BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 816|
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THIRD READING
Bill No: SB 816
Author: Ducheny (D)
Amended: 4/28/09
Vote: 21
SENATE REVENUE & TAXATION COMMITTEE : 7-1, 4/22/09
AYES: Wolk, Alquist, Ashburn, Florez, Padilla, Runner,
Wiggins
NOES: Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Property taxation
SOURCE : Author
DIGEST : This bill makes changes in the Documentary
Transfer Tax law relative to: (1) city ordinances, (2)
assessor records, and (3) change of ownership statements.
ANALYSIS : Existing law (California Constitution, Article
XIIIA, Section 4) prohibits transaction taxes or sales
taxes on transfers of real property; however, the Revenue
and Taxation Code authorizes counties to approve an
ordinance to impose a documentary transfer tax (DTT), which
applies to deeds of transfer of realty within that
jurisdiction and is based on the value of the transfer. In
counties, the rate is fifty-five cents ($0.55) for each
five hundred dollars ($500) of value. All of California's
58 counties apply the tax, which is modeled after the
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repealed Federal Documentary Stamp Tax.
Existing law also allows cities to enact ordinances to
impose a DTT:
1.Noncharter cities within a County that impose a DTT may
apply its tax at half of the rate of the county and
applies as a credit against the county rate.
2.Charter cities may impose a DTT at a higher rate under
the municipal affairs doctrine in the California
Constitution (Article XI, Section 5). If they do so at a
higher rate than the non-charter rate, then the city DTT
does not serve as a credit against the county tax.
Existing law provides several exemptions to the tax,
including when any public agency acquires land, land
acquired as a result of a plan of reorganization or
adjustment such as bankruptcy, and certain transfers in
lieu of foreclosure, among others.
This bill allows DTT ordinances to include an
administrative appeal process to resolve disputes. The
measure additionally states that the when this
administrative process or a court of law fixes the value of
the property for purposes of applying the DTT, that
determination does not bind the value for property tax
purposes.
Existing law provides that any information and records in
the Assessor's office are not public documents and shall
not be open to public inspection, unless specifically
exempted by law. Exemptions include information for law
enforcement agencies, county grand jury, or the Board of
Supervisors.
This bill requires the Assessor to disclose information,
furnish abstracts, and permit access to all records to the
County Recorder when conducting an investigation to
determine whether the documentary transfer tax is imposed.
Existing law requires the person acquiring ownership or
control of a corporation, partnership, limited liability
company, or other legal entity to submit a change in
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ownership statement to the Board of Equalization (BOE),
signed under penalty of perjury, listing all the counties
in which the firm operates. If the person fails to file
the statement within 45 days of a written request from the
BOE, a penalty applies of 10 percent of the taxes
applicable to the new base year reflecting the change in
ownership or control. However, the penalty is extinguished
if the person files a change in ownership statement within
60 days of BOE notification of the penalty.
This bill instead provides that the penalty applies if the
person acquiring the corporation, partnership, limited
liability company, or other legal entity does not file the
change of ownership statement within the earlier of 45 days
from the BOE request or 45 days from the date in change of
control or ownership. The bill changes two sections of
law, the first which applies to changes in control of a
firm, the second which applies to changes in ownership.
This bill also deletes the provision requiring the penalty
to be extinguished if the person files the statement within
60 days of notification of the penalty.
According to the author's office, "SB 816 requires that the
existing 10 percent penalty be applied on taxes due for the
year when a new business owner fails to file a change in
ownership statement with the BOE within 45 days of a change
of ownership or control. Under current law, the penalty is
only applied after a written request for filing is sent
from the BOE. This has resulted in multi-year delays in
reassessments of business properties and losses of hundreds
of millions in taxes to State and Local Governments."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/11/09)
California Assessors' Association
Los Angeles County
DLW:nl 5/11/09 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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