BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 571|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 571
Author: Brown (D)
Amended: 9/1/15 in Senate
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: Author
DIGEST: This bill changes the standard used by assessment
appeals board when determining whether to abate three property
tax penalties.
Senate Floor Amendments of 9/1/15 apply this bill's standard to
change in ownership statements (COSs) for transfers of real
property.
ANALYSIS:
Existing law:
1)Provides that all property is taxable unless explicitly
exempted by the Constitution or federal law.
2)Precludes assessors from revaluing real property for tax
purposes unless a property is newly constructed, or changes
AB 571
Page 2
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 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.
c) For legal entities, 10% of the taxes applicable to the
new value if a change occurred, or if not, 10% of the taxes
based on the current value.
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
AB 571
Page 3
the unreported property for filing late.
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,
COS for real property, or COS for legal entities 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: (Verified9/2/15)
California Assessors Association
OPPOSITION: (Verified9/2/15)
AB 571
Page 4
Executive Committee of the Trusts and Estates Section of the
State Bar of California
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: According to the Executive
Committee of the Trusts and Estates Section of the State Bar of
California (TEXCOM), "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,
AB 571
Page 5
Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low,
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
9/2/15 18:05:27
**** END ****