Washington Administrative Code › Title 458 - Revenue, Department of › Chapter 458-19 - Property tax levies, rates, and limits › Section 458-19-085 - Refunds-Procedures-Applicable limits

Current through Register Vol. 24-14, July 15, 2024
(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.