Amended in Assembly June 8, 2016

Senate Bill No. 1480

Introduced by Committee on Governance and Finance (Senators Hertzberg (Chair), Beall, Hernandez, Lara, Moorlach, Nguyen, and Pavley)

March 17, 2016

An act to amend begin delete Section 1840 end delete begin insert Sections 254.5, 1840, and 4674 end insert of the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

SB 1480, as amended, Committee on Governance and Finance. begin delete Property tax: local government property: application. end delete begin insert Property taxation. end insert

begin insert

Existing law relieves applicants granted a welfare exemption and owning certain exempt property from reapplying for the welfare exemption in any subsequent year in which there has been no transfer of, or other change in title to, the exempted property and the property is used exclusively by a governmental entity or by a nonprofit corporation, as specified. Existing law requires the assessor to annually mail a notice to every applicant relieved of the requirement of filing an annual application as so described and requires the notice to be in a form and contain that information that the State Board of Equalization may prescribe. Existing law also requires the notice to include a card that is to be returned to the assessor by an applicant desiring to maintain eligibility for the welfare exemption.

end insert begin insert

This bill would instead require the State Board of Equalization to prescribe the form and content of the notice after consultation with the California Assessors’ Association. The bill would eliminate the requirement that the notice include a card and would instead require the notice to inform any applicant desiring to maintain eligibility for the welfare exemption for the next fiscal year of the procedure to reaffirm exemption eligibility.

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The California Constitution generally exempts real property that is owned by a local government from property taxation, but provides that real property owned by a local government that is located outside its boundaries is taxable if it was taxable when acquired. Existing law authorizes a county, city and county, or municipal corporation that owns taxable property to apply to the State Board of Equalization for a review, equalization, or adjustment of a property tax assessment relating to this publicly-owned property. Existing law requires that this application be submitted to the board on or before the later of either July 20 or within 2 weeks of the date upon which a county assessor delivers the local roll containing that assessment to the county auditor.

This bill would instead require that this application be submitted to the board on or before November 30.

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Existing law generally authorizes a county tax collector to sell tax-defaulted property 5 years or more, or 3 years or more, as applicable, after that property has become tax defaulted. Existing law requires the proceeds from the sale of tax-defaulted property to be deposited in the delinquent tax sale trust fund and requires the proceeds in the fund to be distributed in a specified manner. Existing law requires any excess proceeds remaining in the delinquent tax sale trust fund after distribution of the proceeds to be retained in the fund subject to being claimed by parties of interest, as provided. Existing law, at the expiration of a specified time period, authorizes any excess proceeds not claimed to be transferred to the county general fund.

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This bill would authorize the county to deduct certain costs prior to transferring any excess proceeds not claimed to the county general fund.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

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begin insert SECTION 1. end insert   

end insert

begin insert Section 254.5 of the end insert begin insert Revenue and Taxation Code end insert

begin insert is amended to read: end insert

254.5.  

(a) Claims for the welfare exemption and the veterans’
organization exemption shall be filed on or before February 15 of
each year with the assessor.

The assessor may not approve a property tax exemption claim
until the claimant has been issued a valid organizational clearance
certificate pursuant to Section 254.6. Financial statements shall
be submitted only if requested in writing by the assessor.

(b) (1) The assessor shall review all claims for the welfare
exemption to ascertain whether the property on which the
exemption is claimed meets the requirements of Section 214. The
assessor shall also review all claims for the veterans’ organization
exemption to ascertain whether the property on which the
exemption is claimed meets the requirements of Section 215.1. In
this connection, the assessor shall consider, among other matters,
whether:

(A) Any capital investment of the owner or operator for
expansion of a physical plant is justified by the contemplated return
thereon, and required to serve the interests of the community.

(B) The property on which the exemption is claimed is used for
the actual operation of an exempt activity and does not exceed an
amount of property reasonably necessary to the accomplishment
of the exempt purpose.

(2) The assessor may institute an audit or verification of the
operations of the owner or operator of the applicant’s property to
ascertain whether both the owner and operator meet the
requirements of Section 214.

(c) (1) The assessor may deny a claim for the welfare exemption
on a property, notwithstanding that the claimant has been granted
an organizational clearance certificate by the board.

(2) If the assessor finds that the claimant’s property is ineligible
for the welfare exemption or the veterans’ organization exemption,
the assessor shall notify the claimant in writing of all of the
following:

(A) That the property is ineligible for the exemption.

(B) That the claimant may seek a refund of property taxes paid
by filing a refund claim with the county.

(C) That if the claimant’s refund claim with the county is denied,
the claimant may file a refund action in superior court.

(d) Notwithstanding subdivision (a), an applicant, granted a
welfare exemption and owning any property exempted pursuant
to Section 214.15 or Section 231, shall not be required to reapply
for the welfare exemption in any subsequent year in which there
has been no transfer of, or other change in title to, the exempted
property and the property is used exclusively by a governmental
entity or by a nonprofit corporation described in Section 214.15
for its interest and benefit. The applicant shall notify the assessor
on or before February 15 if, on or before the preceding lien date,
the applicant became ineligible for the welfare exemption or if,
on or before that lien date, the property was no longer owned by
the applicant or otherwise failed to meet all requirements for the
welfare exemption.

Prior to the lien date, the assessor shall annually mail a notice
to every applicant relieved of the requirement of filing an annual
application by this subdivision.

The notice shall be in a form and contain that information that
the board may prescribe, begin insert after consultation with the California
Assessors’ Association, end insert and shall set forth the circumstances under
which the property may no longer be eligible for exemption, and
advise the applicant of the duty to inform the assessor if the
property is no longer eligible for exemption.

The notice shall begin delete include a card that is to be returned to the
assessor by end delete begin insert inform end insert any applicant desiring to maintain eligibility
for the welfare exemption under Section 214.15 or Section begin delete 231.
The card shall be in the following form: end delete begin insert 231 for the next fiscal
year of the procedure to reaffirm exemption eligibility. The failure
to reaffirm eligibility for the exemption does not of itself constitute
a waiver of exemption as called for by the California Constitution,
but may result in additional contact by the assessor to verify exempt
activity. end insert

begin delete

To all persons who have received a welfare exemption under
Section 214.15 or Section 231 of the Revenue and Taxation Code
for the ____ fiscal year.

Question: Will the property to which the exemption applies in
the ____ fiscal year continue to be used exclusively by government
or by an organization as described in Section 214.15 for its interest
and benefit in the ____ fiscal year?

YES ___  NO ___

Signature: ____________

Title: ________________

Failure to return this card does not of itself constitute a waiver
of exemption as called for by the California Constitution, but may
result in onsite inspection to verify exempt activity.

end delete

(e) Upon any indication that a welfare exemption or veterans’
organization exemption on the property has been incorrectly
granted, the assessor shall redetermine eligibility for the exemption.
If the assessor determines that the property, or any portion thereof,
is no longer eligible for the exemption, he or she shall immediately
cancel the exemption on so much of the property as is no longer
eligible for the exemption.

(f) If a welfare exemption or veterans’ organization exemption
on the property has been incorrectly allowed, an escape assessment
as provided by Article 4 (commencing with Section 531) of Chapter
3 in the amount of the exemption, with interest as provided in
Section 506, shall be made, and a penalty shall be assessed for any
failure to notify the assessor as required by this section in an
amount equaling 10 percent of the escape assessment, but may not
exceed two hundred fifty dollars ($250).

(g) Pursuant to Section 15640 of the Government Code, the
board shall review the assessor’s administration of the welfare
exemption and the veterans’ organization exemption as part of the
board’s survey of the county assessment roll to ensure the proper
administration of the exemption.

begin delete SECTION 1. end delete

begin insert SEC. 2. end insert   

Section 1840 of the Revenue and Taxation Code is
amended to read:

1840.  

If any county, city and county, or municipal corporation
desires to secure a review, equalization, or adjustment of the
assessment of its property by the board pursuant to subdivision
(g) of Section 11 of Article XIII of the California Constitution, it
shall apply to the board for that review, equalization, or adjustment
in writing on or before November 30. If the assessment objected
to is one made outside the regular period for those assessments,
the application for review shall be filed with the board within 60
days from the date the tax bill is mailed to the assessee.

Every application shall show the facts claimed to require action
of the board, and a copy of the application shall be filed with the
assessor whose assessment is questioned. Upon receipt of a timely
application, the board shall afford the applicant notice and a hearing
in accordance with any rules and regulations as the board may
prescribe. The failure to file a timely application shall bar the
applicant from relief under subdivision (g) of Section 11 of Article
XIII or this section.

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begin insert SEC. 3. end insert   

end insert

begin insert Section 4674 of the end insert begin insert Revenue and Taxation Code end insert begin insert is
amended to read: end insert

4674.  

Any excess in the proceeds deposited in the delinquent
tax sale trust fund remaining after satisfaction of the amounts
distributed under Sections 4672, 4672.1, 4672.2, 4673, and 4673.1
shall be retained in the fund on account of, and may be claimed
by parties of interest in the property as provided in, Section 4675.
At the expiration of the period specified in subdivision (e) of
Section 4675, any excess proceeds not claimed under Section 4675
may be transferred to the county general begin delete fund. end delete begin insert fund of the county
by the county auditor, except that prior to the transfer, the county
may deduct those costs of maintaining the redemption and
tax-defaulted property files, and those costs of administering and
processing the claims for excess proceeds, that have not been
recovered under any other law. end insert