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Bill would let county treasurers cancel small personal-property tax liens, change surplus-payment rules for distraint sales
Summary
Senate Bill 5221 would allow county treasurers to cancel personal-property tax liens when the cost to collect exceeds the tax due, change how surplus funds from distraint sales are paid (requiring an owner refund request), and allow title issuance when no title exists for mobile homes sold at distraint.
House Finance heard Senate Bill 5221 on March 18. The bill would make several changes to state law governing distraint (the seizure and sale of personal property to collect unpaid taxes) and the disposition of surplus proceeds from distraint sales.
Committee staff Christina King explained current process: when an owner misses a personal-property tax payment, the county treasurer may seize and auction property; the treasurer must advertise the sale and distribute proceeds to pay taxes, interest and costs, and automatically remit any excess to the titled owner. The bill would allow county treasurers to cancel personal property taxes, including taxes on titled manufactured or mobile homes, when the cost to collect and distraint the property exceeds the tax amount due. It would remove the requirement that the treasurer automatically pay excess sale proceeds to the owner; instead, an owner must request a refund and claims to excess funds would be extinguished if not asserted within three years, after which the county deposits unclaimed funds into the current expense fund. The bill also allows the Department of Licensing to issue a new certificate of title when a mobile home, park model, or manufactured home is purchased at a county distraint sale and no title can be found.
Thurston County Treasurer Jeff Gaddman (president of the Washington State Association of County Treasurers) testified in support, describing that in his county many distraints cost more to administer than the tax recovered ("It does not make sense to spend $500 of public money to collect $100 in taxes"). He also urged removal of the three-year title waiting requirement for mobile homes so housing can be returned to the market. Jennifer Wallace of the Washington Association of County Officials also supported the bill, saying the current timeline and requirements are outdated and produce hardship for mobile homeowners and small businesses.
Staff said a fiscal note is available and that the bill would produce no state revenue impact but could create indeterminate local revenue decreases in the year cancellations occur; counties can recover canceled taxes through a refund-levy process in the following year. The committee closed the hearing segment after supportive county-official testimony; the transcript records no committee vote or action in this session.
