BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2314
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 2314 (Block and Knight)
          As Amended  June 24, 2010
          Majority vote
           
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          |ASSEMBLY:  |71-0 |(April 26,      |SENATE: |35-0 |(July 1, 2010) |
          |           |     |2010)           |        |     |               |
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           Original Committee Reference:    REV. & TAX.  

           SUMMARY  :   Extends the time period for a disabled veteran, who  
          has not yet received a disability rating from the United States  
          Department of Veterans Affairs (USDVA), to file a property tax  
          exemption claim, and deletes a requirement for the disabled  
          veteran to have a "pending" application with the USDVA.  

           The Senate amendments  make nonsubstantive changes to the  
          provisions of this bill.

           EXISTING LAW  :

          1)Exempts from property tax, in whole or in part, the home of a  
            veteran who is totally disabled because of injury or disease  
            incurred in military service, or his/her surviving unmarried  
            spouse. [Article XIII, Section 4, California Constitution;  
            Revenue and Taxation Code (R&TC) Section 205.5].  The disabled  
            veterans' exemption is also available to the surviving spouse  
            of a person who has died as a result of service-connected  
            injuries while on active military duty.  The amount of the  
            exemption depends on the claimant's income.  The basic  
            exemption amount is $100,000, adjusted annually for inflation.  
             For low-income claimants, the exemption amount is $150,000,  
            adjusted annually for inflation.  For the 2010-11 fiscal year,  
            the disabled veterans' exemption amount will be $172,592 of  
            assessed value for those with a household income below $51,699  
            (the 'low-income' exemption), and $115,060 for all other  
            disabled veterans (the 'basic' exemption).  

          2)Defines a "totally disabled veteran" as a veteran who has a  
            disability rating from the USDVA or the military service from  
            which the veteran was discharged at 100%, or has a disability  
            compensation rating at 100% because he/she is unable to secure  
            or follow a substantially gainful occupation.  








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          3)Requires a disabled veteran to file a claim with the local  
            county assessor to receive the exemption.  To receive the  
            basic exemption, a claimant need only file once.  To receive  
            the larger low-income exemption, the claimant must file a  
            claim each year to verify income eligibility.  The annual  
            filing period is between January 1 and February 15.  

          4)Specifies that, if a claim is filed after the deadline, the  
            exemption can still be obtained at a reduced level (either 90%  
            or 85% of the exemption amount) as outlined in R&TC Section  
            276.  However, an exception to this "partial exemption" rule  
            is allowed in the case of late-filed claims where the USDVA  
            has not finished processing the veterans' disability rating  
            certification.  If a person files a late claim due to a  
            pending disability rating from the USDVA, the full amount of  
            the exemption will be granted retroactively, effective on the  
            date of a disability, but the claim must be filed no later  
            than 30 days after receiving a disability rating letter from  
            the USDVA, or before the next following lien date (January 1).  
             

           AS PASSED BY THE ASSEMBLY  , this bill:  

          1)Extended from 30 days to 90 days the time period during which  
            a disabled veteran must file a property tax exemption claim to  
            receive the full exemption amount retroactively to the  
            effective date of disability, where the rating letter issued  
            by the USDVA was not timely. 

          2)Deleted a requirement that a disabled veteran have had an  
            "application pending" with the USDVA.  

           FISCAL EFFECT  :  The State Board of Equalization (BOE) staff  
          estimates that this bill will have a negligible revenue impact.   


           COMMENTS  :  The Author's Statement.  The author states that,  
          veterans are "designated 100% disabled if they have made  
          tremendous sacrifices in answering the call of duty resulting in  
          extreme physical and/or mental challenges.  At the state level,  
          we have determined that this designation should trigger certain  
          benefits in recognition of their honorable service.  One of  
          those is a property tax exemption on their home.  In providing  
          this benefit, we need to make sure that disabled veterans have  








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          the opportunity to properly take advantage of this program.   
          This bill will remove unnecessary impediments identified by the  
          Board of Equalization for disabled veterans' to receive a  
          property tax exemption retroactively on their home to the  
          effective date of the disability when they are belatedly granted  
          the 100% disability rating from the US Department of Veterans  
          Administration."

          The Bill's Purpose.  According to BOE, the sponsor of this bill,  
          the purpose of this bill is to make it easier for disabled  
          veterans to receive the maximum amount of the property tax  
          exemption on their home on a retroactive basis.   

          Background.  Under existing law, a veteran must receive a  
          disability certification from either the USDVA or the military  
          service, from which the veteran was discharged, in order to  
          qualify for the property tax exemption.  In addition, the  
          eligible veteran must file a timely claim with the county  
          assessor by the specified deadlines to receive the full amount  
          of the property tax exemption.  However, it may take years to  
          receive a final USDVA disability rating certification,  
          especially, if the veteran appeals the initial disability  
          rating.  In 2000, the law was changed to allow disabled veterans  
          to receive the maximum amount of the property tax exemption  
          retroactively, once they receive a qualifying disability rating.  
          [SB 1362 (Poochigian), Chapter 1085, Statutes of 2000].   The  
          effective date of the exemption in those cases would be the same  
          as the effective date of the disability, as determined by the  
          USDVA or the military service.  The claim, however, must be  
          filed within 30 days after receiving a disability rating letter  
          from the USDVA, or before the next following lien date (January  
          1), whichever is later. [SB 2092 (Senate Revenue and Taxation  
          Committee), Chapter 775, Statutes of 2002].  Thus, a veteran who  
          receives a disability rating certification in early January has  
          almost a full year to file the claim, whereas a disabled veteran  
          who receives the certification on December 31st has only 30 days  
          to file the claim. 

          The 30-day Deadline.  This bill extends the existing 30-day  
          deadline to 90 days for a disabled veteran to file a property  
          tax exemption claim.  The author and the sponsor state that  
          disabled veterans, after receiving the letter of disability  
          certification, need some time to sort through various documents  
          and materials to learn of the available veteran benefits and  
          programs.  Some veterans become aware of the exemption after the  








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          30-day filing deadline has passed.   In such a case, the  
          veterans would still be eligible for an 85% partial exemption  
          but not a full exemption.  If the filing deadline proposed by  
          this bill is extended to 90 days, a disabled veteran would  
          receive an extra $172, in the case of a basic exemption, and  
          $259, in the case of a low-income exemption.  

          The "Pending" Application Requirement.  This bill would  
          eliminate the "pending" application requirement to allow more  
          disabled veterans to receive the exemption retroactively to the  
          effective date of the disability.  Some administrators request  
          proof or substantiation that an application had been pending.   
          It is an unnecessary condition that could easily disqualify a  
          disabled veteran from receiving the full exemption amount.  As  
          long as the veteran obtains a final disability certification  
          letter, there is no reason for the "pending application"  
          requirement to remain in the statute.  Whether or not the  
          veteran had an application pending with the USDVA is irrelevant  
          for the final eligibility determination process and simply  
          superfluous, if not detrimental to the applicants.  


           Analysis Prepared by  :  Oksana Jaffe / REV. & TAX. / (916)  
          319-2098 


                                                               FN:  0005071