Rules and Ancillary Document Review Checklist

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Document Reviewed: WAC 458-12-005

Title: Definition - Property - Personal

Reviewer:

Date Review Started: 12/03/97

Do not Fill in

Is this document being reviewed at this time because of a taxpayer or business association request? (If "YES", explain). No.

Type an "x" (lowercase) in the column that most correctly answers the question, and provide clear, concise, and completed explanations where needed.

  1. Explain the goal(s) and purpose(s) of the document:

    2. The goal of WAC 458-12-005 is to inform taxpayers about the two categories of personal property, tangible and intangible. Its purpose is to provide specific examples of each category of personal property as established by a statute, Board of Tax Appeals’ decision, Attorney General’s opinion, or by case law. RCW 84.04.080 (Personal Property) defines personal property in broad terms and this rule clarifies the scope of the statute so that it may be applied by assessors, appraisers, and taxpayers.

     

  2. Need:

YES

NO

  
 

x

 If reviewing a rule are there any other ancillary documents that can be included in a rule revision? (List ancillary documents in the space provided).
 

N/A

 If reviewing an ETB or PTB or any other ancillary document can it be easily included in an existing rule?

X

   Is the document necessary to comply with the statutes that authorize it?
 

X

 Is the document obsolete to a degree that warrants repeal or revision?

X

   Have laws or other circumstances changed so that the document should be amended or repealed?

X

   Is the document necessary to protect or safeguard the health, welfare, or safety of Washington’s citizens (welfare includes budget levels necessary to provide services to the citizens of the state of Washington)?

Please explain and list those ancillary documents recommended for repeal either because they should be incorporated into a revised rule or have outlived their usefulness.

During the 1997 legislative session, RCW 84.36.070 (Intangibles exempt) was amended to clarify the exemption allowed for intangible personal property. The amended statute now includes a lengthy description of intangible personal property that is exempt from property tax. It also contains a list of characteristics related to real property that are not to be classified as intangible personal property and are, therefore, taxable. This statute also provides that the Department and county assessors may continue to use generally accepted appraisal practices to value real and tangible personal property, which may sometimes include the influence or enhancement of intangible personal property (such as licenses and permits granted by a government agency to put the property to its intended use). These statutory changes need to be included in WAC 458-12-005.

 

  1. Effectiveness:

YES

NO

  

x

   Is the document providing the results that is was originally designed to achieve in a reasonable manner?
 

x

 Are there regulatory alternatives or new technologies that could more effectively or efficiently achieve the same objectives?

Please explain answer(s):

The rule as written achieves its intent and purpose. No other regulatory alternative would more effectively or efficiently inform taxpayers or local taxing officials about the types of tangible and intangible personal property.

 

4. Clarity:

YES

NO

  

x

   Is the document written and organized in a clear and concise manner so that it can be readily understood by those to whom it applies?

Please explain answer(s):

This rule was adopted in 1968 and has never been amended. It is written in a clear and concise manner although it is not in the format now preferred by DOR that includes an introductory paragraph explaining the intended usage and headings for subsections. Both the style and content of the rule need to be revised so that it is written in a user-friendly and informative manner. WAC 458-12-005 is used in conjunction with WAC 458-12-245 (Listing of property - Intangibles [personal property]).

 

  1. Intent and Statutory Authority:

YES

NO

  

x

   Is the document consistent with the legislative intent of the statutes that authorize it?

x

   Is the document based upon sufficient statutory authority?
 

x

 Is there a need to develop a more specific legislative authorization in order to protect the health, safety, and welfare of Washington’s citizens?
 

x

 Is there a need to recommend legislative changes to the underlying statutes?.

List authorizing statutes, Give cites as required and explain answer(s):

RCW 84.04.080 defines "personal property" for purposes of taxation by listing different types of property. It also includes a list of items that are not considered property for the purposes of property tax. This list primarily contains items of intangible personal property that was contained in RCW 84.36.070 (Intangibles - exempt) before it was revised in 1997. WAC 458-12-005 repeats and expands on the items of personal property contained in these two statutes. However, the rule needs to be amended to incorporate the 1997 amendments to RCW 84.36.070.

  1. Coordination:Agencies should consult with and coordinate with other jurisdictions that have similar regulatory requirements when it is likely that coordination can reduce duplication and inconsistency.

YES

NO

  
 

x

 Could additional consultation and coordination with other governmental jurisdictions and state agencies with similar regulatory authority eliminate or reduce duplication and inconsistency?

Please explain answer:

Property taxes are levied at the local level only. Local government and other state agencies, as appropriate, are consulted during the rule making process so the chance of adopting duplicative and/or inconsistent regulations is minimal.

  1. Cost: (Answer yes only when a Cost Benefit Analysis was completed when the rule was last amended).

YES

NO

  
 

x

 Have qualitative and quantitative benefits of the document been considered in relation to its costs? (Consider only costs imposed by document not statute.)

Please explain answer:

This is an interpretative rule that imposes no new or additional administrative burdens on businesses that are not imposed by law.
  1. Fairness:

YES

NO

  

x

   Does the document result in equitable treatment of those required to comply with it?
 

x

 Should it be modified to eliminate or minimize any disproportionate impacts on the regulated community? (Consider only impacts imposed by document not statute).
 

x

 Should it be strengthened to provide additional protection?

Please explain answer(s):

This rule applies equally to all taxpayers who possess tangible and intangible personal property. DOR has no record of any difficulties or negative impacts of the rule.

  1. LISTING OF DOCUMENTS REVIEWED: (Include any documents discussed above. When listing statutes, ancillary documents, or other regulations also provide titles. Court, Board of Tax Appeals (BTA), or Appeals Division (WTD) decisions should be listed by citation followed by a brief description (phrase or sentence) of the pertinent issue(s).)

Statute(s) Implemented:

RCW 84.04.080 "Personal Property"

RCW 84.36.070 "Intangibles - exempt"

ESHB 5286 (chapter 181, laws of 1997) Intangible personal property - clarification of taxation

Court Cases:

Pier 67, Inc. v. King County, 78 Wn.2d 48 (1970) value of improvements on leased public land;

Clark-Kunzl Co. v. Williams, 78 Wn.2d 59, 469 P.2d 874 (1970) ) value of improvements on leased public land;

Sohol v. Clark, 78 Wn 813, (1971) personal property on Indian land;

Chief Seattle Prop. v. Kitsap County, 86 Wn.2d 7, 541 P.2d 699 (1975) non-federal improvement on federal Indian reservation is taxable as personal property;

Timber Traders v. Johnston, 13 Wn. App. 607, 536 P.2d 655 (1975) standing timber owned separately from forest land is personal property;

Makah Indian Tribe v. Clallam County, 73 Wn. 677, 440 P.2d 442 (1968) personal property on Indian land;

Wasser & Winters v. Jefferson Cy., 84 Wn.2d 597, 528 P.2d 471 (1974) ) standing timber owned separately from forest land is personal property;

Leuthold v. Davis, 56 Wn.2d 710, 355 P.2d 6 (1960) ) standing timber owned separately from forest land is personal property;

Duwamish Warehouse Co. v. Hoppe, King County Assessor, 102 Wn.2d 249, 684 P.2d 703 (1984) when improvement on public owned land is to revert to public lessor, the reversionary interest must be considered in determining FMV; and

Washington Mutual v. Dep't of Revenue, 77 Wn. App. 669, 893 P.2d 654 (1995) improvements on leased public land.

Ancillary documents:

PTB 75-1 : Sales Tax as an element of value (valuation issue, not on point with this rule)

Administrative Decisions:

AGO 51-53 No. 408: unpatented mining claims are personal property, therefore real estate sales tax does not apply;

AGO 59-60 No. 31: taxation of real and personal property within this state but owned by a city in Oregon;

AGO 63-64 No. 116: whether coins and currency as articles of merchandise are subject to taxation at their fair market value;

AGO 1968 No. 4: whether oysters are personal property;

AGO 1977 No. 8: improvements on publicly owned land ;

AGLO 1979 No. 17: public land leased to Indian tribe and subleased to third party;

Chief Seattle Properties, Inc. v. Kitsap County, BTA Nos. 450 and 451 (1970) improvements on Indian land;

Brach Barrett, et al v. July 1969 Pierce County Board of Equalization, BTA Nos. 732 thru 802 (1971);

Hoppe, King County Assessor v. Sea-Land Service, Inc., BTA No. 71-41 (1973);

Ralph E. Pittman v. King County Assessor, BTA No. 11871 (1975);

Auburn Enterprises v. King County Assessor, BTA Nos. 76-2, 76-3 (1976) lease of Indian allotment and improvements thereon;

Urban/Four Seasons Hotel Venture, a general partnership v. King County Assessor and Washington State Department of Revenue, BTA Nos. 28341-28344 (1986) improvements on leased public land;

Hedreen v. King County Assessor, BTA Nos. 35789 & 35899 (1989) location of title to improvements on leased public land determines whether improvements is personal property or contract rent; and

Lockhaven Marina, Inc. v. King County Assessor, BTA No. 38169 (1991) ) location of title to improvements on leased public land determines whether improvements are personal property or contract rent.

 

Yes No

x Business Methods have substantially changed to warrant repealing or amending the document.

x Administrative Changes have occurred enough to warrant repealing or amending the document.
  1. Review Recommendation: Indicate whether you are recommending that the Department amend; repeal; or leave the rule or ancillary document as is.

X Amend

Repeal

Leave as is

Incorporate ancillary document into a new or existing rule. (Subject of this review must an ancillary document and not a rule).

 

Explanation: (If you chose amend or a new rule, please explain why rule making is being considered and list specific reasons why the rule is necessary. If you choose "leave as is" explain why rule should remain in its present state. Also explain any recommendation to incorporate and/or repeal an ancillary document):

WAC 458-12-005 needs to be put into the format now preferred by the Department. The specific references to court cases, attorney general opinions, and BTA decision need to be removed from the text of the rule. The types of tangible and intangible personal property that have been established as such by an AG opinion, BTA decision, or court case since the 1968 adoption of the rule need to be added.

L&P and Property Tax need to discuss the advisability of removing the entire section on "intangible personal property" because of the 1997 legislative changes to RCW 84.36.070 prior to drafting amendments to this rule. The current rule contains references to types of intangible personal property that are not part of the new statute and may need to remain in the rule to clarify what is considered intangible personal property.

 
  1. Manager action: Date: ________________

_____ Reviewed recommendation _____ Accepted recommendation

_____ Returned for further action

Comments: