BILL ANALYSIS Ó
AB 563
Page 1
ASSEMBLY THIRD READING
AB 563 (Furutani)
As Amended May 11, 2011
Majority vote
REVENUE & TAXATION 6-3 APPROPRIATIONS 12-5
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|Ayes:|Perea, Beall, Charles |Ayes:|Fuentes, Blumenfield, |
| |Calderon, Cedillo, Alejo, | |Bradford, Charles |
| |Gordon | |Calderon, Campos, Davis, |
| | | |Gatto, Hall, Hill, Lara, |
| | | |Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Donnelly, Harkey, |Nays:|Harkey, Donnelly, |
| |Nestande | |Nielsen, Norby, Wagner |
| | | | |
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SUMMARY : Authorizes designated city employees to obtain or
access otherwise confidential information from the county
assessor when the city is conducting an investigation to
determine whether the documentary transfer tax (DTT) should be
imposed. Specifically, this bill :
1)Requires a county assessor to disclose information, furnish
abstracts, and permit access to all records in his/her office
to designated employees of a city's finance office that is
conducting an investigation to determine whether a DTT should
be imposed for an unrecorded change in control or ownership of
property.
2)Provides that, in order to receive otherwise confidential
information, a designated employee of a city's finance office
must submit a written request to the assessor certifying,
under penalty of perjury, that he/she needs the information to
assist with the preparation and enforcement of a DTT and that
confidential information will not become public record and
will not be open to public inspection.
3)Prohibits county assessors from disclosing social security
numbers.
4)Imposes a state-mandated local program and states that, if the
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Commission on State Mandates determines that this bill
contains mandates by the state, reimbursement to local
agencies and school districts for the costs shall be made
pursuant to the statutory provisions.
EXISTING LAW :
1)Requires assessors to keep certain information confidential
ŬRevenue and Taxation Code (R&TC) Section 408(a)].
2)Provides an exception to the general rule of confidentiality
for certain governmental agencies or representatives.
Requires the county assessor to disclose information, furnish
abstracts, or permit access to all records in his/her office
to law enforcement agencies, the county grand jury, and other
specified entities, including the county recorder in the case
of an investigation to determine whether a DTT is imposed
ŬR&TC Section 408(b)].
3)Allows charter cities to levy a DTT pursuant to a local
ordinance and their authority. The locally imposed DTT is
generally collected by the county recorder ŬR&TC Part 6.7 of
Division 2 (Sections 11901-11935)].
FISCAL EFFECT : According to the Assembly Appropriations
Committee, mandated state reimbursement is unlikely, and the
records may be made available at county offices during the
normal course of business for minimal cost.
COMMENTS :
The author's statement . The author states that, "AB 563 would
allow for information sharing between County Assessor's Offices'
and cities to identify change of ownership legal entity
transfers and other real property transfers that may not be
currently captured. Enactment of the proposed legislation is
estimated to result in improved and increased collection of the
Documentary Transfer Tax at a time of fiscal crisis for local
governments."
DTT . The California Constitution (Article XIIIA, Section 4)
prohibits transaction taxes or sales taxes on transfers of real
property. However, the DTT law, enacted in 1967, allows cities
and counties to enact, by ordinance, taxes on documents that
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serve to transfer real property. The DTT applies to deeds of
transfer of realty within the jurisdiction that imposes a DTT
and is based on the value of the transfer. The tax may be used
for general or specific purposes, although all DTTs levied thus
far are general taxes. The tax is administered by county
recorders who cannot, by law, record the property transfer until
the tax is paid. Counties collect the tax but remit the city
tax to the appropriate city.
All of California's 58 counties impose the tax, which is modeled
after the repealed Federal Documentary Stamp Tax. Hundreds of
California cities also levy the tax, ranging from the general
law city rate of $.55 for each $500 of value up to $7.50 in the
City of Oakland. Non-charter cities within a county that impose
a DTT may impose its tax at half of the rate of the county,
which works as a credit against the county rate. 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.
The courts have consistently held that a DTT is an excise tax
for the privilege of exercising one of the incidents of property
ownership, its conveyance. It is not a property tax because it
is imposed solely on the privilege of disposing of one's
property and realizing its actual value. Fielder v. City of Los
Angeles, 14 Cal.App.4th 137; Fisher v. Alameda County, 20 Cal.
App. 4th 120.
Access to records in the county assessor's office . Existing law
provides that any information and records in the county
assessor's office are not public documents and shall not be open
to public inspection, unless specifically exempted by law.
Exemptions include sharing of information with law enforcement
agencies, county grand jury, or the board of supervisors. In
2009, the list of enumerated exemptions was expanded to allow a
county recorder access to all records in the assessor's office
for purposes of determining whether a DTT is due ŬR&TC Section
408(b)]. The DTT is administered at the local level by the
county recorder, so providing access to assessor information
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helps recorders to determine whether the DTT applies to certain
changes of ownership.
AB 563 (Furutani) would further amend R&TC Section 408(b) to add
certain designated employees of a city's finance office to the
list of agencies that may have access to all records in the
assessor's office for purposes of determining whether a DTT is
due. AB 563 is sponsored by the City of Los Angeles, a charter
city. According to the State Board of Equalization's (BOE)
analysis of this bill, the City of Los Angeles has an agreement
with the Los Angeles County for the collection of taxes between
the City and County. Apparently, the agreement provides that,
if the County is unable to, or does not, collect the DTT when
the instrument or writing is presented for recordation, the City
has the responsibility to collect the DTT. In order to
determine whether the DTT is due, the City may have to conduct
an investigation and/or perform audits of city revenues related
to DTTs, which may require access to assessor's records.
Currently, both California and many cities face difficult budget
times. AB 563 (Furutani) aims to increase taxpayer compliance
at the local level, thereby generating more revenue to help
close budget gaps, consistent with the state's own efforts to
close the tax gap.
Confidentiality . Generally, critics of information sharing
between government entities are concerned about possible
unlawful disclosure or inspection of confidential tax
information. Thus, often, provisions allowing information
sharing contain safeguards against, and penalties for, unlawful
disclosure of confidential taxpayers' information. For example,
an existing information sharing program between the Franchise
Tax Board (FTB) and cities provides for criminal sanctions for
unlawful disclosure or inspection of such information, which
supplements FTB's institutional commitment to taxpayer
information confidentiality. The information possessed by the
county assessor's office is considerably less sensitive than the
information found on income tax returns. Nonetheless, this bill
includes certain safeguards to ensure that the information
acquired by city's employees from the county assessor will not
become public record and will not be open to public inspection,
provided that it is not public record and is not open to public
inspection when in the assessor's possession.
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Similar legislation .
SB 816 (Ducheny), Chapter 622, Statutes of 2009, made changes in
the DTT law relative to city ordinances, assessor records, and
change of ownership statements, including allowing county
recorders to assess the county assessors' records when
investigating if a DTT is due.
SB 1146 (Cedillo), Chapter 345, Statutes of 2008, extended the
sunset date for the program that allows the FTB to share
information with tax officials of any city in California until
December 31, 2014.
SB 1374 (Cedillo), Chapter 513, Statutes of 2006, extended the
program that allows the FTB to provide information to tax
officials of any city in California until December 31, 2011.
AB 63 (Cedillo), Chapter 915, Statutes of 2001, extended the
circumstances under which the FTB may disclose tax information
to tax officials of any city, until December 31, 2008.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098 FN:
0001027