BILL ANALYSIS Ó AB 2643 Page 1 ASSEMBLY THIRD READING AB 2643 (Ma) As Amended May 29, 2012 Majority vote LOCAL GOVERNMENT 8-0 REVENUE & TAXATION 7-0 ----------------------------------------------------------------- |Ayes:|Smyth, Alejo, Bradford, |Ayes:|Perea, Harkey, Beall, | | |Campos, Davis, Gordon, | |Cedillo, Wagner, Gordon, | | |Hueso, Norby | |Nestande | ----------------------------------------------------------------- SUMMARY : Makes several changes to the statutes related to property tax collection. Specifically, this bill : 1)Deletes the exception for the return of replicated property tax payments, for purposes of allowing the tax collector to apply any refund due to a taxpayer, or the taxpayer's agent, to any delinquent taxes due for the same property for which the same taxpayer, or his or her agent, is liable, thereby applying the provisions authorizing the tax collector to apply any refund to any delinquent taxes. 2)Limits penalty relief, for cases in which a taxpayer has failed to pay taxes on an assessment that is the subject of a pending informal review due to a decline in value as a result of damage, destruction, depreciation, obsolescence, removal of property, or other factors causing a decline in value, to the difference between the county assessor's final determination of value and the value on the assessment roll for the fiscal year covered by the application. 3)Restricts the penalty relief specified in 3) above to those properties upon which an application for an informal review is pending before the county assessor on the effective date of the bill's implementation, or in situations where those applications for an informal review are filed with the county board after the date of the bill's implementation. 4)Specifies for the penalty relief for any taxpayer that has paid at least 80% of the amount of tax finally determined due by the county assessor within 30 days of filing an application for reassessment, that the tax collector must accept payment AB 2643 Page 2 of the balance of the tax due without penalties or interest. 5)Requires the county tax collector to notify all taxpayers that receive a tax bill of the provisions of the bill related to penalty relief. 6)Provides that the provisions of the bill related to penalty relief may only become operative if the board of supervisors of a county, with the approval of the county's tax collector and the county's auditor, adopts a resolution or ordinance approving this section. 7)Extends, for purposes of calculating the interest on property tax refunds, the time period the county treasurer has to advise the State Controller of the county pool apportioned rate and of computations made in deriving that rate from 60 to 90 days. EXISTING LAW : 1)Requires, when the amount of property taxes paid exceeds the amount due by more than $10, the tax collector to send notice of the overpayment to the taxpayer, and provides that the notice must be mailed to the taxpayer's last known address and state the amount of overpayment and that a refund claim may be filed, as specified. 2)Allows the tax collector to apply any refund due a taxpayer, or the taxpayer's agent, to any delinquent taxes due on the same property for which the same taxpayer or his or her agent is liable, except as specified for the return of replicated property tax payments. 3)Limits, in the case in which a taxpayer has failed to pay taxes on an assessment that is the subject of a pending assessment appeal, as provided, the amount of penalty relief to the difference between the final determination of value by the county board, as defined, and the value on the assessment roll for the fiscal year covered by the application. 4)Requires the county board to provide a specified notice to taxpayers impacted by the penalty provisions. AB 2643 Page 3 5)Requires the payment of interest on property tax refunds at the greater of 3% per annum or the county pool apportioned rate. 6)Requires the county treasurer to advise the State Controller of the county pool apportioned rate and of computations made in deriving that rate, no later than 60 days after the end of that fiscal year. FISCAL EFFECT : None COMMENTS : This bill is sponsored by the CACTTC and makes several changes to the laws related to property tax collection. The bill extends the time county treasurers have to calculate the pool rate and report it to the State Controller from 60 days to 90 days after the end of the fiscal year. Current law requires the payment of interest on property tax refunds at the greater of 3% per annum or the county pool apportioned rate. Additionally, the bill limits penalty relief, for cases in which a taxpayer has failed to pay taxes on an assessment that is the subject of a pending informal review due to a decline in value as a result of the damage, destruction, depreciation, obsolescence, removal of property, or other facts causing a decline in value, to the difference between the county assessor's final determination of value and the value on the assessment roll for that fiscal year. The bill provides that penalty relief only applies to those properties for which an application for an informal review is pending before the county assessor on or after the effective date of the bill's implementation. Current law limits penalty relief, for cases in which a taxpayer has failed to pay taxes on an assessment that is the subject of a pending assessment appeal, to the difference between the county board of supervisor's final determination of value and the value on the assessment roll for that fiscal year. Current law requires the county board of supervisors to provide mailed notice to each taxpayer upon an application for reduction in assessment with the county board if that taxpayer will be impacted by the penalty provisions, and also requires the board of supervisors, with the approval of the county's tax collector and auditor, to adopt an ordinance that approves this section of law dealing with limiting penalty relief. The penalty under these provisions is 10% of the tax due. AB 2643 Page 4 Under current law, the penalty calculations are different depending upon whether the assessor or the assessment appeals board lowers the value. This bill creates consistency in the penalty calculations by making it the same for both types of valuation decreases. The sponsor indicates that this provision will remove the incentive for taxpayers to pay tax bills late when a value reduction is pending from the assessor. Amendments taken in the Assembly Revenue and Taxation Committee include the 80% safe harbor rule and also require the county assessor to notify taxpayers of the limited penalty relief upon filing an application for an information review, and give the county board of supervisors the authority to opt in to the penalty relief provisions of the bill, with the approval of the county's tax collector and the county's auditor. Support arguments: Supporters argue that this bill clarifies the statutes related to property tax collection and overpayment, penalty relief, and gives county treasurers a longer period of time to calculate the pool rate and report it to the State Controller. Opposition arguments: None on file. Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958 FN: 0003754