BILL ANALYSIS �
AB 563
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Date of Hearing: May 2, 2011
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Henry T. Perea, Chair
AB 563 (Furutani) - As Introduced: February 16, 2011
Majority vote. Fiscal committee.
SUBJECT : Property taxation: assessor: disclosure: appraisal
information.
SUMMARY : Authorizes city employees to obtain or access
otherwise confidential information from the county assessor when
the city is conducting an investigation to determine whether the
documentary transfer tax (DTT) is imposed. Specifically, this
bill :
1)Requires a county assessor to disclose information, furnish
abstracts, and permit access to all records in his/her office
to employees of a city that is conducting an investigation to
determine whether a DTT is to be imposed.
2)Imposes a state-mandated local program and states that, if the
Commission on State Mandates determines that this bill
contains mandates by the state, reimbursement to local
agencies and school districts for the costs shall be made
pursuant to the statutory provisions.
EXISTING LAW :
1)Requires assessors to keep certain information confidential.
�Revenue and Taxation Code (R&TC) Section 408(a)].
2)Provides an exception to the general rule of confidentiality
for certain governmental agencies or representatives.
Requires the county assessor to disclose information, furnish
abstracts, or permit access to all records in his/her office
to law enforcement agencies, the county grand jury, and other
specified entities, including the county recorder in the case
of an investigation to determine whether a DTT is imposed.
�R&TC Section 408(b)].
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3)Allows charter cities to levy a DTT pursuant to a local
ordinance and their authority. The locally imposed DTT is
generally collected by the county recorder. �R&TC Part 6.7 of
Division 2 (Sections 11901-11935)].
FISCAL EFFECT : None.
COMMENTS :
1)The Author's Statement . The author states that, "AB 563 would
allow for information sharing between County Assessor's
Offices' and cities to identify change of ownership legal
entity transfers and other real property transfers that may
not be currently captured. Enactment of the proposed
legislation is estimated to result in improved and increased
collection of the Documentary Transfer Tax at a time of fiscal
crisis for local governments."
2)Arguments in Support . The City of Los Angeles, sponsor of AB
563, believes that "an information sharing program, modeled
after the AB 63/SB 1146 program that was initiated in the Fall
of 2001 would prove successful in capturing tax owed to local
governments, while maintaining taxpayer confidentiality
protections." The sponsor states that, "At a time of fiscal
crisis for local governments, this type of program would help
result in improved and increased collection of an existing
revenue source."
3)DTT . The California Constitution (Article XIIIA, Section 4)
prohibits transaction taxes or sales taxes on transfers of
real property. However, the DTT law, enacted in 1967, allows
cities and counties to enact, by ordinance, taxes on documents
that serve to transfer real property. The DTT applies to
deeds of transfer of realty within the jurisdiction that
imposes a DTT and is based on the value of the transfer. The
tax may be used for general or specific purposes, although all
DTTs levied thus far are general taxes. The tax is
administered by county recorders who cannot, by law, record
the property transfer until the tax is paid. Counties collect
the tax but remit the city tax to the appropriate city.
All of California's 58 counties impose the tax, which is modeled
after the repealed Federal Documentary Stamp Tax. Hundreds of
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California cities also levy the tax, ranging from the general
law city rate of $.55 for each $500 of value up to $7.50 in
the City of Oakland. Non-charter cities within a county that
imposes a DTT may impose its tax at half of the rate of the
county, which works as a credit against the county rate.
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.
The courts have consistently held that a DTT is an excise tax
for the privilege of exercising one of the incidents of
property ownership, its conveyance. It is not a property tax
because it is imposed solely on the privilege of disposing of
one's property and realizing its actual value. Fielder v.
City of Los Angeles, 14 Cal.App.4th 137; Fisher v. Alameda
County, 20 Cal. App. 4th 120.
4)Access to Records in the County Assessor's Office . Existing
law provides that any information and records in the county
assessor's office are not public documents and shall not be
open to public inspection, unless specifically exempted by
law. Exemptions include sharing of information with law
enforcement agencies, county grand jury, or the board of
supervisors. In 2009, the list of enumerated exemptions was
expanded to allow a county recorder access to all records in
the assessor's office for purposes of determining whether a
DTT is due. �R&TC Section 408(b)]. The DTT is administered
at the local level by the county recorder, so providing access
to assessor information helps recorders to determine whether
the DTT applies to certain changes of ownership.
AB 563 would further amend R&TC Section 408(b) to add city
employees to the list of agencies that may have access to all
records in the assessor's office for purposes of determining
whether a DTT is due. AB 563 is sponsored by the City of Los
Angeles, a charter city. According to the State Board of
Equalization's (BOE) analysis of this bill, the City of Los
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Angeles has an agreement with the Los Angeles County for the
collection of taxes between the city and county. Apparently,
the agreement provides that, if the County is unable to, or
does not, collect the DTT when the instrument or writing is
presented for recordation, the City has the responsibility to
collect the DTT. In order to determine whether the DTT is
due, the City may have to conduct investigation and/or perform
audits of city revenues related to DTTs, which may require
access to assessor's records.
Currently, both California and many cities face difficult
budget times. AB 563 aims to increase taxpayer compliance at
the local level, thereby generating more revenue to help close
budget gaps, consistent with the state's own efforts to close
the tax gap.
5)Taxpayer Confidentiality . Generally, critics of information
sharing between government entities are concerned about
possible unlawful disclosure or inspection of confidential tax
information. Thus, often, provisions allowing information
sharing contain safeguards against, and penalties for,
unlawful disclosure of confidential taxpayers' information.
For example, an existing information sharing program between
the Franchise Tax Board (FTB) and cities provides for criminal
sanctions for unlawful disclosure or inspection of such
information, which supplements FTB's institutional commitment
to taxpayer information confidentiality. The information
possessed by the county assessor's office is considerably less
sensitive than the information found on income tax returns.
Nonetheless, the Committee may wish to consider amending AB
563 to include some sort of safeguards against unlawful
disclosure of information acquired by city's employees from
the county assessor.
6)Similar Legislation.
SB 816 (Ducheny), Chapter 622, Statutes of 2009, made changes in
the DTT law relative to city ordinances, assessor records, and
change of ownership statements, including allowing county
recorders to assess the county assessors' records when
investigating if a DTT is due.
SB 1146 (Cedillo), Chapter 345, Statutes of 2008, extended the
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sunset date for the program that allows the FTB to share
information with tax officials of any city in California until
December 31, 2014.
SB 1374 (Cedillo), Chapter 513, Statutes of 2006, extended the
program that allows the FTB to provide information to tax
officials of any city in California until December 31, 2011.
AB 63 (Cedillo), Chapter 915, Statutes of 2001, extended the
circumstances under which the FTB may disclose tax information
to tax officials of any city, until December 31, 2008.
REGISTERED SUPPORT / OPPOSITION :
Support
California Tax Reform Association
The City of Los Angeles, Office of the Mayor Antonio R.
Villaraigosa (sponsor)
Opposition
None on file
Analysis Prepared by : Oksana Jaffe / REV. & TAX. / (916)
319-2098