Senate Bill 5802 — State of Washington, 67th Legislature, 2022 Regular Session (Senators Fortunato, Holy, and Stanford)

Summary

Senate Bill 5802, State of Washington, 67th Legislature, 2022 Regular Session, by Senators Fortunato, Holy, and Stanford, relating to providing additional financial relief for property owners using the senior citizen and disabled persons property tax exemption and deferral programs. Its title describes increasing the income thresholds and lowering the interest rate for deferred property taxes, and lists RCW 84.36.383, 84.36.385, 84.38.020, and 84.38.100 as amended. Read first time 01/11/22, the bill was referred to the Committee on Business, Financial Services & Trade. The text provides that the deferred lien must bear interest at the rate of two percent per year. Section 5 states that the act applies to taxes levied for collection in 2023 and thereafter.

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Full text

     S-3284.3

                               SENATE BILL 5802


     State of Washington       67th Legislature          2022 Regular Session

     By Senators Fortunato, Holy, and Stanford

     Read first time 01/11/22.      Referred     to   Committee   on   Business,
     Financial Services & Trade.




1        AN ACT Relating to providing additional financial relief for
2    property owners using the senior citizen and disabled persons
3    property tax exemption and deferral programs by increasing the income
4    thresholds and lowering the interest rate for deferred property
5    taxes; amending RCW 84.36.383, 84.36.385, 84.38.020, and 84.38.100;
6    and creating a new section.


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


 8       Sec. 1.    RCW 84.36.383 and 2021 c 220 s 1 are each amended to
 9   read as follows:
10       As used in RCW 84.36.381 through 84.36.389, unless the context
11   clearly requires otherwise:
12       (1) "Combined disposable income" means the disposable income of
13   the person claiming the exemption, plus the disposable income of his
14   or her spouse or domestic partner, and the disposable income of each
15   cotenant occupying the residence for the assessment year, less
16   amounts paid by the person claiming the exemption or his or her
17   spouse or domestic partner during the assessment year for:
18       (a) Drugs supplied by prescription of a medical practitioner
19   authorized by the laws of this state or another jurisdiction to issue
20   prescriptions;


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 1       (b) The treatment or care of either person received in the home
 2   or in a nursing home, assisted living facility, or adult family home;
 3       (c) Health care insurance premiums for medicare under Title XVIII
 4   of the social security act;
 5       (d) Costs related to medicare supplemental policies as defined in
 6   Title 42 U.S.C. Sec. 1395ss;
 7       (e) Durable medical equipment, mobility enhancing equipment,
 8   medically prescribed oxygen, and prosthetic devices as defined in RCW
 9   82.08.0283;
10       (f) Long-term care insurance as defined in RCW 48.84.020;
11       (g) Cost-sharing amounts as defined in RCW 48.43.005;
12       (h) Nebulizers as defined in RCW 82.08.803;
13       (i)   Medicines  of   mineral,   animal,  and   botanical   origin
14   prescribed, administered, dispensed, or used in the treatment of an
15   individual by a person licensed under chapter 18.36A RCW;
16       (j) Ostomic items as defined in RCW 82.08.804;
17       (k) Insulin for human use;
18       (l) Kidney dialysis devices; and
19       (m) Disposable devices used to deliver drugs for human use as
20   defined in RCW 82.08.935.
21       (2) "Cotenant" means a person who resides with the person
22   claiming the exemption and who has an ownership interest in the
23   residence.
24       (3) "County median household income" means the median household
25   income estimates for the state of Washington by county of the legal
26   address of the principal place of residence, as published by the
27   office of financial management.
28       (4) "Department" means the state department of revenue.
29       (5) "Disability" has the same meaning as provided in 42 U.S.C.
30   Sec. 423(d)(1)(A) as amended prior to January 1, 2005, or such
31   subsequent date as the department may provide by rule consistent with
32   the purpose of this section.
33       (6) "Disposable income" means adjusted gross income as defined in
34   the federal internal revenue code, as amended prior to January 1,
35   1989, or such subsequent date as the director may provide by rule
36   consistent with the purpose of this section, plus all of the
37   following items to the extent they are not included in or have been
38   deducted from adjusted gross income:



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 1       (a) Capital gains, other than gain excluded from income under
 2   section 121 of the federal internal revenue code to the extent it is
 3   reinvested in a new principal residence;
 4       (b) Amounts deducted for loss;
 5       (c) Amounts deducted for depreciation;
 6       (d) Pension and annuity receipts;
 7       (e) Military pay and benefits other than attendant-care and
 8   medical-aid payments;
 9       (f) Veterans benefits, other than:
10       (i) Attendant-care payments;
11       (ii) Medical-aid payments;
12       (iii) Disability compensation, as defined in Title 38, part 3,
13   section 3.4 of the Code of Federal Regulations, as of January 1,
14   2008; and
15       (iv) Dependency and indemnity compensation, as defined in Title
16   38, part 3, section 3.5 of the Code of Federal Regulations, as of
17   January 1, 2008;
18       (g) Federal social security act and railroad retirement benefits;
19       (h) Dividend receipts; and
20       (i) Interest received on state and municipal bonds.
21       (7) "Income threshold 1" means:
22       (a) For taxes levied for collection in calendar ((years prior to
23   2020)) year 2023, a combined disposable income equal to ((thirty
24   thousand dollars)) $60,000; and
25       (b) For taxes levied for collection in calendar year ((2020))
26   2024 and thereafter, a combined disposable income equal to the
27   greater of "income threshold 1" for the previous year or ((forty-
28   five)) 45 percent of the county median household income, adjusted
29   every five years beginning August 1, ((2019)) 2026, as provided in
30   RCW 84.36.385(8).
31       (8) "Income threshold 2" means:
32       (a) For taxes levied for collection in calendar ((years prior to
33   2020)) year 2023, a combined disposable income equal to ((thirty-five
34   thousand dollars)) $65,000; and
35       (b) For taxes levied for collection in calendar year ((2020))
36   2024 and thereafter, a combined disposable income equal to the
37   greater of "income threshold 2" for the previous year or ((fifty-
38   five)) 55 percent of the county median household income, adjusted
39   every five years beginning August 1, ((2019)) 2026, as provided in
40   RCW 84.36.385(8).
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 1       (9) "Income threshold 3" means:
 2       (a) For taxes levied for collection in calendar ((years prior to
 3   2020)) year 2023, a combined disposable income equal to ((forty
 4   thousand dollars)) $70,000; and
 5       (b) For taxes levied for collection in calendar year ((2020))
 6   2024 and thereafter, a combined disposable income equal to the
 7   greater of "income threshold 3" for the previous year or ((sixty-
 8   five)) 65 percent of the county median household income, adjusted
 9   every five years beginning August 1, ((2019)) 2026, as provided in
10   RCW 84.36.385(8).
11       (10) "Principal place of residence" means a residence occupied
12   for more than six months each calendar year by a person claiming an
13   exemption under RCW 84.36.381.
14       (11) The term "real property" also includes a mobile home which
15   has substantially lost its identity as a mobile unit by virtue of its
16   being fixed in location upon land owned or leased by the owner of the
17   mobile home and placed on a foundation (posts or blocks) with fixed
18   pipe, connections with sewer, water, or other utilities. A mobile
19   home located on land leased by the owner of the mobile home is
20   subject, for tax billing, payment, and collection purposes, only to
21   the personal property provisions of chapter 84.56 RCW and RCW
22   84.60.040.
23       (12) The term "residence" means a single-family dwelling unit
24   whether such unit be separate or part of a multiunit dwelling,
25   including the land on which such dwelling stands not to exceed one
26   acre, except that a residence includes any additional property up to
27   a total of five acres that comprises the residential parcel if this
28   larger parcel size is required under land use regulations. The term
29   also includes a share ownership in a cooperative housing association,
30   corporation, or partnership if the person claiming exemption can
31   establish that his or her share represents the specific unit or
32   portion of such structure in which he or she resides. The term also
33   includes a single-family dwelling situated upon lands the fee of
34   which is vested in the United States or any instrumentality thereof
35   including an Indian tribe or in the state of Washington, and
36   notwithstanding the provisions of RCW 84.04.080 and 84.04.090, such a
37   residence is deemed real property.


38       Sec. 2.   RCW 84.36.385 and 2021 c 145 s 24 are each amended to
39   read as follows:
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 1       (1) A claim for exemption under RCW 84.36.381 as now or hereafter
 2   amended, may be made and filed at any time during the year for
 3   exemption from taxes payable the following year and thereafter and
 4   solely upon forms as prescribed and furnished by the department of
 5   revenue. However, an exemption from tax under RCW 84.36.381 continues
 6   for no more than six years unless a renewal application is filed as
 7   provided in subsection (3) of this section.
 8       (2) A person granted an exemption under RCW 84.36.381 must inform
 9   the county assessor of any change in status affecting the person's
10   entitlement to the exemption on forms prescribed and furnished by the
11   department of revenue.
12       (3) Each person exempt from taxes under RCW 84.36.381 in 1993 and
13   thereafter must file with the county assessor a renewal application
14   not later than December 31st of the year the assessor notifies such
15   person of the requirement to file the renewal application. Renewal
16   applications must be on forms prescribed and furnished by the
17   department of revenue.
18       (4) At least once every six years, the county assessor must
19   notify those persons receiving an exemption from taxes under RCW
20   84.36.381 of the requirement to file a renewal application. The
21   county assessor may also require a renewal application following an
22   amendment of the income requirements set forth in RCW 84.36.381.
23       (5) If the assessor finds that the applicant does not meet the
24   qualifications as set forth in RCW 84.36.381, as now or hereafter
25   amended, the claim or exemption must be denied but such denial is
26   subject to appeal under the provisions of RCW 84.48.010 and in
27   accordance with the provisions of RCW 84.40.038. If the applicant had
28   received exemption in prior years based on erroneous information, the
29   taxes must be collected subject to penalties as provided in RCW
30   84.40.130 for a period of not to exceed five years.
31       (6) The department and each local assessor is hereby directed to
32   publicize the qualifications and manner of making claims under RCW
33   84.36.381 through 84.36.389, through communications media, including
34   such paid advertisements or notices as it deems appropriate. Notice
35   of the qualifications, method of making applications, the penalties
36   for not reporting a change in status, and availability of further
37   information must be included on or with property tax statements and
38   revaluation notices for all residential property including mobile
39   homes, except rental properties.


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 1       (7) The department must authorize an option for electronic filing
 2   of applications and renewal applications for the exemption under RCW
 3   84.36.381.
 4       (8) Beginning August 1, ((2019)) 2022, and by March 1st every
 5   fifth year thereafter, the department must publish updated income
 6   thresholds. The adjusted thresholds must be rounded up to the nearest
 7   ((one thousand dollars)) $1,000. If the income threshold adjustment
 8   is negative, the income threshold for the prior year continues to
 9   apply. The department must adjust income thresholds for each county
10   to reflect the most recent year available of estimated county median
11   household incomes, including preliminary estimates or projections, as
12   published by the office of financial management. For the purposes of
13   this subsection, "county median household income" has the same
14   meaning as provided in RCW 84.36.383.
15       (9) Beginning with the adjustment made by March 1, ((2024)) 2027,
16   as provided in subsection (8) of this section, and every second
17   adjustment thereafter, if an income threshold in a county is not
18   adjusted based on percentage of county median income, then the income
19   threshold must be adjusted based on the growth of the seasonally
20   adjusted consumer price index for all urban consumers (CPI-U) for the
21   prior ((twelve)) 12-month period as published by the United States
22   bureau of labor statistics. In no case may the adjustment be greater
23   than one percent. The adjusted thresholds must be rounded to the
24   nearest one dollar. If the income threshold adjustment is negative,
25   the income threshold for the prior year continues to apply.


26       Sec. 3.   RCW 84.38.020 and 2019 c 453 s 4 are each amended to
27   read as follows:
28       The definitions in this section apply throughout this chapter
29   unless the context clearly requires otherwise.
30       (1)(a) "Claimant" means a person who either elects or is required
31   under RCW 84.64.050 to defer payment of the special assessments
32   and/or real property taxes accrued on the claimant's residence by
33   filing a declaration to defer as provided by this chapter.
34       (b) When two or more individuals of a household file or seek to
35   file a declaration to defer, they may determine between them as to
36   who the claimant is.
37       (2) "Devisee" has the same meaning as provided in RCW 21.35.005.
38       (3) "Equity value" means the amount by which the fair market
39   value of a residence as determined from the records of the county
                                     p. 6                          SB 5802
 1   assessor exceeds the total amount of any liens or other obligations
 2   against the property.
 3       (4) "Heir" has the same meaning as provided in RCW 21.35.005.
 4       (5) "Income threshold" means: (a) For taxes levied for collection
 5   in calendar ((years prior to 2020)) year 2023, a combined disposable
 6   income equal to ((forty-five thousand dollars)) $75,000; and (b) for
 7   taxes levied for collection in calendar year ((2020)) 2024 and
 8   thereafter, a combined disposable income equal to the greater of the
 9   income threshold for the previous year, or ((seventy-five)) 75
10   percent of the county median household income, adjusted every five
11   years beginning August 1, ((2019)) 2022, as provided in RCW
12   84.36.385(8). Beginning with the adjustment made by March 1, ((2024))
13   2027, as provided in RCW 84.36.385(8), and every second adjustment
14   thereafter, if the income threshold in a county is not adjusted based
15   on percentage of county median income as provided in this subsection,
16   then the income threshold must be adjusted based on the growth of the
17   consumer price index for all urban consumers (CPI-U) for the prior
18   ((twelve)) 12-month period as published by the United States bureau
19   of labor statistics. In no case may the adjustment be greater than
20   one percent. The adjusted threshold must be rounded to the nearest
21   one dollar. If the income threshold adjustment is negative, the
22   income threshold for the prior year continues to apply.
23       (6) "Local government" means any city, town, county, water-sewer
24   district,   public   utility   district,   port   district,  irrigation
25   district, flood control district, or any other municipal corporation,
26   quasi-municipal    corporation,   or    other   political   subdivision
27   authorized to levy special assessments.
28       (7) "Real property taxes" means ad valorem property taxes levied
29   on a residence in this state in the preceding calendar year.
30       (8) "Residence" has the meaning given in RCW 84.36.383.
31       (9) "Special assessment" means the charge or obligation imposed
32   by a local government upon property specially benefited.


33       Sec. 4.   RCW 84.38.100 and 2013 c 221 s 8 are each amended to
34   read as follows:
35       Whenever a person's special assessment and/or real property tax
36   obligation is deferred under the provisions of this chapter, the
37   amount deferred and required to be paid pursuant to RCW 84.38.120
38   becomes a lien in favor of the state upon his or her property and has
39   priority as provided in chapters 35.49, 35.50, 36.35, and 84.60 RCW.
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 1   However, the interest of a mortgage or purchase contract holder who
 2   is required to cosign a declaration of deferral under RCW 84.38.090,
 3   has priority to such deferred lien. This lien may accumulate up to
 4   eighty percent of the amount of the claimant's equity value in the
 5   property and must bear interest at the rate of ((five)) two percent
 6   per year from the time it could have been paid before delinquency
 7   until said obligation is paid. However, when taxes are deferred as
 8   provided in RCW 84.64.050, the amount must bear interest at the rate
 9   of ((five)) two percent per year from the date the declaration is
10   filed until the obligation is paid or the date that the obligation is
11   charged off as finally uncollectible. In the case of a mobile home,
12   the department of licensing must show the state's lien on the
13   certificate of title for the mobile home. In the case of all other
14   property, the department of revenue must file a notice of the
15   deferral with the county recorder or auditor.


16       NEW SECTION.    Sec. 5.   This act applies to taxes levied for
17   collection in 2023 and thereafter.

                                  --- END ---




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