BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 563 HEARING: 6/29/11
AUTHOR: Furutani FISCAL: Yes
VERSION: 5/11/11 TAX LEVY: No
CONSULTANT: Grinnell
PROPERTY TAX APPRAISAL INFORMATION
Assessors must disclose information to cities to collect
the documentary transfer tax
Background and Existing Law
The California Constitution (Article XIIIA, Section 4)
prohibits the state from levying transaction taxes or sales
taxes on transfers of real property; however, the
Documentary Transfer Tax (DTT), enacted in 1967, allows
cities and counties to enact taxes on deeds of transfer of
realty within that jurisdiction. Counties or cities may
use proceeds of the tax for general or specific purposes,
although all DTTs levied thus far are general taxes.
County recorders administer the tax, and cannot record the
property transfer until the purchaser pays the tax.
Counties collect the tax but remit the city tax to the
appropriate city. All of California's 58 counties and
hundreds of cities levy the tax, ranging from the general
law city rate of fifty-five cents per $1000 of value up to
$15.00 per $1,000 in the City of Oakland. In counties, the
rate is fifty-five cents ($0.55) for each five hundred
dollars ($500) of value. The DTT is largely modeled after
the repealed Federal Documentary Stamp Tax.
Generally, any information and records in the Assessor's
office are not public documents and are not open to public
inspection, unless allowed by law. Exemptions include
information for law enforcement agencies, county grand
jury, or the Board of Supervisors. Two years ago, the
Legislature required 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 due (SB
816, Ducheny, 2008). The City of Los Angeles wants the
Assessor to share this information with city financial
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officials to help assess the DTT.
Proposed Law
Assembly Bill 563 requires the Assessor to disclose
information, furnish abstracts, or permit access to all
records in his or her office to designated employees of a
city's finance office when conducting an investigation to
determine whether a documentary transaction tax should be
imposed for an unrecorded change in control or ownership of
property. Upon request, the Assessors shall provide the
information to the designated employee, who must certify to
the assessor that the information is necessary to assist
with the preparation and enforcement of the DTT, and is not
a public record that is open to public inspection. The
measure states that any information provided cannot include
social security numbers.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . According to the Author, "AB 563
would allow for information sharing between County
Assessor's Offices' and cities to identity 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. Give an inch, take a mile ? In 2001, the Legislature
allowed local officials to obtain taxpayer information from
the Franchise Tax Board (FTB) to enforce their local
business license taxes, pursuant to a written agreement (AB
63, Cedillo). In 2006, the Legislature extended the
program until 2011 (SB 1374, Cedillo). In 2008, the
Legislature extended the program until 2014, and required
local agencies to share its business license tax
information with the FTB to help it administer the Personal
Income and Corporation Tax Laws (SB 1146, Cedillo). Cities
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routinely cite these programs as effective revenue
generators; however, the City of Los Angeles, the sponsor
of this bill, has been particularly aggressive using the
FTB information for local tax enforcement. The City of Los
Angeles sends threatening letters to any person within the
city who included any business income on a Schedule C with
FTB, stating they faced significant penalties and interest
unless they obtained a business license and remitted the
appropriate tax. Collections agents followed up with phone
calls. While information sharing helps tax enforcement
agencies ensure that taxpayers are paying the correct
amount, will the fiscally distressed City of Los Angeles
use DTT information authorized by this bill in potentially
aggressive ways, similar to the past? The Committee may
wish to consider the manner in which cities plan on using
the information, and whether the possible enhancements for
tax enforcement and revenues will negatively affect
taxpayers.
3. Do it yourself . Currently, the City of Los Angeles
relies on Los Angeles County to collect the DTT on its
behalf. However, because the County receives less of a
share of the tax owed than the City does for real estate
transactions in the City, the City wants to collect some of
the money itself. However, they require the County
Assessor's information to do so, giving rise to AB 563.
Assembly Actions
Assembly Revenue and Taxation 6-3
Assembly Appropriations 12-5
Assembly Floor 52-27
Support and Opposition (6/23/11)
Support : Office of Mayor Antonio Villaraigosa, City of Los
Angeles, City of Lakewood, California Assessors
Association, California Nurses Association, California Tax
Reform Association
Opposition : Unknown.
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