Current through Register Vol. 23-24, December 15, 2023
(1)
Introduction.Chapters 84.68 and 84.69 RCW both set out procedures
and conditions under which property taxes are refunded. This rule explains the
differences between the types of refunds authorized under each chapter, the
procedures related to the refunds, and the effect the refunds have on levy
limits and the levy setting process in general.
(2)
Court ordered refunds under chapter
84.68 RCW - County tax refund fund levy. Any person who believes that
the taxes levied against their property are unlawful or excessive may pay the
taxes under protest, setting forth all the grounds upon which the tax is
claimed to be unlawful or excessive, and bring an action in superior court or
in any federal court of competent jurisdiction against the state, county, or
municipality.
RCW
84.68.020. If the court determines that the
taxes were indeed unlawful or excessive, it will enter a judgment in favor of
the taxpayer who paid the tax under protest and determine the amount to be
refunded to the taxpayer. When such a judgment is entered, the law provides a
specific procedure for refunding the money to the taxpayer in
RCW
84.68.030 and for taxing districts to
generate the moneys to be refunded in
RCW
84.68.040. Any and all taxing districts that
were levying taxes against the property at the time for which a refund is
directed by court order under RCW 84.68.-020 must levy, or have levied for
them, an amount for the county tax refund fund. The county tax refund fund levy
is a regular levy that is subject to all the applicable levy limitations
provided in law for regular levies. However, the law specifically exempts a
refund fund levy from the levy limit set forth in
RCW
84.55.010.
(a) Method used to make refunds. When a court
judgment is entered in favor of a taxpayer,
RCW
84.68.030 states that the refund is to be
paid via warrants drawn against the "county tax refund fund." If, at the time
the judgment is entered, there are no moneys in that fund, then the warrants
bear interest and are "callable under such conditions as are provided by law
for county warrants."
(b) Process
used to generate funds for the county tax refund fund.
RCW
84.68.040 provides that as part of the annual
levying of taxes for county purposes, the county is required to make and enter
a tax levy or levies for the county tax refund fund. The purpose of the refund
fund levy is to produce moneys to be deposited into a fund from which a
taxpayer, who paid taxes that were later adjudged to be unlawful or excessive,
can be repaid, without unduly affecting the operating funds of the taxing
districts. This levy has precedence over all other tax levies for county and/or
taxing district purposes.
(c) Who
makes and enters the tax levies for the refund fund levy? Officers of local
taxing districts, the county legislative authority, the county assessor, and
any other person or entity that would normally be involved in the levy making
process are required to make and enter the refund fund levy. However, if a
taxing district is required to levy for the county tax refund fund and fails to
do so, or if a taxing district is required to levy for the county tax refund
fund and does not have a regular nonvoted levy, then the county legislative
authority levies the tax for or on behalf of the district, the assessor sets
the rate, and the treasurer collects the tax.
(d) What limitations apply to the county tax
refund fund levy? There are four basic levy limitations that need to be taken
into consideration: The levy limit set forth in
RCW
84.55.010; the constitutional (Article VII,
section 2 ) and statutory (RCW 84.52.010 ) one
percent limit; the statutory dollar rate limit for the various taxing
districts; and the aggregate dollar rate limit contained in
RCW
84.52.043.
(i) The levy limit set forth in
RCW
84.55.010 does not apply to the county tax
refund fund levy, regardless of which taxing district is involved (see
RCW
84.55.070 ). Therefore, a taxing district(s)
can levy the amount to be refunded even if that amount will cause the total
levy of the taxing district to exceed the levy limit. For example, a court
orders County A to refund $10,000 to a Taxpayer. The proper county officials in
County A must determine what portion of the $10,000 is attributable to Taxing
District No. 1. For purposes of this example, Taxing District No. 1 owes the
Taxpayer $1,000. Taxing District No. 1's levy last year was $30,000. Without
considering new construction, improvements to property, increases in the
assessed value of state assessed property, and increases in assessed value due
to the construction of wind turbine, solar, biomass, and geothermal facilities,
the levy for this year under the levy limit would be $30,300.
However, Taxing District No. 1's levy for this year, including
the refund fund levy, can be $31,300.
(ii) The constitutional one percent limit,
the statutory dollar rate limit, and the aggregate dollar rate limit apply to
any refund fund levy. Consequently, any refund fund levy must be contained
within the maximum dollar rate authorized by law for any taxing district. For
example, if under the levy limit, the county current expense levy rate is
$1.80/$1,000 and the refund fund levy rate is $ 0.10/$1,000 A.V., then only
$1.70 may go to the current expense fund. Similarly, if the current expense
levy rate, as limited by the levy limit, is $1.50/$1,000 A.V., then the $
0.10/$1,000 is added to the $1.50 making a levy rate that is $1.60/$1,000 A.V.
Any combination is possible as long as the total of the two does not exceed the
statutory dollar rate maximum of $1.80/$1,000 A.V. for levies made for county
purposes. All moneys levied for the county tax refund fund levy are allocated
first, without consideration of any delinquency, and then whatever balance is
remaining goes to the district's operating fund.
(e) Refund fund's relationship to excess
levies. Because the refund fund levy is the direct result of a court ordered
judgment in a specific amount, it does not matter whether the judgment amount
is derived from taxes paid on regular, excess, or bond levies, or any
combination of these levies. The refund fund levy is separate and independent
of the levies from which it arose. The levy includes an additional amount
deemed necessary to meet the obligations of the county tax refund fund, taking
into consideration the probable portions of the taxes that will not be
collected or collectible during the year in which they are due and payable, as
well as any unobligated cash in hand in this fund.
(f) Applicability to school district levies
and state school levy. All taxing districts for which, and within which, taxes
were collected unlawfully are required to levy for the refund fund. A refund
fund for the school district would not be limited by a dollar rate limit.
However, the school district refund fund levy would be subject to the
constitutional one percent limit because the refund fund is a regular levy
subject to all applicable limits. The state school levy will include a refund
fund levy, which will be calculated by the department at the time it levies the
state school levy. The state, as a taxing district itself, follows the same
procedures that apply to any other taxing district, to the extent that those
procedures are applicable.
(g)
Separate account in county treasury. The county treasurer must keep a separate
account for each district for which a refund fund is created and can only
disburse money from that account to the taxpayer(s) entitled to receive a court
ordered refund.
(3)
Administrative refunds under chapter 84.69 RCW. Property taxes may
be refunded on the order of the county treasurer before or after delinquency if
the property taxes were paid under one of the circumstances listed in
RCW
84.69.020. These circumstances include
errors, changes in valuation or status by a county board of equalization or the
state board of tax appeals, and delays in applying for a senior citizen
exemption or deferral.
(a) The levy limit set
forth in RCW 84.55.010 does not apply.
RCW
84.55.070 states that the limitations
contained in chapter 84.55 RCW do not apply to property tax refunds paid or to
be paid under the provisions of
RCW
84.69.180. Therefore, an amount necessary to
fund any refund paid in accordance with
RCW
84.69.020 may be added to the levy for a
taxing district without regard to the levy limit. A refund levy is not subject
to the levy limit. However, the statutory dollar rate limit still applies to
each taxing district, as well as the five dollar and ninety cent limit set
forth in RCW 84.52.043 and the
constitutional one percent limit set forth in Article VII, section 2 of the
state Constitution and
RCW
84.52.050.
(b) Refunds include interest. Refunds
authorized under
RCW
84.69.020 must include interest that is
payable from the time the taxes were paid. The rate of interest is calculated
in accordance with
RCW
84.69.100, established annually by the
department, and published in WAC
458-18-220.
(c) Taxing districts, other than the state,
may levy a tax upon all the taxable property within the district for the
purpose of:
(i) Funding refunds paid or to be
paid under this chapter, except for refunds due to taxes paid more than once,
RCW
84.69.020(1), including
interest, as ordered by the county treasurer or county legislative authority
within the preceding twelve months; and
(ii) Taxes that have been abated or canceled,
offset by any supplemental taxes collected under
Title
84 RCW other than amounts
collected due to highly valued disputed property,
RCW
84.52.018, within the preceding twelve months
can be levied by taxing districts other than the state.
(iii) This subsection (3)(c)(ii) only applies
to abatements and cancellations that do not require a refund under chapter
84.69 RCW. Cancellations that require a refund are included within the scope of
(c)(i) of this subsection.
(d) Example 1. This example demonstrates net
refunds, cancellations, and supplements that occurred within the past twelve
months and the refund levy that can be requested by the taxing district:
Refunds |
$8,000 |
Cancellations |
$10,000 |
Abatements |
$ 1,000 |
Supplements |
$ 7,000 |
Net cancellations and abatements offset by supplements
|
$4,000 |
Net amount eligible for a refund levy |
$12,000 |
(e)
Example 2. This example assumes that the base for computing the allowable levy
is $10,000 and refers to the county current expense levy rate that may not
exceed one dollar and eighty cents per thousand dollars of assessed value in
accordance with
RCW
84.52.043.
(i) Statutory rate requested does not exceed the dollar
rate allowable: |
The allowable levy for the county current expense fund
|
$10,000 |
Refunds paid or to be paid |
$2,000 |
Total amount of levy |
$12,000 |
Assessed value |
$7,000,000 |
Levy rate |
$1.714/$1,000 |
The levy rate is within the statutory rate limit of
$1.80/$1,000 |
(ii) Statutory rate requested exceeds the dollar rate
allowable: |
Allowable levy |
$10,000 |
Refunds paid or to be paid |
$2,000 |
Total amount of levy |
$12,000 |
Assessed value |
$6,500,000 |
Levy rate |
$1.846/$1,000 |
The dollar rate cannot exceed $1.80/ $1,000; therefore,
the maximum that can be levied is $6,500,000 x $1.80/$1,000 |
$11,700 |
Amount to be refunded |
$2,000 |
Amount to be credited to current expense |
$9,700 |
(f)
The base for computing the following year's levy limit does not include the
refund levy amount. In the preceding example, the base for the following year's
levy limit calculation is $10,000. However, when calculating the additional
levy amount based on the value of new construction, improvements to property ,
increases in the assessed value of state assessed property, and increases in
assessed value due to the construction of wind turbine, solar, biomass, and
geothermal facilities, the actual regular levy rate (including the refund levy)
is used.
Statutory Authority:
RCW
84.08.010,
84.08.070,
84.48.080,
84.55.060,
84.52.0502,
chapters
84.52 and 84.55 RCW, and
RCW
34.05.230(1). 02-24-015,
§ 458-19-085, filed 11/25/02, effective
12/26/02.