BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 507|
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THIRD READING
Bill No: SB 507
Author: DeSaulnier (D)
Amended: 5/11/11
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-2, 4/27/11
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Fuller, La Malfa
NO VOTE RECORDED: Huff
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Property taxation: change in ownership
statement
SOURCE : Author
DIGEST : This bill increases the penalty for new owners
failing to file a Change in Ownership Statement upon
request from the assessor or the Board of Equalization
(BOE) from $2,500 to $5,000 for property eligible for the
homeowners' exemption, and from $5,000 to $20,000 for
property not eligible for the homeowners' ex-emption. This
bill extends the deadline from 45 days to 90 days for new
owners to file a change of ownership statement with either
the assessor or BOE, and to comply with the request without
penalty. This bill applies to statements law requires new
owners file with assessors for locally-assessed property,
or with BOE, which collects the statement when a legal
entity changes ownership or control.
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ANALYSIS : Assessors revalue property at current, full
market value for property tax purposes whenever it changes
ownership or is newly constructed. Whenever ownership
changes, the new owner must file a Change in Ownership
Statement. However, there is no penalty for failure to
file the statement unless the assessor makes a written
request for the statement and the owner subsequently fails
to file the statement within 45 days. Additionally,
persons who acquire control or ownership of legal entities
that own property must file a change in ownership statement
with BOE, but again, no penalty applies for failing to file
the statement with BOE. BOE then makes a written request
to the person for the statement, and assessors may then
apply the penalty if the person does not respond to the BOE
written request.
The penalty for failing to file a Change in Ownership
Statement after receiving a request from the assessor is 10
percent of the tax, up to a maximum of $2,500, if the
violation was not willful. The county board of supervisors
may abate the penalty due to reasonable cause, provided the
taxpayer filed an application for abatement within 60 days
after the assessor's notification of the penalty.
This bill increases the penalty for new owners failing to
file a Change in Ownership Statement upon request from the
assessor or BOE:
From $2,500 to $5,000 for property eligible for the
homeowners' exemption, and
From $5,000 to $20,000 for property not eligible for the
homeowners' exemption.
This bill extends the deadline from 45 days to 90 days for
new owners to file a change of ownership statement with
either the assessor or BOE, and to comply with the request
without penalty. This bill applies to statements law
requires new owners file with assessors for
locally-assessed property, or with BOE, which collects the
statement when a legal entity changes ownership or control.
This bill specifies to which addresses the assessor may
mail this request or a notice of a penalty. This bill also
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requires this request to identify the real property or
manufactured home for which the statement is required to be
filed, and requires the notice of penalty to identify the
parcel or parcels for which the penalty is assessed.
This bill provides the assessor to abate the penalty if the
new owner notifies the BOE and the assessor within 60 days
of notice of the penalty that the request was based on
erroneous information. This bill provides that the penalty
also applies if the new owner submits an incomplete form
and does not supply missing information upon a second
request.
This bill deems that a change of ownership statement is
filed on the date of the postmark affixed by the United
States Postal Service or the date certified by a bona fide
private courier statement. This bill changes the contents
of the notice to taxpayers on the statement to reflect the
higher penalty amounts, longer deadline, and revised dating
procedures in each section spelling out the contents of the
form (Revenue and Taxation Code Sections 480, 480.1, and
480.2). This bill also states that because this part of
Property Tax Law refers only to county boards of
supervisors but many counties have assessment appeals
boards, then references to boards of supervisors also refer
to assessment appeals boards.
Prior legislation . AB 843 (Eng), 2007-08 Session, and AB
926 (Chu), 2005-06 Session, were both vetoed by Governor
Schwarzenegger. In his veto message of AB 843, the
Governor stated: "This bill would raise the cap on the
penalty for non-willful failures to file a Change in
Ownership Statement (Statement) with the county assessor.
While this measure's provisions are an improvement over AB
926, which I vetoed last year, I am still concerned that
the notification procedures in this measure do not
adequately ensure that
property owners actually receive requests from county
assessors in a timely manner. Slightly different from AB
926, this bill merely provides for an additional 15 days to
respond to requests and expands the number of addresses
where a request may be sent. Thus, this bill continues to
assume that new property owners actually receive such
requests from county assessors in a timely manner. I
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encourage the proponents of this bill and property owners
to develop procedures to ensure requests are appropriately
delivered and received before penalties for failure to
respond are levied."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/16/11)
California Assessors' Association
California State Association of Counties
California Tax Reform Association
ARGUMENTS IN SUPPORT : According to the author, "A
property owner's failure to report changes in ownership,
willful or not, has greatly reduced the ability of county
assessors and the BOE to efficiently process these changes.
It is time to increase the penalty for non-compliance so as
to encourage timely response to requests for information,
should a preliminary change in ownership be incomplete or
should a county assessor or the BOE require additional
information for processing. The purpose of this legislation
is not to generate revenue for assessors' offices; rather
the penalty increase is an attempt to encourage timely
filing of the Change of Ownership Statement (COS).
Taxpayers often view the low penalty as an opportunity to
postpone timely filing of the COS to delay paying
appropriate property taxes. The increase in the penalty is
an attempt to eliminate the financial advantage of late
filing and to facilitate timely payment of property taxes."
AGB:mw 5/17/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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