BILL ANALYSIS �
AB 2756
Page A
CONCURRENCE IN SENATE AMENDMENTS
AB 2756 (Revenue and Taxation Committee)
As Amended August 5, 2014
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |60-10|(May 28, 2014) |SENATE: |34-1 |(August 25, |
| | | | | |2014) |
-----------------------------------------------------------------
Original Committee Reference: REV. & TAX.
SUMMARY : Prohibits any state or county employee from making any
decision regarding a "change in ownership" issue or a property
tax exemption, except a homeowners' exemption claim, without
holding a valid assessment analyst certificate issued by the
State Board of Equalization (BOE) and provides that, where tax
is not imposed on dyed blended biodiesel fuel upon removal from
the terminal rack, if tax was previously imposed on the
biodiesel fuel portion, then a claim for refund is allowed for
the tax paid on that biodiesel fuel.
The Senate amendments add provisions previously contained in AB
2757 (Committee on Revenue and Taxation)<1> of the current
legislative session, which do the following:
1)Provide that, where tax is not imposed on dyed blended
biodiesel fuel upon removal from the terminal rack, if tax was
previously imposed on the biodiesel fuel portion, then a claim
for refund is allowed for the tax paid on that biodiesel fuel.
2)Provide that the claim for refund shall only be allowed to the
extent a supplier can show that the tax on that biodiesel fuel
has been paid by the same supplier.
3)Make other technical and conforming changes to the Diesel Fuel
Tax Law.
EXISTING LAW :
1)Provides that all property is taxable, unless otherwise
provided by the California Constitution or federal laws.
[California Constitution Article XIII, Section 1(a).] Limits
---------------------------
<1> This bill is now authored by Assembly Member Bocanegra and
contains unrelated provisions.
AB 2756
Page B
ad valorem taxes on real property to 1% of the full cash value
of that property (Proposition 13 of 1978).
2)Requires real property to be reassessed to its current fair
market value whenever a "change in ownership" occurs.
[California Constitution Article XIII A, Section 2; Revenue
and Taxation Code (R&TC) Sections 60 to 69.5.]
3)Provides that a "change in ownership" includes a transfer of
any interest in real property between a corporation,
partnership, or other legal entity and a shareholder, partner
or any other person. [R&TC Section 61(j).]
4)Specifies in R&TC Sections 60 through 69.5 what constitutes a
"change in ownership."
5)Provides a homeowners' exemption from property taxes equal to
$7,000 in assessed value (at a one percent property tax rate,
the exemption reduces property taxes by roughly $70) for
owner-occupied homes. Once granted, homeowners' exemptions
are generally permanent. However, an assessor may deny a
homeowner's exemption if the property becomes vacant or is
under construction as of the January 1st lien date.
6)Imposes a tax, under the Diesel Fuel Tax Law, upon the
removal, entry, sale, delivery, or specified use of diesel
fuel, at a specified rate per gallon.
7)Provides for a reimbursement of the amount of the tax to
persons who have used tax-paid fuel for specified nontaxable
uses, which is allowed through a claim for refund.
AS PASSED BY THE ASSEMBLY , this bill:
1)Prohibited a person, who is an employee of the state, a
county, or a city and county, from making decisions regarding
changes in ownership or a property tax exemption, other than a
homeowners' exemption, unless he or she is the holder of a
valid assessment analyst certificate issued by the BOE.
2)Required the BOE to provide for the examination of applicants
for an assessment analyst certificate and authorized the BOE
to contract with the Department of Human Resources to give the
examinations.
AB 2756
Page C
3)Prohibited the BOE from imposing any charge upon a county or
city and county or an applicant for an examination or
certification required by this bill or training conducted by
the BOE.
4)Required each applicant to disclose, at the time of
certification, on forms provided by the BOE, his or her
financial interest in any legal entity.
5)Declared that this bill shall not be construed to impede an
assessor from managing his or her staff resources efficiently,
and in a manner that allows non-certificated staff to prepare
and work with exemption applications and change in ownership
documents, provided that the non-certificated staff are not
responsible for making exemption or change in ownership
decisions.
FISCAL EFFECT : According to the Senate Appropriations
Committee:
1)The BOE certification provisions of this bill are estimated to
have no revenue impact.
2)With respect to the Diesel Fuel Tax Law provisions, the Senate
Appropriations Committee notes, "[T]he potential overpayment
of diesel fuel tax in 2012-13 was $800,000 (special fund).
Given projected growth of the biodiesel fuel industry, future
refund amounts are likely to increase."
COMMENTS : As originally passed by the Assembly, this bill
contained only those provisions related to assessment analyst
certificates issued by the BOE. Current law does not require
any certification or training for employees who make change in
ownership or exemption decisions. Yet, their decisions can
potentially add or eliminate millions of dollars each year from
tax rolls statewide. Both change in ownership and exemption
decisions have become highly complex, requiring a deep
understanding of many different legal documents and a variety of
statutes, regulations, and court decisions. This bill ensures
that state and local employees making change in ownership and
property tax exemption decisions are adequately trained and
educated.
This bill was also amended in the Senate to add the Diesel Fuel
Tax Law provisions previously contained in AB 2757.
AB 2756
Page D
Under California law, biodiesel is considered to be a diesel
fuel and is subject to the excise tax on diesel fuel. The fuel
industry generally describes biodiesel according to the
applicable percentage of biodiesel blended with petroleum
diesel. For example, "B5" would represent a blend comprised of
95% petroleum diesel and 5% biodiesel.
Most domestically produced biodiesel comes from the Midwest.
Because distribution of this biodiesel occurs outside of the
normal bulk transfer/terminal system, the excise tax applies
upon the fuel's entry into California. As such, the "enterer"
is responsible for the diesel fuel tax when the fuel enters the
state. Biodiesel that is produced in California, on the other
hand, is generally taxed upon removal from the fuel production
facility.
In either case, when another supplier makes a subsequent
purchase of this tax-paid biodiesel to create a blended diesel
fuel, the tax-paid biodiesel fuel is blended with "ex-tax"
diesel fuel. When this blended fuel is subsequently removed
from the terminal rack, it results in tax being assessed twice
on the biodiesel portion. In such cases, the state allows the
supplier to claim a credit on their return.
Some suppliers, however, have been unable to obtain a credit or
refund for taxes paid on biodiesel that enters the state, or is
produced in-state, and is delivered into their terminals as
tax-paid, but is subsequently removed at the terminal rack for a
nontaxable purpose. In other words, while current law allows
reimbursement for tax paid on diesel fuel that has been taxed
more than once, the current statutory regime does not account
for tax-paid diesel fuel that is taxed coming into the terminal
but removed for nontaxable purposes (i.e., dyed biodiesel
blends). In such cases, the supplier is unable to recover the
tax from the customer and is also unable to seek reimbursement
for the tax from the BOE. Since the tax-paid biodiesel portion
is blended with ex-tax dyed diesel fuel, it is not subject to
taxation when removed from the terminal rack. Because there is
no subsequent taxable event with which to claim the credit, the
current statute does not provide for a reimbursement of the
tax-paid portion of the biodiesel.
This bill allows a diesel fuel tax refund to a supplier for that
portion of tax-paid biodiesel fuel removed from the terminal
AB 2756
Page E
rack as a dyed biodiesel blend.
Analysis Prepared by : Oksana Jaffe and M. David Ruff / REV. &
TAX. / (916) 319-2098
FN: 0004904