TAXATION ‑- REAL ESTATE SALES TAX ‑- LIABILITY OF OWNER ON SUCCESSIVE CONTRACTS OF SALE

TAXATION ‑- REAL ESTATE SALES TAX ‑- LIABILITY OF OWNER ON SUCCESSIVE CONTRACTS OF SALE.

An owner of real property is subject to payment of the real estate sales tax upon the entry of each successive contract for the sale of the same piece of real property, each such contract constituting a "sale" of real property subject to the tax.

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                                                                   March 3, 1952

Honorable Arthur H. Reed
Acting Prosecuting Attorney
Cowlitz County Court House
Kelso, Washington                                                                                               Cite as:  AGO 51-53 No. 247

Dear Sir:

            We have your letter requesting our opinion on the following question concerning the real estate sales tax:

            Where the owner of real property enters a contract to sell the same and at that time pays the real estate sales tax upon the entire contract amount, but later declares a forfeiture of such contract for a defaulted payment, retakes the property, and enters a new contract for the sale of the property to another party, is the owner again subject to payment of the real estate sales tax upon the entry of the second contract?

            Our conclusion is that an owner of real property is subject to payment of the real estate sales tax upon the entry of each successive contract for the sale of the same piece of real property, each such contract constituting a "sale" of real property subject to the tax.

             [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            In your letter you state that the payment of the second tax under the above factual situation has been complained of as being an unfair burden upon the person who contracts to sell property but has to repossess the same, and subsequently enters a second contract of sale.  We are inclined to sympathize with this complaint, especially in a situation where the contract is not performed by the purchaser, and only slight payments have been made by him.  However, by chapter 28.45, RCW, which authorizes the imposition of the real estate sales tax (chapter 11, Laws of 1951, First Ex. Sess., as amended by chapter 19, Laws of 1951, Second Ex. Sess.), and by the ordinances imposing the tax, the tax is imposed upon every sale of real property in the county.  The word "sale" is defined to include not only the actual conveyance or transfer of title or ownership to the property, but also the entry of any contract for such a conveyance or transfer of title.  The facts of the instant problem are that an owner of land has entered two contracts for the sale of the land.  The statutes and ordinances leave no alternative to the collection of the tax upon the entry of each contract.

Very truly yours,

SMITH TROY
Attorney General

C. JOHN NEWLANDS
Assistant Attorney General