Nonprofit water associations

From the 2024 DOR Tax Exemption Study

Det. No. 12-0216, 32 WTD 134 (June 27, 2013) 135 FINDINGS OF FACT [Taxpayer] is a nonprofit water association located in . . . Washington. Taxpayer was formed … for the purpose of providing its members with clean drinking water. . . . In 2011, the Audit Division of the Department of Revenue (“Department”) examined Taxpayer’s books and records for the period January 1, 2007, through March 31, 2011. During the audit, the Audit Division questioned Taxpayer on a line item identified as “Membership Dues & Assessments.” The Audit Division ascertained from Taxpayer that the funds in the Membership Dues & Assessments account were up-front fees paid by new members in order join Taxpayer’s association. Taxpayer’s [new members sign a water user’s agreement which states] what its members receive in exchange for their up-front membership fee. . . . The cost of new memberships was $. . . per location. The membership fee gives a member a right to vote and a right to hook-up to Taxpayer’s water source. Taxpayer asserts that not all members actually connect to the water system. Taxpayer states that the up-front fees collected from new members in the “Membership Dues & Assessments” account are used