BILL ANALYSIS SENATE REVENUE & TAXATION COMMITTEE Senator Lois Wolk, Chair AB 2314 - Block Introduced: February 19, 2010 Hearing: June 9, 2010 Fiscal: Yes SUMMARY: Makes Two Changes to Eligibility Criteria for Taxpayers to Apply for Cancellation or Taxes and Refunds when Filing a Late Disabled Veterans' Exemption Claim. EXISTING LAW (California Constitution) allows the Legislature to partially or wholly exempt from property taxes the value of a disabled veteran's home if the veteran has lost one or more limbs, is totally blind, or is totally disabled, as a result of a service-connected injury. The Constitution allows taxpayers to apply the disabled veterans' exemption, currently provided by statute at the inflation adjusted value of either $115,060 or $172,592 depending on the taxpayer's income, but not in addition to the veterans or homeowners' exemption. The Constitution additionally allows the exemption for unmarried surviving spouses of persons who die while on active duty, or subsequently die as a result of service-connected injuries. EXISTING LAW provides the specific statutory exemption amounts, and requires taxpayers eligible for the exemption to file a claim for the exemption once with the Assessor. Taxpayers who file claims after February 15th obtain partial exemptions of either 85% or 90% for the first year, then the full exemption in subsequent years; however, taxpayers may obtain a cancellation of taxes and a refund AB 2314 - Block Page 2 for a claim filed after that date when the U.S. Department of Veterans Affairs (USDVA) has not finished processing the veteran's disability rating certification. Taxpayers receive refunds when they submit an appropriate claim with the disability rating letter from the USDVA the later of 30 days after receiving the letter or on or before the next lien date (January 1st), giving taxpayers waiting for the certification some leeway to obtain the full exemption. Additionally, the law also requires the taxpayer to have an application pending with the USDVA when filing the exemption. THIS BILL extends from 30 days to 90 days the deadline for taxpayers applying for the disabled veterans' exemption to submit the USDVA rating letter. The measure also repeals the requirement that the taxpayer have an application pending with the USDVA to be eligible for tax cancellation and subsequent refund. FISCAL EFFECT: According to the BOE, AB 2314 does not impact revenues. COMMENTS: A. Purpose of the Bill The author provides the following statement: This bill removes unnecessary impediments to receiving the disabled veterans' property tax exemption retroactively which the Board of Equalization has identified and would assist disabled veterans in getting full retroactive property tax exemptions on their home should they become eligible for the exemption at a future date. AB 2314 - Block Page 2 A disabled veterans' exemption is available to persons with a 100% disability rating from the USDVA. (The exemption is also available to surviving spouses of persons killed in active duty.) The exemption is up to $175,592 for those with household incomes below $51,669 and applies to the principal place of residence. It can take a number of years to receive a disability rating from the USDVA, particularly if the veteran appeals the initial disability rating. In 2000, legislation was enacted to allow disabled veterans to receive the full amount of the exemption retroactively once they received a qualifying disability rating with a back dated effective date - but they were only given 30 days to file the claim. Thirty days will not always be enough time since there are a variety of materials as well as various programs and benefits that disabled veterans' and their families must sort through after receiving their disability rating which can be overwhelming. This bill would give disabled veterans' more time (up to 90 days) to file for the property tax exemption for which they become newly qualified. This bill would also eliminate references to having a pending application with the USDVA which may allow more disabled veterans to receive the exemption retroactively to the effective date of disability. In some instances, there may not have necessarily been a pending application and in others tax administrators have requested proof of the pending application which was not easy to obtain. This is an unnecessary condition and counter to the intent to provide any subsequently eligible disabled veteran the full amount of the exemption retroactively. Support and Opposition Support:Board of Equalization (sponsor) AB 2314 - Block Page 2 Oppose: None received. --------------------------------- Consultant: Colin Grinnell