Attorney General Declares City Real Estate Tax Scheme Illegal

Frequently in the media and on television, Realtors are portrayed as sleazy, money-hungry salespeople who are only interested in their own well-being. This is far, far from the truth, but examples of the public service that Realtors provide rarely get any exposure.

Please see the article below from the Northwest Multiple Listing Service describing a recent attempt by a city to double-tax its citizens and how the local association of Realtors led gthe fight to stop it.

KIRKLAND, Wash. ( Oct. 30, 2006) – State attorney general Rob McKenna recently issued an opinion declaring illegal the City of Sultan's plan to increase real estate excise taxes while receiving a rebate on lost sales tax from Snohomish County.

The AG opinion was sought by State Representative Brian Sullivan (21st District) at the urging of the Snohomish County Camano Association of REALTORS®. The City's proposal would have raised Sultan's real estate excise tax to a rate of 2.28%, the highest in the State.

REALTORS® pointed out that the tax increase proposal was not economically beneficial to the City, or to homeowners, because Sultan would have to give up its retail sales tax to the County. The City attempted to circumvent state law by negotiating with the County to rebate the lost sales tax in addition to collecting the new real estate tax.

In his opinion, the Attorney General said "the Legislature chose to foreclose" such double taxation schemes. "State law requires cities to choose between the sales tax and the real estate excise tax ...a city may not escape the consequences of its choice by collecting both revenue sources."

"This decision shuts the door on any other cities attempting to double tax homeowners in this way," said REALTOR® Association President Dave Miles. "Many thanks to those members of the NWMLS who contacted Sultan and helped us defeat this illegal scheme."