Senate BillNo. 661


Introduced by Senator Hill

February 27, 2015


An act to amend Sections 755 and 756 of, to amend, repeal, and add Sections 1152, 1153, and 1155 of, and to add Sections 100.51, 721.51, and 828.1 to, the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 661, as introduced, Hill. Property taxation: state assessment: commercial air carrier personal property.

Existing property tax law requires the personal property of an air carrier to be taxed at its fair market value, and the California Constitution requires property subject to ad valorem property taxation to be assessed in the county in which it is situated. Existing law, through the 2015-16 fiscal year, specifies a formula to determine the fair market value of certificated aircraft of a commercial air carrier, and rebuttably presumes that the amount determined pursuant to this formula is the fair market value of the certificated aircraft.

The California Constitution requires the State Board of Equalization to assess specified properties owned by specified entities. Existing property tax law provides for the valuation of properties of a state assessee that owns property in more than one county. Existing law also provides, pursuant to specified formulas, for the application in each county of specified tax rates to the allocated assessed value of a state assessee’s property, and for the allocation among jurisdictions in that county of the resulting revenues.

This bill would, from the lien date for the 2016-17 fiscal year and each fiscal year thereafter, require the board to assess personal property that is owned by a commercial air carrier, as defined, in a manner consistent with currently specified procedures that determine the extent that the certificated aircraft is physically present in each county within the state. This bill would require the board to notify county assessors, as specified, if a commercial air carrier’s taxable personal property includes fixtures that are to be locally assessed as real property. This bill would require that the revenues derived from the assessment of this property be allocated in the same percentage shares as revenues derived from locally assessed property among the jurisdictions in which the property is located. This bill would also make conforming changes to related provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 100.51 is added to the Revenue and
2Taxation Code
, to read:

3

100.51.  

Notwithstanding any other law, for the 2016-17 fiscal
4year and each fiscal year thereafter, all of the following apply:

5(a) The property tax assessed value of taxable personal property
6that is owned by a commercial air carrier, as defined in Section
7721.51, and that is assessed by the board, shall be allocated entirely
8to that tax rate area in the county in which the property is located.

9(b) The tax rate applied to the assessed value allocated pursuant
10to subdivision (a) shall be the rate calculated pursuant to Section
1193.

12(c) The revenues derived from the application of the tax rate to
13the assessed value allocated to a tax rate area pursuant to
14subdivision (a) shall be allocated among the jurisdictions in that
15tax rate area, in those same percentage shares that property tax
16revenues derived from locally assessed property are allocated to
17those jurisdictions in that tax rate area, subject to any allocation
18and payment of funds as provided in subdivision (b) of Section
1933670 of the Health and Safety Code, and subject to any
20modifications or adjustments made pursuant to Sections 99 and
2199.2.

22

SEC. 2.  

Section 721.51 is added to the Revenue and Taxation
23Code
, to read:

24

721.51.  

(a) Notwithstanding any other law, commencing with
25the lien date for the 2016-17 fiscal year and for each fiscal year
26thereafter, the board shall annually assess all personal property
P3    1that is owned, claimed, possessed, used, controlled, or managed
2by a commercial air carrier as defined in subdivision (b).

3(b) (1) For purposes of this section, “commercial air carrier”
4means an air carrier or foreign air carrier engaged in air
5transportation as defined in Section 1150.

6(2) Certificated aircraft owned or used by a commercial air
7carrier shall be assessed in a manner consistent with the procedures
8set forth in Article 6 (commencing with Section 1150) of Chapter
95 that determines the extent that the certificated aircraft is
10physically present in each county within this state.

11(c) The board may audit a commercial air carrier as otherwise
12provided by law.

13

SEC. 3.  

Section 755 of the Revenue and Taxation Code is
14amended to read:

15

755.  

(a) On or before July 15, the board shall transmit to each
16county auditor an estimate of the total unitary value and operating
17nonunitary value of state-assessed property in the county and of
18nonunitary state-assessed property in each revenue district in the
19county. An estimate need not be made for a revenue district that
20did not levy a tax or assessment during the preceding year unless
21the board receives on or before January 1 preceding the fiscal year
22for which the levy is to be made a notice in writing of the proposed
23levy. The estimate shall be regarded as establishing the total
24assessed value of state-assessed property in the county and each
25revenue district in the county for the purpose of determining tax
26rates, subject only to those changes as may be transmitted on or
27prior to July 31. All information furnished pursuant to this section
28is at all times during office hours open to inspection by any
29interested person or entity.

30(b) Notwithstanding subdivision (a), in making the estimate
31referred to in subdivision (a), the value of property described in
32paragraph (1) of subdivision (a) of Section 100.1 and the
33nonunitary value of the property of regulated railway companies,
34property subject to subdivisions (i), (j), (k), and (l) of Section 100,
35begin delete andend delete property subject to Section 100.9begin insert, and property subject to
36Section 100.51end insert
shall be allocated by revenue district.

37(c) The amendments made to this section by the act that added
38this subdivision apply for the 2007-08 fiscal year and for each
39fiscal year thereafter.

P4    1

SEC. 4.  

Section 756 of the Revenue and Taxation Code is
2amended to read:

3

756.  

(a) On or before July 31, the board shall transmit to each
4county auditor a roll showing the unitary and operating nonunitary
5assessments made by the board in the county and the nonoperating
6nonunitary assessments made by the board in each city and revenue
7district in the county; provided, however, that the roll need not
8show the assessments made by the board in a revenue district which
9did not levy a tax or assessment during the preceding year. The
10roll is at all times, during office hours, open to the inspection of
11any person representing any taxing agency or revenue district, or
12any district described in Section 2131. If the roll does not show
13the assessments in a revenue district as herein provided and a notice
14of a proposed levy is furnished to the board in writing, on or before
15January 1 preceding the fiscal year for which the levy is to be
16made, the board shall furnish an estimate of the total assessed value
17of nonoperating nonunitary state-assessed property in the district
18and shall transmit thereafter to the county auditor a statement of
19roll change showing the nonoperating nonunitary assessments
20made by the board in the district.

21(b) Notwithstanding subdivision (a), in making the roll referred
22to in subdivision (a), the value of property described in paragraph
23(1) of subdivision (a) of Sectionbegin delete 100.1end deletebegin insert 100.11end insert and the nonunitary
24value of the property of regulated railway companies, property
25subject to subdivisions (i), (j), (k), and (l) of Section 100,begin delete andend delete
26 property subject to Section 100.9begin insert, and property subject to Section
27100.51end insert
shall be enrolled by revenue district.

28(c) The amendments made to this section by the act that added
29this subdivision apply for the 2007-08 fiscal year and for each
30fiscal year thereafter.

31

SEC. 5.  

Section 828.1 is added to the Revenue and Taxation
32Code
, to read:

33

828.1.  

(a) All of the following apply to a property statement
34submitted by a commercial air carrier:

35(1) Personal property located in this state, other than certificated
36aircraft, shall be reported by reference to the tax rate area in order
37to allocate assessed value by tax rate area as required by Section
38100.51.

P5    1(2) Information related to certificated aircraft that normally
2make physical contact in counties shall be reported in the form
3prescribed by the board.

4(b) If a commercial air carrier’s property statement includes
5fixtures that are to be locally assessed as fixtures, the board shall
6provide information regarding the fixtures to the county assessor
7for the county in which the fixtures are located.

8

SEC. 6.  

Section 1152 of the Revenue and Taxation Code is
9amended to read:

10

1152.  

The allocation formula to be used by each assessor is as
11follows:

12(a) The time in state factor is the proportionate amount of time,
13both in the air and on the ground, that certificated aircraft have
14spent within the state during a representative period as compared
15to the total time in the representative period. For purposes of this
16subdivision, all time, both in the air and on the ground, that
17certificated aircraft have spent within the state prior to the aircraft’s
18first entry into the revenue service of the air carrier in control of
19the aircraft on the current lien date shall be excluded from the time
20in state factor. This factor shall be multiplied by 75 percent.

21(b) The arrivals and departures factor is the proportionate
22number of arrivals in and departures from airports within the state
23of certificated aircraft during a representative period as compared
24to the total number of arrivals in and departures from airports
25during the representative period. This factor shall be multiplied
26by 25 percent.

27(c) For the 1983-84 fiscal year and fiscal years thereafter, in
28computing the time-in-state factor, on each occasion during the
29representative period that a certificated aircraft has spent 720 or
30more consecutive hours on the ground, all ground time in excess
31of 168 hours shall be excluded from the time in state attributable
32to that aircraft.

33(d) The time-in-state factor shall be added to the arrivals and
34departures factor.

35(e) The figure produced by application of subdivision (d) equals
36the allocation to be applied to full cash value to determine the
37value to which the assessment ratio shall be applied.

begin insert

38(f) This section shall remain in effect only until January 1, 2016,
39and as of that date is repealed.

end insert
P6    1

SEC. 7.  

Section 1152 is added to the Revenue and Taxation
2Code
, to read:

3

1152.  

The allocation formula to be used by the board is as
4follows:

5(a) The time in state factor is the proportionate amount of time,
6both in the air and on the ground, that certificated aircraft have
7spent within the state during a representative period as compared
8to the total time in the representative period. For purposes of this
9subdivision, all time, both in the air and on the ground, that
10certificated aircraft have spent within the state prior to the aircraft’s
11first entry into the revenue service of the air carrier in control of
12the aircraft on the current lien date shall be excluded from the time
13in state factor. This factor shall be multiplied by 75 percent.

14(b) The arrivals and departures factor is the proportionate
15number of arrivals in and departures from airports within the state
16of certificated aircraft during a representative period as compared
17to the total number of arrivals in and departures from airports
18during the representative period. This factor shall be multiplied
19by 25 percent.

20(c) For the 2016-17 fiscal year and each fiscal year thereafter,
21in computing the time-in-state factor, on each occasion during the
22representative period that a certificated aircraft has spent 720 or
23more consecutive hours on the ground, all ground time in excess
24of 168 hours shall be excluded from the time in state attributable
25to that aircraft.

26(d) The time-in-state factor shall be added to the arrivals and
27departures factor.

28(e) The figure produced by application of subdivision (d) equals
29the allocation to be applied to full cash value to determine the
30value to which the assessment ratio shall be applied.

31(f) This section shall become operative on January 1, 2016.

32

SEC. 8.  

Section 1153 of the Revenue and Taxation Code is
33amended to read:

34

1153.  

begin insert(a)end insertbegin insertend insertAfter consulting with the assessors of the counties
35in which aircraft of an air carrier normally make physical contact,
36the board shall designate for each assessment year the
37representative period to be used by the assessors in assessing the
38aircraft of the carrier.

begin insert

39(b) This section shall remain in effect only until January 1, 2016,
40and as of that date is repealed.

end insert
P7    1

SEC. 9.  

Section 1153 is added to the Revenue and Taxation
2Code
, to read:

3

1153.  

(a) Notwithstanding any other law, for the 2016-17 fiscal
4year and for each fiscal year thereafter, the representative period
5to be used by the board in assessing the certificated aircraft of a
6commercial air carrier shall be the second full week of January
7annually.

8(b) This section shall become operative on January 1, 2016.

9

SEC. 10.  

Section 1155 of the Revenue and Taxation Code is
10amended to read:

11

1155.  

For purposes of Section 404, certificated aircraft shall
12be deemed to be situated only in those taxing agencies in which
13the aircraft normally make physical contact with sufficient
14regularity to entitle such agencies to tax the aircraft under the laws
15and Constitution of the United States. Flight time within the state
16shall be allocated as follows:

17(a) If the aircraft takes off in one taxing agency which is entitled
18to tax (within the meaning of the preceding sentence) and lands
19in another agency which is entitled to tax, the flight time between
20such taxing agencies shall be allocated one-half to each such
21agency.

22(b) If the aircraft arrives from out of state or leaves the state,
23the flight time from or to the state boundary shall be allocated to
24the taxing agency entitled to tax in which the aircraft first lands
25or last takes off, as the case may be.

begin insert

26(c) This section shall remain in effect only until January 1, 2016,
27and as of that date is repealed.

end insert
28

SEC. 11.  

Section 1155 is added to the Revenue and Taxation
29Code
, to read:

30

1155.  

(a) For purposes of Section 100.51, certificated aircraft
31shall be deemed to be situated only in those tax rate areas in which
32the aircraft normally make physical contact with sufficient
33regularity to entitle that tax rate area to the assessed value of the
34aircraft under the laws and Constitution of the United States. Flight
35time within the state shall be allocated as follows:

36(1) If the aircraft takes off in one tax rate area that is entitled to
37the assessed value of the aircraft and lands in another tax rate area
38that is entitled to the assessed value of the aircraft, the flight time
39between the two tax rate areas shall be allocated one-half to each
40of the two tax rate areas.

P8    1(2) If the aircraft arrives from out of state or leaves the state,
2the flight time from or to the state boundary shall be allocated to
3the tax rate area entitled to the assessed value of the aircraft in
4which the aircraft first lands or last takes off, as the case may be.

5(b) This section shall become operative on January 1, 2016.



O

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