Current through Register Vol. 23-24, December 15, 2023
(1)
Introduction. This rule
explains the application of the state property tax to ships and vessels. Ships
and vessels that are not subject to the excise tax imposed by
chapter
82.49 RCW are either
subject to the state property tax or are exempt from both the property tax and
the excise tax. This rule covers only those ships and vessels subject to the
property tax. See chapter 308-93 WAC for information regarding ships and
vessels subject to the excise tax, which is administered by the department of
licensing. This rule also discusses the annual derelict vessel removal fee that
is imposed upon all persons required by
RCW
84.40.065 to list any ship or vessel with the
department of revenue for state property tax purposes (see
RCW
79.100.180 ).
(2)
Which ships and vessels are subject
to property taxation? A ship or vessel is subject to the state property
tax if the ship or vessel is:
(a)Used
exclusively for commercial fishing purposes; or
(b) Primarily engaged in commerce and has or
is required to have a valid marine document as a vessel of the United States.
(See RCW
84.36.080 ).
Accordingly, such a ship or vessel is subject to assessment by
the department of revenue for that portion of the property tax levied by the
state for state purposes.
(3)
Which ships and vessels are exempt
from property taxation? The following are exempt from all property
taxes, including the state levy:
(a)A ship or
vessel listed in the state or federal register of historical places (see
RCW
84.36.080 );
(b)A ship or vessel with an assessed value of
less than five hundred dollars (see
RCW
84.36.015 ); and
(c) A ship or vessel that is not within the
scope of subsection (2) of this rule (see
RCW
84.36.090 ).
(4)
What is the annual derelict vessel
removal fee? Except as otherwise provided in (a) of this subsection, an
annual derelict vessel removal fee is imposed upon all persons required by
RCW
84.40.065 to list any ship or vessel with the
department of revenue for state property tax purposes.
(a)The derelict vessel removal fee does not
apply in any year that a person required to list a ship or vessel does not owe
the state property tax levied for collection in that year with respect to that
ship or vessel.
(b)The annual
derelict vessel removal fee is equal to one dollar per vessel foot measured by
extreme length of the vessel, rounded up to the nearest whole foot.
(c)Each year the amount of the derelict
vessel removal fee due for that calendar year will be provided in the tax
statement required in
RCW
84.40.065.
(d)The person listing a ship or vessel and
the owner of the ship or vessel, if not the same person, are jointly and
severally liable for the fee.
(e)
The department of revenue will collect the derelict vessel removal fee and all
property taxes upon ships and vessels listed with the department in accordance
with RCW
84.40.065, and all applicable interest and
penalties on such taxes and fees. The taxes and derelict vessel removal fee are
due and payable to the department on or before the thirtieth day of April and
shall be delinquent after that date.
(5)
What happens if the property taxes
and derelict vessel removal fees are delinquent or not paid?
(a)
(i) If
payment of the tax, derelict vessel removal fee, or both, is not received by
the department by the due date, a penalty of five percent of the amount of the
unpaid tax and fee will be imposed;
(ii) If the tax and fee are not received
within thirty days after the due date, a total penalty of ten percent of the
amount of the unpaid tax and fee will be imposed;
(iii) If the tax and fee are not received
within sixty days after the due date, a total penalty of twenty percent of the
amount of the unpaid tax and fee will be imposed; and
(iv) No penalty listed in this subsection
will be less than five dollars.
(b) Delinquent taxes under this section are
subject to interest at the rate set forth in
RCW
82.32.050 from the date of delinquency until
paid. Delinquent derelict vessel removal fees are also subject to interest at
the same rate and in the same manner as provided for delinquent taxes under
RCW
82.32.050.
(c) If upon information obtained by the
department it appears that any ship or vessel required to be listed according
to the provisions of
RCW
84.40.065 is not listed, the department will
value the ship or vessel and assess against the owner of the vessel the taxes
and derelict vessel removal fees found to be due and shall add thereto interest
at the rate set forth in
RCW
82.32.050 from the original due date of the
tax and fee until the date of payment. The department will notify the vessel
owner by mail of the amount, and it becomes due and payable by the vessel owner
within thirty days of the date of the notice. If payment is not received by the
department by the due date specified in the notice, the department will add
apenalty of ten percent of the tax and fee found due. A person who willfully
gives a false listing or willfully fails to list a ship or vessel as required
by RCW
84.40.065 will be subject to the penalty
imposed by
RCW
84.40.130(2), which will be
assessed and collected by the department.
(6)
What are a ship or vessel owner's
obligations? Under
RCW
84.40.065, every individual, corporation,
partnership, trust, and estate must list with the department any ship or vessel
subject to that person's ownership, possession, or control that is subject to
property taxation under
RCW
84.36.080. The requirements, penalties, and
liens provided in
chapters
84.40 and 84.60 RCW for
all other personal property apply to ships and vessels listed with the
department.
The listed owner of a ship or vessel as of January 1st of the
assessment year is responsible for payment of the property tax for that vessel
in the following year.
Delinquent taxes and fees, along with all penalties and
interest, will be collected by the department according to the procedures set
forth in chapter 82.32
RCW for the filing and execution of tax warrants, including the imposition of
warrant interest. In the event a warrant is issued by the department for the
collection of taxes, derelict vessel removal fees, or both, the department will
add a penalty of five percent of the amount of the delinquent tax and fee, but
not less than ten dollars.
The department will also withhold the decals required under
RCW
88.02.570(10) for failure to
pay the state property tax or derelict vessel removal fee.
A ship or vessel is subject to property taxation even if it is
temporarily not within the limits of the state on January 1st of the year in
which the vessel is to be assessed. If ownership of a taxable ship or vessel is
transferred after January 1st, the listed owner as of January 1st remains
liable for payment of the full amount of tax payable in the following year. The
full year's property tax may be abated only if the ship or vessel is damaged or
destroyed and qualifies for a reduction in value under
RCW
84.70.010.
For example, Seller A sells a taxable charter boat to Buyer B
on August 14, 2013. Because Seller A was the listed owner as of January 1,
2013, Seller A is responsible for the entire year's property tax for the 2013
assessment year. That tax is due by April 30, 2014. Buyer B will be the listed
owner for 2014 and responsible for the property tax for assessment year 2014,
which is due by April 30, 2015.
(7)
What happens if my ship or vessel
is out of the state or being repaired during part of the year? A
qualifying ship or vessel, referred to as an "apportionable vessel," may have
its assessed value reduced in certain circumstances. A reduction in assessed
value will reduce the amount of tax due.
(a)
What is an "apportionable vessel"? Under
RCW
84.40.036, an "apportionable vessel" is a
ship or vessel that is:
(i) Engaged in
interstate commerce, meaning the transporting of persons or property from one
state or territory of the United States to another;
(ii) Engaged in foreign commerce, meaning the
transporting of persons or property between a state or territory of the United
States and a foreign country; or
(iii) Engaged exclusively in fishing,
tendering, harvesting and/or processing seafood products on the high seas or
waters under the jurisdiction of other states.
(b)
How is value apportioned? An
apportionable vessel has its value apportioned as provided in this subsection.
(i) The value is apportioned based on the
number of days or fractions of days that the vessel was within the limits of
the state during the calendar year preceding the calendar year in which the
vessel is assessed. No value is apportioned to this state unless the vessel is
within the limits of the state for more than one hundred twenty days. Days
during which a ship or vessel leaves the limits of the state only while
navigating the high seas to travel between points in this state are considered
as days within this state. A ship or vessel that does not qualify as an
apportionable vessel under subsection (5)(a) of this rule may not have its
value apportioned, regardless of the number of days the ship or vessel is
within or outside the limits of the state.
(A)A "fraction of a day" means more than
sixteen hours in a calendar day.
(B)The "limits of the state" means the
boundaries of the state of Washington abutting Canada, Oregon, and Idaho and
three miles to the west of Washington's coast line.
(ii) Time during which an apportionable
vessel is in the state exclusively for one or more of the following purposes is
not considered as time within the limits of the state, if the length of time is
reasonable to such purpose:
(A) Undergoing
maintenance, repair, or alteration;
(B) Taking on or discharge cargo, passengers,
or supplies; or
(C) Serving as a
tug for a vessel under (b)(ii) (A) or (B) of this subsection .
A "reasonable length of time" includes a reasonable length of
travel time to enter and leave the limits of the state exclusively for one of
the purposes listed in (b)(ii)(A) through (C) of this subsection. A ship or
vessel engaging in any activity or use not described in (b)(ii)(A) through (C)
of this subsection, or merely being moored, is not considered to be within the
state exclusively for the purposes described in this
subsection.
(c)
Examples. The following
examples illustrate the application of the apportionment rules. These examples
should be used only as a general guide. The tax results of other situations
must be determined after a review of all facts and circumstances.
(i) Barge A loads cargo in Washington Port Z
in eastern Washington. Loaded, Barge A embarks down the Columbia River to
Vancouver, Washington and discharges its cargo. This activity does not qualify
Barge A as an apportionable vessel because Barge A did not engage in interstate
or foreign commerce. The barge would qualify as an apportionable vessel for the
following assessment year if it had discharged its cargo at Portland,
Oregon.
(ii) Charter Boat operates
out of XYZ Charters, based in Anacortes, Washington. The charter begins in
Anacortes and sails into Canadian waters for one month before returning to
Anacortes to complete the charter. This activity does not qualify Charter Boat
as an apportionable vessel because Charter Boat did not engage in foreign or
interstate commerce; no persons or property were transported from one country
or state to another.
(iii) Charter
Boat operates out of XYZ Charters, based in Anacortes, Washington. Charter Boat
is delivered to persons who board the vessel in Vancouver, British Columbia.
Charter Boat cruises in Canadian waters for one month before returning to
Anacortes where the passengers disembark, completing the charter. This
transaction involves foreign commerce because persons were transported between
another country and the United States. As a result, the vessel qualifies as an
apportionable vessel and its value will be apportioned based upon the number of
days the vessel is within the limits of the state during that calendar
year.
(iv) Fishing Boat goes to
Alaska each year to fish and returns to Seattle each fall for repair and
maintenance. The vessel qualifies as an apportionable vessel and its value will
be apportioned to reflect the days the vessel is within the limits of the state
during that calendar year. The days in Washington for repair and maintenance
are not counted, if the amount of time is reasonable. Travel time to and from
Washington is also not counted as time within the state because the trip was
exclusively for the purpose of obtaining repair and maintenance services. As a
result, none of the vessel's value will be apportioned to Washington in this
instance.
(v) Charter Boat Owner A
purchases a vessel on November 1, 2011. The boat had previously been used as a
pleasure craft. The boat is first used in interstate commerce as a charter boat
in January 2012 and spends half of the year outside of state waters in calendar
year 2012. The boat is first listed in Owner A's name for tax purposes as of
January 1, 2012. The vessel's entire value is assessed in 2012 because the
vessel did not qualify as an apportionable vessel during calendar year 2011
(the calendar year preceding the assessment year). Owner A will first pay
property taxes in the 2013 tax year based upon the vessel's value in the 2012
assessment year. The full amount of tax is due by April 30, 2013. The value for
the 2013 assessment year will be apportioned based upon the boat's use in
calendar year 2012 (50% of time within state waters). The amount of tax due for
tax year 2014 will be based upon the 2013 assessed value and is due by April
30, 2014.
Amended by
WSR
15-09-023, Filed 4/7/2015, effective
5/8/2015
Statutory Authority:
RCW
84.08.005,
84.08.070, and
82.01.060(2).
03-16-028, § 458-17-101, filed 7/29/03, effective
8/29/03.