TAXATION - FOREST - TAXATION OF REFORESTATION LANDS UPON REMOVAL FROM CLASSIFICATION
(1) Whenever any land is removed from classification as reforestation land, RCW 84.28.065 requires the owner to pay to the county in which the land is located: (a) A yield tax of twelve and one half percent (or 1% per year if the land was classified for less than twelve years) of the value of the timber or forest crop remaining on the land at the time of declassification, based upon full current stumpage rates as fixed by the county assessor; and (b) an additional amount arrived at by subtracting the total of all taxes paid on both the land and the forest crop because of classification from the amount of taxes which would have been paid had the land not been classified, based upon what owners of similar but unclassified land and forest crops paid during the same period.
(2) In addition to being required when reforestation lands are declassified upon petition of the owner thereof, the payments required by RCW 84.28.065 must also be made when declassification results from a petition under RCW 84.28.050 and 84.28.060 by the state department of natural resources, the county assessor, or taxpayers other than the landowner.
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October 22, 1970
Honorable Don L. Talley
State Senator, 18th District
Kelso, Washington 98626
Cite as: AGO 1970 No. 22
By a letter previously acknowledged you have requested an opinion of this office on two questions pertaining to taxation upon the declassification of reforestation land under the provisions of chapter 84.28 RCW. We paraphrase your questions as follows:
1. What taxes must be paid to a county under RCW 84.28.065 upon the removal of reforestation lands from this [[Orig. Op. Page 2]] classification?
2. In view of the fact that RCW 84.28.065 expressly requires the payment of taxes before an order may issue declassifying reforestation land upon petition of the owner thereof, are payments also required when declassification results from a petition made under RCW 84.28.050 and 84.28.060 by the state department of natural resources, the county assessor, or taxpayers other than the landowner?
The answer to the first question is contained in the following analysis. We answer the second question in the affirmative for the reasons stated below.
The purpose of chapter 84.28 RCW, in permitting the classification of lands for reforestation, is expressed in RCW 84.28.005 to be the encouragement, protection, and promotion of the growth of new forests of commercial value on lands chiefly valuable for that purpose. The act1/ establishes an exclusive system of taxation of reforestation lands which is designed to encourage this purpose by lessening the tax burden during the long period of time necessary to grow timber for market.
The act provides a method of classifying lands as reforestation lands; and once this has been accomplished, it establishes their assessed valuation at two dollars an acre for lands lying west of the Cascade mountains and at one dollar an acre for lands east of said mountains. See, RCW 84.28.090.
Under RCW 84.28.110 whenever any of the forest crop is harvested the owner must pay to the county in which the land is located a yield tax of twelve and one half percent of the [[Orig. Op. Page 3]] market value of the crop cut, except that if the lands have been classified for less than twelve years, a yield tax of only one percent for each year of classification is to be paid.
All taxes assessed as the result of classification are paid to the county treasurer and distributed the same as general taxes upon unclassified property within the same taxing district. See, RCW 84.28.140.
Lastly, we should note that authority for this special tax treatment is found in the 14th Amendment to the state Constitution which provides that while real estate shall constitute one class for tax purposes, lands devoted to reforestation may be taxed by either a yield tax, an ad valorem tax, or by both at such rate as the legislature may fix. See,State ex rel. Mason Co. Logging Co. v. Wiley, 177 Wash. 65, 31 P.2d 539 (1934).
When it has been determined under procedures established by the act that certain reforestation lands should be removed from classification, RCW 84.28.065 provides for payments to be made to the county, as follows:
"Whenever any land is removed from classification as reforestation land it shall thereafter be assessed and taxed without regard to the provisions of this chapter, and there shall thereupon become due and owing to the county in which such land is situated the taxes set forth in this section.
"(a) A yield tax equal to twelve and one half percent of the value of the timber or forest crop remaining on the land, based upon full current stumpage rates fixed by the assessor: Provided, That whenever, within a period of twelve years following the classification of any lands as reforestation lands, any such lands shall be removed from classification, the owner thereof shall be required to pay a yield tax upon the timber of one percent for each year that has expired from the date of such classification until such removal from classification.
[[Orig. Op. Page 4]]
"(b) A sum of money equivalent to the amount, if any, by which the tax paid on the land and forest crop because of classification under this chapter is less than the tax paid during the same period on similar land and forest crop that was not classified.
"The assessor shall prepare a roll of lands to be removed from classification and shall extend against such lands the taxes computed as provided in this section, and shall forthwith transmit to the county treasurer a record of such taxes; and the county treasurer shall thereupon enter the amount of such taxes upon his records against such lands and their owner; and such taxes shall thereupon become a lien against such lands and timber and also against any forest material that may be cut thereon and against any other real or personal property owned by such owner. Such taxes shall become delinquent on the fifteenth day of March next following the effective date of the commission's order. The lien of such taxes shall be superior, and shall be enforceable, in the same manner and to the same effect as provided in RCW 84.28.140 for collection of yield taxes on materials removed from classified lands: Provided, That payment of such taxes shall be a condition precedent to issuance of an order removing lands from classification pursuant to provisions of RCW 84.28.063: Provided further, That an order classifying lands or removing lands from classification shall not be retroactive, but the effective date of such order shall not be earlier than the first day of January next following the date of issuance of such order."
You suggest in your letter that perhaps subsections (a) and (b) are to be applied in the alternative. We do not, however, believe such an interpretation expresses the legislative intent. The very language of the statute requires both subsections to be used. Furthermore, if the subsections were to be applied in the alternative there would be no guidelines established (except when there is no timber or forest crop remaining on the land) to determine when one subsection should be used rather than the other; nor is anyone designated to make such an election.
[[Orig. Op. Page 5]]
The legislative plan appears to be that upon declassification the owner will pay to the county in which the land is located, for the period of classification, a sum of money which will approximate and at least equal the amount he would have paid in regular property taxes had the land not been classified.
Thus, under RCW 84.28.065, supra, upon the removal of the land from classification as reforestation land the owner is required to pay to the county under subsection (a) a yield tax of twelve and one half percent (or one percent a year if the land was classified for less than twelve years) of the value of the timber or forest cropremaining on the land at the time of declassification, based upon fullcurrent stumpage rates as fixed by the county assessor.
In addition, subsection (b) requires the owner to pay an amount, if any, arrived at by subtracting the total of all taxes paid on both the land and forest crop "because of classification," from the amount of taxes which would have been paid had the land not been classified, based upon what owners of similar but unclassified land and forest crops paid during the same period.
The taxes paid "because of classification" include (1) the ad valorem tax measured by the arbitrary assessed valuation of one or two dollars an acre as provided in RCW 84.28.090; (2) the yield tax, if any, paid upon the harvesting of all or part of the timber or forest crop under RCW 84.28.110, and (3) the yield tax, if any, paid under subsection (a) of RCW 84.28.065 upon any remaining timber or forest crop at the time of declassification. The latter, like the other taxes, would be paid only "because of classification" and not otherwise.
We have not overlooked RCW 84.28.150 which provides that during classification "all buildings, improvements, agricultural, mineral or values other than forest values" upon any classified land shall continue to be taxed under the general tax laws and assessed for benefits under any applicable local improvement law. Obviously, such taxes and assessments would not be paid "because of classification," nor should they be included as part of the "taxes which would have been paid had the land not been classified." In other words, these taxes and assessments are to be excluded from the computation made under subsection (b).
To summarize our answer to this question, the purpose of the act is to lessen the tax burden during the period of time the [[Orig. Op. Page 6]] land is used for reforestation. When that period ends and the lands are removed from classification, the owner must then make up any difference between what he paid in taxes during or "because of classification" and what he would have paid in taxes if the lands had not been classified. This insures that the county and other taxing districts will not lose tax revenues because of its reforestation program. Payment of a portion of the regular taxes will simply be deferred during classification or until all or a portion of the forest crop is harvested with any balance becoming due when the land is declassified.
It is our opinion that payment of the taxes required for declassification under RCW 84.28.065,supra, must be made regardless of who instigates the declassification procedure.
There are three ways by which action for the removal of land from classification as reforestation lands may be commenced. The first is by petition of the state department of natural resources or the county assessor under RCW 84.28.050; the second is by petition of twenty-five taxpayers of the county in which the lands are situated under RCW 84.28.060; and the third by the landowner himself under RCW 84.28.063.
Your question arises because of the first proviso of RCW 84.28.065 which reads:
". . . Provided, That payment of such taxes shall be a condition precedent to issuance of an order removing lands from classification pursuant to provisions of RCW 84.28.063: . . ."
read together with the following provisions of RCW 84.28.063:
"The owner may at any time cause any of his lands classified under this chapter to be removed from such classification by filing written notice to that effect with the county assessor of the county in which such lands are situate, which notice shall describe the lands to be removed, giving the legal description thereof by government legal subdivision. Copy of such notice shall also be filed with the department, the commission and the county auditor of [[Orig. Op. Page 7]] the county in which the lands are situated. Upon receipt from the county treasurer of evidence of payment of the yield taxes imposed by RCW 84.28.065, the commission shall issue an order removing said lands from classification, and such lands shall thereby be removed from classification as reforestation lands as of the first day of January next following the date of issuance of such order, and shall cease to be assessed and taxed as such and shall be free from any lien for unpaid taxes due or assessable under this chapter except as provided in RCW 84.28.065." (Emphasis supplied.)
The foregoing statutes require that when petition for declassification is made by the owner of the land the taxes imposed by RCW 84.28.065 must be paid before any order for declassification may issue. While there is no such condition precedent for issuing the order when a petition for declassification is made by the state department of natural resources, the county assessor, or twenty-five taxpayers of the county, this does not mean that the petition must be made by the owner before he is liable for such taxes. RCW 84.28.065 clearly states that:
"Whenever any land is removed from classification as reforestation land it shall thereafter be assessed and taxes without regard to the provisions of this chapter, andthere shall thereupon become due and owing to the county in which such land is situated the taxes set forth in this section." (Emphasis supplied.)
The last paragraph of that section is couched in language expressing the same intent.
If the owner petitions for declassification he must be prepared to pay the taxes required or the lands will not be ordered declassified. If the petition is not by the owner, the order can issue but the owner must still pay the taxes due under RCW 84.28.065 (a) and (b). In this case, they are to be collected as provided in that section and under RCW 84.28.140, which afford the landowner [[Orig. Op. Page 8]] more time to meet the obligation under situations where declassification is undoubtedly accomplished without his consent.
We trust the foregoing will be of assistance to you.
Very truly yours,
HENRY W. WAGER
Assistant Attorney General
*** FOOTNOTES ***
1/Chapter 84.28 RCW codifies an act which originated as chapter 40, Laws of 1931; it was reenacted in 1961 as a part of the codification of the state revenue code, see chapter 15, Laws of 1961, and, most recently, was amended in various respects by chapter 214, Laws of 1963.