BILL ANALYSIS Ó
AB 820
Page 1
ASSEMBLY THIRD READING
AB 820 (Gordon)
As Introduced February 17, 2011
Majority vote
REVENUE & TAXATION 5-1
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|Ayes:|Perea, Beall, Charles | | |
| |Calderon, Fuentes, Gordon | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Donnelly | | |
| | | | |
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SUMMARY : Removes the $1 limitation on the amount of fee that a
county assessor, tax collector or auditor may charge for the
preparation of a certificate-of-payment showing taxes paid.
Specifically, this bill :
1)Requires a county assessor, tax collector, and auditor to
charge and collect a fee to cover the actual and reasonable
costs incurred in preparing a certificate-of-payment showing
taxes paid, instead of the existing $1 fee.
2)Provides that the amount of the fee shall be established by
the board of supervisors of the county and shall be subject to
the requirements of Chapter 12.5 (commencing with Section
54985) of Part 1 of Division 2 of Title 5 of the Government
Code (GC).
EXISTING LAW provides that the assessor, tax collector, and
auditor shall charge and collect a $1 fee for the preparation of
a certified copy of a redemption certificate, a certified copy
of an installment redemption receipt, a certificate-of-payment
showing tax paid, and a certified copy of an assessment as
entered on the assessment roll.
FISCAL EFFECT : Unknown
COMMENTS :
Author's Statement . The author states that, "This fee has not
been adjusted in over 60 years. Obviously, the cost of
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providing this service has increased considerably over the
years, and it is critical that local governments be given the
flexibility to charge a fee that more accurately reflects the
cost of providing this service. The process of setting local
fees for cost-recovery, as described in Government Code 54986,
is a proven system that allows for local variance and inflation
over time."
Arguments in Support . The proponents of this bill argue that
the $1 limit "has become a challenge to ensuring cost-recovery
for more complicated certificates." They state that, "while
most certificates do only require a modest amount of time and
resources to produce, in some cases, producing that certificate
can take several hours of work and research." In addition, the
proponents assert that, in these difficult financial times,
"cost recovery for work provided to an individual taxpayer is
absolutely critical to ensuring that the overall level of
service to all taxpayers in the county is not diminished," and
charging actual costs "will reduce pressure on county finances,
and specifically on tax collectors' offices, which provide many
services to California's taxpayers."
Background . Under existing law, a county tax collector is
allowed to charge only $1 for the preparation of a
certificate-of-payment showing taxes paid. The $1 amount was
originally set in 1947 and has never been modified in the last
75 years. According to the California Association of County
Treasurers and Tax Collectors, most requests for a
certificate-of-payment are for the current year and could be
easily and quickly provided. However, many requests - such as
those for certificates for a probate court or subdivision maps,
or from previous years - require additional time and research,
so that the average cost to prepare certificates in more complex
cases is far greater than $1 currently permitted.
What Does This Bill Do ? This bill repeals the $1 limitation
and, instead, requires a county assessor, tax collector, and
auditor to charge and collect a fee to cover the "actual and
reasonable costs" incurred in preparing a certificate-of-payment
showing taxes paid. Under this bill, a county board of
supervisors must determine what constitutes the "actual and
reasonable costs" and establish the fee amount, as provided by
GC Section 54986.
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"Actual and Reasonable" Costs . GC Section 54986 prescribes the
rules that the board of supervisors must follow before approving
any new fee or increasing an existing fee. Thus, the board must
hold at least one public meeting, and at least 14 days prior to
the meeting, a written notice is required to be mailed to
interested parties who have filed for written notifications.
Finally, at least 10 days prior to the meeting, the data
indicating the amount of the cost, or estimated cost, must be
made available to the public.
Under existing law, the majority of all fees and charges imposed
by a treasurer-tax collector in connection with the
administration of property taxes are established and approved by
the board of supervisors under GC Section 54985, which allows
the treasurer-tax collector to recover actual costs.
Specifically, a county board of supervisors has the authority to
set the amount of a fee or charge that is authorized to be
levied by another provision of law. The amount of the fee or
charge must be the amount reasonably necessary to recover the
cost of providing any product or service or the cost of
enforcing any regulation. The fee or charge may be the average
cost and can include direct and indirect costs. The board of
supervisors may request the county auditor to conduct a study to
determine whether the fee or charge is reasonable. A study
typically involves a review of the methodology used in
calculating the estimated costs. Many counties have the auditor
conduct a study prior to presenting the amount of a new fee or
an increase of an existing fee to the board of supervisors for
approval.
Unlike the majority of those fees and charges, the fee imposed
for the preparation of a certificate-of-payment showing taxes
paid is set at $1 and, consequently, does not allow a tax
collector to recover the actual costs incurred.
Proposition 26 . On November 2, 2010, the voters approved
Proposition 26, an initiative constitutional amendment, that
expanded the definition of a "tax" to include many state and
local government assessments previously classified as "fees."
Among other provisions, Proposition 26 amended Article XIII C,
Section 1 of the California Constitution to define the term
"tax" as any levy, charge, or exaction of any kind imposed by a
local government, except certain enumerated fees. One type of
those enumerated exactions is "a charge imposed for a specific
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government service or product provided directly to the payor
that is not provided to those not charged, and which does not
exceed the reasonable costs to the local government of providing
the service or product."
The fee imposed for a certificate-of-payment showing taxes paid
is one of those fees that are charged for the service provided
by a local government. As such, it must comply with the
requirements of Proposition 26. The actual and reasonable costs
of providing this service may vary from county to county and may
very well be more than $1. By authorizing a local board of
supervisors to set the fee, within the confines of both GC
Section 54986 and Proposition 26, this bill would allow local
governments the flexibility needed to recover the actual costs
incurred by them in providing the service of preparing the
certificates-of-payment.
Related Legislation . AB 902 (Alejo), introduced in the current
legislative session, would allow a tax collector to recover the
actual and reasonable costs incurred in administering a sale of
tax-defaulted property. AB 902 was heard by the Revenue and
Taxation Committee and passed out on a five to two vote on April
25, 2011.
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098
FN: 0000320