BILL ANALYSIS �
AB 2756
Page A
GOVERNOR'S VETO
AB 2756 (Revenue and Taxation Committee)
As Amended August 5, 2014
2/3 vote
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|ASSEMBLY: |60-10|(May 28, 2014) |SENATE: |34-1 |(August 25, |
| | | | | |2014) |
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|ASSEMBLY: |62-14|(August 27, | | | |
| | |2014) | | | |
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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
(Revenue and Taxation Committee)<1> of 2014, 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.
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<1> This bill is now authored by Assembly Member Bocanegra and
contains unrelated provisions.
AB 2756
Page B
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 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.
AB 2756
Page C
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.
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
AB 2756
Page D
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.
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
AB 2756
Page E
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 rack as
a dyed biodiesel blend.
GOVERNOR'S VETO MESSAGE :
"This measure requires employees in county Assessor offices who
decide change in ownership issues affecting the real property tax to
receive state provided training and certification.
"This is something the Assessors can and should be doing without a
state mandate."
Analysis Prepared by : Oksana Jaffe and M. David Ruff / REV. &
TAX. / (916) 319-2098
FN: 0005705