Completing an exempt electronic controlling interest return

0:01
The names, businesses, and scenario in this video tutorial are fictitious.

0:07
Any resemblance to actual persons, organizations, or companies is purely coincidental and unintentional.

0:16
Thank you for joining me on how to complete an exempt Controlling Interest, or CI, transfer return on My DOR.

0:26
The transfer of a controlling interest in an entity that owns real property or leasehold improvements in Washington state is considered a taxable sale of the entity's real property and is subject to real estate excise tax, or REET.

0:43
The simple definition of controlling interest is the transfer of 50% or more beneficial interest in an entity.

0:52
To access the CI return, go to dor.wa.gov and select the orange login button at the top right of the screen.

1:05
Log in by entering your Secure Access Washington, otherwise known as SAW, User ID and Password, then select Log in to My DOR.

1:17
If asked, complete the Multi-factor Authentication challenge to verify your identity.

1:23
If you need help creating a SAW account, please go to dor.wa.gov/REET, and under More Information select the link Completing an Electronic Controlling Interest Return – My DOR help.

1:41
A My DOR login is not needed and only a SAW account can be used.

1:46
Now we will begin. Click the Real Estate Excise Tax Controlling Interest link in the File and Pay Taxes tile or select the large green Get Started button to go to the online services page.

2:01
For this tutorial, I will be selecting the Real Estate Excise Tax Controlling Interest link.

2:10
Now we will start filing the CI Transfer return.

2:14
The first page will ask if you are looking for a draft.

2:18
To find a previously saved REET CI Draft Return, go to the My DOR home screen and use the search bar to search for the draft.

2:28
If you are not looking for a draft and want to file a new CI Transfer return, select Next.

2:37
I will be entering a new return.

2:40
Select New Return and click Next.

2:44
Answer the question prompted: Does the transferred entity on real property or leasehold improvements in Washington state?

2:51
If no, then you do not need to file a return.

2:55
If you have any questions about this, please contact the REET team at 360-704-5905.

3:04
If the entity does own real property or leasehold improvements, select Yes and enter the date of transfer.

3:15
The date of transfer cannot be before January 1, 2020 and it cannot be more than 30 days in the future.

3:24
If you are reporting a transfer with the date of transfer prior to January 1, 2020, please file via a paper return.

3:33
If you would prefer to upload data for the transfer, there is a separate video on how to do so under More Information on the REET landing page.

3:43
Please go to dor.wa.gov/REET to access our landing page.

3:52
The data upload feature is beneficial for transfers involving a large number of transfeors, transferees, or parcels.

4:01
For this training, I will be manually entering the data. Select Next. 

4:08
On this page, I will be entering the entity's information whose ownership is changing.

4:13
Select Add Entity. At the top right hand of the page,

4:20
You can add more entities, copy the entity, or delete an entity.

4:28
Enter the entity's information and verify the address.

4:35
If required, select the correct address and select Save.

4:42
If the address cannot be verified or you want to use the address as you entered it, select Yes to override and continue.

4:52
Enter the UBI or Federal Identifier Number of the entity.

4:57
Do not enter a Social Security number. If there is no UBI or Federal Identifier Number, leave this field blank.

5:05
If additional entities need to be added, select the Add Entity link and repeat these steps to add all entities involved in the transfer.

5:20
The first tab is a summary of the entities entered.

5:24
You can review and edit the details of each entity by selecting the name of the entity either in the tab or the list, or by selecting the pencil icon.

5:35
For this example, Cascadia Perk Coffee House is the entity whose ownership is changing.

5:41
Select Next. On this page I will be entering the Transferors information.

5:51
The transferor is the individual or entity who is transferring their ownership.

5:57
For this training, I will be using two transferors to show how an individual and entity are entered. Select Add Transferor.

6:09
Select the transferor type from the options provided in the drop-down menu, and enter the transferors information.

6:21
Their address will need to be verified, and an e-mail address and phone number are required for each transferor to move forward.

6:30
At the bottom of the page, enter the percentage of ownership that is being transferred.

6:35
As a reminder, do not enter the Social Security number of an individual.

6:41
Only enter the UBI or FIN of an entity if available.

6:46
The UBI for the transferors and transferees should not match the UBI of the entity’s whose ownership is changing.

6:57
In this exercise, Lena Barrett is transferring her 45% ownership in Cascadia Perk Coffee House, LLC.

7:06
If you select Next without adding another transferor a pop-up will appear stating the transfer is below the 50% required reporting threshold per Washington Administrative Code or WAC 458-61A-101(2).

7:27
If there is not another transferor making the total transferred ownership above 50%, you are not required to file a CI transfer return.

7:38
If you are filing an information only return to report a transfer less than 50%, you must do so on a paper return which can be found at dor.wa.gov/REETforms.

7:56
If there is another transferor, enter it now by selecting the Add Transferor button at the bottom of the page and add the additional transferor. The second transferor is Salty Breeze LLC.

8:11
Select the appropriate transferor type from the drop-down menu.

8:18
Enter the second transferor’s information and verify the address.

8:23
An e-mail and phone number are required.

8:27
Enter the percentage of ownership transferred at the bottom of the page.

8:31
For this exercise, Salty Breeze, LLC is transferring its 55% ownership of Cascadia Perk Coffee House, LLC.

8:41
The UBI, if applicable, should not match the entity or transferee.

8:47
Select Next.

8:50
I will be adding the transferee’s information next.

8:54
The transferee is the individual or entity acquiring the ownership of the entity being transferred.

9:03
Select the Add Transferee link and select the transferee type from the drop-down menu.

9:15
For this exercise, the transferee is an individual, Maggie Nolan.
9:24
Verify the address, enter the contact information, and UBI if applicable.

9:33
Remember, do not include a Social Security number and the UBI should not match the entity's or transferor's UBI.

9:42
Enter the percentage of ownership acquired. 

9:46
If applicable, repeat this to add all transferees.

9:49
If the total percentage transferred and the total percentage acquired do not match, a warning message will appear.

9:57
The preparer can either update the information to match or acknowledge the discrepancy to continue.

10:03
For this exercise, the entity ownership acquired totals 100%.

10:08
Select Next. 

10:12
On this screen, answer Yes or No if the entity whose ownership is changing has any subsidiaries that own real property in Washington state.

10:22
If yes, a list of all subsidiaries of the transferred entity, including the addresses and relationships of all entities and the true and fair value of real property they own in Washington, will be required to be uploaded once you reach the Attachments section of the return.

10:41
For this exercise, there are no subsidiaries involved.

10:45
Select Next to continue.

10:50
On the next page, enter the Washington state parcels owned by the entity whose ownership is changing.

10:57
Enter the county, the parcel number, and the true and fair value.

11:03
Select the county the parcel is located in by using the drop-down menu, enter the parcel number, and the true and fair value.

11:13
Repeat steps one through three to add all parcels.

11:16
Please be aware that counties have different numbering systems for their parcels.

11:20
Some have dashes, periods or defer in length.

11:27
Be sure to include all leading and trailing zeros.

11:32
For parcel format help, there is a Parcel Format Help link located under More Information on the REET landing page.

11:40
Select Next to run the parcel validation.

11:51
If the parcel number cannot be verified and the location code is not found, an error message will appear like it did here.

12:00
If the error message appears, verify the parcel is formatted correctly by using the Parcel Format Guide located on the REET landing page.

12:14
If corrections are made to the parcel numbers and they are still not validating, check the Override Parcel Validation box and select Next.

12:22
This should only be done after attempting to fix the parcel that could not be validated.

12:28
Some situations that may require parcel override would be reporting leasehold improvements, recently merged or segregated parcels, mobile homes, etcetera.

12:40
You will be required to enter the location code of any parcels that were not validated.

12:46
Parcel codes can be found on the REET landing page in the What Rate Do I Pay? section.

12:55
I removed the dashes from the Mason County parcel and I was able to validate.

13:00
Here's what it looks like with all parcels validated.

13:03
Select Next.

13:06
Once all parcels have been entered, this page will provide the local, city, or county tax due per parcel, and the total local, city, or county tax combined, along with the true and fair value for each parcel and the combined true and fair value total.

13:26
Select Next.

13:29
This page will ask about predominant use as classified under Revised Code of Washington or RCW 84.34, RCW 84.33 and RCW 84.34.20.

13:47
The predominant use page is used to determine the predominant use for real estate transactions that include one or more parcels, which qualify as agriculture or timberland, and includes one or more parcels that do not qualify as agriculture or timberland.

14:06
If all parcels are used as timberland or agriculture, select Yes to the first question.

14:14
If some parcels are used as timberland or agriculture and others are not, select Yes to the second question.

14:22
You will be required to complete the predominant use worksheet.

14:27
There is a separate video covering how to report predominant use on a controlling interest return submitted through My DOR.

14:36
This video can be found at the REET landing page under More information.

14:41
For this exercise, the parcels are not predominant use.

14:45
Select Next. This page shows the state graduated rates for REET are being used and provides a total state REET calculation.

14:59
Select Next.

15:02
Here is where an exemption would be claimed if applicable.

15:06
To claim an exemption, select one from the drop-down menu.

15:13
For this exercise, the WAC 458-61A-202(6)(f) probate exemption has been claimed.

15:24
If claiming an exemption where a document is required, text will appear notifying you that additional documentation is required prior to submission.

15:35
Select Next.

15:37
This page shows the required attachments if applicable.

15:42
For this exemption, a certified copy of the letters testamentary or administration is required.

15:49
If you select Next without uploading required documentation, an error message will appear requesting all required attachments be uploaded.

16:03
Upload the attachment.

16:06
Optional attachments, such as a cover letter can also be uploaded here.

16:12
Please make sure to name the documents and use the attachment description to describe what the optional attachments are.
16:20
Select Next.

16:24
The next page will show the return totals.

16:27
This will provide a summary of the total due, including the local REET, state REET, and estimated penalty and interest if applicable.

16:37
A controlling interest transfer must be reported within five days from the date of transfer, and penalties and interest are due if the tax is not paid within one month of the date of transfer.

16:49
Please see WAC 458-61A-101(8) for reporting requirements.

17:00
This can also be found on the REET landing page under When Is Tax Due?

17:07
If you are claiming an exemption, this screen will display all zeros as no REET would be due.

17:13
Select Next.

17:16
Answer the question if a preparer is filing the return on behalf of one of the parties.

17:24
Provide the information for the preparer and if someone else will be reviewing and signing the return.

17:30
For this example, the preparer is signing on behalf of the transferors.

17:38
Answer the question if another agent is signing their return on behalf of the parties.

17:44
For this exercise, the transferee themselves is signing the return.

17:51
If you are signing on behalf of any party, select the check box that you have read and understand that you certify the information on the return is true and correct, and you acknowledge all transactions are subject to audit by the Department.

18:07
It also details that perjury is a Class C felony and in the event of an audit, it is the taxpayers responsibility to provide documentation to support the true and fair value, or any exemption claimed.

18:22
Keep records for four years per RCW 82.45.100 and WAC 458-61A-301(9).

18:35
Select Next.

18:39
If an agent or preparer is not providing both required signatures, additional signature web requests will be required.

18:47
If applicable, select the transferor, transferee, or agent who should receive the electronic signature request.

19:00
Only one signature per transferor and one signature per transferee is allowed.

19:07
Additional signatures can be provided but are not required by adding an exhibit in the Optional Attachments section.

19:15
Selected parties will receive an e-mail and mailed letter with instructions to complete the signature request. Confirm the e-mail and party that will be reviewing the return.

19:28
Once the return is fully signed by both parties, it cannot be amended.

19:33
The return is not complete and will not be processed until all electronic signatures are received.

19:41
Select Next.

19:45
This page details that no payment is needed for the submission as an exemption was claimed, and that signatures are required for both the transferor and transferee in order to accept payment and to process the return.

20:00
Select Submit.

20:03
Save the confirmation number on the screen.

20:07
An e-mail will be sent immediately to the recipient to review and sign the return.

20:13
The other person signing the return does not need a My DOR or SAW account to review the return.

20:22
The party that received the signature e-mail will follow the instructions that are provided.

20:28
This is an example of what the e-mail looks like and is used for demonstration purposes only.

20:34
The e-mail will be sent immediately upon submission.

20:39
Follow the link and enter the letter ID number and verification code provided in the e-mail, as well as the date of transfer.

20:49
Select Next.

20:53
The transferee will review the return.

20:57
If edits need to be made, the preparer will go to their My DOR, select File a REET Controlling Interest Transfer Return, and go to the return selection page and select Edit Submission.

21:13
They will enter the confirmation number written down prior to sending the transferee an electronic signature request, and the date of transfer.

21:23
Edits can only be made prior to the transferee signing the return.

21:30
Once the return has been reviewed and signed under penalty of perjury, a confirmation number will be provided.

21:37
This will need to be saved.

21:39
We also recommend printing the confirmation.

21:42
This confirmation is only available on this page.

21:46
Once you leave this page, you cannot get the confirmation number again.

21:50
This confirmation number will need to be provided to the REET team if you are checking the status of your return.

21:58
If you select Print Confirmation it will provide you with a printable version of your confirmation number.

22:04
Select OK to go back to the My DOR homepage.

22:08
You have now completed a controlling interest transfer return claiming an exemption submitted through My DOR, with two different signers.

22:17
If you have any questions, please visit our website at dor.wa.gov/REET or call the REET team at 360-704-5905.