Below is the Washington State Department of Revenue statute for the
Personal Property Tax law. The County of Walla Walla has started to send
out notices of taxation for personal property (all furnishings) being used
in vacation rentals. The notices state that inventory has to be completed
by April 30th of 2009. You will be asked to list actual cost of each
personal item.
This taxation is just wrong! Walla Walla Grape Havens and Preferred Properties is working with one
owner who has received a notice. It appeared to me (from looking at the pictures)
that they got the information from VRBO. The one property owner with WWGH
who has already received her notice is taking this to the State level. I
understand if you have not received this notice yet, that you may not want
to get involved in fighting this tax, however, if you are on VRBO, you will
most likely receive a notice very soon. I urge you to contact State and
Local representatives to stop this unfair taxation!
Our stand is:
1. These items have already been taxed at the time of purchase (Walla Walla
is 8.3% total / Seattle is up to 9%). This sales tax is divided between
State/County/City.
2. Personal Property Taxation is DOUBLE TAXATION! After paying the sales
tax, the Personal Property Tax is then taxed at the same rate as Property
Taxes. I could not get a straight answer on how much this tax actually is.
However, if I take my property tax and figure the rate it comes to 1.052616.
So using this rate: 30,000 (personal property value) x 1.052616 = 315.78
per year for the first year. The second year would be depreciated on most
items by 50% and the third year would not be taxed. I realize this is not a
huge amount of money, but it's the principal. Aren't we suppose to be free
from double taxation?
3. This is like saying a building contractor has to pay personal property
tax on his saws, hammers, nails - anything that is not resale. The
assessor's office reminded me that farmers are going to be taxed in the same
way as VR owners. Now isn't that comforting! The government is going to
take away some of our farmers subsidies and then add a tax to their
equipment used in the business of growing crops. This is ludicrous. O.K. -
enough of personal views - just ignore my tirade please....
4. You as a vacation rental owner do not pay B&O directly, but Grape Havens
pays B&O on all of your income, so each property is paying B&O on the income
it brings in. The State benefits from this taxation.
5. You pay Property Taxes on your vacation rental property. The
State/County/City benefit from this taxation.
6. You pay sales tax and lodging tax through Grape Havens on all your
vacation rental property income. The State/County/City benefit from this
tax. The city benefits an extra 2% from lodging tax over normal retail
sales tax.
The one owner who has already received this notice is the owner of The Stone
Compass - Tami Jones. Tami has contacted Damien Sinnott at the Chamber of
Commerce. He helps small businesses in Walla Walla who are also members of
the Chamber. She has also contacted the office of Congresswoman Cathy
McMorris Rogers http://www.mcmorris.house.gov/ Cathy suggested contacting
Senator Mike Hewitt http://www.leg.wa.gov/senate/Hewitt/ . There is also
Senator Patty Murray http://murray.senate.gov/ I suggest contacting
Representative Maureen Walsh also http://www.leg.wa.gov/House/walsh/
It is pointless to contact the Assessor's Office or The Department of
Revenue! Their stance is this is just the way this is and has been in
effect since March of 2007. It appears the local government has the
responsibility of collecting this tax. Evidently Walla Walla hasn't been
doing their job up until now.
PERSONAL PROPERTY TAX
Most people know that property tax applies to real property, however, some may not know that property tax also applies to personal property. Most personal property owned by individuals is exempt. For example, household goods and personal effects are not subject to property tax. However, if these items are used in a business, property tax applies. Personal property tax does not apply to business inventories, or intangible property such as copyrights and trademarks. Personal property is subject to the same levy rate as real property. The characteristic that distinguishes real and personal property is mobility. Real property includes land, structures, improvements to land, and certain equipment affixed to land or structures. Personal property includes machinery, equipment, furniture, and supplies of businesses and farmers. It also includes any improvements made to land leased
from the government (leasehold improvements).
Administration
By state law, the county assessor is responsible for the assessment of real and personal property, including the calculation of taxes. The treasurer is responsible for the billing and collection of the taxes based on the “tax roll” received from the assessor. The Department of Revenue is also involved in the administration of property taxes and advises assessors and treasurers on how to assess property to assure uniformity of assessment and taxation throughout the state.
Personal Property Tax Forms:
If you use personal property that is not exempt, you must complete a Personal Property Tax Listing Form by April 30 each year. Listing forms are available from your local county assessor’s office. An electronic form is also available from the Department of Revenue's web site as an option for first-time filers. The listing must identify all taxable property located in the county as of 12 p.m. on
January 1.
The assessor uses this information to value property for taxes due the following year. As a property owner, you are responsible for filing a personal property listing each year that you have taxable property even if you do not receive the form by mail. If you have multiple business locations, you must complete a separate listing for each location. The assessed value is allocated to the taxing district based on where the property is located.
When completing the form you must:
List all assets you own or control as of
January 1,
including those assets fully depreciated in your
accounting records, and assets in storage.
Identify each personal property category. For example,
office equipment should be broken into separate
categories of personal computers, network servers,
printers, phones, etc.
Include the total purchase cost of each item. This
excludes sales or use tax, but includes costs to make
the item usable such as installation and freight.
Include the date each item was acquired.
Once property is listed on the tax rolls, the assessor
mails a new listing form each year. You then have an
opportunity to add or delete property, as appropriate,
and return the form to the county assessor by
April 30.
Valuation:
The assessor values the property at 100
percent of its current market value. Market, or true and
fair value, is the amount that a willing and unobligated
buyer will pay a willing and unobligated seller. After
performing a personal property assessment, the assessor
informs the property owner of the assessed value.
Penalty for Failing to File:
To avoid a penalty, the
assessor must receive your
listing form by April 30. The
penalty is five percent of the tax due per month, up to a
maximum of 25 percent. If the assessor does not receive
your form, the assessor will estimate the value of the
property based on the best information available.
Appeal of Assessed Value:
You should contact the
assessor’s office if you believe an assessment is incorrect.
The assessor, or their representative, can explain how
the value was determined and make corrections
if appropriate.
If you still believe the assessment is incorrect or
excessive, you have the right to appeal the assessment
to the local county board of equalization. Appeal forms
are available from your local county assessor’s office.
The appeal (petition) must be filed by July 1 of the
assessment year or within 30 days of the date the
assessment was mailed, whichever is later. Some
counties have extended the filing deadline to 60 days.
Please check with the board of equalization in the county
where the property is located to determine the filing
deadline for the appeal.
Tax Liens:
The amount of tax due becomes a lien on
personal property. The lien is in effect from the time the
assessor makes the assessment until the taxes are paid.
For example, an assessor values personal property
in June, and the lien is in effect until the taxes are paid
on April 30 of the following year.
If the tax remains unpaid, the treasurer may place a lien
on the owner’s other real and personal property.
Payment of Property Taxes:
Property tax payments are
due by April 30 and October 31. If the amount of tax due
is $50 or less, full payment is due by
April 30. If the tax
due is more than $50, half of the amount due may
be paid by April 30 and the balance by
October 31.
The county treasurer mails property tax statements
every February.
The owner of the property on January 1 of the
assessment year owes the tax due the following year.
The tax is due even if the business closes, or the property
is sold or transferred before the end of the year. For
example, a property owner submits a list of personal
property held as of January 1, 2007, and then sells the
property in July 2007. The property owner (seller) owes
the full amount of taxes due in 2008 for the 2007
assessment year.
The lien follows the property. This means that a new
owner can be held liable if the previous owner does
not pay the tax. Be sure to check with your local county
treasurer’s office before buying or selling personal
property.
Penalties for Late Payment:
Personal property tax
payments made after the due date are subject to interest
and may also be subject to a penalty. If you do not make
your first half tax payment by April 30, the full year tax is
delinquent on May 1. Interest is calculated at one percent
per month on the full year taxes, until paid in full. A
penalty of three percent applies on the current year taxes
if still delinquent on June 1. An additional penalty of
eight percent applies if taxes are delinquent on
December 1.
Distraint (Seizure) of Property/Advance Payment
Requirement:
If property taxes are not paid on time, the
treasurer may take control of the personal property until
the taxes are paid. The treasurer may also seize the
property or require an immediate tax payment and/or
advance payment if it is alleged that the property will
be sold, destroyed, or removed from the state or county
before the tax is paid. (RCW 84.56.070)
TAXABLE Personal
Property
Unless specifically exempt, all tangible personal property
is subject to personal property tax. The major categories
of
taxable personal property include the following:
Machinery and Equipment, Fixtures and Furniture:
Most machinery, equipment, and fixtures are considered
personal property unless permanently affixed to real
property. Personal property is generally considered
permanently affixed to real property if it cannot be
removed without causing damage to the real property,
or if it is adapted for use only in one location. The
assessor’s office can answer questions about whether a
specific item is taxable as real or personal property.
Taxable tangible personal property includes but is not
limited to:
Office furniture and fixtures such as desks, chairs, etc.
Office equipment such as computers and printers
Store fixtures and equipment
Computer software (canned and embedded)
Manufacturing machinery and equipment
Construction equipment
Office trailers
Signs
Commercial fishing equipment
Leased Equipment:
Equipment that is leased under
a lease-purchase contract is subject to personal property
tax. Both the lessor and the lessee may be requested
to list the equipment. The assessor will determine which
party is liable for the tax.
Farm Equipment, Machinery, Supplies, and Tools:
Most farm equipment, machinery and supplies are
subject to personal property tax. An exemption or
partial exemption may apply to some farm machinery
and equipment. Contact your local assessor for
exemption information.
Leasehold Improvements:
Personal property tax
applies when the lessee/tenant retains ownership of the
leasehold improvements, or is required to remove them
at the end of the lease. For example, the improvements
a lessee makes to a leased space are taxable as
leasehold improvements.
Supplies, Materials and Tools:
Taxable materials and
supplies include office, shop, janitorial, brochures,
promotional materials, fuel held in storage, spare parts,
etc. Tax does not apply to items that are held for resale
or that become an ingredient or component of an article
manufactured for sale.
Watercraft:
Watercraft is subject to either property
tax (at the state levy rate) or watercraft excise tax.
Commercial watercraft that is exempt from the watercraft
excise tax is subject to personal property tax.
Owners of charter vessels documented with the U.S.
Coast Guard must register with the Special Programs
Division of the Department of Revenue and pay
property tax.
Taxable watercraft include:
Vehicles used entirely upon private propety
Vessels used exclusively for commercial fishing
Documented vessels, such as tugs, used to transport
property or persons between specific points
Barges, dredges, and similar watercraft
Charter vessels that are required to be documented
by the United States Coast Guard
For more information or to obtain a listing form, please
contact the Special Programs Division of the Department
of Revenue at (360) 570-3248. For more information,
please refer to RCW 82.40.065.
Vehicles:
Personal property tax applies to vehicles that
are used off-road and not primarily designed for use on
public streets or highways, licensed or not.
Taxable vehicles include:
Vehicles used entirely upon private property
Special highway construction equipment,
such as earth moving and paving equipment.
Farm vehicles
Off-road vehicles
Racing vehicles
Intangible personal property
Personal property tax does not apply to intangible
personal property such as monies, notes, certificates
of deposit, personal service contracts, franchise
agreements, trademarks, patents, brand names,
copyrights, licenses, and customer lists.
destroyed property
If your property is destroyed in whole or in part during
the year, the assessed value may be reduced. To obtain
a reduction, you must file a claim with the local county
assessor within three years of the date of destruction
or reduction in value. Claim forms are available from the
assessor’s office. This reduction is not available to a
person convicted of arson with respect to the property.
personal property
tax exemptions
Personal property tax does not apply to:
Household goods and personal effects unless used
in a business activity.
Personal property owned by governmental entities.
Business inventories including goods for resale,
ingredients or components of articles manufactured
for sale, and livestock. (Property held for lease/rental
is subject to tax.)
Custom software and modifications to canned software.
Cargo containers used in interstate commerce.
$15,000 of assessed value for persons who qualify
as head of family; the assessor determines who qualifies
for this exemption.
Personal property accounts valued at less than $500
(Those qualifying for the $15,000 head of family
exemption do not qualify).
Property owned by nonprofit organizations such
as churches and social service agencies; qualifying
entities must apply for the exemption each year.
Property owned by schools.
Vehicles used or designed primarily to be used
on the public streets or highways.
STATE DEPARTMENT OF REVENUE
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