A ski resort located on federal land had a taxable leasehold interest and was therefore subject to Washington leasehold excise tax. The U.S. Forest Service had granted the taxpayer a special use permit covering 4,350 acres, of which 2,600 were skiable terrain. The taxpayer paid the Forest Service an annual permit fee based on its gross revenues. Under the terms of the permit, the taxpayer did not have an exclusive right to use the land.
In lieu of the real property tax, RCW 82.29A.030 imposes a leasehold excise tax on leasehold interests in publicly owned land. The taxpayer argued that the permit did not create a taxable leasehold interest under RCW 82.29A.020 because the permit did not grant the taxpayer a right of possession. The Court of Appeals held, however, that a plain meaning analysis resolved the issue in the Department of Revenue’s favor. The court noted that the statute treats possession and occupancy as interchangeable concepts, with language such as “the rights of use or occupancy” and “rights of access, occupancy, or use.” Further, the taxpayer’s argument that possession, as used in RCW 82.29A.020(1), means exclusive possession of and control over the land ignored the clause stating that a taxable leasehold interest may grant “possession and use, to a degree less than fee simple ownership.” The taxpayer’s occupancy of the land therefore sufficed to establish possession within the statute’s plain meaning.
Crystal Mountain, Inc. v. Washington Department of Revenue, The Court of Appeals of Washington, Division Two, No. 42081-3-II, March 5, 2013
