Title of Rule and Other Identifying Information: WAC 458-16A-140 Senior citizen, disabled person, and one hundred percent disabled veteran exemption -- Exemption described -- Exemption granted -- Exemption denied -- Freezing property values, this rule explains how county assessors process a claimant's application form for the senior citizen, disabled person, or one hundred percent disabled veteran property tax exemption. The rule describes the exemption and what happens when the exemption is granted or denied by the assessor.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The department of revenue is proposing to amend this rule to recognize provisions of E2SHB 1208 (chapter 350, Laws of 2009). This legislation amended RCW 84.69.030 to change one of the requirements for administrative refunds of property taxes. Prior to passage of E2SHB [1208], a petition for refund could be filed with the county treasurer requesting refund of taxes paid within the three years prior to requesting the refund. Now, the county treasurer is directed to only refund property taxes that were due within the three years prior to the refund request.

     Copies of draft rules are available for viewing and printing on our web site at http://dor.wa.gov/content/FindALawOrRule/RuleMaking/agenda.aspx.

     Reasons Supporting Proposal: To recognize 2009 legislation.

     Statutory Authority for Adoption: RCW 84.36.389 and 84.36.865.

     Statute Being Implemented: RCW 84.69.030.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Department of revenue, governmental.

     Name of Agency Personnel Responsible for Drafting: Peggy Davis, 1025 Union Avenue S.E., Suite 200, Olympia, WA, (360) 570-5867; Implementation and Enforcement: Brad Flaherty, 1025 Union Avenue S.E., Suite #200, Olympia, WA, (360) 570-5860.

September 22, 2010

Alan R. Lynn

Rules Coordinator

OTS-3645.1

AMENDATORY SECTION(Amending WSR 08-16-079, filed 7/31/08, effective 8/31/08)

WAC 458-16A-140   Senior citizen, disabled person, and one hundred percent disabled veteran exemption -- Exemption described -- Exemption granted -- Exemption denied -- Freezing property values.   (1) Introduction. This rule explains how county assessors process a claimant's application form for the senior citizen, disabled person, or one hundred percent disabled veteran property tax exemption. The rule describes the exemption and what happens when the exemption is granted or denied by the assessor.

     (2) The exemption described. This property tax exemption reduces or eliminates property taxes on a senior citizen's, disabled person's, or one hundred percent disabled veteran's principal residence. Except for benefit charges made by a fire protection district, this exemption does not reduce or exempt an owner's payments for special assessments against the property. Local governments impose special assessments on real property because the real property is specially benefitted by improvements made in that area (e.g., local improvement district assessments for roads or curbs, surface water management fees, diking/drainage fees, weed control fees, etc.). All the property owners in that area share in paying for these improvements. The only exception related to this program is for benefit charges made by a fire protection district. Fire protection district benefit charges are reduced twenty-five, fifty, or seventy-five percent depending upon the combined disposable income of the claimant. RCW 52.18.090.

     (a) Excess levies. A qualifying claimant receives an exemption from excess levies on his or her principal residence.

     (b) Regular levies. Depending upon the claimant's combined disposable income, the exemption may also apply to all or a portion of the regular levies on the claimant's principal residence. Both the level of the claimant's combined disposable income and the assessed value of the home determine the amount of the regular levy exempted from property taxes. The exemption applies to all the regular and excess levies when the assessed value of the claimant's principal residence falls below the amount of exempt assessed value identified in RCW 84.36.381 (5)(b) and the claimant's combined disposable income is also below the levels set in that section.

     (c) Property taxes due. Generally the owner pays the property taxes on the principal residence and obtains directly the benefit of this exemption. If the claimant is not the property's owner, or is not otherwise obligated to pay the property taxes on the principal residence, but "owned" the principal residence for purposes of this exemption, the property owner that owes the tax must reduce any amounts owed to them by the claimant up to the amount of the tax exemption. If the amounts owed by the claimant to this property owner are less than the tax exemption, the owner must pay to the claimant in cash any amount of the tax exemption remaining after this offsetting reduction. RCW 84.36.387(6).

     (3) Processing exemption applications. County assessors process applications for the senior citizen, disabled person, or one hundred percent disabled veteran exemption. The assessors grant or deny the exemption based upon these completed applications.

     (a) Application review. The county assessor reviews a completed application and its supporting documents.

     The assessor:

     (i) Notes on a checklist for the claimant's file the supporting documents received;

     (ii) Reviews the supporting documents;

     (iii) Records relevant information from the supporting documents into the claimant's file. In particular, the assessor records into the file the claimant's age and a summary of the income information received; and

     (iv) After reviewing the supporting documents, must either destroy or return the supporting documents used to verify the claimant's age and income.

     (b) Incomplete applications. A county assessor may return an incomplete application or a duplicate application. An incomplete application may be missing:

     (i) Signatures;

     (ii) Information upon the form; or

     (iii) Supporting documents.

     Upon returning an incomplete application, the assessor should provide the claimant with a dated denial form listing the signatures, information, or documents needed to complete the application. The denial of an incomplete application may be appealed in the same manner as a denial of the exemption.

     (c) The assessor may accept any late filings for the exemption even after the taxes have been levied, paid, or become delinquent. An application filed for the exemption in previous years constitutes a claim for a refund under WAC 458-18-210.

     (4) Exemption timing if approved. Property taxes are reduced or eliminated on the claimant's principal residence for the year following the year the claimant became eligible for the program. When a late application is filed, the exemption may only result in:

     (a) A ((property tax)) refund for any paid property taxes ((paid)) that were due within the previous three years ((of the payment date)); and

     (b) Relief from unpaid property taxes for any previous years.

     (5) Exemption procedure when claim granted. When the exemption is granted, the county assessor:

     (a) Freezes the assessed value of the principal residence upon the assessment roll;

     (b) Determines the level of exemption the claimant qualifies for;

     (c) Notifies the claimant that the exemption has been granted;

     (d) Notifies the claimant of his or her duty to file timely renewal applications;

     (e) Notifies the claimant of his or her duty to file change of status forms when necessary;

     (f) Notifies the claimant of the need to reapply for the exemption if the claimant moves to a replacement residence;

     (g) Notifies the claimant that has supplied estimated income information whether or not follow-up income information is needed;

     (h) Places the claimant on a notification list for renewal of the exemption;

     (i) Places the claimant on a notification list if supporting documents are needed to confirm estimated income information prior to May 31st of the following year;

     (j) Exempts the residence from all or part of its property taxes; and

     (k) Provides the department with a recomputation of the assessed values for the immediately preceding year as a part of the annual recomputation process.

     (6) Exemption procedure when claim denied. The assessor denies the exemption when the claimant does not qualify. The assessor provides a dated denial form listing his or her reasons for this denial. A claimant may appeal the exemption's denial to the county board of equalization as provided for in WAC 458-14-056.

     (7) Freezing the property value. The assessor freezes the assessed value of the principal residence either on the latter of January 1, 1995, or January 1st of the year when a claimant first qualifies for the exemption. The assessor then tracks both the market value of the principal residence and its frozen value. The assessor provides both the principal residence's market value and its frozen value in the valuation notices sent to the owner.

     (a) Frozen values in counties using a cyclical revaluation plan. In counties using a cyclical revaluation plan, the assessor:

     (i) Revalues the principal residence, for property revalued in that assessment year, before the assessed value is frozen; or

     (ii) Freezes the principal residence's value at the most recent assessed value for property that is not revalued in that assessment year.

     The assessor continues to revalue the principal residence during the regular revaluation cycles to track the market value for the property.

     (b) Adding on improvement costs. The assessor adds onto the frozen assessed value the cost of any improvements made to the principal residence.

     (c) One-year gaps in qualification. If a claimant receiving the exemption fails to qualify for only one year because of high income, the previous frozen property value must be reinstated on January 1st of the following year when the claimant again qualifies for the program.

     (d) Moving to a new residence. If an eligible claimant moves, the county assessor freezes the assessed value of the new principal residence on January 1st of the assessment year in which the claimant transfers the exemption to the replacement residence.

[Statutory Authority: RCW 84.36.383, 84.36.389, and 84.36.865. 08-16-079, § 458-16A-140, filed 7/31/08, effective 8/31/08; 03-09-002, § 458-16A-140, filed 4/2/03, effective 5/3/03.]

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