BILL ANALYSIS Ó
AB 711
Page 1
Date of Hearing: April 4, 2011
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
AB 711 (Lara) - As Introduced: February 17, 2011
Majority vote
SUBJECT : Property tax: owner-occupied single-family dwelling:
rebuttable presumption.
SUMMARY : Shifts the burden of proof from a county assessor to a
taxpayer in an assessment appeal hearing involving the
taxpayer's vacation or secondary home. Specifically, this bill :
1)Revises, for purposes of Revenue and Taxation Code (RT&C)
Section 167, the definition of an "owner-occupied single
family dwelling" to mean a single-family dwelling that
satisfies both of the following:
a) The dwelling is the owner's principal place of
residence.
b) The dwelling qualifies for a homeowners' property tax
exemption.
2)Shifts the burden of proof, by revising the definition of
"owner-occupied single-family dwelling," in favor of a county
assessor in any administrative hearing involving the
imposition of a property tax on, or the assessment of, a
taxpayer's or assessee's owner-occupied single-family dwelling
that is a vacation or a secondary home.
EXISTING LAW :
1)Provides for a rebuttable presumption regarding the burden of
proof in favor of a taxpayer in an assessment appeal hearing
involving the imposition of a tax on, or the assessment of, an
owner-occupied single-family dwelling. (R&TC Section 167).
2)Specifies that the homeowner's exemption does not extend to
property that is a vacation or secondary home of the owner.
It also does not apply to a property that is vacant, rented,
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or under construction on the lien date. (R&TC Section 218).
FISCAL EFFECT : According to the State Board of Equalization
(BOE) staff, this bill will have no impact on General Fund (GF)
revenues.
COMMENTS :
1)Author's Statement . The author states that, "Section 167 of
the Revenue and Taxation Code provides that the assessor has
the burden of proof in any administrative hearing on an
owner-occupied single-family dwelling. In 2010, a California
Court of Appeal overturned an interpretation by finding that
an owner of a vacation home should be given the benefit of the
presumption of correctness, and that the assessor had the
burden of proof.
"AB 711 would provide that an owner-occupied single-family
dwelling means a single-family dwelling that is the owner's
principal place of residence and that qualifies for a
homeowners' property tax exemption.
"By making this correction, no property owner is losing the
right to appeal a value. In hearings, both the assessor and
the applicant will present evidence, and the board or hearing
officer will make a determination based on evidence presented.
"AB 711 is not a new tax. "Owner-occupied" was always intended
to protect hardworking Californians who own the home in which
they live and not intended to give those owning multiple
properties protection for every dwelling they own.
"AB 711 corrects and clarifies the meaning of an
"owner-occupied" dwelling for Section 167 of the Revenue and
Taxation Code."
2)The Argument in Support . According to the sponsor of this
bill, AB 711 is needed to correct and clarify that the burden
of proof in favor of the taxpayer in an assessment appeal
hearing should be limited to principal places of residence and
should not apply to vacation homes. The sponsor believes that
this bill is consistent with the original intent of R&TC
Section 167 and states that the traditional interpretation of
the term "owner-occupied single-family dwelling" has been
limited to a taxpayer's principal residence that qualifies for
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a homeowner's or disabled veterans' exemption. Finally, the
sponsor argues that AB 711 is intended "to correct an
oversight in the original language."
3)Background . A taxpayer may protest the assessments of his/her
property by appealing to a local assessment appeals board. An
assessor is generally entitled to the presumption affecting
the burden of proof that he/she has properly performed his/her
duty to assess all properties fairly and on equal basis.
ÝEvidence Code (EC) Section 664; Hunt-Wesson Foods, Inc. v.
County of Alameda (1974) 41 Cal.App.3d 163, 180]. In other
words, the taxpayer has the burden of proving the property was
improperly assessed. ÝTexaco Producing v. County of Kern
(1998) 66 Cal.App.4th 1029, 1046]. Thus, in a hearing before
an assessment appeals board, the taxpayer with the burden of
proof must present his/her evidence first. ÝCal. Code Regs.,
Title 18, Section 313(c)]. However, a county assessor has a
burden of proof in certain types of assessment appeals
hearings that involve (a) the value of owner-occupied
single-family dwellings, (b) penalty assessments, (c) escape
assessments; (d) non-enrollment of a purchase price, and (e)
when the county assessor intends to report a higher assessed
value than the one on the assessment roll. In all of those
five types of assessment appeals hearings, the county assessor
must affirmatively establish, by a preponderance of evidence,
the correctness of his/her opinion of value or other
assessment action.
R&TC Section 167 is one of those statutory exceptions to the
normal burden of proof imposed on the taxpayer. R&TC Section
167 provides that, once the taxpayer or assessee has supplied
all information as required by law to the assessor in an
administrative hearing involving an owner-occupied,
single-family dwelling, the burden of proof shifts to the
assessor. In other words, it creates a rebuttable presumption
that the owner's valuation is correct and the burden is on the
county assessor to overcome the presumption. The application
of this section is limited to assessment appeals involving the
imposition of a tax on, or the assessment of, an
owner-occupied single-family dwelling, or the appeal of an
escape assessment.
R&TC Section 167 was added by SB 223 (Wedworth), Chapter 69,
Statutes of 1976. This Committee's analysis of SB 223 states
that "it can be argued that, since the assessor made the
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determination of value on a particular parcel of property and
that since the assessor has the data upon which such
assessments were made, the assessor should go forward first in
an equalization proceeding and carry the burden of proof.
This would be particularly appropriate regarding assessments
based on comparable sales (which includes most assessments on
homes)." In the BOE letter sent in 1976 to then Governor
Brown by W.W. Dunlop, the BOE Executive Secretary, also sheds
some light on the author's intent in introducing SB 233. It
states that:
"It is our understanding that the author's interest in
the bill stems from an assessment appeals board
hearing in Los Angeles County in which he
appeared for the taxpayer. After hearing his testimony,
the assessor stated
that he would stand on the roll as submitted and the
board ruled for the
assessor. Apparently, it was the opinion of the assessor
and the board that
the author had introduced no evidence to refute the
assessor's value. As a
result of that experience, we understand, the author
felt it was improper for
the assessor to introduce no evidence to support his
value and sought to
require introduction of that evidence."
4)The Recent Development: Farr v. County of Nevada . Recently,
the California Court of Appeal reiterated that, under the
presumption affecting the burden of proof in favor of the
homeowner in a hearing before an assessment appeals board
involving an owner-occupied single-family home, the
homeowner's valuation is presumed correct and the burden is on
the assessor to overcome the presumption. ÝFarr v. County of
Nevada (2010) 187 Cal.App.4th 669]. The term "owner-occupied
single-family dwelling" is not defined in the statute but the
court interpreted that term to include an owner-occupied
vacation or second home, when it held that the Nevada County
Assessment Appeals Board failed to apply the statutory
presumption affecting the burden of proof in favor of the
homeowner of a vacation home.
5)A Rebuttable Presumption Affecting the Burden of Proof. A
presumption is "an assumption of fact that the law requires to
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be made from another fact or group of facts found or otherwise
established in the action." (EC Section 600). A presumption
is not evidence. (EC Section 600).
Generally, there are two distinct kinds of rebuttable
presumptions in California law: presumptions affecting the
burden of producing evidence and presumptions affecting the
burden of proof. ÝEC Section 601; Pellerin v. Kern County
Employees' Retirement Assn. (2006) 145 Cal.App. 4th 1099,
1106]. As explained by the court in Farr v. County of Nevada,
"Ýa] rebuttable presumption affecting the burden of producing
evidence 'is merely a preliminary assumption in the absence of
contrary evidence, i.e., evidence sufficient to sustain a
finding of the nonexistence of the presumed fact." ÝFarr v.
County of Nevada, 187 Cal.App.4th 669, citing Assembly
Committee on Judiciary, com., reprinted at 29B pt. 2 West's
Ann. Evid. Code (1995 ed.) foll. Section 604, p. 59]. In
contrast, a presumption affecting the burden of proof has "a
more substantial impact in determining the outcome of
litigation." (Ibid.). The effect of a presumption affecting
the burden of proof is to impose upon the party against whom
it operates the burden of proving the nonexistence of the
presumed fact. (EC Section 606). In other words, it imposes
"an affirmative obligation to prove it false by a
preponderance of the evidence, unless a different standard of
proof is required by law." (EC Sections 115 and 606; Pellerin
v. Kern County Employees' Retirement Assn., 145 Cal.App.4th
at p.1106). The burden of proof and the burden of producing
evidence initially coincide ÝEC Section 550(b)]; so "it may
fairly be said a presumption affecting the burden of proof
initially places on the same party the burden of producing
evidence." (Farr v. County of Nevada, 187 Cal.App.4th at p.
682). However, while the burden of producing evidence, once
met, may shift between the parties, the burden of proof
remains with the party on which it is placed by law. ÝIbid.;
Tusher v. Garbielsen (1998) 68 Cal.App.4th 131, 145)].
6)Exclusion of Vacation and Secondary Homes . The new definition
of the term "owner-occupied single-family dwelling" proposed
by this bill would exclude vacation and secondary homes and
would be limited only to principal residences that qualify for
the homeowners' property tax exemption. If this bill were to
become law, then in an assessment appeal hearing involving the
assessment of a vacation or secondary home, the property owner
would have the burden of proof that the property was
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improperly assessed and would have to present his/her evidence
first.
REGISTERED SUPPORT / OPPOSITION :
Support
California Assessors' Association
Opposition
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098