BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 711 HEARING: 6/29/11
AUTHOR: Lara FISCAL: No
VERSION: 2/17/11 TAX LEVY: No
CONSULTANT: Grinnell
PROPERTY TAX REBUTTABLE PRESUMPTIONS
Limits the burden of proof exception on the assessor only
on principal place of residences.
Background and Existing Law
Section One of Article XIII of the California Constitution
provides that all property is taxable unless explicitly
exempted by the Constitution or federal law. The
Constitution limits the maximum amount of any ad valorem
tax on real property at 1% of full cash value, plus any
locally-authorized bonded indebtedness. Assessors
reappraise property whenever it is purchased, newly
constructed, or when ownership changes. The Constitution
and statute define those terms.
When a taxpayer disagrees with the Assessor regarding the
property's value, he or she must file an appeal with the
county assessment appeals board, which is the Board of
Supervisors in 19 counties, or composed of individuals
selected by the Board in the other 39. After the
assessment appeals board renders a decision, the taxpayer
or the assessor can then appeal to the county board of
supervisors. After that, the taxpayer or the Assessor can
appeal to the Courts.
The Evidence Code presumes that official duties are
regularly performed. Board of Equalization (BOE) Rules
translate the Evidence Code to property tax disputes before
assessment appeals boards by stating that the taxpayer has
the burden to produce evidence showing that the Assessor
did not derive the property's correct value as part of his
or her regular duties. The presumption provides a starting
point for the Board's consideration of the issue in most
cases by requiring the taxpayer to first produce evidence,
after which a further exchange of information and rebutting
AB 711 -- 2/17/11 -- Page 2
of claims between the parties can ensue. If the taxpayer
cannot do so, the assessment appeals board dismisses the
case without the assessor having to provide evidence. This
presumption differs from the presumption on the burden of
proof which places the responsibility on one party to prove
the other's claims false under a specified evidentiary
standard, such as a "preponderance of the evidence," which
generally applies in property tax cases.
While the taxpayer bears the burden of producing evidence
in most property tax disputes, the Revenue and Taxation
Code departs from the general rule by specifying that
notwithstanding any other law, the Assessor bears the
burden of proof regarding the valuation of owner-occupied,
single-family dwelling or the appeal of an escape
assessment when the taxpayer has previously supplied all
required information. The statute does not require that
the property be the taxpayer's principal place of residence
and eligible for the homeowners' exemption for the assessor
to bear the burden of proof in a dispute. The California
Assessors' Association wants to change the law to limit the
exception in the Revenue and Taxation Code from the general
evidentiary rules to only those cases when the property
serves as the taxpayer's principal place of residence and
is eligible for the homeowners' exemption.
Proposed Law
AB 711 limits the properties that trigger the burden of
proof on the assessor in property cases to those
owner-occupied, single-family dwellings that are also the
taxpayer's principal place of residence and eligible for
the homeowners' exemption from property tax.
State Revenue Impact
BOE states that the measure has no direct revenue impact.
Comments
1. Purpose of the bill . According to the author, "Section
167 of the Revenue and Taxation Code provides that the
Assessor has the burden of proof in any administrative
AB 711 -- 2/17/11 -- Page 3
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. If you show me yours . Currently, the Assessor can
merely stand on his or her valuation of non-owner occupied
property, thereby forcing the taxpayer to incur the expense
of commissioning appraisals and studies showing that the
assessor is incorrect. The Assessor does not need to
justify the value unless and until the taxpayer comes forth
with evidence. However, for owner-occupied property, the
situation is different: the Assessor must prove by a
preponderance of the evidence that the property has a
higher value than the taxpayer believes, providing the
taxpayer a significant advantage. According to the BOE,
the Legislature added this taxpayer protection 35 years ago
in response to a case where the Los Angeles County Assessor
stood by his valuation and offered no evidence, and the
assessment appeals board agreed. The taxpayer's
representative, James Q. Wedworth, either was or became a
State Senator that subsequently introduced the bill that
placed the burden of proof on the Assessor for cases
involving single-family dwellings. AB 711 limits the
benefit to only those properties that are eligible for the
homeowners' exemption and the taxpayer's principal place of
residence, thereby denying it for taxpayers' vacation and
second homes. The Committee may wish to consider the
merits of denying these taxpayers such a significant tax
benefit.
AB 711 -- 2/17/11 -- Page 4
3. Paging Dr. Livingstone . Presumptions in the tax world
are generally placed on taxpayers for a very good reason:
tax agencies can't know more about a taxpayer's facts and
circumstance than he or she does. Taxpayers keep their own
books and records, so the taxpayer has possession of the
material necessary to rebut the tax agencies' claim if
needed. In the reverse, tax agencies cannot access the
taxpayer's records to prove the proposed assessment true.
The general presumption in property tax discourages a
taxpayer from filing appeals for all of his or her
properties, without which the taxpayer could force the
assessor to justify his or her value first in every case,
an impossible task given limited public resources. For
those reasons, the current exception is limited only to the
property where a taxpayer hangs his or her hat. AB 711
comports with existing presumptions and the current
exception to ensure that taxpayers have the advantage when
disputing the value of where they live, but cannot
overburden assessors by appealing valuations for other
properties.
4. Farr and away . AB 711 responds to the Third Appellate
Court's decision in Farr v. County of Nevada (Case C061848,
2010.) John Farr, a taxpayer with a vacation home in
Nevada County, disputed the Assessor's valuation of his
property that he had owned for many years but upon which he
recently started constructing a home. The Nevada County
Assessment Appeals Board mistakenly required Farr to
proceed first in the case and show his evidence, then
further erred by stating in its findings of fact and
decision that the board proceeded on the basis that neither
party would gain much advantage from a presumption when
Assessor clearly bears the responsibility to prove by a
preponderance of the evidence. The Court remanded the case
to the Assessment Appeals Board for a new hearing.
Assembly Actions
Assembly Revenue and Taxation: 6-0
Assembly Floor: 48-12
Support and Opposition (6/22/11)
Support : California Assessors' Association
AB 711 -- 2/17/11 -- Page 5
Opposition : California Taxpayers Association