Date of Adoption: June 30, 1999.

Purpose: This rule explains how to determine the date of sale for purposes of the real estate excise tax. It also explains the application of interest and penalties when the tax is not paid within thirty days of the date of sale. It is being revised to incorporate provisions of chapter 149, Laws of 1996, and chapter 157, Laws of 1997, which affect the computation/imposition of interest and penalties. The revised rule also explains that the penalty imposed on the delinquent payment of taxes applies to both the state and local tax components.

Citation of Existing Rules Affected by this Order: Amending WAC 458-61-090 Date of sale--Interest and penalty.

Statutory Authority for Adoption: RCW 82.45.150.

Other Authority: RCW 82.32.300.

Adopted under notice filed as WSR 99-10-033 on April 29, 1999.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 1, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 1, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 1, Repealed 0. Effective Date of Rule: Thirty-one days after filing.

June 30, 1999

Claire Hesselholt

Rules Manager

Legislation and Policy Division

OTS-2693.1

AMENDATORY SECTION(Amending WSR 94-04-088, filed 2/1/94, effective 3/4/94)

WAC 458-61-090
((Interest and penalties--))Date of sale--Interest and penalty.

(1) Introduction. The tax imposed under chapter 82.45 RCW (Excise tax on real estate sales) is due and payable to the county treasurer as of the date of sale((, whether or not the contract of sale or instrument of conveyance is recorded at that time)). This rule explains how to determine the date of sale. It also explains the application of interest and penalties when the tax liability is not paid within one month of the date of sale.

(2) Date of sale. The tax imposed under chapter 82.45 RCW is due and payable to the county treasurer as of the date of sale, whether or not the contract of sale or instrument of conveyance is recorded at that time.

(a) When a contract of sale or instrument of conveyance is signed and delivered by the grantor to an escrow agent licensed under chapter 18.44 RCW (Escrow Agent Registration Act), a title company, a title insurance company, or an attorney at law acting as an escrow agent, with instructions to deliver the instrument to the grantee upon the fulfillment of one or more conditions, the date of sale will be presumed to be the date that the instrument is presented for recording, subject to the following:

(i) A statement, as provided by WAC 458-61-150, signed by the escrow agent, the title company agent, the title insurance company agent, or attorney, is attached to the affidavit indicating that the instrument was delivered to such person in the capacity of an escrow agent; and

(ii) The date shown on the instrument is not more than ninety days prior to the date the affidavit is presented to the county treasurer for filing.

(b) In all other cases the date of sale will be presumed to be the date shown on the instrument. A taxpayer alleging a date of sale other than the instrument date has the burden of proving that delivery of title or ownership of the property in exchange for consideration occurred on the date alleged.

(3) Interest. If the tax is paid within ((thirty days following)) one month of the date of sale, interest will not be ((applied)) imposed.  If the tax is not paid within ((thirty days following)) one month of the date of sale, ((the amount of unpaid tax shall bear interest in the amount of one percent per each thirty-day period, or part thereof, beginning with)) interest will be imposed on the total amount of the unpaid tax (both the state and local components) from the date of sale to the date of full payment. RCW 82.45.100(1) and 82.46.010(5). This interest is calculated on a monthly basis with a full month's interest accruing at the beginning of each month. Even if the full payment is not made at the end of a month, any portion of a month existing at the time of full payment will accrue a full month of interest. (See subsection (2)(b)(i) and (ii) and (c)(i) of this rule for examples of how interest is calculated and what day of each month interest accrues.)

(a) Interest imposed before January 1, 1999, is computed at the rate of one percent per month or portion of a month.

(b) Effective January 1, 1999, as a result of interest rate changes introduced in chapter 157, Laws of 1997, interest is computed per month or portion of a month at an annual variable interest rate determined as per RCW 82.32.050(2). This interest rate is adjusted on the first day of each January. The rate applied to any given month or portion of a month is the annual variable interest rate in effect at the beginning of that month, divided by twelve. Any interest imposed for a month or portion of a month that starts in December will be imposed at the interest rate effective in December, even though the interest rate may change on January 1st. The department of revenue will provide written notification to the county treasurers of the variable rate on or before December 1st of the year preceding the calendar year in which the variable interest rate applies. Other persons interested in the annual variable interest rate may contact the department of revenue special programs division directly.

(i) For example, assume a taxable real estate transaction with a November 20, 1998, date of sale. The original tax due is one thousand dollars and full payment is received on March 15, 1999. Interest begins on November 21st (the day after the date of sale). Prior to January 1, 1999, the interest rate for real estate excise tax is one percent per month. For this example only, assume that an annual variable interest rate of nine percent is effective on January 1, 1999, which is a monthly rate of seventy-five hundredths of a percent (nine percent annual variable interest rate divided by twelve months). Four months of interest is due and is computed as follows:

Nov 21 to Dec 20, 1998	$1,000 tax at 1 % per month	$10.00
Dec 21 to Jan 20, 1999	$1,000 tax at 1% per month	$10.00
Jan 21 to Feb 20, 1999	$1,000 tax at .75% per month	$ 7.50
Feb 21 to Mar 15, 1999	$1,000 tax at .75% per month	$ 7.50
Total additional interest due with March 15, 1999, payment		$35.00

In this example, note that a full month's interest applies effective February 21st even though the period of February 21st through March 15th is only a partial month.

(ii) As an additional example, assume a taxable real estate transaction with a February 1, 1999, date of sale. The original tax due is one thousand dollars and full payment is received on April 15, 1999. Interest begins on February 2nd (the day after the date of sale). For this example, assume that an annual variable interest rate of nine percent is effective on January 1, 1999. Three months of interest is due and is computed as follows:

Feb 2 to Mar 1, 1999	$1,000 tax at .75% per month	$ 7.50
Mar 2 to Apr 1, 1999	$1,000 tax at .75% per month	$ 7.50
Apr 2 to Apr 15, 1999	$1,000 tax at .75% per month	$ 7.50
Total additional interest due with April 15, 1999, payment		$22.50

(c) When interest must be calculated in a shorter month that does not have a day corresponding to the original date of sale, interest is computed on the first day of the following calendar month.

For example, assume a real estate transaction with a January 30th date of sale and a payment date of May 10th. Since February has only twenty-eight days (assuming it is not a leap year), the 28th of February most closely corresponds to the January 30th date of sale. If the tax liability is not paid on or before the last day of February (within one month of the date of sale), the liability is delinquent and the first two months of interest will be added on March 1st (the first day of the following calendar month). Interest begins on January 31st (the day after the date of sale). By the time the May 10th payment is made, four months of additional interest are due. For this example, assume that the original tax due is one thousand dollars and the annual variable interest rate is nine percent. The interest is computed as follows:

Jan 31 to Feb 28, 1999	$1,000 tax at .75% per month	$7.50
Mar 1 to Mar 30, 1999	$1,000 tax at .75% per month	$7.50
Mar 31 to Apr 30, 1999	$1,000 tax at .75% per month	$7.50
May 1 to May 10, 1999	$1,000 tax at .75% per month	$7.50
Total additional interest due with May 10, 1999, payment		$30.00

(((3))) (4) Penalty. In addition to the interest described in subsection (((2))) (3) of this section, if the payment of any tax is not received by the county treasurer within one month of the date of sale a delinquent penalty applies. This penalty is imposed on the total amount of the unpaid tax (both state and local components). RCW 82.45.100(2) and 82.46.010(5).

(a) If tax is not paid:

(((a))) (i) Within ((thirty days)) one month of the date of sale, a penalty of five percent of the amount of the tax will be added to the tax due;

(((b))) (ii) Within ((sixty days)) two months of the date of sale, a total penalty of ten percent shall be added to the tax due; and

(((c))) (iii) Within ((ninety days)) three months of the date of sale, a total penalty of twenty percent will be added to the tax due.

(((4))) (b) Penalties ((shall)) will be assessed only against the grantor and ((shall)) will not be included in the lien arising under RCW 82.45.070.  ((See RCW 82.45.100.

(5) When an instrument of sale or conveyance is signed and delivered by the grantor to an escrow agent licensed under chapter 18.44 RCW, a title company, a title insurance company, or an attorney at law acting as an escrow agent, with instructions to deliver the instrument to the grantee upon the fulfillment of one or more conditions, the date of sale will be presumed to be the date that the instrument is presented for recording, subject to the following:

(a) A statement, as provided by WAC 458-61-150, signed by the escrow agent, the title company agent, the title insurance company agent, or attorney, is attached to the affidavit indicating that the instrument was delivered to such person in the capacity of an escrow agent; and

(b) The date shown on the instrument is not more than ninety days prior to the date the affidavit is presented to the county treasurer for filing.

(6) In all other cases the date of sale will be presumed to be the date shown on the instrument.  A taxpayer alleging a date of sale other than the instrument date has the burden of proving that delivery of title or ownership of the property in exchange for consideration occurred on the date alleged.))

[Statutory Authority: RCW 82.32.300 and 1993 sp.s. c 25.  94-04-088, § 458-61-090, filed 2/1/94, effective 3/4/94.  Statutory Authority: RCW 82.45.120 and 82.45.150.  82-15-070 (Order PT 82-5), § 458-61-090, filed 7/21/82.]

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