Washington Senate Bill Report SB 6034 (Jan. 17, 2024)
- Issuer
- Congressional materials
- Document type
- Report
- Date
- 2024-01-18
- Case
- 2024 01 18 A31645 D264899 Bill Report 6034 Sba Bfgt 24
Summary
A Washington Senate Bill Report on SB 6034, as of January 17, 2024, prepared for the Senate Committee on Business, Financial Services, Gaming & Trade, whose hearing was 1/18/24. The bill concerns the excise tax treatment of document recording and filing fees that title and escrow businesses receive from clients for remittance to county offices, and is sponsored by Senators Schoesler and Dozier. The background describes document recording fees and surcharges, including a $100 Covenant Homeownership Program assessment beginning January 1, 2024, and the retail sales tax and business and occupation tax. The bill would exclude such remitted fees from sales tax and B&O tax, exempt the preference from a performance statement and expiration, and apply it prospectively and retroactively to pending disputed assessments. A fiscal note was requested on January 8, 2024.
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Full text
SENATE BILL REPORT
SB 6034
As of January 17, 2024
Title: An act relating to clarifying the excise tax treatment of document recording and filing fees
received by title and escrow businesses from clients for remittance to county recording and
filing offices.
Brief Description: Clarifying the excise tax treatment of document recording and filing fees
received by title and escrow businesses from clients for remittance to county recording and
filing offices.
Sponsors: Senators Schoesler and Dozier.
Brief History:
Committee Activity: Business, Financial Services, Gaming & Trade: 1/18/24.
Brief Summary of Bill
• Modifies the sales tax statutes to remove county filing or recording fees
from being subject to sales tax.
• Modifies the business and occupation (B&O) tax statutes to provide an
exemption for amounts paid to a county filing office for a filing or
recording fee when calculating B&O revenues.
• Exempts these exemptions from expiration and performance statements.
• Applies the act prospectively and retroactively to disputed assessments
pending before the Department of Revenue, Board of Tax Appeals, or
any court of law.
SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES, GAMING & TRADE
Staff: Clint McCarthy (786-7319)
This analysis was prepared by non-partisan legislative staff for the use of legislative
members in their deliberations. This analysis is not part of the legislation nor does it
constitute a statement of legislative intent.
Senate Bill Report -1- SB 6034
Background: Document Recording. Document recording serves a public accessibility and
preservation function. A wide range of documents can be publicly recorded and are
potentially subject to document recording fees and surcharges. Many documents that are
recorded are related to real estate, such as deeds, liens, deeds of trust, covenants, easements,
leases, plats, and surveys. Other examples of the types of documents that may be recorded
include community property agreements; certain notices; divorce decrees; and foreign birth,
marriage, and death certificates. There is no comprehensive list of the types of documents
that can be recorded.
Generally, the county auditor will accept a document for recording as long as the document
meets the formatting requirements, and the appropriate fees and surcharges are paid.
County auditors do not review recorded documents for content accuracy or legality.
Fees and Surcharges. Fees for recording a document are set by statute, collected by the
county auditors, and distributed to certain funds and programs. There is a $5 fee for
recording the first page of a document and an additional $1 fee for recording each additional
page of a document.
In addition to the document recording fees, there are a number of document-recording
surcharges created by statute, including surcharges to support preservation and accessibility
of permanent documents, the State Library Operations, the State Library Archives Building,
urban planning, and affordable housing. These surcharges generally apply to all documents
recorded, although some surcharges include exceptions for certain types of documents.
County auditors collect and distribute the following housing surcharges:
• a $13 Affordable Housing for All surcharge;
• a $62 Local Homeless Housing and Assistance surcharge;
• an $8 additional Local Homeless Housing and Assistance surcharge; and
• a $100 housing surcharge enacted in 2021.
For standard documents with no applicable exemptions, the total document recording fee
for the first page, including the surcharges, is around $200.
Beginning January 1, 2024, the county auditor started collecting a Covenant
Homeownership Program (CHP) assessment of $100 for each document recorded, with
certain exceptions. This assessment is in addition to any other charge, surcharge, or
assessment allowed by law. The county auditor may retain up to 1 percent of the moneys
for collection costs and must remit the remainder to the state treasurer to be deposited in the
Covenant Homeownership Account (CHA).
The CHP assessment does not apply to assignments or substitutions of previously recorded
deeds of trust; documents recording a birth, marriage, divorce, or death; any recorded
documents otherwise exempted under state law; marriage licenses issued by the county
auditor; documents recording a name change order; or documents recording a federal, state,
Senate Bill Report -2- SB 6034
county, city, water-sewer district, or wage lien, or satisfaction of lien.
The statute related to county auditor's fees is amended to include a reference to the new
CHP assessment.
Retail Sales and Use Tax. Retail sales taxes are imposed on retail sales of most articles of
tangible personal property, digital products, and some services. A retail sale is a sale to the
final consumer or end user of the property, digital product, or service. If retail sales taxes
were not collected when the user acquired the property, digital products, or services, then
use tax applies to the value of property, digital product, or service when used in this state.
The state, all counties, and all cities levy retail sales and use taxes. The state sales and use
tax rate is 6.5 percent.
Business and Occupation Tax. Washington's major business tax is the business and
occupation (B&O) tax. The B&O tax is imposed on the gross receipts of business activities
conducted within the state, without any deduction for the costs of doing business.
Businesses must pay the B&O tax even though they may not have any profits or may be
operating at a loss. A taxpayer may have more than one B&O tax rate, depending on the
types of activities conducted. Major B&O tax rates are 0.471 percent for retailing; 0.484
percent for manufacturing, wholesaling, and extracting; and 1.5 percent for services and for
activities not classified elsewhere. Several preferential rates also apply to specific business
activities. A business does not have to file an annual B&O tax return if the business does
not owe other taxes or fees to the Department of Revenue (DOR) and has annual gross
proceeds of sales, gross income, or value of products for all B&O tax classifications of less
than $28,000 per year, or less than $46,667 if at least 50 percent of its taxable income is
from services or activities not classified elsewhere.
Tax Preference Performance Statements. State law provides for a range of tax preferences
that confer reduced tax liability upon a designated class of taxpayer. Tax preferences
include tax exclusions, deductions, exemptions, preferential tax rates, deferrals, and credits.
Washington has over 650 tax preferences, including a variety of sales and use tax
exemptions. Legislation that establishes or expands a tax preference must include a Tax
Preference Performance Statement that identifies the public policy objective of the
preference, as well as specific metrics the Joint Legislative Audit and Review Committee
can use to evaluate the effectiveness of the preference. All new tax preferences
automatically expire after ten years unless an alternative expiration date is provided.
Expiration of Tax Preferences. If a new tax preference created after August 1, 2013, does
not have an expiration date in the legislation, it will automatically expire ten years after the
effective date.
Summary of Bill: The definition of the term "abstract, title insurance, and escrow
services" is modified for the purpose of calculating sales tax to not include amounts
received by a person for remittance to a county filing office as a either a document filing or
Senate Bill Report -3- SB 6034
recording fee. These same amounts for remittance to a county filing office are made to be
not subject to the B&O tax. This tax preference is exempt from having to complete a tax
preference performance statement. The tax preference is permanent and exempt from
having to be reauthorized in ten years. The tax preference also applies prospectively and
retroactively to disputed assessments pending before the DOR, Board of Tax Appeals, or
any court of law.
Appropriation: None.
Fiscal Note: Requested on January 8, 2024.
Creates Committee/Commission/Task Force that includes Legislative members: No.
Effective Date: Ninety days after adjournment of session in which bill is passed.
Senate Bill Report -4- SB 6034
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