wa-law.org > bill > 2025-26 > SB 5111 > Original Bill
The legislature finds that the department of revenue has recently assessed title and escrow businesses for failing to collect and pay sales and use and business and occupation tax on recording surcharges.
The legislature finds the department of revenue has not issued rule making or guidance notifying the industry of its obligation to collect and pay sales and use and business and occupation tax on recording surcharges.
The legislature finds that some title and escrow companies have been assessed large sums of back taxes for failure to pay sales and use and business and occupation tax on recording surcharges, which creates a severe hardship for these entities, most of which are small independent businesses.
The legislature also finds that on February 27, 2024, the court of appeals of the state of Washington, division II, published an opinion in BIAW v. The State of Washington and, in that opinion, the court of appeals concluded that Washington's document recording surcharge is an excise tax rather than a fee because the "overwhelming purpose of the surcharge is to alleviate the housing crisis by financing certain funds, which is a desired public benefit. Only one percent of the total surcharge, $1.83, is distributed and used by the county auditor for its surcharge collection activities."
Therefore, it is the intent of the legislature to declare that it is the policy of the state that sales and use and business and occupation taxes may not be levied on a document recording surcharge, which the court of appeals has concluded is an excise tax.
(1)(a) "Sale at retail" or "retail sale" means every sale of tangible personal property (including articles produced, fabricated, or imprinted) to all persons irrespective of the nature of their business and including, among others, without limiting the scope hereof, persons who install, repair, clean, alter, improve, construct, or decorate real or personal property of or for consumers other than a sale to a person who:
This chapter does not apply to amounts remitted to a county filing office for the purpose of recording documents.
A person is eligible for the exemption under this section if the person is primarily engaged in escrow agent services as described in RCW 18.44.011 (7) and (8) and 18.44.021(1).
The remittance amounts must be separately identified on a settlement statement, HUD-1, or closing disclosure.
RCW 82.32.805 and 82.32.808 do not apply to this act.
This act takes effect January 1, 2026.