WSR 98-18-006

PERMANENT RULES

DEPARTMENT OF REVENUE

[Filed August 20, 1998, 4:33 p.m.]



Date of Adoption: August 20, 1998.

Purpose: WAC 458-16-110, 458-16-165, 458-16-300, and 458-16-310 are property tax rules dealing with exemptions granted to nonprofit organizations. They are being amended at this time because the statutes they implement were revised by the legislature during the last few years. The amended rules will explain and implement how the department will administer the legislative changes. WAC 458-16-111 is being repealed because its contents are to be incorporated into WAC 458-16-110, which is being amended, so that all information regarding the application and renewal processes relating to property tax exemptions will be contained in one rule.

Citation of Existing Rules Affected by this Order: Repealing WAC 458-16-111 Filing fees, penalties and refunds; and amending WAC 458-16-110 Applications--Who must file, initial applications, renewal applications, annual certifications, 458-16-165 Conditions under which nonprofit organizations, associations, or corporations may obtain a property tax exemption, 458-16-300 Public meeting hall--Public meeting place--Community meeting hall, and WAC 458-16-310 Community celebration facilities.

Statutory Authority for Adoption: RCW 84.36.865.

Other Authority: RCW 84.36.037, 84.36.805, 84.36.815, 84.36.825, and 84.36.840.

Adopted under notice filed as WSR 98-14-084 on June 30, 1998.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, amended 0, repealed 0; Federal Rules or Standards: New 0, amended 0, repealed 0; or Recently Enacted State Statutes: New 0, amended 4, repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, amended 0, repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, amended 0, repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, amended 0, repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, amended 0, repealed 0; Pilot Rule Making: New 0, amended 0, repealed 0; or Other Alternative Rule Making: New 0, amended 4, repealed 1.

Effective Date of Rule: Thirty-one days after filing.

August 20, 1998

Russell W. Brubaker

Assistant Director

Legislation and Policy Division



REPEALER



The following section of the Washington Administrative Code is hereby repealed:



WAC 458-16-111 Filing fees, penalties and refunds.

OTS-2153.2

AMENDATORY SECTION (Amending WSR 94-07-008, filed 3/3/94, effective 4/3/94)



WAC 458-16-110  Applications--Who must file, initial applications, ((renewal applications,)) annual ((certifications)) declarations, filing fees, penalties, and refunds. (((1) Introduction. This section explains the procedures property owners must follow to apply for and to renew all real and personal property tax exemptions provided under chapter 84.36 RCW for which the taxpayer must apply to receive.

(2) Application required. All foreign national governments, cemeteries, nongovernmental nonprofit corporations, organizations, and associations, and soil and water conservation districts seeking exemption from ad valorem property taxation under the provisions of chapter 84.36 RCW shall apply for exemption with the department of revenue. Unless otherwise exempted by law, no real or personal property shall be exempt from taxation unless an application has first been filed and exemption has been granted therefor.

(3) Initial applications. In general, initial applications for exemption of real or personal property shall be filed with the department of revenue on or before March 31. However, when real property that may qualify for exemption is acquired or when real property is converted to a use that may qualify the property for exemption, in order for the property to be granted exemption, an initial application must be filed with respect to the property within sixty days following acquisition or conversion; if this application is not received within this period, the penalties set forth in WAC 458-16-111 will be applied. All initial applications shall comply with the following:

(a) The application shall be made on a form prescribed by the department and signed by an authorized agent of the applicant.

(b) To the extent exemption is sought for real property, each application may include all property that is contiguous and part of a homogeneous unit. Except with respect to applications for exemption of church property involving a noncontiguous parsonage or convent, a separate application must be submitted for real property that is not both contiguous and part of a homogeneous unit.

(i) Contiguous property means real property adjoining other real property, all of which is under the control of a single applicant even though the properties may be separated by public roads, railroads, rights of way or waterways.

(ii) A homogeneous unit means one where the property is under the control of a single applicant and the operation and use of the property is integrated with and directly related to the activity of the applicant.

(c) The application shall include copies of the articles of incorporation or association, or constitution or other establishing document, together with all current amendments thereto, and also include a copy of the bylaws of the applicant. The application shall also include a copy of any current letter from the Internal Revenue Service that grants the applicant exemption from payment of federal income taxes, unless the nonprofit organization, association, or corporation is part of a larger organization, association, or corporation, like a church or the boy scouts, that has been issued a group 501 (c)(3) exemption ruling by or is otherwise exempt from filing with the Internal Revenue Service. If copies of these documents have previously been filed with the department and are still current, the application need not include them.

(d) The application shall include an accurate map identifying by dimension the use or proposed use of all real property including buildings, building sites, parking areas, landscaping, vacant areas, and, if requested by the department, floor plans of multistoried buildings from which a determination exempting the total area can be made or from which a segregation for partial exemption can be made.

(e) The application shall accurately describe the real and personal property for which exemption is sought. The application shall include a legal description of all real property and provide the county tax parcel number for each parcel of real property. A copy of the current deed relative to the real property shall also be included with the application.

(f) The application shall indicate whether any of the real or personal property that is the subject of the application is leased or loaned from or to others, and if so, include a copy of the lease agreement and further indicate the following:

(i) Which property is leased or loaned;

(ii) The amount of the rent or other consideration;

(iii) To whom or from whom the property is loaned or leased;

(iv) What use is being made of the property; and

(v) What is the monthly amount of operation and maintenance costs.

(4) Renewal applications. In order to requalify for exemption, each applicant (except nonprofit cemeteries) shall submit a renewal application not later than March 31 of each fourth year following the date of the most recent initial application. The renewal application shall be made on forms prescribed by the department and signed by an authorized agent of the applicant, and shall include information regarding any change in use or in exempt status or any change in the items covered in subsection (3)(b) through (f) of this section, since the filing of the initial application or since the filing of the previous renewal application.

(5) Annual certifications - affidavit. In order to retain the exemption from property taxation, each applicant (except nonprofit cemeteries) that has previously been granted exemption shall annually file an affidavit with the department certifying that the use and exempt status of the real and personal property claimed as exempt has not changed. These affidavits shall be on forms prescribed by the department and shall be in accordance with the following:

(a) The department shall annually on or before January 1 mail affidavit forms or, when appropriate, renewal forms to owners of record of exempt property at their last known address.

(b) The affidavit form or renewal form shall be filed with the department no later than March 31 and signed by an authorized agent of the applicant. The filing shall be due by March 31 regardless of whether the form was received by the applicant from the department.

(c) If the applicant fails to file the affidavit or renewal form within a reasonable time after the due date, and after the department has mailed an additional notice to the applicant at the applicant's last known address, the department may remove the exemption from the property and upon removal shall so notify the assessor in the county where the property is located.

(6) Failure to file renewal application or annual certification. When the exemption has been removed as a result of an applicant's failure to file a renewal application or an annual certification, if the applicant wishes to requalify for exemption:

(a) Within the same assessment year, the applicant must complete and file a renewal application or an annual certification together with any required late filing penalties; or

(b) Within a subsequent assessment year, the applicant must file an initial application together with the initial filing fee and any required late filing penalties.

(7) Filing fees and penalties. All initial applications, renewal applications or annual certifications are subject to the filing fees and penalties set forth in WAC 458-16-111.

(8) Effective date of exemption. Applications that are approved shall be effective for property taxes due and payable the year following the year of application. Applications for previous years, up to a maximum of three years from the date of payment of the tax, may be accepted if the applicant provides proof acceptable to the department that the property qualified for exemption in the assessment year prior to the tax year for which exemption is claimed and the initial filing fee and late filing penalties are paid.

(9) Where to obtain application forms. Applications for exemption may be obtained from any county assessor's office or from the department of revenue.)) (1) Introduction. This section explains the procedures property owners must follow to apply for and to renew all real and personal property tax exemptions provided under chapter 84.36 RCW for which the taxpayer must apply in order to receive. It also specifies the fee that must be submitted with an initial application or renewal declaration for exemption, as well as the late filing penalty that is due whenever an initial application or renewal declaration is received after the filing deadline.

(2) Application required. All foreign national governments, cemeteries, nongovernmental nonprofit corporations, organizations, and associations, and soil and water conservation districts seeking exemption from property taxation under the provisions of chapter 84.36 RCW shall apply for exemption with the department of revenue. Unless otherwise exempted by law, no real or personal property shall be exempt from taxation until an application has been filed and an exemption has been granted.

(3) Where to obtain application forms. Applications for exemption may be obtained from any county assessor's office or the department of revenue.

(4) Initial applications. Generally, initial applications for exemption of real or personal property shall be filed with the department of revenue on or before March 31 to exempt the property from taxes due the following calendar year. However, an initial application may be filed after March 31st if the property is acquired for or converted to an exempt use after that date, if the property may qualify for exemption under one of the statutes contained in chapter 84.36 RCW, and if, following the acquisition or conversion of the property, an application for exemption is submitted within sixty days. If an initial application under these circumstances is not received within sixty days, the late filing penalty described in subsection (9) of this section will be imposed. All initial applications shall comply with the following:

(a) A filing fee of thirty-five dollars shall be submitted with each application.

(b) The application shall be made on a form prescribed by the department and signed by the applicant or the applicant's authorized agent.

(c) Each application for exemption of real property may include all property that is contiguous and part of a homogeneous unit. A separate application must be submitted for real property that is not both contiguous and part of a homogeneous unit. However, a separate application shall not be required for church property involving a noncontiguous parsonage or convent.

(i) Contiguous property means real property adjoining other real property, all of which is under the control of a single applicant even though the properties may be separated by public roads, railroads, rights of way, or waterways.

(ii) A homogeneous unit means one where the property is under the control of a single applicant and the operation and use of the property is integrated with and directly related to the exempt activity of the applicant.

(d) The application shall include copies of the articles of incorporation or association, or constitution or other establishing document, together with all current amendments thereto, showing nonprofit status and a copy of the bylaws of the nonprofit entity applying for exemption. The application shall also include a copy of any current letter from the Internal Revenue Service that grants the applicant exemption from paying federal income taxes, unless the nonprofit organization, association, or corporation is part of a larger organization, association, or corporation, like a church or the boy scouts, that has been issued a group 501 (c)(3) exemption ruling by or is otherwise exempt from filing with the Internal Revenue Service. If copies of these documents have previously been filed with the department and are still current, they do not have to be resubmitted.

(e) The application shall include an accurate map identifying by dimension the use or proposed use of all real property including buildings, building sites, parking areas, landscaping, vacant areas, and, if requested by the department, floor plans of multistoried buildings. This map will be used to determine whether the property is entitled to a total exemption or a partial exemption based upon the use of the total area.

(f) The application shall accurately describe the real and personal property for which exemption is sought. The application shall include a legal description of all real property, provide the county tax parcel number for each parcel of real property, and, if the property is owned by the applicant, a copy of the current deed relative to the real property.

(g) The application shall indicate whether any of the real or personal property included in the application is rented or loaned from or to others. If the property is rented or loaned, the applicant must include a copy of the rental agreement with the application and answer the following questions:

(i) Which property, in whole or in part, is rented or loaned;

(ii) The amount of the rent or other consideration received;

(iii) To whom or from whom the property is rented or loaned;

(iv) What use is being made of the property; and

(v) The monthly amount of operation and maintenance costs related to the rented or loaned property.

(5) Effective date of exemption. If the application for exemption is approved, the property shall be exempt from property taxes due the year immediately following the year the application was submitted. For example, if an application is submitted in 1995 and the property is eligible for exemption effective 1/1/95, the property will be exempt from taxes due in 1996. Applications for previous years may by submitted, up to a maximum of three years from the date the taxes were paid, if the applicant provides proof acceptable to the department that the property qualified for exemption in the assessment year prior to the tax year for which exemption is claimed and the initial filing fee and late filing penalties are paid.

(6) Annual renewal declaration. In order to retain a property tax exemption, each nonprofit entity (except nonprofit cemeteries) receiving an exemption shall annually file a renewal declaration with the department certifying that the use and exempt status of the real and personal property claimed as exempt has not changed. The declaration shall be on a form prescribed by the department and shall be in accordance with the following:

(a) The department shall annually on or before January 1 mail a renewal declaration to the owners of record of exempt property at their last known address.

(b) The renewal declaration shall be filed with the department no later than March 31, signed by the owner, and accompanied by a filing fee of eight dollars and seventy-five cents. This declaration shall include information regarding any change of use and a certification as to the truth and accuracy of the information listed. It shall be due on or before March 31 regardless of whether the department mailed the declaration to the owner.

(c) If the owner fails to file the renewal declaration by the due date, and after the department has mailed an additional notice to the owner at the owner's last known address, the department shall remove the exemption from the property and notify the assessor in the county where the property is located that the exemption is removed and that the property is to be placed back on the tax rolls.

(7) Failure to file annual renewal declaration. When the exemption has been removed as a result of an owner's failure to file an annual renewal declaration and the owner wishes to reapply for the property tax exemption:

(a) Within the same assessment year, the owner must complete and file an annual renewal form and pay any required late filing penalties; or

(b) Within a subsequent assessment year, the owner must file an initial application, pay the initial filing fee, and pay any required late filing penalties.

(8) Full payment of filing fees is required before an initial application or renewal declaration will be processed. The department will not process an application or a renewal form for a property tax exemption until all filing fees and penalties, if applicable, have been paid.

(9) Late filing penalty. When an initial application or renewal form is not submitted by the due date, a late filing penalty of ten dollars is due for every month, or portion thereof. This penalty is calculated from the date the filing was due up to the postmark date shown on the application or renewal declaration.

(10) Refund of filing fee or penalty. No filing fees or late filing penalty will be refunded after a determination on the application or renewal is issued by the department. However, filing fees and the late filing penalty will be refunded under the following circumstances:

(a) When a duplicate application or renewal form for exemption for the same property is filed for the same year;

(b) When an application or renewal form for exemption is received by the department and the department has no authority to grant the exemption requested; or

(c) When a written request to withdraw the application or renewal form for exemption is received before a determination has been issued by the department. The request to withdraw the application or renewal form must be signed by the owner or the owner's authorized agent.



[Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, 458-16-110, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.865. 85-05-025 (Order PT 85-1), 458-16-110, filed 2/15/85; 81-05-017 (Order PT 81-7), 458-16-110, filed 2/11/81; Order PT 77-2, 458-16-110, filed 5/23/77; Order PT 76-2, 458-16-110, filed 4/7/76. Formerly WAC 458-12-146.]

OTS-2154.3

AMENDATORY SECTION (Amending WSR 94-07-008, filed 3/3/94, effective 4/3/94)



WAC 458-16-165  Conditions under which nonprofit organizations, associations, or corporations may obtain a property tax exemption. (1) Introduction. Nonprofit organizations, associations, and corporations may obtain a property tax exemption under the provisions of RCW 84.36.030, 84.36.035, 84.36.037, 84.36.040, 84.36.041, 84.36.043, 84.36.045, 84.36.046, 84.36.047, 84.36.050, 84.36.060, 84.36.350, 84.36.480, ((and)) 84.36.550, and chapter 202, Laws of 1998. To be exempt from property taxation, these nonprofit organizations, associations, or corporations must also comply with the requirements contained in RCW 84.36.805 and RCW 84.36.840. This section explains the conditions and requirements set forth in RCW 84.36.805 and 84.36.840. Property exempt under RCW 84.36.030 is not subject to the requirements of RCW 84.36.840.

(2) Definitions. For purposes of this section, the following definitions apply:

(a) "Maintenance and operation expenses" means items of expense allowed under generally accepted accounting principles to maintain and operate the loaned or rented portion of the exempt property.

(b) "Revenue" means income received from the loan or rental of exempt property when the income exceeds the amount of ((the expenses of)) maintenance and operation expenses attributable to the portion of the property loaned or rented.

(c) "Personal service contract" means a contract between a nonprofit organization, association, or corporation and an independent contractor under which the independent contractor provides a service on the organization's, association's, or corporation's tax exempt property. (See example contained in subsection (3)(c) of this section.)

(3) Exclusive use. Unless the applicable statute states otherwise, the exempt property shall be exclusively used for the actual operation of the activity for which the nonprofit organization, association, or corporation ((that)) applied ((for)) and received the property tax exemption ((and)). The amount of exempt property shall not exceed an area reasonably necessary ((for that)) to facilitate the exempt purpose.

(a) Loan or rental of exempt property. As a general rule, the loan or rental of ((the)) exempt property ((or a portion of the property)) does not ((subject the property to taxation)) make it taxable if the rents or donations received for the use 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 the property would be exempt from tax if owned by the organization to which it is loaned or rented((, except for)). Property owned by organizations and societies of war veterans, public assembly halls, public meeting places, community meeting halls, and community celebration facilities are not subject to these limitations.

(i) Exception - loaned or rented for less than fifteen days. ((If exempt property is loaned or rented the tax exempt)) The status of ((the)) exempt property will not be affected if:

(A) The property is loaned or rented for a period of fifteen consecutive days or less;

(B) The property is loaned or rented to another nonprofit organization, association, or corporation that would qualify for exemption if it owned the loaned or rented property((, unless the)). This limitation does not apply to exempt property ((is)) owned by organizations and societies of war veterans, public assembly halls, public meeting places, community meeting halls, and community celebration facilities; and

(C) All income received from the rental is devoted exclusively to the exempt purpose of the nonprofit organization, association, or corporation ((that receives)) receiving the tax exemption.

(ii) Loaned or rented to produce income. If the ((property is loaned or rented and the lessor or lessee intends to produce revenue from the loan or rental, the subject property shall not be exempt. Property loaned or rented from which revenue is to be produced must be segregated and taxed whether or not the revenue is devoted to exempt purposes)) lessor or lessee of exempt property intends to produce income from exempt property loaned or rented, the property will lose its exempt status. Property loaned or rented to produce income must be segregated from exempt property used for exempt purposes. However, property exempt under RCW 84.36.037 (public assembly halls, public meeting places, community meeting halls, and community celebration facilities) may be loaned or rented for pecuniary gain or to promote business activities for a maximum of seven days each assessment year or in a county with less than ten thousand people, the property may be used to promote the following business activities: Dance lessons; art classes; or music lessons (see WAC 458-16-300 and 458-16-310).

(iii) Example. If a ((room or floor within)) portion of a building owned by a nonprofit hospital is rented to a ((social service agency and the social service agency intends)) pharmacy and the hospital and/or the pharmacy intend to use this area to produce ((revenue, the rented)) income, this portion of the ((building)) hospital must be segregated from the remainder of the building that is being used for exempt hospital purposes. ((The segregated and rented portion of the building will then be subject to ad valorem property taxes.)) The portion of the building rented to the pharmacy is subject to property tax.

(b) Fund-raising activities. The use of exempt property for fund-raising activities sponsored by an exempt organization, association, or corporation does not subject the property to taxation if the fund-raising activities are consistent with the purposes for which the exemption was granted. The term "fund raising" means any revenue-raising activity limited to less than five days in length that disburses fifty-one percent or more of the profits realized from the activity to the exempt nonprofit organization, association, or corporation ((that is)) holding the fund raising event.

(i) Example 1. A nonprofit social service agency holds an art auction in the auditorium of its tax exempt facility to raise funds. ((Since the fund-raising activity is being held on exempt property,)) The activity must be less than five days in length and fifty-one percent of the profits must be disbursed to the social service agency because the fund-raising activity is being held on exempt property.

(ii) Example 2. A nonprofit school has a magazine subscription drive to raise funds ((during which)) and the subscriptions are being sold door-to-door by students. ((Since the subscription drive is not being held on exempt property, the drive is not limited to less than five days and fifty-one percent of the profits from this fund-raising activity do not have to be remitted to the school.)) There are no limitations on this fund-raising activity because the subscription drive is not being held on exempt property.

(c) Personal service contract - exempt programs. Programs provided under a personal service contract will not jeopardize the exemption if the following conditions are met:

(i) The program is compatible and consistent with the purposes of the exempt organization, association, or corporation;

(ii) The exempt organization, association, or corporation maintains separate financial records as to all receipts and expenses related to the program; and

(iii) A summary of all receipts and expenses of the program ((will be)) are provided to the department of revenue upon request.

(iv) Example. A nonprofit school may decide to offer aerobic classes to promote general health and fitness. All brochures and bulletins ((that advertise)) advertising these classes must show that the school is sponsoring the classes. Under the terms of the contract between the nonprofit school and the aerobic instructor, an independent contractor, the instructor must provide the classes for a predetermined fee. All fees collected from the participants of the classes must be received by the school; the school, in turn, will absorb all costs related to the classes.

(d) Personal service contract - nonexempt programs. Programs provided under a personal service contract (i) that require the contractor to reimburse the nonprofit organization for program expenses or (ii) in which the instructor is paid a fee based on the number of people ((that)) who attend the program will be viewed as a rental agreement and will subject the property to ((ad valorem)) property tax.

(4) Irrevocable dedication required. The property must be irrevocably dedicated to the purpose for which the exemption was granted. Upon liquidation, dissolution, or abandonment by a nonprofit organization, association, or corporation, ((said)) the property shall not directly or indirectly benefit any shareholder or other individual except a nonprofit organization, association, or corporation that would be entitled to receive a property tax exemption if it applied for it.



Exception: If, under the terms of a loan or rental agreement, a nonprofit organization, association, or corporation receives the benefit of the property tax exemption, the property need not be irrevocably dedicated if it is loaned or rented to a nonprofit organization, association, or corporation for use as:



(a) A nonprofit organization engaged in procuring, processing blood, plasma, or blood products (RCW 84.36.035);

(b) A nonprofit day care center (RCW 84.36.040);

(((b))) (c) A library (RCW 84.36.040);

(((c))) (d) An orphanage (RCW 84.36.040);

(((d))) (e) A home for the sick or infirm (RCW 84.36.040);

(((e))) (f) A hospital (RCW 84.36.040);

(((f))) (g) An outpatient dialysis facility (RCW 84.36.040);

(((g))) (h) A nonprofit home for the aging (RCW 84.36.041);

(((h))) (i) A nonpermanent shelter to low-income homeless persons or victims of domestic violence (RCW 84.36.043); ((or

(i))) (j) A nonprofit organization conducting medical research or training of medical personnel (RCW 84.36.045);

(k) A nonprofit cancer clinic or center (RCW 84.36.046);

(l) A facility used to produce or perform musical, dance, artistic, dramatic, or literary works (RCW 84.36.060); or

(m) Residential housing occupied by low-income developmentally disabled persons (chapter 202, Laws of 1998).

(5) No discrimination allowed. The facilities located on and the services offered on the exempt property shall be available to all persons regardless of race, color, national origin, or ancestry.

(6) Compliance with licensing or certification requirements. ((The)) A nonprofit organization, association, or corporation seeking or receiving a property tax exemption shall comply with all applicable licensing and certification requirements ((when a)) imposed by law or regulation ((of the federal, state, or local government requires it)).

(7) Property sold subject to an option to repurchase. ((If property is)) Property sold to a nonprofit organization, association, or corporation subject to an option to repurchase by the seller((, the property)) shall not qualify for ((exempt status)) an exemption.

(8) Duty to produce financial records. In order to determine whether an organization, association, or corporation is exempt under the provisions of chapter 84.36 RCW and before the exemption is renewed each year, the organization, association, or corporation claiming a property tax exemption ((under chapter 84.36)) shall file a signed statement, made under oath, with the department of revenue ((on forms furnished by the director or his/her designee,)) that its income ((and)), receipts, ((including)) and donations((,)) have been ((applied to the actual expenses of maintenance and operation)) used to pay the actual expenses incurred to maintain and operate the exempt facility or for its capital expenditures and to no other purpose. This signed statement shall ((also)) include a statement ((of)) listing the receipts and disbursements of the organization, association, or corporation. This statement shall be made on a form prescribed and furnished by the department.

(a) The provisions of this subsection do not apply to an organization, association, or corporation either applying for or receiving an exemption under RCW 84.36.030.

(b) When an organization, association, or corporation ((has been granted exemption from ad valorem taxation)) is currently receiving a property tax exemption, this signed statement must be submitted on or before April 1 each year. If this statement is not received on or before April 1, the department shall remove the tax exemption from the property. However, the department shall allow a reasonable extension of time for filing if the ((tax)) exempt organization, association, or corporation has submitted a written request for ((this)) an extension on or before the required filing date and for good cause ((shown therein)).

(9) Caretaker's residence. If a nonprofit organization, association, or corporation exempt under chapter 84.36 RCW employs a caretaker to provide either security or maintenance services and a caretaker's residence is located on exempt property, the residence may qualify for exemption if the following conditions are met:

(a) The caretaker's duties include regular surveillance, patrolling ((of)) the exempt property, and routine maintenance services;

(b) The size of the residence is reasonable and appropriate in light of the caretaker's duties and the size of the exempt property; and

(c) The caretaker receives the use of the residence as part of his or her compensation and does not pay rent. Reimbursement of ((utilities)) utility expenses created by the caretaker's presence ((will)) are not ((be considered as)) rent.



[Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, 458-16-165, filed 3/3/94, effective 4/3/94.]

OTS-2155.2

AMENDATORY SECTION (Amending WSR 94-07-008, filed 3/3/94, effective 4/3/94)



WAC 458-16-300  Public meeting hall--Public meeting place--Community meeting hall. (1) Introduction. This section explains the property tax exemption available under the provisions of RCW 84.36.037 for real and personal property owned by a nonprofit organization, association, or corporation and used exclusively as a public meeting hall, public meeting place, or community meeting hall.

(2) Definitions. For purposes of this section, the following definitions apply:

(a) "Inadvertent use or inadvertently used" means any unintentional or accidental use of exempt property by an individual, organization, association, or a corporation for pecuniary gain or to promote business activities through either carelessness, lack of attention, lack of knowledge, mistake, surprise, or neglect.

(b) "Public gathering" means any social function that the general public could, if invited, attend. For example, a public gathering includes, but is not limited to, a wedding, reception, funeral, reunion, or meeting of any organization, association, or corporation that is open to nonmembers. The term does not mean a meeting to which only members of a specific organization, association, or corporation are allowed to attend.

(c) "Maintenance and operation expenses" means items of expense allowed under generally accepted accounting principles to maintain and operate the loaned or rented portion of the exempt facility.

(d) "Owner" means a nonprofit organization, association, or corporation.

(e) "Property" means real or personal property owned by a nonprofit organization, association, or corporation.

(3) Exemption. Real and personal property owned by a nonprofit organization, association, or corporation and used exclusively as a public assembly hall, public meeting place, or community meeting hall shall be exempt from taxation under the following conditions:

(a) Exclusive use. The property is used exclusively for public gatherings and is available to any individual, organization, association, or corporation that may desire to use the property. ((However,)) Membership in a particular organization, association, or corporation shall not be ((a prerequisite)) required to use the property.

(b) Exemption for real property - area. The area of real property exempt under this section shall not exceed one acre. This area shall include the building(s), the land under the building(s), and any additional area needed for parking.

(c) Statement of availability and fees required. The owner of the property shall prepare and make available upon request a schedule of fees, a policy on the availability of the facility, and any restrictions on the use of the facility. The owner may impose any conditions or restrictions reasonably necessary to safeguard the property and to comply with the purposes of this exemption.

(d) Annual summary required. The owner shall provide the department of revenue with a detailed summary containing the following information regarding the ((use)) manner in which the exempt property was used during the preceding year ((of all property it claimed to be exempt under this section)):

(i) The name of any person, organization, association, or corporation that used the property;

(ii) The date(s) on which the property was used;

(iii) The purpose for which the property was used;

(iv) The income derived from the rental of the property; and

(v) The expenses incurred relating to the use of the property.

(e) Entities that schedule regular meetings. Any property owned by a nonprofit organization, association, or corporation that schedules regular meetings of its members or shareholders will also qualify for this exemption if:

(i) The owner meets the conditions set forth in (a) through (d) of this subsection;

(ii) The owner does not use the property more than twenty-five percent of the useable time; and

(iii) The facility is used an equal number or greater number of times for public gatherings than the number of times it is used by the owner for gatherings not open to the general public.

(f) Loan or rental of property. The tax exempt status of the property will not be affected if it is loaned or rented and the amount of rent or donations collected for the use, loan, or rental of the exempt property:

(i) Is reasonable; and

(ii) Does not exceed the maintenance and operation expenses that are created by the corresponding use, loan, or rental.

(g) Property not included within this exemption. Property that is used more than fifty percent of the time by a nonprofit organization, association, or corporation that allows only members to attend its activities does not qualify for this exemption.

(4) Use of property for pecuniary gain or to promote business activities. If a public meeting hall, public meeting place, or community meeting hall exempt under subsection (3) of this section is used for pecuniary gain or to promote business activities, the property tax exemption will be lost for the assessment year following the year in which the exempt property is so used. However, the exemption will not be lost if:

(a) The exempt property is used for pecuniary gain ((not more than three)) or to promote business activities seven days ((a)) or less in an assessment year; or

(b) In a county with less than ten thousand people, the exempt property is used to promote the following business activities: Dance lessons; art classes; or music lessons; or

(c) The exempt property is inadvertently used by an individual, organization, association, or a corporation for pecuniary gain or to promote business activities if the inadvertent use is not a pattern of use. A "pattern of use" is presumed when an inadvertent use of the property for pecuniary gain or to promote business activities is repeated within the same assessment year or within two or more successive assessment years.

(5) Additional requirements. Any organization, association, or corporation that applies for a property tax exemption under this section must also comply with the provisions of WAC 458-16-165. WAC 458-16-165 sets forth additional conditions and requirements that must be complied with to obtain a property tax exemption pursuant to RCW 84.36.037.



[Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, 458-16-300, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.865. 81-21-010 (Order PT 81-14), 458-16-300, filed 10/8/81.]

OTS-2156.2

AMENDATORY SECTION (Amending WSR 94-07-008, filed 3/3/94, effective 4/3/94)



WAC 458-16-310  Community celebration facilities. (1) Introduction. This section explains the property tax exemption available under the provisions of RCW 84.36.037 for real and personal property owned by a nonprofit organization, association, or corporation and used primarily for annual community celebration events.

(2) Definitions. For purposes of this section, the following definitions apply:

(a) "Inadvertent use or inadvertently used" means any unintentional or accidental use of exempt property by an individual, organization, association, or corporation for pecuniary gain or to promote business activities through either carelessness, lack of attention, lack of knowledge, mistake, surprise, or neglect.

(b) "Public gathering" means any social function that the general public could, if invited, attend. For example, a public gathering includes, but is not limited to, a wedding, reception, funeral, reunion, or meeting of any organization, association, or corporation that is open to nonmembers. The term does not mean a meeting to which only members of a specific organization, association, or corporation are allowed to attend.

(c) "Maintenance and operation expenses" means items of expense allowed under generally accepted accounting principles to maintain and operate the loaned or rented portion of the exempt facility.

(d) "Property" means real or personal property owned by a nonprofit organization, association, or corporation.

(3) Exemption. Real and personal property owned by a nonprofit organization, association, or corporation and used primarily for annual community celebration events shall be exempt from taxation under the following conditions:

(a) Exemption for real property - area. The area of real property to be exempt shall not exceed twenty-nine acres.

(b) Primary use. The property has been primarily used for annual community celebration events for at least ten years.

(c) Essentially unimproved property. The property is essentially unimproved except for restroom facilities and covered shelters. A "covered shelter," for example, may consist of a covered area that is unenclosed but allows some protection from the elements or it may provide a sheltered eating area with or without a picnic table or outside grill, or both.

(d) Purpose. The purpose of the property is to provide a facility for an annual community celebration.

(e) Statement of availability and fees required. The owner of the property shall prepare and make available upon request a schedule of fees, a policy on the availability of the facility, and any restrictions on the use of the facility. The owner may impose conditions and restrictions that are reasonably necessary to safeguard the property and to promote the purposes of this exemption.

(f) Annual summary required. The owner shall annually provide the department of revenue with a detailed summary containing the following information regarding the ((use)) manner in which the exempt property was used during the preceding year ((of all property it claimed to be exempt under this section)):

(i) The name of any person, organization, association, or corporation that used the property;

(ii) The date(s) on which the property was used;

(iii) The purpose for which the property was used;

(iv) The income derived from the rental of the property; and

(v) The expenses incurred relating to the use of the property.

(g) Loan or rental of property. The tax exempt status of the property will not be affected if it is loaned or rented and the amount of rent or donations collected for the use, loan, or rental of the exempt property:

(i) Is reasonable; and

(ii) Does not exceed the maintenance and operation expenses that are created by the corresponding use, loan, or rental.

(4) Use of property for pecuniary gain or to promote business activities. If a community celebration facility exempt under subsection (3) of this section is used for pecuniary gain or to promote business activities, the property tax exemption will be lost for the assessment year following the year in which the exempt property is so used. However, the exemption will not be lost if:

(a) The exempt property is used for pecuniary gain ((not more than three)) or to promote business activities seven days ((a)) or less in an assessment year; or

(b) In a county with less than ten thousand people, the exempt property is used to promote the following business activities: Dance lessons; art classes; or music lessons; or

(c) The exempt property is inadvertently used by an individual, organization, association, or a corporation for pecuniary gain or to promote business activities if the inadvertent use is not a pattern of use. A "pattern of use" is presumed when an inadvertent use of the property for pecuniary gain or to promote business activities is repeated within the same assessment year or within two or more successive assessment years.

(5) Additional requirements. Any organization, association, or corporation that applies for a property tax exemption under this section must also comply with the provisions of WAC 458-16-165. WAC 458-16-165 sets forth additional conditions and requirements that must be complied with to obtain a property tax exemption pursuant to RCW 84.36.037.



[Statutory Authority: RCW 84.08.010, 84.08.070 and chapter 84.36 RCW. 94-07-008, 458-16-310, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.865. 81-21-010 (Order PT 81-14), 458-16-310, filed 10/8/81.]