BILL ANALYSIS Ó SB 948 Page 1 Date of Hearing: June 27, 2011 ASSEMBLY COMMITTEE ON REVENUE AND TAXATION Henry T. Perea, Chair SB 948 (Committee on Governance and Finance) - As Amended: June 7, 2011 Majority vote. Fiscal committee. SENATE VOTE : 39-0 SUBJECT : Property taxation. SUMMARY : Makes several technical changes to the property tax law relating to collection of tax. Specifically, this bill : 1)Requires a local county assessor to provide to the tax collector, upon written request from the tax collector, certain confidential information for the preparation and enforcement of tax sales, as specified. Specifies that this information will remain confidential, not subject to public inspection, and requires the tax collector to reimburse the assessor for the actual and reasonable costs incurred by the assessor in providing this information. 2)Modifies the procedure of filing property tax protests by specifying that taxpayers must file a protest with the county clerk, and pay taxes to the treasurer-tax collector. 3)Amends Revenue and Taxation Code (R&TC) Section 2611.1, relating to discharges of accountability by a county department, officer, or employee who collects taxes, to require discharges under that section to comply with updated Government Code sections that describe the process for county officials to file an application for a "discharge of accountability on the grounds that the amount owed is too small to justify the costs of collection." 4)States that an overpayment of tax is determined by the tax collector as of the date and time that the tax payment is received. Allows the tax collector, if the refund is due the taxpayer, to process a refund without sending a notice of overpayment to the taxpayer. SB 948 Page 2 5)Deletes the requirement to notify the State Controller in the situation when a treasurer-tax collector proposes property for a tax sale but then later removes it from the sale upon the recommendation from the county counsel. 6)Requires third-party agents, who are acting on behalf of any party of interest with respect to filing a claim for any excess proceeds from the tax sale, to submit proof that the source of those proceeds have been disclosed to the party of interest and that a claim to recover those proceeds may be filed by the party of interest directly with the county at no cost. 7)Allows treasurer-tax collectors, when they are required to provide notice of the right to claim proceeds that exceed $150 to the last known mailing address of the parties of interest in a tax sale but cannot obtain the address, to forego the requirement to publish the notice in a newspaper of general circulation if the costs of publication exceed the amount of the tax sale proceeds. 8)Revises the provision dealing with the correction of errors in publications published by a treasurer-tax collector to specify that the treasurer-tax collector has 60 days after the original publication to republish, and specifies that the re-publication may not affect the right of a taxpayer, assessee, or other private party in a material way. 9)Requires the treasurer-tax collector, when taxpayers or their agents make payments on the wrong property, 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 when the payment is not subject to chargeback, dishonor, or reversal. Specifies that interest shall only be paid if the treasurer-tax collector has failed to transfer or refund the payment as required. 10)Makes other technical corrections to property tax collection laws to update incorrect cross- references and correct outdated code sections. 11)Provides that no reimbursement is required by the provisions of this bill because the only costs that may be incurred by a local agency or school district are the result of a program for which legislative authority was requested by that local SB 948 Page 3 agency or school district. EXISTING LAW : 1)Requires the treasurer-tax collector to publish various notices in a newspaper or three public places including, among others, notice of impending default for failure to pay taxes on real property and notice of intended sale of tax-defaulted property by the tax collector. Authorizes a treasurer-tax collector, in the case of an error in a publication, to correct the error in a supplementary publication lasting at least ten days in the same manner as the original publication. 2)Requires assessors to keep certain information confidential. ÝR&TC Section 408(a)]. Provides an exception to the general rule of confidentiality for certain governmental agencies or representatives. Requires the county assessor to disclose information, furnish abstracts, or permit access to all records in his/her office to law enforcement agencies, the county grand jury, and other specified entities, including the county recorder in the case of an investigation to determine whether a documentary transfer tax (DTT) is imposed. ÝR&TC Section 408(b)]. 3)Establishes a procedure by which an assessee of property taxes may pay taxes under protest in cases in which the assessor does not, upon or prior to completion of the local tax roll, send a notice to an assessee whose property was not on the prior year's secured roll, or to an assessee of real property on the local secured roll whose property's full value has increased. Requires a protest to be filed with the tax collector, together with the payment of taxes, as specified. 4)Allows any county department, officer, or employee who collects taxes, penalties, or other costs to file an application for a "discharge of accountability" whenever the costs of collection exceed the revenue collected. 5)Requires the treasurer-tax collector, when a taxpayer overpays tax by more than $10, to notify the taxpayer of the overpayment. 6)Authorizes a county tax collector to sell tax-defaulted property after a specified amount of time. Allows the SB 948 Page 4 treasurer-tax collector, whenever a treasurer-tax collector proposes property for a tax sale, to remove the parcel upon recommendation from the county counsel, that the removal is in the best interest of the county, and requires the treasurer-tax collector to notify the State Controller of the removal of the parcel for sale. 7)Allows a party of interest in the tax-defaulted property sold at a tax sale to file a claim for the excess proceeds from the sale, as specified. Allows third party agents to recover excess tax proceeds on behalf of a party of interest, as specified. 8)Requires a county to provide notice, including publishing notice in a newspaper, of the right to claim the excess proceeds from the sale of a tax-defaulted property. 9)Allows the treasurer-tax collector, in the case where a taxpayer makes a payment on the wrong property, to cancel the credit on the unintended property and apply it to the correct property within a specified time period. If there is no property to which the credit may be applied, the tax collector is required, upon being convinced by substantial evidence of a mistake, to refund the payment. 10)Requires treasurer-tax collectors to provide notice of the right to claim proceeds to the last known address of parties of interest in a tax sale that exceeds $150, and specifies that if the treasurer-tax collector cannot obtain the address, he/she must publish notice in a newspaper of general circulation in the county of the tax-defaulted property. 11)Requires that property taxes be refunded if the payments exceed the equalized value of the property, as determined by the county Board of Equalization, and authorizes a county tax collector or county auditor to refund taxes within four years of payment if the amount paid exceeds the amount due on the property as shown on the tax roll. 12)Requires counties to pay interest to taxpayers when a court allows the taxpayer to recover a penalty previously assessed under specified sections of R&TC Section 830. FISCAL EFFECT : Unknown. SB 948 Page 5 COMMENTS : 1)Purpose of this Bill . SB 948 is sponsored by the California Association of County Treasurer-Tax Collectors. According to the author, this bill is intended to improve the administration of property tax laws. 2)Access to Records in the County Assessor's Office . Existing law provides that information and records in the county assessor's office are not public documents and shall not be open to public inspection, unless specifically exempted by law. Exemptions include sharing of information with law enforcement agencies, county grand jury, and a board of supervisors. In 2009, the list of enumerated exemptions was expanded to allow a county recorder access all records in the assessor's office for purposes of determining whether a DTT is due. ÝR&TC Section 408(b)]. SB 948 would further amend R&TC Section 408(b) to add local tax treasurers-collectors to the list of agencies that may access the assessor's records for purposes of preparing and enforcing tax sales. Generally, critics of information sharing between government entities are concerned about possible unlawful disclosure or inspection of confidential tax information. Thus, often, provisions allowing information sharing contain safeguards against, and penalties for, unlawful disclosure of confidential taxpayers' information. For example, an existing information sharing program between the Franchise Tax Board (FTB) and cities provides for criminal sanctions for unlawful disclosure or inspection of such information, which supplements FTB's institutional commitment to taxpayer information confidentiality. The information possessed by the county assessor's office is considerably less sensitive than the information found on income tax returns. However, this bill contains no protection against unlawful disclosure of information acquired by a county treasurer-tax collector from the county assessor. Similar to this bill, AB 563 (Furutani), set to be heard June 29, 2011 in the Senate Governance and Finance Committee, expands the list of authorized agencies that have access to the assessor's records to include certain designated city employees. This Committee amended AB 563 to require a designated employee of a city's finance office to submit a written request to the assessor certifying, under penalty of SB 948 Page 6 perjury, that he/she needs the information to assist with the preparation and enforcement of a DTT and that confidential information will not become public record and will not be open to public inspection. The Committee may wish to amend SB 948 to include a similar provision, in order to ensure consistency in the treatment of various agencies that are authorized to have access to the assessor's records. 3)Double Referral . This bill was doubled-referred with the Assembly Committee on Local Government, and passed out of that Committee with a 9-0 vote on June 15, 2011. For additional discussion of this bill, please refer to that Committee's analysis. 4)Related Legislation. AB 563 (Furutani), introduced in the current legislative session, authorizes designated city employees to obtain or access otherwise confidential information from the county assessor when the city is conducting an investigation to determine whether the documentary transfer tax (DTT) should be imposed. AB 563 is currently pending in the Senate Governance and Finance Committee. SB 816 (Ducheny), Chapter 622, Statutes of 2009, made changes in the DTT law relative to city ordinances, assessor records, and change of ownership statements, including allowing county recorders to assess the county assessors' records when investigating if a DTT is due. SB 1146 (Cedillo), Chapter 345, Statutes of 2008, extended the sunset date for the program that allows the FTB to share information with tax officials of any city in California until December 31, 2014. SB 1374 (Cedillo), Chapter 513, Statutes of 2006, extended the program that allows the FTB to provide information to tax officials of any city in California until December 31, 2011. AB 63 (Cedillo), Chapter 915, Statutes of 2001, extended the circumstances under which the FTB may disclose tax information to tax officials of any city, until December 31, 2008. REGISTERED SUPPORT / OPPOSITION : SB 948 Page 7 Support California Association of County Treasurer-Tax Collectors Opposition Robert Pool, Esq., Gangloff, Gangloff & Pool Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916) 319-2098