SB 5711 Action Alert – Public Hearing on Thursday, March 13 at 4:00 pm

HEARING || Thursday, March 13 at 4:00 p.m. – SB 5711

Urging all Members & Non-Members of WA-SSA to attend the 

Senate Ways and Means Committee Hearing and Join Us in

OPPOSITION of SB 5711

SB 5711 was just scheduled for a hearing, and we need you to attend 

and join us for this fight.  

If you haven't already signed up in opposition to stating CON, 

please do so now!

SB 5711 Hearing – Thursday, March 13 at 4:00 p.m.

We Urge You to Please TESTIFY Via Zoom or In-Person

 House Senate Ways and Means Committee Hearing on Thursday, March 13

 at 4:00 pm

J.A. Cherberg Building Room 4 | Olympia, WA

•  Testify in-person, click here
  
•  Testify virtually, click here
  
•  To Submit written testimony, click here
  
•  To Provide opposition to be noted for the legislative record, click here
  

HB 1907/SB 5711 – Unconstitutional Tax on Rent

HB 1907/SB 5711 –

• Unconstitutional Tax on Rent: Redefines the rental or lease of individual storage units at self-service storage facilities as a retail transaction, making it subject to Washington’s sales tax and business & occupation (B&O) tax.

• Increased Costs for Consumers: Self storage units are often used as an extension of the home, often in communities with high-density housing; a tax on self storage rents increases the cost of living and will worsen housing affordability.

• Unfair Burden on Small Businesses: Many small businesses depend on self-storage for affordable space. Taxing these rentals adds unnecessary financial strain, making it more difficult for them to survive.

• Inconsistency and Dangerous Precedent: Self-storage units are real property, not retail services. Historically, real estate leases have not been subject to sales tax. 

  This reclassification could set a dangerous precedent that leads to taxation of other real estate rentals, including residential and commercial leases.

• Negative Impact on the Storage Industry: Increased tax obligations could have negative effects on the value of Washington storage properties, the majority (53%) of which are owned by “Mom and Pops” – single store operators often owned and managed by one or two people.

• Regressive and Unfair Taxation: Many self storage occupants rent when they are between homes or following a death in the family, divorce, or disaster; it is a necessity, not a luxury.

• Legal Concerns: Since 1960, when the Washington Supreme Court decided in the case of "Apt. Operators Ass'n of Seattle, Inc. v. Schumacher," Washington’s Constitution has prohibited tax on rental real estate. By redefining self-storage as a retail transaction, HB 1907/SB 5711 could be seen as an unconstitutional attempt to impose taxes on real property rentals. Legal challenges are likely, and the bill’s legal standing is highly questionable.

LEGAL ANALYSIS | CONSTITUTIONAL ISSUES

Washington State’s Constitutional Protections on Rent Taxation could indeed pose a legal challenge to HB 1907/SB 5711, which seeks to impose a sales tax on self-storage rentals.

1. Potential Violation of the Washington State Constitution (Article VII, Section 1) 

• Washington’s Constitution prohibits taxing rent on real estate. Traditionally, leases and rental agreements for real property (such as apartments, office space, and other forms of real estate) are not subject to sales tax.
• Self-storage units are legally classified as real property, since they are fixed structures rented for occupancy of goods, much like an apartment or a warehouse lease.
• Argument Against HB 1907/SB 5711: The bill reclassifies self-storage rentals as a “retail transaction” rather than a property rental, which could be seen as an unconstitutional attempt to tax rent indirectly.

2.  Legal Precedent and Case Law 

• Historically, Washington courts have upheld exemptions from sales tax for real property rentals.
• If self-storage facilities are considered real estate rentals rather than a service, then the proposed tax could be challenged as unconstitutional under previous interpretations of rental taxation laws.

3.  Inconsistency with Existing Taxation Policy 

• Other types of property rentals (residential, commercial, warehouse) are not subject to sales tax in Washington.
• By singling out self-storage units, HB 1907/SB 5711 creates a special tax on one type of rental, which could be challenged as an arbitrary and discriminatory tax policy.
• Potential Equal Protection Violation: Businesses and consumers could argue that taxing only self-storage rentals while exempting other real property rentals is an unfair and unconstitutional distinction.

4.  Possible Legal Challenges and Injunctions 

• If passed, storage facility operators or trade organizations may file lawsuits challenging HB 1907/SB 5711 under Washington’s constitutional protections on real estate rentals.
• A court could issue an injunction blocking the tax from taking effect, pending litigation.
• If the law is ruled unconstitutional, the state may have to reimburse storage renters for unlawfully collected sales taxes. 

THE SELF STORAGE INDUSTRY PAYS ITS “FAIR SHARE”

Self-storage businesses contribute their fair share to the state budget. As business owners, we already pay significant taxes, including:

• Sales tax, which is collected and remitted on boxes, packing tape, and moving supplies sold at our facilities.
• Retail sales tax and retailing B&O taxes, paid by Portable On Demand Storage operators on monthly portable container rents
• Real Property tax, up to 30% of which go directly to the state with the rest funding local programs.
• Personal property tax, including taxes on semi-permanent storage structures even though they are moveable
• Employment taxes: like any other Washington business, we contribute to Unemployment Insurance, Paid Family Medical Leave, and Workers’ Compensation taxes.

UNCERTAIN LEGAL STANDING

HB 1907/SB 5711 attempts to sidestep Washington’s prohibition on taxing rent by redefining storage unit rentals as “retail sales.” However, if challenged in court, a strong argument exists that this tax is an unconstitutional expansion of sales tax onto real property leases, making its legal standing highly questionable.

Sponsor: Representatives Peterson, Gregerson, Ormsby, Parshley, Pollet, Macri, Hill; Senators Bateman, Alvarado, Nobles, Trudeau

Status HB:       House Finance Committee

Status SB:       Senate Ways & Means Committee

Hearing: Thursday, March 13 at 4:00 p.m. | JACB Room 4

You can find your lawmakers by inputting your home address here.

Senate Member contact information, here

House Member contact information, here