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Office of the Attorney General

Attorney General

Bob Ferguson

AGO 1952 No. 354 - Jul 18 1952
Attorney General Smith Troy


The tax on personal property destroyed between January 1 and the levy date remains valid.

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                                                                    July 18, 1952

Honorable Hugh H. Evans
Prosecuting Attorney
Spokane County
Spokane, Washington                                                                                                              Cite as:  AGO 51-53 No. 354

Attention:  !ttMr. Willard J. Sharpe

Dear Sir:

            You request our opinion relative to

            the validity of taxes on insured personal property destroyed subsequent to the tax date but prior to the date of levy.

            We advise such taxes remain valid.


            RCW 84.40.010 provides:

            "All property now existing, or that is hereafter created or brought into this state, shall be subject to assessment and taxation for state, county, and other taxing district purposes, upon equalized valuations thereof, fixed with reference thereto on the first day of January at 12 o'clock meridian in each year, * * *"

             [[Orig. Op. Page 2]]

            RCW 84.40.020 provides in part:

            "* * * All personal property in this state subject to taxation shall be listed and assessed every year, with reference to its value and ownership on the first day of January of the year in which it is assessed:  Provided, That if the stock of goods wares, merchandise, or material, whether in a raw or finished state or in process of manufacture, owned or held by any taxpayer on January first of any year does not fairly represent the average stock carried by such taxpayer, the county assessor shall list and assess such stock upon the basis of the monthly average of stock owned or held by such taxpayer during the preceding calendar year or during such portion thereof as the taxpayer was engaged in business."

            Pursuant to these statutes, January first is the "taxable moment" or the "tax day" for personal property in this state.  SeeCounty of Martin v. A. M. Drake, 40 Minn. 137, 139, 41 N.W. 942 (1889):

            "All tax laws have to fix upon some particular date in the year at which to determine the taxability as well as the ownership and value of property, for purposes of assessment and taxation.  Our revenue laws have fixed this at the 1st of May * * *.  Personal property is assessed and taxed with regard to both its value and ownership at that date * * *.  Every man must pay taxes on what he then owns, and at its then value, no matter how short a time he may have owned it, or how soon thereafter it is lost.  All property, if in being as taxable property at that date, is liable to taxation for that year at its then value, although it may only have come into being the day before, and may be in whole or in part destroyed the day after."  (Emphasis supplied)

            See alsoWangler Bros. v. Black Hawk County, 56 Iowa 384, 9 N.W. 314 (1881);Blossom v. Van Court, 34 Mo. 390, 86 Am. Dec. 114;Wildberger v. Shaw, 84 Miss. 442, 36 So. 539 (1904).

             [[Orig. Op. Page 3]]

            As to the power of the legislature to set a tax day, see State v. Snohomish County, 71 Wash. 320, 323, 325, 128 Pac. 667 (1912).  See alsoThe Town of Uniontown v. J. M. Klemgard, 129 Wash. 144, 148, 224 Pac. 610 (1924);Peacock Mill Co. v. W. J. Honeycutt, 55 Wash. 18, 103 Pac. 1112 (1909);United States v. Pierce County, 193 Fed. 529 (1912);United States v. Albers, et al., 55 Fed. Supp. 217 (1944); andShotwell v. Moore, 129 U. S. 590 (1888).  See also 2 Cooley, Taxation (4th Ed. 1924) Sec. 546.

            RCW 84.60.030 and 84.60.040 provide three methods of collecting personal property taxes.  The county may

            (1) Enforce the statutory lien on the specific items of personal property assessed;

            (2) Enforce the statutory lien on other items of personal property owned by the same taxpayer after distraint by the County Treasurer; and

            (3) Enforce the statutory lien on real property owned by the taxpayer after selection and charge by the County Treasurer.

            Destruction of the specific items of personal property assessed will, of course, as a practical matter, prevent use of collection procedure No. 1.  However, collection procedures Nos. 2 and 3 still remain.  Destruction of the specific property assessed (or removal from the taxing jurisdiction, etc.) would appear to be one of the main reasons for providing alternative collection procedures.

            The legislative intent that the tax continues despite destruction of the property is further demonstrated by the statutory provision that insurance on destroyed personal property will be subject to the tax lien.  RCW 84.56.220 provides:

            "In the event of the destruction of personal property by fire after the date of delinquency in any year, the lien of the personal property tax shall attach to and follow any insurance that may be upon the property and the insurer shall pay to the county treasurer from the insurance money all taxes, interest, and costs that may be due, or are a lien, against the identical property destroyed."

             [[Orig. Op. Page 4]]

            This provision, although not in itself controlling because the remedy only comes into effect subsequent to delinquency which, except for jeopardy distraints (see RCW 84.56.090, 84.56.100 and 84.56.110) comes into play only after the levy date, specifically contemplates that the tax has continually remained in force even though the property is subsequently destroyed.

            A specific tax day is necessary to at least determine the following: (1) the owner of the property, (2) its existence, and (3) whether the property was within the tax jurisdiction.  A change in either of these three items, subsequent to the imposition of the tax, does not affect the validity of the tax, but may of course alter the method of collection.

            Personal property is rendered "out of existence" by its consumption no less than by destruction; and the fortuity of the event is not statutorily pertinent.  It could not be and still permit that degree of certainty necessary to efficient and proper conduct of county budgetary operations.  Further, if the property were physically removed from state jurisdiction it also is "out of existence" insofar as the taxing sovereignty is concerned.  The statutes are clear that the legislature did not intend that personal property taxes be avoided by either destruction, consumption or removal from jurisdiction occurring subsequent to the valid imposition of the tax.  As well stated byCounty of Martin v. Drake, supra, these reasons require a "taxable moment" and alternative collection procedures.

            Further, RCW 84.40.020,supra, provides for tax assessment upon merchants based on anaverage inventory.  Consumption of the goods taxed (with attendant destruction) and even removal from the jurisdiction are not only contemplated but expected.  But notice tax liability as of the tax day is in no wise affected.  Other related statutes relating to collection, etc., furnish further confirmation.

            The opinion inPuget Sound Power & Light Company v. Cowlitz County, 28 Wn. (2d) 907, 234 P. (2d) 506 (1951) admittedly contains certain sentences which, when read alone, might appear contrary to the analysis contained herein.  However, note that thePuget Sound case is specifically based on the theory that the purchasers of the property were constitutionally exempt entities.  Thus a personal property tax, being primarily a debt of the property, was extinguished by what might be termed, in effect, a constitutional exception to our property tax laws.  Destruction of the goods taxed provides no constitutional problem.  If it did, the validity of the insurance provision supra, which is common to most states, would be doubtful and of course it is not.

             [[Orig. Op. Page 5]]

            We therefore cannot but conclude that a tax validly and properly imposed upon personal property subsequently destroyed, consumed, sold to non-exempt [[nonexempt]]purchasers, or removed to another jurisdiction prior to date of levy, remains valid.

Very truly yours,

Attorney General

Assistant Attorney General