BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1323|
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THIRD READING
Bill No: SB 1323
Author: Lieu (D)
Amended: 4/29/14
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-0, 4/24/14
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu, Walters
NO VOTE RECORDED: Knight
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Property taxation
SOURCE : California Assessors Association
DIGEST : This bill simplifies the cancellation or refunding of
penalties for the late filing of property tax exemption
applications, and reduces the penalty from $250 to $200. This
bill deletes the religious organizations size limitation of over
500 people on leased land to qualify for property tax exemption
for parking facilities, and allows exemptions for contiguous
properties to be filed in a single claim.
ANALYSIS : California Constitution Section 1 of Article XIII
provides that all property is taxable unless explicitly exempted
by the Constitution or federal law, but allows the Legislature
to exempt property used for charitable purposes owned by
nonprofit entities organized and operated for charitable
purposes, none of whose income inure to the benefit of any
private shareholder or individual. The Legislature enacted this
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exemption, commonly known as the "welfare exemption."
Exemptions apply to the annual property tax roll, as well as to
one-time supplemental assessments, which assessors send to
taxpayers whenever a change of ownership or new construction
results in a reassessment after the lien date of January 1 to
reflect the difference between the initial and revised
assessment.
I. Cancelling and refunding taxes on exempt property .
Currently, when a taxpayer files an application for an
exemption for property used as a college, cemetery, church,
religious exhibition, veterans' organization, free public
library, free museums, or other welfare exempt property
before the supplemental assessment is due; the assessor can
cancel all taxes, penalties, and interest for that
assessment. However, if the taxpayer does not file an
application until after that date, but before the first
installment becomes delinquent, the assessor reduces any
taxes, penalties, and interest by 90%, but not below $250.
If the taxpayer applies after that date, the assessor can
only reduce taxes, penalties, and interest by 85%, but not
below $200. However, some exemptions depart from the general
rule, such as:
For not timely filed claims for the veterans' or
homeowners' exemption, the assessor can refund up to 80%
of the tax provided the taxpayer files an application on
or before the date the first installment becomes due.
For not timely filed claims for the disabled veterans'
exemption, the assessor can refund up to 90% of the tax
provided the taxpayer files an application on or before
the date the first installment becomes due, but only 85%
if the taxpayer does not file the claim before that time.
For any other exemption not listed above, if the
taxpayer does not file an application until after that
date, but before the first installment becomes delinquent,
the assessor reduces any taxes, penalties, and interest by
90%, but when the taxpayer applies after that date, the
assessor can only reduce taxes, penalties, and interest by
85%.
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Additionally, past practice for taxpayers and organization
was to file one exemption application, regardless of the
number of properties owned. However, assessors process one
claims per property, and cannot easily identify which
property should be assessed the penalty when a taxpayer
owning multiple properties does not file for the exemption on
time.
This bill provides that for all the exemptions except the
veterans', homeowners' exemption, and disabled veterans'
exemption, the assessor can cancel 90% of the taxes,
penalties, or interest, that exceeds $20,000 in total amount
($200 in property tax at the 1% rate). This bill changes
both the individual statutes for each property tax exemption,
as well as the general law that guides supplemental
assessments.
This bill provides that the $20,000 in total amount assessed
valuation penalty cap for exempt properties applies to each
application, which can include a property location with six
contiguous parcels. If a taxpayer owns multiple properties,
and fails to file applications on time for any of them, the
penalty equals $200 per application, instead of per taxpayer.
II. Church parking lots . Existing law allows the welfare
exemption for all real property necessary and desirable for
persons attending services to park their cars. However, the
church, religious denomination, or sect must not have a
congregation of more than 500 people for it to be eligible
for the exemption. Additionally, the law conditions the
exemption on the parking of "automobiles."
This bill deletes the 500 person limit, and changes
"automobiles" to "vehicles."
III. Affidavits . Taxpayers seeking an exemption must annually
submit an affidavit to the assessor each year providing any
required information, and can currently combine all of his or
her property into one affidavit. Additionally, state law
generally requires taxpayers to submit affidavits for
exemptions between the lien date and 5 p.m. on February 15.
This bill requires the taxpayer to submit the affidavit for
each property for which he/she seeks an exemption, but also
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allows the taxpayer to file a single claim for a property
consisting of contiguous parcels. This bill also clarifies
that the claim period for the full disabled veterans'
exemption begins when the taxpayer becomes eligible for the
exemption and ends on February 15.
IV. Forms . State law often contains the exact form that
assessors and taxpayers use, including the card that
applicants for the welfare exemption send to the assessor
each year to show no change in eligibility for the exemption,
and the notice that the assessor sends each year to taxpayers
who received the religious exemption the year before.
This bill deletes both the card and the notice from the law,
and instead directs the Board of Equalization (BOE) to
prescribe cards and notices for applicants and assessors to
use, which BOE does for all of its forms annually.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 5/13/14)
California Assessors' Association (source)
California Association of Nonprofits
ARGUMENTS IN SUPPORT : According to the author, "California's
property taxation laws and regulations can be fairly complex and
all appropriate attempts should be made to simplify them for the
betterment of taxpayers and administrators alike. This measure
is about simplifying the code sections related to late-filings.
It will streamline the process for granting property tax welfare
exemptions related to certain types of property such as
religious institutions and hospitals. Ultimately, by bringing
efficiencies to claiming welfare exemption status, this measure
will save taxpayers and local government, including county
assessors, precious time and resources."
AB:k 5/13/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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