BILL ANALYSIS
SB 823
Page 1
Date of Hearing: June 15, 2009
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Charles M. Calderon, Chair
SB 823 (Committee on Revenue and Taxation) - As Introduced:
March 10, 2009
Majority vote.
SENATE VOTE : 35-0
SUBJECT : Property taxation: collection.
SUMMARY : Makes several technical changes to various provisions
of the property tax law. Specifically, this bill :
1)Specifies that, only if a property tax payment is made through
the tax collector's authorized website or telephone number,
the payment is deemed received on the date the taxpayer
completes the electronic payment.
2)Requires a county to return a replicated property tax payment
to the tendering party within 60 days of the date the payment
becomes final, instead of 60 days following the receipt of
that payment.
3)Defines the term "final" as the original payment that is not
subject to chargeback, dishonor, or reversal.
4)Provides that interest on the amount of a replicated tax
payment begins to accrue within 60 days of the date the
payment becomes final, instead of 60 days of the date of
receipt . Specifies that the interest shall be computed for
the period beginning 60 days after the replicated payment
becomes final until the payment is returned to the tendering
party.
5)Authorizes a county board of supervisors to rescind a sale of
tax-defaulted property, under specified circumstances, with
the written consent of the county legal adviser and the
purchaser's successor in interest in the property, except a
bona fide purchaser for value.
6)Authorizes a county board of supervisors to rescind a sale of
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tax-defaulted property, on or after January 1, 2010, even if
the purchaser of that property or his/her successor in
interest in that property does not agree to the rescission in
writing, provided that all of the following conditions are
satisfied:
a) The property has not been transferred or conveyed by the
purchaser at the tax sale to a bona fide purchaser for
value;
b) The property has not become subject to a bona fide
encumbrance for value subsequent to the recordation of the
tax deed;
c) A hearing is scheduled before the board of supervisors;
and,
d) Not less than 45 days prior to the hearing, the tax
collector sends a notice to the purchaser or his/her
successor in interest in the property, via certified mail
with return receipt requested, to the last known mailing
address.
7)Requires that a notice sent by the tax collector to the
purchaser of tax-defaulted property contain specified
information including the date, time, and place of the
hearing, a description of the property sold, the reason for
the rescission of the sale, and a statement that a refund will
be issued to the purchaser.
8)States that, when a sale of tax-defaulted property is
rescinded, the purchaser is entitled to a refund of the amount
paid as the purchase price plus interest at the county pool
rate from the date of purchase after the rescission of the tax
deed is recorded. Requires the county clerk to acknowledge
the signature of the county tax collector before the county
tax collector records the rescission with the county recorder.
9)Makes technical, non-substantive changes to renumber Revenue
and Taxation Code (R&TC) Section 4839.2 as Section 3699 and
deletes the language in RT&C Sections 3791.4 and 3793.1 that
allows the county board of supervisors' designee to approve
tax sales to non-profit organizations and public agencies
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EXISTING LAW :
1)Requires a property owner to pay property taxes to the
treasurer or tax collector of the county within which the
property is located.
2)Requires a county to return a replicated property tax payment
to the tendering party within 60 days of the receipt of the
payment.
3)Defines "replicated payment" as a payment submitted by or on
behalf of a taxpayer, which is indicated for application to a
specific tax or tax installment that has already been paid,
whether or not the prior payment and the replicated payment
are in the same amount.
4)Provides that, if a replicated tax payment is not returned to
the tendering party within 60 days of receipt, interest will
accrue for the period beginning 60 days after receipt until
the replicated payment is returned to the tendering party.
5)Provides that if property taxes are not paid within five years
of the notice of impending default, the property becomes
subject to sale and will be sold at a public auction. The tax
collector has the power to sell property that has been
tax-defaulted for five years or more, or three years or more
in the case of nonresidential commercial property.
Tax-defaulted property may be sold under either of the
following procedures, each with distinct statutory
requirements:
a) Sale to private persons (including taxing authorities)
by auction (R&TC Section 3691 et seq.); or,
b) Sale to state and local taxing agencies by agreement
(R&TC Section 3791 et seq.).
6)States that, in the case where a tax deed to a purchaser has
been recorded and it is determined that the property should
not have been sold, the county and the purchaser may agree to
rescind the sale if (a) the property has not been transferred
by the purchaser to a bona fide purchaser for value, and (b)
the property has not become subject to a bona fide encumbrance
for value after recordation [R&TC Section 3731(a)]. If the
sale is rescinded, the purchaser is entitled to a refund of
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only the purchase price. The rescission is required to be
executed by the county tax collector, and the signatures of
both the purchaser and the county tax collector must be
acknowledged by the county clerk. The tax deed becomes void
on recordation of the rescission. A holder of a tax
certificate who received all or part of the amount paid by a
delinquent taxpayer or the purchaser is not obligated to
refund any amount to the purchaser, the county, the delinquent
taxpayer, or any other person.
7)Allows a county board of supervisor to appoint a designee to
approve sales of tax defaulted property to public agencies and
non-profit organizations.
FISCAL EFFECT : Unknown, but probably no fiscal effect.
COMMENTS :
1)The author states that, "SB 823 consolidates items that make
technical changes to property tax law sponsored by the
California Association of County Treasurer-Tax Collectors.
The bill improves the administration of property tax laws to
help both taxpayers and tax collectors. Consolidating the
measures into a single bill negates the need for individual
bills to enact each change. Additionally, the measure only
contains items with universal agreement; items that are
controversial or problematic will be removed from the bill."
2)Committee staff notes all of the following:
a) This bill extends the time period within which a county
must refund a replicated payment to the tendering party
from 60 days of receipt to 60 days of the date on which the
payment becomes final. According to the author, certain
types of payments, such credit card payments, Automated
Clearing House debits, and electronic checks are subject to
chargeback and reversal for a period of up to 180 days
after issuance. Because of a potential chargeback or
reversal of payments, counties frequently do not issue a
refund until the time during which the payment may be
reversed expires. As a result, the counties may be
required to pay interest to the tendering party for as long
as 120 days. This bill will ensure that a replicated
payment becomes final before the county is required to
issue a refund of that payment to the tendering party.
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b) This bill also creates an alternative procedure for a
county board of supervisors to rescind a sale of
tax-defaulted property. Under existing law, a sale of
tax-defaulted property may be rescinded if it is determined
that the property should not have been sold, but only if
the purchaser of that property agrees to the rescission in
writing. For example, a rescission of the tax-defaulted
property sale is warranted when the assessor failed to
notify the owner of record of the impending sale.
Generally, on or before July 1, the assessor must complete
the local assessment roll and deliver it to the auditor.
In rare circumstances, the assessor fails to update the
names of some property owners and their addresses as
recorded on the assessment roll. Consequently, if the
property is in default and the tax collector sends a notice
of the proposed sale, the owner of record may never receive
that notice since his/her name and address is not on the
assessment roll.
Currently, a purchaser who does not agree in writing to a
rescission of the sale must turn to courts. Because the
amount of refund is limited to the purchase price only, the
purchaser will not recover any expenses that he/she
incurred in improving the purchased property, if he/she
were to agree to the rescission. Similarly, a county tax
collector must take legal action to force the purchaser to
relinquish his/her rights to the property. According to
the sponsor, this bill, by providing for a hearing before
the board of supervisors, creates a mechanism for the
county tax collector and the purchaser to settle a
potentially controversial case without filing a lawsuit.
c) R&TC Section 4839.2 requires a county board of
supervisor to approve tax sales and transmit a copy of the
resolution to the tax collector. This bill renumbers that
section to place it closer to other provisions related to
the county board of supervisors' approval of tax sales.
d) Prior to 2000, county boards of supervisors were
required to approve the sale of tax-defaulted property to
public agencies and qualified nonprofit corporations. In
2000, the California Association of County Treasurers and
Tax Collectors sponsored legislation that amended R&TC
Sections 3791.4 and 3793.1 to allow county boards of
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supervisors to appoint a designee to approve these types of
sales. In 2003, the same organization sponsored
legislation to add R&TC Section 3794.3 to specify that the
sale of tax-defaulted property may take place only if
approved by the board of supervisors. (SB 1063 (Committee
on Revenue and Taxation), Ch. 199, Stats. of 2003).
Therefore, existing law regarding the approval of tax sales
to public agencies and non-profit organizations appears to
be inconsistent. This bill would repeal the conflicting
language by removing the provisions from R&TC Sections
3791.4 and 3793.1 that allow the board of supervisors to
appoint a designee to approve these types of tax sales.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Treasurer-Tax Collectors
California State Controller, John Chiang
Opposition
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098