BILL ANALYSIS
SB 816
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Date of Hearing: July 8, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 816 (Ducheny) - As Amended: June 26, 2009
Policy Committee: Revenue and
Taxation Vote: 6-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill modifies the imposition of an existing penalty on
businesses that fail to file a change in ownership statement
following the transfer of property, and implements various other
changes to administration of property tax law. Specifically, the
bill:
1)Imposes a penalty for the failure to file such a statement
within 45 days of the date in which the change of ownership or
control occurs. Currently the penalty is only applied upon
failure to respond by the specified date contained in a
written request by the Board of Equalization.
2)Deletes an existing-law provision that extinguishes the
penalty if the business files a complete statement within 60
days of notification of the penalty. Instead allows the county
board of supervisors to abate the penalty in cases where it is
established that the failure to remit the change-of-ownership
document was due to reasonable cause.
3)Provides that any ordinance adopted pursuant to the
Documentary Transfer Tax Act may include an administrative
appeal process for resolution of disputes that are related to
the documentary transfer tax.
4)Specifies that, whether the amount of documentary transfer tax
is determined by an administrative appeal process or
established by a court, the value of the property established
for purposes of determining the amount of documentary transfer
tax due shall not be binding on the determination of the value
of that property for property tax purposes.
SB 816
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FISCAL EFFECT
No change in tax liabilities. However, the bill may result in
increased penalties and property tax collections. The latter
would occur to the extent that the penalty modifications result
in more timely filings of change-of-ownership documents.
COMMENTS
1)Background . Under Proposition 13, real property is reassessed
when it is sold or transferred. Whenever a change in ownership
is recorded, the county recorder provides the assessor with a
copy of the transfer ownership document as soon as possible.
Assessors discover most changes in ownership of real property
via grant deeds or other documents that are recorded with the
county recorder. However, with respect to property owned by a
legal entity (such as corporation, LLC, or partnership), a
change of control or ownership may not result in a grant deed
or other document being recorded that might alert the assessor
that the property should be reassessed. Thus, discovery of
these types of changes in ownership is dependent on self
reporting.
Existing law requires that, whenever there is a change in
control or ownership of a legal entity, the party acquiring
ownership or control must file a signed change in ownership
statement with the BOE. There is no penalty for failing to
self-report the change. A penalty (equal to 10% of assessed
taxes) is only assessed if the entity fails to report the
change of ownership following a written request by BOE.
Consequently, there is no consequence for failing to
self-report a change of ownership in a timely manner.
2)Purpose . This bill is sponsored by the County Assessors
Association as a means to improve the discovery of changes in
ownership, resulting in more timely receipt of increased
property taxes.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081