BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                        AB 571|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                   THIRD READING 


          Bill No:  AB 571
          Author:   Brown (D)
          Amended:  5/4/15 in Assembly
          Vote:     21  

           SENATE GOVERNANCE & FIN. COMMITTEE:  7-0, 7/1/15
           AYES:  Hertzberg, Nguyen, Beall, Hernandez, Lara, Moorlach,  
            Pavley

           ASSEMBLY FLOOR:  77-0, 5/28/15 - See last page for vote

           SUBJECT:   Property taxation:  property statement:  change in  
                     ownership statement:  penalty


          SOURCE:    California Assessors' Association




          DIGEST:  This bill changes the standard used by assessment  
          appeals board when determining whether to abate two property tax  
          penalties.


          ANALYSIS:   


          Existing law:


          1)Provides that all property is taxable unless explicitly  
            exempted by the Constitution or federal law.








                                                                     AB 571  
                                                                    Page  2




          2)Precludes assessors from revaluing real property for tax  
            purposes unless a property is newly constructed, or changes  
            ownership.


          3)Charges each County Board of Supervisors, or an assessment  
            appeals board of its own creation, with fairly and impartially  
            conducting hearings between taxpayers and the assessor,  
            including requesting penalty abatement.


          4)Requires the new owner to file a Change in Ownership Statement  
            (COS) with the assessor when ownership changes.


          5)Imposes the following penalties for failing to file a COS:


             a)   For real property eligible for the homeowners'  
               exemption, $100, or 10% of the taxes applicable to the new  
               value up to $5,000, whichever is greater.


             b)   For real property not eligible for the homeowners'  
               exemption, $100 or 10% of the taxes applicable to the new  
               value up to $20,000, whichever is greater.


          6)Requires assessors to revalue personal property annually.


          7)Directs taxpayers to list taxable personal property on the  
            business personal property statements, and submit them  
            annually to the assessor after the January 1st lien date but  
            before April 1st each year; however, taxpayers can submit the  
            statement without penalty by May 7.


          8)Requires assessors to impose a penalty of 10% of the value of  
            the unreported property for filing late.  









                                                                     AB 571  
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          9)Allows assessment appeals board can abate penalties  
            attributable to the failure to file a COS or business personal  
            property statement if the taxpayer can establish that the  
            failure to file the statement was due "to reasonable cause and  
            not willful neglect."  


          This bill amends the standard used by assessment appeals boards  
          for penalties for failing to file a business property statement  
          or COS for real property to allow abatement upon "reasonable  
          cause and circumstances beyond the assessee's control, and  
          occurred notwithstanding the exercise of ordinary care in the  
          absence of willful neglect." 

          Comments

          The Board of Equalization states that the standard that AB 571  
          applies for failing to file business property statements and COS  
          appears in 56 of 76 relevant sections of property tax law.   
          Ultimately, assessment appeals boards in 58 counties will  
          determine how to apply AB 571's standard when they adjudicate  
          specific cases, but legislators may want to consider whether AB  
          571's consistency is worth the potential effect of limiting  
          abatement for successors who inherit control of property or  
          legal entities.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No


          SUPPORT:   (Verified7/2/15)


          California Assessors' Association (source)
          Howard Jarvis Taxpayers Association


          OPPOSITION:   (Verified7/2/15)


          The Executive Committee of the Trusts and Estates Section of the  
            State Bar of California









                                                                     AB 571  
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          ARGUMENTS IN SUPPORT:      According to the author, "AB 571  
          aligns existing penalty forgiveness provisions in Revenue &  
          Taxation Code Sections 463 and 483 to mirror the language used  
          in Section 4985.2.  The consistent standard will provide  
          individuals with an opportunity to have their penalty waived if  
          they are able to demonstrate that the failure to file was due to  
          circumstances beyond their control and occurred notwithstanding  
          the exercise of ordinary care. Clarification of this discrepancy  
          will benefit taxpayers qualifying for penalty forgiveness.  AB  
          571's standard has been in place for 35 years, and ample case  
          law exists to interpret it.  Assessors add that cases  
          interpreting the standard require that the standard of ordinary  
          care increase in direct proportion to the sophistication of the  
          taxpayer."




          ARGUMENTS IN OPPOSITION:  The Executive Committee of the Trusts  
          and Estates Section of the State Bar of California (TEXCOM)  
          oppose AB 571, stating that this bill's effort to make penalty  
          abatement consistent may make abatement more difficult for  
          taxpayers to obtain.  TEXCOM argues that the current standard is  
          well established in law, and sufficient to establish grounds to  
          abate a penalty that accounts for unusual circumstances that a  
          surviving spouse, child or other personal representative can  
          face after the death of a property owner.  TEXCOM also asserts  
          that requiring abatement only on circumstances beyond the  
          assessee's control, doesn't fit in the particular circumstances  
          of the successors of an entity coping with a property owner's  
          death, where successor property owners are trying to establish  
          control of potentially valuable property or a legal entity  
          shortly after death. 



          ASSEMBLY FLOOR:  77-0, 5/28/15
          AYES:  Alejo, Travis Allen, Baker, Bigelow, Bonilla, Bonta,  
            Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez,  
            Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,  
            Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Hadley, Harper, Roger Hernández, Holden, Irwin, Jones,  
            Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,  







                                                                     AB 571  
                                                                    Page  5


            Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin,  
            Nazarian, Obernolte, O'Donnell, Olsen, Patterson, Perea,  
            Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago,  
            Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber,  
            Wilk, Williams, Wood, Atkins
          NO VOTE RECORDED:  Achadjian, Bloom, Grove

          Prepared by:Colin Grinnell / GOV. & F. / (916) 651-4119
          7/2/15 13:38:52


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