BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 2291 |Hearing | 6/15/16 |
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|Author: |Achadjian |Tax Levy: |No |
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|Version: |6/8/16 Amended |Fiscal: |No |
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|Consultant|Grinnell |
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Property taxes: delinquent taxes: partial payment: fee
Authorizes a county board of supervisors to allow the tax
collector to charge a fee for the reasonable costs of partial
property tax payments.
Background
State law sets January 1st of each year as the "lien date," or
the date upon which the assessor values property, and property
taxes are imposed on its owner in the form of a lien against the
property. For property on the secured roll, which generally
includes real property such as land and buildings, tax
collectors must send bills to taxpayers by November 1st.
Taxpayers must pay their bills in two installments: the first on
November 1st, which becomes delinquent December 10th, and the
second on February 1st, with delinquency occurring on April
10th. Taxpayers can pay in full at the first installment.
Taxpayers with mortgages who pay property taxes through impound
accounts collected as part of monthly mortgage payments don't
pay according to this schedule; they receive informational
copies of tax bills instead. Many other locally-imposed
charges, fees, taxes, and assessments, such as Mello-Roos taxes,
benefit assessments, and parcel taxes, are also collected as
part of the property tax bill, and subject to the same
restrictions and penalties.
AB 2291 (Achadjian) 6/8/16 Page 2
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When taxes become delinquent, state law imposes a 10% penalty on
each amount, and counties can also apply administrative charges.
The property becomes tax defaulted if taxes remain unpaid as of
June 30th, triggering redemption penalties of 1.5% a month until
the full amount is paid. After five years, the tax collector
with approval by the Board of Supervisors can sell a tax
defaulted residential property to satisfy back taxes, penalties,
costs, and other liens; for commercial property, the tax
collector can do so after three years. Counties allow taxpayers
to pay in installments by making an initial payment of 20% of
the amount outstanding, but only after a property becomes tax
defaulted. Under an installment plan, taxpayers must make one
payment a year for five years, in addition to paying current
taxes. Failure to make timely payments on an installment plan
again places the property in default; however, taxpayers can
enter into another installment plan at the beginning of the next
fiscal year.
Additionally, tax collectors can also accept partial payments
from delinquent taxpayers if authorized to do so by the board of
supervisors. The tax collector must first apply the payment to
penalties, interest, and costs, and if funds remain, to tax due.
While many counties have authorized tax collectors to accept
partial payments, tax collectors want to authorize a fee for
instituting and maintaining a partial payment arrangement.
Proposed Law
Assembly Bill 2291 allows a county board of supervisors to
authorize the tax collector to recover the reasonable costs for
instituting and maintaining a partial payment arrangement for
property taxes. The initial authorizing ordinance must
establish the maximum fees that the tax collector can charge,
and are limited to cost recovery only. The county board of
supervisors must adopt the fee and any subsequent changes part
of a regularly scheduled meeting after at least one public
meeting where oral and written presentations can be made.
The measure states that the fee is imposed for a specific
government service or product provided directly to the payor
that is not provided to those not charged, and which does not
exceed the reasonable cost to provide the service for purposes
AB 2291 (Achadjian) 6/8/16 Page 3
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of the California Constitution. The bill also says that the fee
is subject to statutory requirements that cap the fee at the
amount reasonably necessary to provide the service.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the author, "AB 2291 would
simply allow counties to recover the cost of providing an
alternative for taxpayers with tax-defaulted property.
Accepting payments on a monthly basis would offer a
substantially lower barrier to entry than the existing, more
restrictive Permanent Installment Plan. As a result, AB 2291
would allow more taxpayers to begin paying off their delinquent
taxes with lower monthly payments in the same manner they
typically pay other debt. This will have direct benefits to
taxpayers who are making earnest efforts to pay taxes owed. AB
2291 is both taxpayer friendly and maintains local control for
countries that choose to provide this service."
2. Costs . Tax collectors generally rely on county general fund
allocations from the Board of Supervisors to operate their
offices and fulfill their legal duties. As such, funding and
service levels will vary from county to county, and tax
collectors must compete for funding against many other worthy
causes such as public safety, health care, and other county
offices and services when the Board enacts the budget. State
law also allows tax collectors to charge fees to recover the
reasonable costs for some specified services, such as an
application fee for valuing property for the purpose of
redemption, or a processing fee for entering into an installment
payment plan, but doesn't contain explicit authorization for
many others, such as partial payment plans. Many counties
already accept partial payments without charging a fee, paying
for any costs out of general funding. Any county that currently
does not accept partial payments can commence doing so without
charging a fee. Taxpayers with sufficient means are not likely
to make partial payments given significant penalties, interest,
and risk of tax sale, so adding a fee on to taxpayers who can
AB 2291 (Achadjian) 6/8/16 Page 4
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only pay partially may serve as a financial barrier to taxpayers
who can't pay in full. Additionally, counties who have been
accepting partial payments without a fee would have legal
authorization to do so under AB 2291, which could allow tax
collectors to shift costs currently funded as part of general
operations onto taxpayers who can only make partial payments.
However, some counties that won't currently accept partial
payments without charging a fee may choose to do so under AB
2291. The Committee may wish to consider the effect on AB 2291
on taxpayers who have difficulty meeting their obligations.
Assembly Actions
Assembly Revenue and Taxation 9-0
Assembly Floor 74-0
Support and
Opposition (6/9/16)
Support : California Association of County Treasurer-Tax
Collectors, California State Association of Countries, Santa
Clara County Board of Supervisors.
Opposition : None received.
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