Tax Issues
Potential Tax Liability
- Length of Time in Classification
When land is classified as either farm and agricultural land,
open space, or timber land, it shall not be applied to any other
use for a period of not less than ten years unless transferred
or reclassified into another current use classification or an
early withdrawal penalty will apply. The land continues in current
use classification after the ten year period until a request for
withdrawal is made by the owner, the use of land no longer complies,
or the ownership has changed and the new owner has not signed
a Notice of Continuance. The notice of classification is recorded
with the county auditor in the same manner as the recording of
state tax liens on real property.
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Sale of Classified Land
When classified land is sold, the seller or transferor becomes
liable at the time of sale for the additional tax, interest, and
penalty unless the new owner(s) signs the Notice of Continuance
which is attached to or shown on the excise tax affidavit. The
county auditor shall not accept an instrument of conveyance on
any classified land unless the Notice of Continuance has been
signed or the additional tax had been paid. The assessor shall
determine if the land qualifies for continued classification.
Owner May Request Withdrawal
If the owner intends to withdraw all or a portion of the land
from classification after ten years, two years prior notice must
be given to the county assessor. This notice can be filed after
the eighth assessment year of the initial ten year classification
period. If a portion of a parcel is removed from classification,
the remaining portion must meet the requirements of original classification
unless the remaining parcel has different income criteria.
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Action on Withdrawal
Upon receipt of a request for withdrawal, the assessor shall
notify the legislative authority which originally approved the
classification and, when two years have elapsed, the assessor
shall withdraw the land from classification. The land which is
withdrawn from classification shall be subject to an additional
tax equal to the difference between the amount of tax paid under
the classification and the tax at true and fair value for the
last seven years, plus interest at the statutory rate charged
on delinquent property taxes.
Owner to Notify Assessor
of Change in Use
An owner changing the use of land from a classified use must
notify the county assessor within sixty days of this action. The
assessor shall remove the land from classified status and impose
and additional tax equal to the difference between the tax paid
on current use value and the tax that would have been paid on
that land had it not been so classified, payable for the last
seven years, plus interest at the same rate as charged on delinquent
property taxes, plus a penalty of twenty percent of the total
amount.
Taxes Allocated to Portion
of Year
Assessed valuation before and after removal of classification
shall be listed and allocated according to that part of the year
to which each assessed valuation applies.
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Criteria for Classification
Continues to Apply After Classification Has Been Granted
Owner of classified land must continue to meet the criteria
established for classification or the assessor may remove the
land from the current use classification.
After giving the owner written notice and an opportunity to
be heard, the assessor may determine that all or a portion of
the land no longer meets the criteria for classification.
Removal of Land Classification
By County Assessor May Be Appealed
Within thirty days after the removal from classification, the
assessor shall notify the owner in writing explaining the reasons
for removal. The owner has thirty days following the date the
notice was mailed by the assessor to file an appeal of the removal
of classification to the County Board of Equalization.
Additional Tax Due
At the time land is removed from classification it becomes subject
to any additional tax, applicable interest, and a penalty which
shall be due and payable to the county treasurer within thirty
days after the owner is notified. The penalty is not imposed if
the removal satisfies the ten year requirement.
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Lien of Taxes
Any additional tax, applicable interest, and penalty, becomes
a lien on the land at the time the land is removed from classification.
This lien shall have priority over any other encumbrance on the
land. Such lien may be foreclosed upon expiration of the same
period after delinquency in the same manner as delinquent real
property taxes.
Distribution of Additional
Taxes
Upon collection, the additional tax shall be distributed by
the county treasurer in the same manner in which current taxes
applicable to the subject land are distributed.
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When removal of
Land is Not Subject to Additional Tax
The additional tax, applicable interest, and penalty shall not
be imposed if the removal of classification results solely from:
- Land is transferred to a government entity in exchange for
other land located in the State of Washington;
- Land taken through the exercise of the power of eminent domain,
or sale or transferred in anticipation of the exercise of such
power was received in writing or by other official action;
- A natural disaster changes the use of such land;
- Official action by the state, county, or city disallows the
present use of such land;
- Transfer of land to a church when such land would qualify
for exemptions granted therein
- Acquisition of property interests by state agencies or agencies
or organizations qualified under RCW 84.34.210 and 64.04.130
(See RCW 84.34.108(~f)); or
- Removal of land classified as farm and agricultural land
on which housing for employees and/or principal place of residence
is sited.
- Removal of land from classification after enactment of a
statutory exemption that qualifies the land for exemption and
receipt of notice from the owner to remove the land from classification.
- The creation, sale, or transfer of forestry riparian easments
under RCW 76.13.120
- The creation, sale, or transfer of a fee interest or a conservation
easement for the riparian open space program under RCW 76.09.040.
- The sale or transfer of land within two years after the death
of the owner of at least a fifty percent interest in the land
if the land has been assessed and valued as classified forest
land, designated as forest land under chapter 84.33 RCW, or
classified under this chapter continuously since 1993.
- The sale or transfer of land after the death of the owner
of at least a fifty percent interest in the land if the land
has been assessed and valued as classified forest land, designated
as forest land under chapter 84.33 RCW, or classified under
this chapter continuously since 1993 and the sale or transfer
takes place within two years after July 22, 2001, and the death
of the owner occurred after January 1, 1991.
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