BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  SB 1323
          Author:   Lieu (D)
          Amended:  4/29/14
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  6-0, 4/24/14
          AYES:  Wolk, Beall, DeSaulnier, Hernandez, Liu, Walters
          NO VOTE RECORDED:  Knight

           SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8


           SUBJECT  :    Property taxation

           SOURCE  :     California Assessors Association


           DIGEST  :    This bill simplifies the cancellation or refunding of  
          penalties for the late filing of property tax exemption  
          applications, and reduces the penalty from $250 to $200.  This  
          bill deletes the religious organizations size limitation of over  
          500 people on leased land to qualify for property tax exemption  
          for parking facilities, and allows exemptions for contiguous  
          properties to be filed in a single claim.

           ANALYSIS  :    California Constitution Section 1 of Article XIII  
          provides that all property is taxable unless explicitly exempted  
          by the Constitution or federal law, but allows the Legislature  
          to exempt property used for charitable purposes owned by  
          nonprofit entities organized and operated for charitable  
          purposes, none of whose income inure to the benefit of any  
          private shareholder or individual.  The Legislature enacted this  
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          exemption, commonly known as the "welfare exemption."   
          Exemptions apply to the annual property tax roll, as well as to  
          one-time supplemental assessments, which assessors send to  
          taxpayers whenever a change of ownership or new construction  
          results in a reassessment after the lien date of January 1 to  
          reflect the difference between the initial and revised  
          assessment.  

          I.    Cancelling and refunding taxes on exempt property  .   
             Currently, when a taxpayer files an application for an  
             exemption for property used as a college, cemetery, church,  
             religious exhibition, veterans' organization, free public  
             library, free museums, or other welfare exempt property  
             before the supplemental assessment is due; the assessor can  
             cancel all taxes, penalties, and interest for that  
             assessment.  However, if the taxpayer does not file an  
             application until after that date, but before the first  
             installment becomes delinquent, the assessor reduces any  
             taxes, penalties, and interest by 90%, but not below $250.   
             If the taxpayer applies after that date, the assessor can  
             only reduce taxes, penalties, and interest by 85%, but not  
             below $200.  However, some exemptions depart from the general  
             rule, such as:

                   For not timely filed claims for the veterans' or  
                homeowners' exemption, the assessor can refund up to 80%  
                of the tax provided the taxpayer files an application on  
                or before the date the first installment becomes due.  

                   For not timely filed claims for the disabled veterans'  
                exemption, the assessor can refund up to 90% of the tax  
                provided the taxpayer files an application on or before  
                the date the first installment becomes due, but only 85%  
                if the taxpayer does not file the claim before that time.   


                   For any other exemption not listed above, if the  
                taxpayer does not file an application until after that  
                date, but before the first installment becomes delinquent,  
                the assessor reduces any taxes, penalties, and interest by  
                90%, but when the taxpayer applies after that date, the  
                assessor can only reduce taxes, penalties, and interest by  
                85%.  


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             Additionally, past practice for taxpayers and organization  
             was to file one exemption application, regardless of the  
             number of properties owned.  However, assessors process one  
             claims per property, and cannot easily identify which  
             property should be assessed the penalty when a taxpayer  
             owning multiple properties does not file for the exemption on  
             time.  

             This bill provides that for all the exemptions except the  
             veterans', homeowners' exemption, and disabled veterans'  
             exemption, the assessor can cancel 90% of the taxes,  
             penalties, or interest, that exceeds $20,000 in total amount  
             ($200 in property tax at the 1% rate).  This bill changes  
             both the individual statutes for each property tax exemption,  
             as well as the general law that guides supplemental  
             assessments.

             This bill provides that the $20,000 in total amount assessed  
             valuation penalty cap for exempt properties applies to each  
             application, which can include a property location with six  
             contiguous parcels.  If a taxpayer owns multiple properties,  
             and fails to file applications on time for any of them, the  
             penalty equals $200 per application, instead of per taxpayer.

          II.   Church parking lots  .  Existing law allows the welfare  
             exemption for all real property necessary and desirable for  
             persons attending services to park their cars.  However, the  
             church, religious denomination, or sect must not have a  
             congregation of more than 500 people for it to be eligible  
             for the exemption.  Additionally, the law conditions the  
             exemption on the parking of "automobiles."  

             This bill deletes the 500 person limit, and changes  
             "automobiles" to "vehicles."

          III.  Affidavits  .  Taxpayers seeking an exemption must annually  
             submit an affidavit to the assessor each year providing any  
             required information, and can currently combine all of his or  
             her property into one affidavit.  Additionally, state law  
             generally requires taxpayers to submit affidavits for  
             exemptions between the lien date and 5 p.m. on February 15. 

             This bill requires the taxpayer to submit the affidavit for  
             each property for which he/she seeks an exemption, but also  

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             allows the taxpayer to file a single claim for a property  
             consisting of contiguous parcels.  This bill also clarifies  
             that the claim period for the full disabled veterans'  
             exemption begins when the taxpayer becomes eligible for the  
             exemption and ends on February 15.  

          IV.  Forms  .  State law often contains the exact form that  
             assessors and taxpayers use, including the card that  
             applicants for the welfare exemption send to the assessor  
             each year to show no change in eligibility for the exemption,  
             and the notice that the assessor sends each year to taxpayers  
             who received the religious exemption the year before.  

             This bill deletes both the card and the notice from the law,  
             and instead directs the Board of Equalization (BOE) to  
             prescribe cards and notices for applicants and assessors to  
             use, which BOE does for all of its forms annually.

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  Yes

           SUPPORT  :   (Verified  5/13/14)

          California Assessors' Association (source)
          California Association of Nonprofits

           ARGUMENTS IN SUPPORT  :    According to the author, "California's  
          property taxation laws and regulations can be fairly complex and  
          all appropriate attempts should be made to simplify them for the  
          betterment of taxpayers and administrators alike.  This measure  
          is about simplifying the code sections related to late-filings.   
          It will streamline the process for granting property tax welfare  
          exemptions related to certain types of property such as  
          religious institutions and hospitals.  Ultimately, by bringing  
          efficiencies to claiming welfare exemption status, this measure  
          will save taxpayers and local government, including county  
          assessors, precious time and resources."


          AB:k  5/13/14   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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