BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 507|
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UNFINISHED BUSINESS
Bill No: SB 507
Author: DeSaulnier (D)
Amended: 7/1/11
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
SENATE FLOOR : 21-13, 5/31/11
AYES: Alquist, Calderon, Corbett, De León, DeSaulnier,
Evans, Hancock, Hernandez, Kehoe, Leno, Lieu, Liu,
Lowenthal, Padilla, Pavley, Price, Simitian, Steinberg,
Vargas, Wolk, Yee
NOES: Anderson, Blakeslee, Cannella, Correa, Dutton,
Emmerson, Fuller, Gaines, Harman, Runner, Strickland,
Walters, Wyland
NO VOTE RECORDED: Berryhill, Huff, La Malfa, Negrete
McLeod, Rubio, Wright
ASSEMBLY FLOOR : 47-28, 8/29/11 - See last page for vote
SUBJECT : Property taxation: change in ownership
statement
SOURCE : California Assessors Association
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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.
Assembly Amendments (1) authorize the county board of
equalization or assessment appeals board, instead of the
county board of supervisors to order the penalty abated,
and (2) make clarifying changes.
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 (COS) 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 extends from 45 days to 90 days the deadline for
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new owners of real property and certain legal entities to
submit a change-in-ownership or a change-in-control
statement and increases the penalty for failure to file a
change-in-ownership statement in the case of real property
transfers that must be reported to the local county
assessor. Specifically, this bill:
1. Extends from 45 days to 90 days the time period to file:
A. A COS required to be filed by a new property owner
for real property transfers that must be reported to
the local county assessor;
B. A Legal Entity Ownership Program (LEOP) COS or a
change-in-control statement required to be mailed by
a legal entity to the State Board of Equalization
(BOE); or,
C. A response to a BOE written request for a legal
entity to file a LEOP COS or change in control
statement.
2. Increases the maximum penalty for failure by a new
property owner to timely file a COS, upon request from
the assessor from:
A. $2,500 to $5,000 for all property eligible for the
homeowners' exemption; and
B. $2,500 to $20,000 for property not eligible for
the homeowners' exemption.
3. Clarifies that the penalty imposed on a legal entity for
failure to file a LEOP COS with the BOE is to be levied
by the assessor.
4. Requires the assessor to identify, in his/her written
request for a COS, 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.
5. Clarifies that the penalty applies if either the new
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owner or a legal entity submits an incomplete form and
does not supply missing information upon a second
request from the assessor or BOE, whichever is
applicable.
6. Provides that a penalty imposed on a legal entity for
failure to file a LEOP COS may be abated by the county
assessor responsible for assessing the penalty, if the
entity, within 60 days of the notice of penalty,
notifies both the BOE and the assessor that the request
was based on erroneous information. Authorizes the
county BOE or assessment appeals board, instead of the
county board of supervisors, to order the penalty
abated, as provided, and makes related changes.
7. Specifies all of the following:
A. The address to which the assessor must mail
his/her request for a COS statement or a notice of a
penalty for failure to file such statement.
B. That the 90-day period, within which a new owner
is required to file the statement, begins with the
date of the mailing, rather than the date of the
written request.
C. That the postmark date will serve as the date on
which the property owner is deemed to have filed the
statement.
8. Imposes a state-mandated local program and provides
that, if the Commission on State Mandates determines
that this bill contains costs mandated by the state,
reimbursement for those costs shall be made as
specified.
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
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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
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 8/29/11)
California Assessors' Association (source)
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."
ASSEMBLY FLOOR : 47-28, 8/29/11
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
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Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo,
Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes,
Furutani, Gatto, Gordon, Hayashi, Roger Hernández, Hill,
Hueso, Huffman, Lara, Bonnie Lowenthal, Ma, Mendoza,
Mitchell, Monning, Pan, Perea, Portantino, Skinner,
Solorio, Swanson, Wieckowski, Williams, Yamada, John A.
Pérez
NOES: Achadjian, Bill Berryhill, Conway, Cook, Donnelly,
Fletcher, Beth Gaines, Galgiani, Garrick, Grove,
Halderman, Harkey, Huber, Jeffries, Jones, Knight, Logue,
Mansoor, Miller, Morrell, Nestande, Nielsen, Norby,
Olsen, Silva, Smyth, Valadao, Wagner
NO VOTE RECORDED: Gorell, Hagman, Hall, V. Manuel Pérez,
Torres
AGB:mw 8/30/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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