BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   SB 816|
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                              UNFINISHED BUSINESS


          Bill No:  SB 816
          Author:   Ducheny (D)
          Amended:  8/31/09
          Vote:     21

           
           SENATE REVENUE & TAXATION COMMITTEE  :  7-1, 4/22/09
          AYES:  Wolk, Alquist, Ashburn, Florez, Padilla, Runner,  
            Wiggins
          NOES:  Walters

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8 

           SENATE FLOOR  : 32-2, 5/18/09
          AYES: Alquist, Ashburn, Benoit, Calderon, Cogdill, Corbett,  
            Correa, Cox, Denham, DeSaulnier, Ducheny, Dutton,  
            Hancock, Harman, Huff, Kehoe, Leno, Liu, Lowenthal,  
            Maldonado, Negrete McLeod, Padilla, Pavley, Runner,  
            Simitian, Steinberg, Strickland, Wiggins, Wolk, Wright,  
            Wyland, Yee
          NOES: Aanestad, Walters
          NO VOTE RECORDED: Cedillo, Florez, Hollingsworth, Oropeza,  
            Romero

           ASSEMBLY FLOOR  :  49-27, 9/9/09 - See last page for vote


           SUBJECT :    Property taxation

           SOURCE  :     California Assessors Association


           DIGEST  :    This bill makes changes in the Documentary  
                                                           CONTINUED





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          Transfer Tax law relative to:  (1) city ordinances, (2)  
          assessor records, and (3) change of ownership statements.

           Assembly Amendments  made a clarifying change.

           ANALYSIS  :    Existing law (California Constitution, Article  
          XIIIA, Section 4) prohibits transaction taxes or sales  
          taxes on transfers of real property; however, the Revenue  
          and Taxation Code authorizes counties to approve an  
          ordinance to impose a documentary transfer tax (DTT), which  
          applies to deeds of transfer of realty within that  
          jurisdiction and is based on the value of the transfer.  In  
          counties, the rate is fifty-five cents ($0.55) for each  
          five hundred dollars ($500) of value.  All of California's  
          58 counties apply the tax, which is modeled after the  
          repealed Federal Documentary Stamp Tax.

          Existing law also allows cities to enact ordinances to  
          impose a DTT:

          1.Noncharter cities within a County that impose a DTT may  
            apply its tax at half of the rate of the county and  
            applies as a credit against the county rate.

          2.Charter cities may impose a DTT at a higher rate under  
            the municipal affairs doctrine in the California  
            Constitution (Article XI, Section 5).  If they do so at a  
            higher rate than the non-charter rate, then the city DTT  
            does not serve as a credit against the county tax.  

          Existing law provides several exemptions to the tax,  
          including when any public agency acquires land, land  
          acquired as a result of a plan of reorganization or  
          adjustment such as bankruptcy, and certain transfers in  
          lieu of foreclosure, among others.

          This bill allows DTT ordinances to include an  
          administrative appeal process to resolve disputes.  The  
          measure additionally states that the when this  
          administrative process or a court of law fixes the value of  
          the property for purposes of applying the DTT, that  
          determination does not bind the value for property tax  
          purposes.








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          Existing law provides that any information and records in  
          the Assessor's office are not public documents and shall  
          not be open to public inspection, unless specifically  
          exempted by law.  Exemptions include information for law  
          enforcement agencies, county grand jury, or the Board of  
          Supervisors.

          This bill requires the Assessor to disclose information,  
          furnish abstracts, and permit access to all records to the  
          County Recorder when conducting an investigation to  
          determine whether the documentary transfer tax is imposed.

          Existing law requires the person acquiring ownership or  
          control of a corporation, partnership, limited liability  
          company, or other legal entity to submit a change in  
          ownership statement to the Board of Equalization (BOE),  
          signed under penalty of perjury, listing all the counties  
          in which the firm operates.  If the person fails to file  
          the statement within 45 days of a written request from the  
          BOE, a penalty applies of 10 percent of the taxes  
          applicable to the new base year reflecting the change in  
          ownership or control.  However, the penalty is extinguished  
          if the person files a change in ownership statement within  
          60 days of BOE notification of the penalty.

          This bill provides that the penalty applies if the person  
          acquiring the corporation, partnership, limited liability  
          company, or other legal entity does not file the change of  
          ownership statement within the earlier of 45 days from the  
          BOE request or 45 days from the date in change of control  
          or ownership.  The bill changes two sections of law, the  
          first which applies to changes in control of a firm, the  
          second which applies to changes in ownership.  This bill  
          also deletes the provision requiring the penalty to be  
          extinguished if the person files the statement within 60  
          days of notification of the penalty.

          Existing law also authorizes BOE to recommend to the county  
          board of supervisors that this penalty be abated, if the  
          person or legal entity establishes to the satisfaction of  
          BOE that the failure to file the change in ownership  
          statement within 45 days was due to reasonable cause and  
          not due to willful neglect and the person or legal entity  
          has filed the change in ownership statement and an  







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          application for abatement of the penalty with BOE, as  
          provided.

          This bill authorizes the county board of supervisors to  
          order that this penalty be abated, if the person or legal  
          entity establishes to the satisfaction of the county board  
          of supervisors that the failure to file the change in  
          ownership statement within 45 days was due to reasonable  
          cause and not due to willful neglect and the person or  
          legal entity has filed the change in ownership statement  
          with BOE and an application for abatement of the penalty  
          with the county board of supervisors, as provided. 

          According to the author's office, "SB 816 requires that the  
          existing 10 percent penalty be applied on taxes due for the  
          year when a new business owner fails to file a change in  
          ownership statement with the BOE within 45 days of a change  
          of ownership or control. Under current law, the penalty is  
          only applied after a written request for filing is sent  
          from the BOE.  This has resulted in multi-year delays in  
          reassessments of business properties and losses of hundreds  
          of millions in taxes to State and Local Governments."

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  9/9/09)

          California Assessors' Association (source) 
          Building Owners and Managers Association International
          California Business Properties Association
          California Chamber of Commerce
          California Taxpayers Association
          Commercial Real Estate Development Association
          International Council of Shopping Centers
          League of Women Voters
          Los Angeles County



           ASSEMBLY FLOOR  :  
          AYES: Ammiano, Arambula, Beall, Block, Blumenfield,  
            Brownley, Buchanan, Caballero, Charles Calderon, Carter,  
            Chesbro, Coto, Davis, De La Torre, De Leon, Eng, Evans,  







                                                                SB 816
                                                                Page  
          5

            Feuer, Fong, Fuentes, Furutani, Galgiani, Hall, Hayashi,  
            Hernandez, Hill, Huber, Huffman, Jones, Krekorian, Lieu,  
            Bonnie Lowenthal, Ma, Mendoza, Monning, Nava, John A.  
            Perez, V. Manuel Perez, Portantino, Ruskin, Saldana,  
            Skinner, Solorio, Swanson, Torlakson, Torres, Torrico,  
            Yamada, Bass
          NOES: Adams, Anderson, Bill Berryhill, Tom Berryhill,  
            Conway, Cook, DeVore, Duvall, Emmerson, Fletcher, Fuller,  
            Gaines, Garrick, Gilmore, Hagman, Harkey, Jeffries,  
            Knight, Logue, Miller, Niello, Nielsen, Silva, Smyth,  
            Audra Strickland, Tran, Villines
          NO VOTE RECORDED: Blakeslee, Nestande, Salas, Vacancy


          DLW:nl  9/10/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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