This rule explains the property tax exemption available under the provisions of RCW 84.36.030
(1) to nonprofit organizations or associations organized and conducted for nonsectarian purposes.
(2) Definitions. For purposes of this rule, the following definitions apply:
(a) "Benevolent" refers to social services or programs directed at persons of all ages arising from or prompted by motives of charity or a sense of benevolence, that are marked by a kindly disposition to promote the happiness and prosperity of others by generosity in and pleasure at doing good works, or are organized for the purpose of doing good. For example, a benevolent organization may provide a food bank, a soup kitchen, or counseling services at cost.
(b) "Character building" means social services or programs designed for the general public good that assist people with general living skills, developing interview and job seeking skills, or assist people in working towards independent living and self sufficiency. These services include, but are not limited to, programs designed to develop an individual's moral or ethical strength, leadership, integrity, self-discipline, fortitude, self-esteem, and reputation.
(c) "Commercial" refers to an activity or enterprise that has profit making as its primary purpose.
(d) "Community outreach group" means a nonprofit group organized to extend social services to a particular segment of the community. For example, a rescue mission organized to feed the homeless or a program that targets juveniles "at risk" of criminal or abusive behavior.
(e) "Nonsectarian purpose" means a purpose that is not associated with or limited to a particular religious group.
(f) "Protective" refers to activities that are meant to cover, to guard, or to shield other persons from injury or destruction or to save others from financial loss. For example, a protective organization may provide housing for battered persons or for the developmentally disabled or may assist persons with behavioral problems by providing encouragement, support, and training.
(g) "Rehabilitative or rehabilitation" refers to activities designed to restore individuals to a former capacity, to a condition of health, or to useful or constructive activity. For example, a rehabilitative organization may assist persons to overcome alcohol or substance abuse, or to overcome the effects of a physical injury, stroke, or heart attack.
(h) "Social service" means programs designed to help people resolve problems, become more self-sufficient, prevent dependency, strengthen family relationships, and/or enhance the functioning of individuals in society. These services include, but are not limited to, programs in the general categories of:
(i) Socialization and development; and
(ii) Therapy, help, rehabilitation, and social protection.
(3) Exemption. The real and personal property owned by nonprofit organizations, associations, or corporations are exempt from taxation if the organization, association, or corporation is organized and conducted for nonprofit and nonsectarian purposes. To be exempt, the property must be used for character-building, benevolent, protective, or rehabilitative social services directed at persons of all ages.
(a) Gift and giving. To qualify for this exemption, there must be an element of gift and giving in the nonprofit organization's, association's, or corporation's activities, in relation to the people it serves. This element of gift and giving requires giving something of value with no expectation of compensation or remuneration. The words "gift" and "giving," within the context of this rule, mean a voluntary act. In order to meet this requirement of gift and giving, the nonprofit organization, association, or corporation must annually meet one of the following conditions:
(i) Provide goods and/or services free of charge or at a rate that is at least twenty percent below the total actual cost of such goods and/or services to a minimum of fifteen percent of the total number of people assisted by that nonprofit organization, association, or corporation; or
(ii) Contribute at least ten percent of its total annual income towards the support of character-building, benevolent, protective or rehabilitative social services or programs. "Total annual income" refers to the total income reported to the Internal Revenue Service for that year and includes, but is not limited to, funds received through direct and indirect public support, government grants, membership fees, and other contributions. The term does not include funds that are specifically donated or contributed for capital improvements.
(A) In order to meet this ten percent requirement, a nonprofit organization, association, or corporation may include, but is not limited to, the value of time volunteers donate to carry out program services and functions, the loan of its facilities to community outreach groups, and gifts of scholarships and other fee subsidies.
(B) If a nonprofit organization utilizes volunteer time to reach the ten percent requirement, it must maintain records identifying the individuals who donate their services and the number of hours they donate. The value of donated time will be calculated by using the federal minimum wage standard.
(C) If a nonprofit organization allows community outreach groups to use its facilities free of charge, it must maintain records identifying the community outreach groups that used the exempt property and the number of hours each group used the exempt property. The value of this use will be calculated by taking the number of hours or any portion of an hour, the facility is used by these groups and multiplying it by the customary charge the nonprofit organization, association, or corporation charges to rent its facility to any other group.
(b) Conditions and restrictions. A nonprofit organization, association, or corporation may not impose conditions or restrictions on the use of the exempt property by persons who do not personally pay the total actual cost of a social service, except conditions or restrictions that are reasonably necessary to safeguard the exempt property and to comply with the purposes of this exemption.
(c) Fraternal organizations. Property used by a fraternal organization or association for fraternal purposes does not qualify for an exemption under this rule.
(d) Nonqualifying property. If any portion of the organization's or association's property is used for a commercial rather than a nonprofit, nonsectarian exempt purpose, then that portion will not qualify for this exemption and must be segregated from property used for exempt purposes.
(e) Selling donated merchandise. The sale of donated merchandise is considered an exempt use of the property if the proceeds are dedicated to the exempt purpose associated with the nonprofit, nonsectarian organization or association. For example, thrift store operations that are restricted to the sale of "donated merchandise" will not jeopardize this exemption if the claimant can verify the proceeds are directed to an exempt purpose.
(f) Property with option to repurchase. Property leased, loaned, or sold with the option to repurchase or made available to organizations described in RCW 84.36.030
, does not qualify for this exemption unless:
(i) The property is owned by an organization exempt under RCW 84.36.020
or 84.36.030 and the organization loans, leases, or rents the property to another organization for the exempt purposes described in RCW 84.36.030
(ii) The property is owned by an entity formed exclusively for the purpose of leasing the property to an organization that will use the property for the exempt purposes described in RCW 84.36.030
(A) The lessee uses the property for the exempt purposes provided in RCW 84.36.030
(B) The immediate previous owner of the property had received an exemption under RCW 84.36.020
or 84.36.030 for the property; and
(C) The benefit of the exemption inures to the benefit of the lessee organization.
(4) Additional requirements.
Any organization or association that applies for a property tax exemption under this rule must also comply with the provisions of WAC 458-16-165
. WAC 458-16-165
provides additional conditions and requirements that must be complied with to obtain a property tax exemption pursuant to RCW 84.36.030
[Statutory Authority: RCW 84.08.010
, 84.08.070, 84.08.080, 84.36.389, and 84.36.865. WSR 15-07-021, § 458-16-210, filed 3/10/15, effective 4/10/15. Statutory Authority: RCW 84.08.010
, 84.08.070 and chapter 84.36
RCW. WSR 94-07-008, § 458-16-210, filed 3/3/94, effective 4/3/94. Statutory Authority: RCW 84.36.865
. WSR 88-02-010 (Order PT 87-10), § 458-16-210, filed 12/28/87; WSR 86-12-034 (Order PT 86-2), § 458-16-210, filed 5/30/86; WSR 85-05-025 (Order PT 85-1), § 458-16-210, filed 2/15/85. Statutory Authority: RCW 84.36.389
and 84.36.865. WSR 83-19-029 (Order PT 83-5), § 458-16-210, filed 9/14/83. Statutory Authority: RCW 84.36.865
. WSR 81-05-017 (Order PT 81-7), § 458-16-210, filed 2/11/81; Order PT 77-2, § 458-16-210, filed 5/23/77; Order PT 76-2, § 458-16-210, filed 4/7/76. Formerly WAC 458-12-205.]