to any personal property exempt under section 1 of this act.
     (3) The facilities and services must be available to all regardless of race, color, national origin or ancestry.
     (4) The organization, association, or corporation must be duly licensed or certified where such licensing or certification is required by law or regulation.
     (5) Property sold to organizations, associations, or corporations with an option to be repurchased by the seller shall not qualify for exempt status. This subsection does not apply to property sold to a nonprofit entity, as defined in RCW 84.36.560(7), by:
     (a) A nonprofit as defined in RCW 84.36.800 that is exempt from income tax under section 501(c) of the federal internal revenue code;
     (b) A governmental entity established under RCW 35.21.660, 35.21.670, or 35.21.730;
     (c) A housing authority created under RCW 35.82.030;
     (d) A housing authority meeting the definition in RCW 35.82.210(2)(a); or
     (e) A housing authority established under RCW 35.82.300.
     (6) The department shall have access to its books in order to determine whether the nonprofit organization, association, or corporation is exempt from taxes under this chapter.
     (7) This section does not apply to exemptions granted under RCW 84.36.020, 84.36.032, 84.36.250, and 84.36.260.

Sec. 3   RCW 84.36.840 and 1973 2nd ex.s. c 40 s 14 are each amended to read as follows:
     In order to determine whether organizations, associations, corporations or institutions except those exempted under RCW 84.36.020 ((and)), 84.36.030, and section 1 of this act, are exempt from taxes within the intent of this chapter, and before the exemption shall be allowed for any year, the superintendent or manager or other proper officer of the organization, association, corporation or institution claiming exemption from taxation shall file, with the department of revenue on forms ((furnished by the director)) prescribed by the department of revenue, a signed statement made under oath that the income and the receipts thereof, including donations to it, have been applied to the actual expenses of operating and maintaining it, or for its capital expenditures, and to no other purpose. ((Such)) The forms shall also include a statement of the receipts and disbursements of said organization((: PROVIDED, That)). However, institutions claiming exemption under RCW 84.36.050 shall also file ((in addition)) a list of all property claimed to be exempt, the purpose for which it is used, the revenue derived from it for the preceding year, the use to which such revenue was applied, the number of students in attendance at the school or college, the total revenues of the institution with the source from which they were derived, and the purposes to which such revenues were applied, giving the items of such revenues and expenditures in detail.
     ((Such report)) This signed statement shall be submitted on or before April 1st following the close of the accounting period for the fiscal year ended during the previous calendar year. The department of revenue shall remove the tax exemption from the property and assets of any organization, association, corporation, or institution ((which)) that does not file ((such report)) this statement with the department of revenue on or before the due date((: PROVIDED, That)). The department of revenue shall allow a reasonable extension of time for filing upon written request filed on or before the required filing date and for good cause shown therein.

NEW SECTION.  Sec. 4   This act applies to taxes levied for collection in 2008 and thereafter.