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<p class="MsoListParagraph" style="text-indent:-.25in;mso-list:l0 level1 lfo1"><![if !supportLists]><span style="font-family:Symbol;color:#1F497D"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman"">
</span></span></span><![endif]><span style="color:#1F497D">Dwight, I am fully in support of a law change to curtail the over reaching of the taxing authorities. Let me know what I can do to help this process.
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="color:#1F497D"><o:p> </o:p></span></p>
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<p class="MsoNormal"><b><span style="font-size:14.0pt;color:#1F497D">Gourley Law Group<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt;color:#1F497D">Snohomish Escrow<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:12.0pt;color:#1F497D">The Exchange Connection<o:p></o:p></span></b></p>
<p class="MsoNormal"><b><span style="font-size:14.0pt;color:#1F497D"><o:p> </o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif;color:#1F497D">1002 10<sup>th</sup> Street / PO Box 1091<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif;color:#1F497D">Snohomish, WA 98291<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif;color:#1F497D"><o:p> </o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif;color:#1F497D">360.568.5065<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif;color:#1F497D">360.568.8092 fax<o:p></o:p></span></p>
<p class="MsoNormal"><u><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif;color:#0563C1"><a href="mailto:Craig@glgmail.com"><span style="color:#0563C1">Craig@glgmail.com</span></a></span></u><span style="font-size:10.0pt;font-family:"Arial Rounded MT Bold",sans-serif;color:#1F497D"><o:p></o:p></span></p>
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<div style="border:none;border-top:solid #E1E1E1 1.0pt;padding:3.0pt 0in 0in 0in">
<p class="MsoNormal"><b>From:</b> wsbarp-bounces@lists.wsbarppt.com [mailto:wsbarp-bounces@lists.wsbarppt.com]
<b>On Behalf Of </b>Bickel, Dwight<br>
<b>Sent:</b> Friday, December 18, 2015 5:53 PM<br>
<b>To:</b> WSBA Real Property Listserv <wsbarp@lists.wsbarppt.com>; REALPROP@yahoogroups.com<br>
<b>Subject:</b> [WSBARP] REET Taxation of Transfers of Real Property by Inheritance<o:p></o:p></p>
</div>
</div>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">This message to the Washington real property, probate and trust lawyers is to solicit feedback related to a proposed statutory change. I act as the Co-Chair of the Legislative Committee of the Washington Land Title Association [WLTA].<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">WLTA members propose a statutory amendment that will terminate the burden to pay real estate excise tax [REET] upon transfers of ownership of real property that occur by operation of law due to Wills, trusts, divorces, court decisions,
mergers, etc.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">WA law has not been changed to require such transfers to pay REET. The law remains that only sales of real property require payment of REET. There are many changes in ownership that occur by operation of law that are not taxable as sales.
Such transfers often require no deed of conveyance or recordation.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Transfers that occur pursuant to devise made by a Will are not taxable. Transfers that occur due to the death of an owner pursuant to the legal effect of intestate succession, community property, joint tenancy, life estates and transfer
on death deeds are not taxable. These changes in ownership are not required to pay REET, even if there is no probate or court proceeding.
<i>See</i> <span class="breadcrumbclass"><a href="http://apps.leg.wa.gov/rcw/default.aspx?cite=82.45.010">RCW 82.45.010</a></span>(3).
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">Transfers of ownership that are accomplished pursuant to court orders, such as partition, divorce, condemnation and quiet title, are not taxable. Changes in title to real property that occur by changes in the owner entity that are not sales
are not taxable, also as provided by the cited statute.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">In 2008 the Legislature enacted a new statute, now known as <a href="http://app.leg.wa.gov/RCW/default.aspx?cite=82.45.197">
RCW 82.45.197</a>. <i>See</i> SSB 6851 and <a href="http://leg.wa.gov/codereviser/documents/sessionlaw/2008pam2.pdf">
Chapter 269, Session Laws of 2008</a>. It provided the documentation to be provided to the County Treasurer to claim exemption from REET when the parties wanted to record a conveyance pursuant to inheritance. It begins:
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal" style="mso-margin-top-alt:0in;margin-right:.5in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt">
<span style="font-size:10.0pt;font-family:"Arial",sans-serif">In order to receive an exemption from the tax in this chapter on real property transferred as a result of inheritance under RCW 82.45.010(3)(a), the following documentation must be provided:<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal"><i>See also</i> <a href="http://apps.leg.wa.gov/wac/default.aspx?cite=458-61A-202">
WAC 458-61A-202</a> related to the exemption from REET for inheritance transfers, that states, “<span style="font-size:10.0pt;font-family:"Arial",sans-serif">Transfers of real property by inheritance or devise are not subject to the real estate excise tax.</span>”<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">At some point about four years ago a couple County Treasurers [Grant, Skagit & Yakima] began interpreting RCW 82.45.197 as authority to require heirs who receive title by inheritance to pay REET if they did not have proper documentation.
The position taken was that a probate was required to avoid REET. This affected only a few people because most intestate and non-probate heirs were not recording documents and not filing excise tax affidavits.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">However, due to changes made by the Department of Revenue to its Regulations related to REET, all transfers by operation of law are now required to file an excise tax affidavit. Previously, the Regulations required an excise tax affidavit
and specified the documentation that was required to claim exemption from REET for transfers by operation of law
<i>only when conveyance documents were recorded</i>.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">A change was made February 28, 2014 to WAC <a href="http://apps.leg.wa.gov/wac/default.aspx?cite=458-61A&full=true#458-61A-303">
458-61A-303</a> [the regulation that explains when a real estate excise affidavit is required]. It was not made due to a change in the substantive law.
<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">WAC 458-61A-303 Affidavit. (1) Introduction. This section explains<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">when a real estate excise tax affidavit is required for the<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">((<s>conveyance</s>))
<u>transfer</u> of ((<s>an interest in</s>)) real property. See WAC<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">458-61A-101 for procedures pertaining to transfers and acquisitions of<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">a controlling interest in an entity owning real property in the state<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">of Washington. (2) Affidavit required. In general, an affidavit must be filed<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">when ownership or title to real property transfers as evidenced by<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif">conveyance, deed, grant, assignment, quitclaim,
<u><span style="background:yellow;mso-highlight:yellow">or any other document<o:p></o:p></span></u></span></p>
<p class="MsoNormal" style="margin-left:.5in"><u><span style="font-size:10.0pt;font-family:"Arial",sans-serif;background:yellow;mso-highlight:yellow">effectuating the transfer</span></u><span style="font-size:10.0pt;font-family:"Arial",sans-serif"> including,
but not limited to, the following:<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;background:yellow;mso-highlight:yellow">(b) ((<s>Conveyance</s>))
<u>Transfer</u> resulting from a court order;<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;background:yellow;mso-highlight:yellow">(g) ((<s>Conveyance</s>))
<u>Transfer</u> to an heir in the settlement of an<o:p></o:p></span></p>
<p class="MsoNormal" style="margin-left:.5in"><span style="font-size:10.0pt;font-family:"Arial",sans-serif;background:yellow;mso-highlight:yellow">estate;</span><span style="font-size:10.0pt;font-family:"Arial",sans-serif">
<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-family:"Verdana",sans-serif"><o:p> </o:p></span></p>
<p class="MsoNormal">In the past two years, increasing number of County Treasurers are actively enforcing the payment of REET for inheritance transfers. When heirs sell the property, the Treasurers are requiring excise tax affidavits related to the prior change
of ownership, regardless of the amount of time. If the documentation isn’t perfect, the heirs as sellers must pay REET and penalties before the intended sale may be recorded.
<o:p></o:p></p>
<p class="MsoNormal"><br>
The protests of these people are increasing, in part because Snohomish County, a more populous county, has begun to tax the higher volume of such prior transfers.<o:p></o:p></p>
<p class="MsoNormal"><br>
The WLTA proposes to amend RCW 82.24.197 to expand the potential documentation that will satisfy their right to claim exemption from REET. At the same time, WLTA seeks to clarify that all transfers by operation of law do not require excise tax affidavits and
recordation of affidavits in order to avoid REET.<o:p></o:p></p>
<p class="MsoNormal"><o:p> </o:p></p>
<p class="MsoNormal">If you have comments or questions, or if you are interested to contribute to the legislative process, please contact me or the representatives of the RPP&T Section.<o:p></o:p></p>
<p class="MsoNormal"><b><o:p> </o:p></b></p>
<div>
<p class="MsoNormal"><b><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#002060">Dwight A. Bickel<o:p></o:p></span></b></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#002060">Legislative Committee Co-Chair<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:#002060">Washington Land Title Ass'n<o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:gray">701 - 5th Avenue, Suite 2300<br>
Seattle, WA 98104<br>
Phone: (206) 370-3189</span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:navy"><o:p></o:p></span></p>
<p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:gray">E-mail:
</span><span style="color:#002060"><a href="blocked::mailto:Dwight.Bickel@fntg.com"><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:gray">Dwight.Bickel@fntg.com</span></a></span><span style="font-size:10.0pt;font-family:"Verdana",sans-serif;color:gray"><o:p></o:p></span></p>
</div>
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<p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif">NOTICE: The information contained in this message is proprietary and/or confidential and may be privileged. If you are not the intended recipient of this communication,
you are hereby notified to: (i) delete the message and all copies; (ii) do not disclose, distribute or use the message in any manner; and (iii) notify the sender immediately.
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