BILL ANALYSIS Ó SENATE GOVERNANCE & FINANCE COMMITTEE Senator Lois Wolk, Chair BILL NO: SB 948 HEARING: 5/4/11 AUTHOR: Governance & Finance Committee FISCAL: Yes VERSION: 4/28/11 TAX LEVY: No CONSULTANT: Grinnell PROPERTY TAXATION Changes the property tax collection laws. Background Each year, the former Revenue and Taxation Committee authored a measure to enact several changes to Property Tax Law sponsored by the California Association of County Treasurer-Tax Collectors, who collect property tax payments, execute tax sales, and manage local agencies' money. Many of these measures are technical in nature, and enacting them in separate measures isn't warranted. Although SB 948 may not be germane under a strict interpretation of the single-subject and germaneness rules presented in Californians for an Open Primary v. McPherson (2006), it implements important and necessary changes to property tax laws without taxing legislative resources. Proposed Law Currently, treasurer-tax collectors (TTCs) must provide notice to the right to claim proceeds to the last known parties of interest in a tax sale that exceeds $150. If the treasurer-tax collector cannot obtain the address, he or she must publish notice in a newspaper of general circulation in the county. Senate Bill 948 allows treasurer-tax collectors not to publish the notice in a newspaper of general circulation if the costs of publication exceed the amount of the tax sale's proceeds. Third party agents occasionally seek to recover excess proceeds on behalf of individuals, and submit blanket claims to treasurer-tax collectors with only the name of an individual, but not the source of the proceeds that he or she may be entitled to receive. The agents file the claims SB 948 -- 4/28/11 -- Page 2 hoping to find proceeds that can then be marketed to the individual contingent on a finder's fee, often exceeding 50%. Treasurer-tax collectors are concerned that they would be able to locate these taxpayers without the agents, and could benefit taxpayers by sending proceeds without the finder's fee. Senate Bill 948 requires agents to submit proof of the source of excess proceeds to which the individual is entitled, so that agents that know specific sources of proceeds can claim proceeds unhindered, but those who don't cannot submit blanket claims. Currently, the treasurer-tax collector must publish specified notices in newspapers or three public places in each township. Senate Bill 948 allows a board of supervisors to enact a resolution authorizing the treasurer-tax collector to post these notices on the TTC's regularly -maintained website. The treasurer-tax collector must continue to publish a shortened notice in a newspaper stating that the full notice is available on the TTC's website. Taxpayers file property tax protests with the county clerks, and make payments to treasurer-tax collectors; however, Revenue and Taxation Code §620 states that taxpayers must submit payments and protest claims with the TTC. Senate Bill 948 clarifies that taxpayers file protests with the county clerk, and pay taxes to the treasurer-tax collector. Revenue and Taxation Code §5150.5 requires counties to pay interest to taxpayers when a court allows the taxpayer to recover a penalty previously assessed under paragraphs (1), (2), or (3) of subdivision (a) of Section 830. However, the referenced penalties are in subdivision (c) of Section 830. Senate Bill 948 corrects the cross-reference. State law prohibits assessors from disclosing information and records, unless specifically exempted. Senate Bill 948 allows assessors to disclose information that assists treasurer-tax collectors with tax sales, such as notifying potential parties of interest. The treasurer tax-collector must submit a written request certifying that he or she needs the information to help administer the tax sale law, which cannot include social security numbers. The assessor may charge the treasurer-tax collector for his or her costs, which the treasurer-tax collector must add to the SB 948 -- 4/28/11 -- Page 3 delinquent tax amount. The Government Code allows any county department, officer, or employee that collects taxes, penalties, or other costs to file an application for a "discharge of accountability" whenever the costs of collection exceed the revenue collected. Section 25257, 25258, 25259, and 25259.5 describe the process for county officials to file the application, and were recently updated by the Legislature (SB 857, Committee on Budget and Fiscal Review, 2010). However, corresponding Revenue and Taxation Code §2611.1 still contains language allowing for discharges of accountability which conflicts with the updated Government Code sections. Senate Bill 948 amends the Revenue and Taxation Code section regarding discharges of accountability to require discharges under that section to comply with the updated Government Code sections. When a taxpayer overpays tax by more than $10, the treasurer-tax collector must notify the taxpayer of the overpayment. Senate Bill 948 clarifies that the treasurer-tax collector determines whether an overpayment exists takes place at the time the date and time the payment is received. The measure also states that the tax collector may process a refund without requesting that the taxpayer file a refund claim. Occasionally, taxpayers or their agents make payments on the wrong property. If the taxpayer or his or her agent can convince the treasurer-tax collector by substantial evidence that the payment was intended for another property, the treasurer-tax collector cancels the credit on the unintended property and applies it to the correct property within a specified time period. Treasurer-tax collectors cancel the payment and refund the amount when the taxpayer does not intend the payment to apply to another piece of property. Senate Bill 948 requires the treasurer-tax collector to transfer the payment to the intended property or refund the payment to the taxpayer within 60 days of verifying the mistake, or the date that the payment is not subject to chargeback, dishonor, or reversal. The measure additionally specifies that interest shall only be paid if the treasurer-tax collector does not transfer or refund the payment after that date. Revenue and Taxation Code §5096 provides for that taxed SB 948 -- 4/28/11 -- Page 4 paid before or after delinquency shall be refunded if the payments exceed the equalized value of the property determined by the county board of equalization. Senate Bill 948 changes the reference for the section from the county board of equalization to a recently updated section that requires the county clerk to record changes each month made by the assessment appeals board. The measure also provides that the treasurer-tax collector shall refund payments, as long as the overpayment exceeds $10. If a treasurer-tax collector makes an error in a publication, he or she may correct the error in a supplementary publication lasting at least ten days in the same manner as the original publication. Senate Bill 948 recasts this section to specify that the treasurer-tax collector has 60 days after the original publication to republish. The measure specifies that the republication shall not affect the right of a taxpayer, assesse, or other private party in a material way. Currently, whenever a treasurer-tax collector proposes property for a tax sale, the TTC may remove the parcel upon the recommendation from the county counsel that the removal is in the best interest of the county. The treasurer-tax collector must notify the controller whenever he or she removes a parcel. Senate Bill 948 removes the requirement to notify the Controller. State Revenue Impact No estimate. Comment 1. Purpose of the bill . SB 987 consolidates twelve items that make minor, technical changes to property tax law sponsored by the California Association of County Treasurer-Tax Collectors. The bill improves the administration of property tax laws to help both taxpayers and counties. Consolidating the measures into a single bill negates the need for individual bills to enact each change. Additionally, the measure only contains items with SB 948 -- 4/28/11 -- Page 5 universal agreement; items that are controversial or problematic will be removed from the bill Support and Opposition (4/28/11) Support : California Association of County Treasurer-Tax Collectors Opposition : Unknown.