BILL NUMBER: AB 2492 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 3, 2010
AMENDED IN ASSEMBLY APRIL 8, 2010
INTRODUCED BY Assembly Member Ammiano
FEBRUARY 19, 2010
An act to amend Sections 62, 64, and 65.1 of, and to add
Sections 64.1 and 64.5 to, the Revenue and Taxation Code, relating to
taxation, to take effect immediately, tax levy. An
act to amend Section 64 of, and to add Section 480.8 to, the Revenue
and Taxation Code, relating to taxation, to take effect immediately,
tax levy.
LEGISLATIVE COUNSEL'S DIGEST
AB 2492, as amended, Ammiano. Property taxation: change in
ownership.
The California Constitution generally limits ad valorem taxes on
real property to 1% of the full cash value of that property. For
purposes of this limitation, "full cash value" is defined as the
assessor's valuation of real property as shown on the 1975-76 tax
bill under "full cash value" or, thereafter, the appraised value of
that real property when purchased, newly constructed, or a change in
ownership has occurred. Existing property tax law specifies those
circumstances in which the transfer of ownership interests in a
corporation, partnership, limited liability company, or other legal
entity results in a change in ownership of the real property owned by
that entity, and generally provides that a change in ownership as so
described occurs when a legal entity or other person obtains a
controlling or majority ownership interest in the legal entity.
Existing law also specifies other circumstances in which certain
transfers of ownership interests in legal entities result in a change
in ownership of the real property owned by those legal entities.
This bill would instead specify that when 100% of
ownership interests in a legal entity, as defined, are sold or
transferred in a single transaction, as specified ,
the real property directly or indirectly owned by
that legal entity has changed ownership in proportion to
that portion of the ownership interests in the entity that were
transferred. This bill would also provide that all of the real
property owned by a legal entity in the state has undergone a change
in ownership when over 50% of the ownership interests in that entity
have been transferred, as specified. This bill would also specify, in
the case of a publicly traded company, that all of the real property
owned by the company in the state has undergone a change in
ownership when over 50% of the ownership interests in that company
have been transferred. This bill would establish a rebuttable
presumption that, as of January 1, 2011, and on January 1 of each 3rd
fiscal year thereafter, all of the real property owned by a publicly
traded company in the state has undergone a change in ownership.
This bill would require local assessors to notify a publicly traded
company of this presumption and allow an assessee or an assessor to
rebut this presumption in a specified manner. This bill would also
require the State Board of Equalization to promulgate regulations to
implement these provisions , whether or not any one
legal entity that is a party to the transaction acquires more than
50% of the ownership interests. The bill would require the State
Board of Equalization to notify assessors when a change in ownership
as so described occurs .
This bill would result in a change in state taxes for the purpose
of increasing state revenues within the meaning of Section 3 of
Article XIII A of the California Constitution, and thus would require
for passage the approval of 2/3 of the membership of each house of
the Legislature.
By requiring local assessors to notify publicly traded companies
of the rebuttable presumption described above, this bill would impose
a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
This bill would take effect immediately as a tax levy.
Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes no .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. It is the intent of the Legislature in
enacting this act to specify those circumstances under which real
property owned by banks and financial institutions that have been
subject to mergers and acquisitions by other banks and financial
institutions, such as the mergers that occurred during the financial
crisis of 2008, undergo a change in ownership, to ensure that the
real property owned by those banks and financial institutions undergo
a change in ownership.
SEC. 2. Section 64 of the Revenue and
Taxation Code is amended to read:
64. (a) Except as provided in subdivision (i) of Section 61 and
subdivisions (c) and (d) of this section , the
purchase or transfer of ownership interests in legal entities, such
as corporate stock or partnership or limited liability company
interests, shall not be deemed to does not
constitute a transfer of the real property of the legal entity.
This subdivision is applicable applies
to the purchase or transfer of ownership interests in a partnership
without regard to whether it is a continuing or a dissolved
partnership.
(b) Any corporate reorganization, where all of the corporations
involved are members of an affiliated group, and that qualifies as a
reorganization under Section 368 of the United States Internal
Revenue Code and that is accepted as a nontaxable event by similar
California statutes, or any transfer of real property among members
of an affiliated group, or any reorganization of farm credit
institutions pursuant to the federal Farm Credit Act of 1971 (Public
Law 92-181), as amended, shall not be a change of ownership. The
taxpayer shall furnish proof, under penalty of perjury, to the
assessor that the transfer meets the requirements of this
subdivision.
For purposes of this subdivision, "affiliated group" means one or
more chains of corporations connected through stock ownership with a
common parent corporation if both of the following conditions are
met:
(1) One hundred percent of the voting stock, exclusive of any
share owned by directors, of each of the corporations, except the
parent corporation, is owned by one or more of the other
corporations.
(2) The common parent corporation owns, directly, 100 percent of
the voting stock, exclusive of any shares owned by directors, of at
least one of the other corporations.
(c) (1) (A) When a corporation, partnership,
limited liability company, other legal entity, or any other person
obtains control through direct or indirect ownership or control of
more than 50 percent of the voting stock of any corporation, or
obtains a majority ownership interest in any partnership, limited
liability company, or other legal entity through the purchase or
transfer of corporate stock, partnership, or limited liability
company interest, or ownership interests in other legal entities,
including any purchase or transfer of 50 percent or less of the
ownership interest through which control or a majority ownership
interest is obtained, the purchase or transfer of that stock or other
interest shall be a change of ownership of the real property owned
by the corporation, partnership, limited liability company, or other
legal entity in which the controlling interest is obtained.
(B) When 100 percent of the ownership interests in a legal entity
are sold or transferred in a single transaction, whether by merger,
acquisition, private equity buyout, transfer of partnership shares,
or any other means by which a legal entity acquires the ownership
interests of another legal entity, including the subsidiaries or
affiliates of the legal entity and the property owned by those
subsidiaries or affiliates, the purchase or transfer of the ownership
interests shall be a change of ownership of the real property owned
by the legal entity, whether or not any one legal entity that is a
party to the transaction acquires more than 50 percent of the
ownership interests.
(2) On or after January 1, 1996, when an owner of a majority
ownership interest in any partnership obtains all of the remaining
ownership interests in that partnership or otherwise becomes the sole
partner, the purchase or transfer of the minority interests, subject
to the appropriate application of the step-transaction doctrine,
shall not be a change in ownership of the real property owned by the
partnership.
(d) If property is transferred on or after March 1, 1975, to a
legal entity in a transaction excluded from change in ownership by
paragraph (2) of subdivision (a) of Section 62, then the persons
holding ownership interests in that legal entity immediately after
the transfer shall be considered the "original coowners." Whenever
shares or other ownership interests representing cumulatively more
than 50 percent of the total interests in the entity are transferred
by any of the original coowners in one or more transactions, a change
in ownership of that real property owned by the legal entity shall
have occurred, and the property that was previously excluded from
change in ownership under the provisions of paragraph (2) of
subdivision (a) of Section 62 shall be reappraised.
The date of reappraisal shall be the date of the transfer of the
ownership interest representing individually or cumulatively more
than 50 percent of the interests in the entity.
A transfer of shares or other ownership interests that results in
a change in control of a corporation, partnership, limited liability
company, or any other legal entity is subject to reappraisal as
provided in subdivision (c) rather than this subdivision.
(e) To assist in the determination of whether a change of
ownership has occurred under subdivisions (c) and (d), the Franchise
Tax Board shall include a question in substantially the following
form on returns for partnerships, banks, and corporations (except
tax-exempt organizations):
If the corporation (or partnership or limited liability company)
owns real property in California, has cumulatively more than 50
percent of the voting stock (or more than 50 percent of total
interest in both partnership or limited liability company capital and
partnership or limited liability company profits) (1) been
transferred by the corporation (or partnership or limited liability
company) since March 1, 1975, or (2) been acquired by another legal
entity or person during the year? (See instructions.)
If the entity answers "yes" to (1) or (2) in the above question,
then the Franchise Tax Board shall furnish the names and addresses of
that entity and of the stock or partnership or limited liability
company ownership interest transferees to the State Board of
Equalization.
(f) The State Board of Equalization may prescribe those
regulations as may be necessary to carry out the purposes of this
section.
(g) For purposes of this section, both of the following shall
apply:
(1) "Legal entity" means a corporation, a partnership, a limited
liability company, or other legal entity.
(2) "Ownership interests" means corporate voting stock,
partnership capital and profits interests, limited liability company
membership interests, and other ownership interests in legal
entities.
SEC. 3. Section 480.8 is added to the
Revenue and Taxation Code , to read:
480.8. The board shall notify assessors when a change in
ownership described in subparagraph (B) of paragraph (1) of
subdivision (c) of Section 64 has occurred.
SEC. 4. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect.
SECTION 1. The Legislature finds and declares
all of the following:
(a) For ad valorem property taxation purposes, the California
Constitution generally limits annual increases in the assessed
taxable value of real property to 2 percent of the property's
adjusted base year value, but requires that real property be
reassessed at its full cash value when that real property undergoes a
change in ownership.
(b) These rules provide a necessary protection for real property
owners when land values rise more rapidly than income.
(c) Because of difficulties in identifying changes in ownership of
certain nonresidential commercial and industrial properties, these
properties often escape reassessment at full market value upon a
change in ownership.
(d) As a result of these assessment anomalies, despite rapid
economic growth during the 1990s which increased the value of
nonresidential commercial and industrial properties, the share of
real property taxes paid by nonresidential commercial and industrial
property owners decreased, while the share of real property taxes
paid by residential property owners (e.g. homeowners) increased.
(e) Failure to capture the rising land values of nonresidential
commercial and industrial properties that have undergone a change in
ownership has a range of negative consequences, including, but not
limited to:
(1) Hampering the ability of local governments to build new
infrastructure and provide vital services.
(2) Imposing a disproportionate property tax burden on newly
constructed properties when compared to existing properties.
(3) Encouraging local governments to foster sales tax-generating
retail development rather than fostering job-creating investments
such as manufacturing.
(f) Therefore, it is the intent of the Legislature to enact a
program to specify those circumstances under which nonresidential
commercial and industrial property undergoes a change in ownership,
to ensure that all real property is assessed at fair market value
when that real property undergoes a change in ownership.
SEC. 2. Section 62 of the Revenue and Taxation
Code is amended to read:
62. Change in ownership does not include:
(a) (1) Any transfer between coowners that results in a change in
the method of holding title to the real property transferred without
changing the proportional interests of the coowners in that real
property, such as a partition of a tenancy in common.
(2) Any transfer between an individual or individuals and a legal
entity or between legal entities, such as a cotenancy to a
partnership, a partnership to a corporation, or a trust to a
cotenancy, that results solely in a change in the method of holding
title to the real property and in which proportional ownership
interests of the transferors and transferees, whether represented by
stock, partnership interest, or otherwise, in each and every piece of
real property transferred, remain the same after the transfer. This
paragraph shall not apply to transfers also excluded from change in
ownership under the provisions of subdivision (e) of Section 64.
(b) Any transfer for the purpose of perfecting title to the
property.
(c) (1) The creation, assignment, termination, or reconveyance of
a security interest; or (2) the substitution of a trustee under a
security instrument.
(d) Any transfer by the trustor, or by the trustor's spouse or
registered domestic partner, or by both, into a trust for so long as
(1) the transferor is the present beneficiary of the trust, or (2)
the trust is revocable; or any transfer by a trustee of such a trust
described in either clause (1) or (2) back to the trustor; or, any
creation or termination of a trust in which the trustor retains the
reversion and in which the interest of others does not exceed 12
years duration.
(e) Any transfer by an instrument whose terms reserve to the
transferor an estate for years or an estate for life. However, the
termination of such an estate for years or estate for life shall
constitute a change in ownership, except as provided in subdivision
(d) and in Section 63.
(f) The creation or transfer of a joint tenancy interest if the
transferor, after the creation or transfer, is one of the joint
tenants as provided in subdivision (b) of Section 65.
(g) Any transfer of a lessor's interest in taxable real property
subject to a lease with a remaining term (including renewal options)
of 35 years or more. For the purpose of this subdivision, for 1979-80
and each year thereafter, it shall be conclusively presumed that all
homes eligible for the homeowners' exemption, other than
manufactured homes located on rented or leased land and subject to
taxation pursuant to Part 13 (commencing with Section 5800) and
floating homes subject to taxation pursuant to Section 229, that are
on leased land have a renewal option of at least 35 years on the
lease of that land, whether or not in fact that renewal option exists
in any contract or agreement.
(h) Any purchase, redemption, or other transfer of the shares or
units of participation of a group trust, pooled fund, common trust
fund, or other collective investment fund established by a financial
institution.
(i) Any transfer of stock or membership certificate in a housing
cooperative that was financed under one mortgage, provided that
mortgage was insured under Section 213, 221(d)(3), 221(d)(4), or 236
of the National Housing Act, as amended, or that housing cooperative
was financed or assisted pursuant to Section 514, 515, or 516 of the
Housing Act of 1949 or Section 202 of the Housing Act of 1959, or the
housing cooperative was financed by a direct loan from the
California Housing Finance Agency, and provided that the regulatory
and occupancy agreements were approved by the governmental lender or
insurer, and provided that the transfer is to the housing cooperative
or to a person or family qualifying for purchase by reason of
limited income. Any subsequent transfer from the housing cooperative
to a person or family not eligible for state or federal assistance in
reduction of monthly carrying charges or interest reduction
assistance by reason of the income level of that person or family
shall constitute a change of ownership.
(j) Any transfer during the period March 1, 1975, to March 1,
1981, between coowners in any property that was held by them as
coowners for all or part of that period, and which was eligible for a
homeowner's exemption during the period of the coownership,
notwithstanding any other provision of this chapter. Any transferee
whose interest was revalued in contravention of the provisions of
this subdivision shall obtain a reversal of that revaluation with
respect to the 1980-81 assessment year and thereafter, upon
application to the county assessor of the county in which the
property is located filed on or before March 26, 1982. No refunds
shall be made under this subdivision for any assessment year prior to
the 1980-81 fiscal year.
(k) Any transfer of property or an interest therein between a
corporation sole, a religious corporation, a public benefit
corporation, and a holding corporation as defined in Section 23701h
holding title for the benefit of any of these corporations, or any
combination thereof (including any transfer from one entity to the
same type of entity), provided that both the transferee and
transferor are regulated by laws, rules, regulations, or canons of
the same religious denomination.
(l) Any transfer, that would otherwise be a transfer subject to
reappraisal under this chapter, between or among the same parties for
the purpose of correcting or reforming a deed to express the true
intentions of the parties, provided that the original relationship
between the grantor and grantee is not changed.
(m) Any intrafamily transfer of an eligible dwelling unit from a
parent or parents or legal guardian or guardians to a minor child or
children or between or among minor siblings as a result of a court
order or judicial decree due to the death of the parent or parents.
As used in this subdivision, "eligible dwelling unit" means the
dwelling unit that was the principal place of residence of the minor
child or children prior to the transfer and remains the principal
place of residence of the minor child or children after the transfer.
(n) Any transfer of an eligible dwelling unit, whether by will,
devise, or inheritance, from a parent or parents to a child or
children, or from a guardian or guardians to a ward or wards, if the
child, children, ward, or wards have been disabled, as provided in
subdivision (e) of Section 12304 of the Welfare and Institutions
Code, for at least five years preceding the transfer and if the
child, children, ward, or wards have adjusted gross income that, when
combined with the adjusted gross income of a spouse or spouses,
parent or parents, and child or children, does not exceed twenty
thousand dollars ($20,000) in the year in which the transfer occurs.
As used in this subdivision, "child" or "ward" includes a minor or an
adult. As used in this subdivision, "eligible dwelling unit" means
the dwelling unit that was the principal place of residence of the
child or children, or ward or wards for at least five years preceding
the transfer and remains the principal place of residence of the
child or children, or ward or wards after the transfer. Any
transferee whose property was reassessed in contravention of the
provisions of this subdivision for the 1984-85 assessment year shall
obtain a reversal of that reassessment upon application to the county
assessor of the county in which the property is located. Application
by the transferee shall be made to the assessor no later than 30
days after the later of either the transferee's receipt of notice of
reassessment pursuant to Section 75.31 or the end of the 1984-85
fiscal year.
(o) Any transfer of a possessory interest in tax-exempt real
property subject to a sublease with a remaining term, including
renewal options, that exceeds half the length of the remaining term
of the leasehold, including renewal options.
(p) (1) Commencing on January 1, 2000, any transfer between
registered domestic partners, as defined in Section 297 of the Family
Code, including, but not limited to:
(A) Transfers to a trustee for the beneficial use of a registered
domestic partner, or the surviving registered domestic partner of a
deceased transferor, or by a trustee of such a trust to the
registered domestic partner of the trustor.
(B) Transfers that take effect upon the death of a registered
domestic partner.
(C) Transfers to a registered domestic partner or former
registered domestic partner in connection with a property settlement
agreement or decree of dissolution of a registered domestic
partnership or legal separation.
(D) The creation, transfer, or termination, solely between
registered domestic partners, of any coowner's interest.
(E) The distribution of a legal entity's property to a registered
domestic partner or former registered domestic partner in exchange
for the interest of the registered domestic partner in the legal
entity in connection with a property settlement agreement or a decree
of dissolution of a registered domestic partnership or legal
separation.
(2) Any transferee whose property was reassessed in contravention
of the provisions of this subdivision for a transfer occurring
between January 1, 2000, and January 1, 2006, shall obtain a reversal
of that reassessment upon application to the county assessor of the
county in which the property is located. Application by the
transferee shall be made to the assessor no later than June 30, 2009.
A county may charge a fee for its costs related to the application
and reassessment reversal in an amount that does not exceed the
actual costs incurred. This paragraph shall be liberally construed to
provide the benefits of this subdivision and Article XIII A of the
California Constitution to registered domestic partners.
(A) After consultation with the California Assessors' Association,
the State Board of Equalization shall prescribe the form for
claiming the reassessment reversal described in paragraph (2). The
claim form shall be entitled "Claim for Reassessment Reversal for
Registered Domestic Partners." The claim shall state on its face that
a "certificate of registered domestic partnership" is available upon
request from the California Secretary of State.
(B) The information on the claim shall include a description of
the property, the parties to the transfer of interest in the
property, the date of the transfer of interest in the property, and a
statement that the transferee registered domestic partner and the
transferor registered domestic partner were, on the date of transfer,
in a registered domestic partnership as defined in Section 297 of
the Family Code.
(C) The claimant shall declare that the information provided on
the form is true, correct, and complete to the best of his or her
knowledge and belief.
(D) The claimant shall provide with the completed claim the
"Certificate of Registered Domestic Partnership," or photocopy
thereof, naming the transferee and transferor as registered domestic
partners and reflecting the creation of the registered domestic
partnership on a date prior to, or concurrent with, the date of the
transfer for which a reassessment reversal is requested.
(E) Any reassessment reversal granted pursuant to a claim shall
apply commencing with the lien date of the assessment year, as
defined in Section 118, in which the claim is filed. No refunds shall
be made under this paragraph for any prior assessment year.
(F) Under any reassessment reversal granted pursuant to that
claim, the adjusted full cash value of the subject real property in
the assessment year described in subparagraph (E) shall be the
adjusted base year value of the subject real property in the
assessment year in which the excluded purchase or transfer took
place, factored to the assessment year described in subparagraph (E)
for both of the following:
(i) Inflation as annually determined in accordance with paragraph
(1) of subdivision (a) of Section 51.
(ii) Any subsequent new construction occurring with respect to the
subject real property.
SEC. 3. Section 64 of the Revenue and Taxation
Code is amended to read:
64. (a) For purposes of this section, the following definitions
apply:
(1) "Legal entity" means a corporation, a partnership, a limited
liability company, or other legal entity, but does not include a
publicly traded company.
(2) "Publicly traded company" means a corporation or other entity
that meets both of the following conditions:
(A) The corporation or entity is subject to the filing
requirements of the United States Securities and Exchange Commission.
(B) The corporation or entity directly or indirectly owns an
interest in real property in California.
(3) "Ownership interest" means corporate voting stock, partnership
capital and profits interests, limited liability company membership
interests, and other ownership interests in legal entities and
publicly traded companies.
(4) "Directly owned" means that the legal entity or publicly
traded company has an interest in real property that constitutes
ownership for change in ownership purposes.
(5) "Indirectly owned" means that the legal entity or publicly
traded company has an ownership interest in another legal entity or
publicly traded company that has an interest in real property that
constitutes ownership for change in ownership purposes.
(b) Except as provided in subdivision (i) of Section 61 and
subdivisions (c) and (d), the purchase or transfer of ownership
interests in a legal entity or a publicly traded company does not
constitute a transfer of the real property directly or indirectly
owned by a legal entity or publicly traded company. This subdivision
applies to the purchase or transfer of ownership interests in a
partnership without regard to whether it is a continuing or a
dissolved partnership.
(c) (1) (A) Except as provided in paragraph (2), the transfer of
ownership interests in a legal entity constitutes a change in
ownership of the real property directly or indirectly owned by the
legal entity in the same proportion as that represented by
the ratio of the transferred
ownership interests to the total ownership interests in the legal
entity.
(B) Transfers of different ownership interests in a legal entity
shall be accumulated each assessment year and a new base year value
shall be established as of the following lien date for the real
property interests that have undergone a change in ownership for that
assessment year.
(2) For purposes of this subdivision, both of the following apply:
(A) When the transfer of different ownership interests in a legal
entity represents, cumulatively in any assessment year or in multiple
assessment years, more than 50 percent of the total ownership
interests in that legal entity, all of the real property directly or
indirectly owned by the legal entity in the state has undergone a
change in ownership and a new base year value shall be established
for the real property as of the following lien date.
(B) The transfer of ownership interests in a legal entity during
an assessment year, or as accumulated over multiple assessment years,
that represents, when transferred, less than 10 percent of the
ownership interests in the legal entity and that have a fair market
value of less than one hundred thousand dollars ($100,000), does not
constitute a change in ownership of the real property interests
directly or indirectly owned by the legal entity.
(d) (1) (A) Except as provided in subdivision (e), the transfer of
cumulatively more than 50 percent of the ownership interests in a
publicly traded company results in a change in ownership of all of
the real property directly or indirectly owned by the publicly traded
company in the state and a new base year value shall be established
for the real property as of the date of the transfer of cumulatively
more than 50 percent of the ownership interests in the company.
(B) For purposes of determining whether a change in ownership, as
described in this subdivision, of a publicly traded company's real
property has occurred, it is conclusively presumed that a single,
individual share of voting stock or any other ownership interest in a
publicly traded company is transferred only once subsequent to the
most recent change in ownership of the real property directly or
indirectly owned by that publicly traded company.
(2) For the 2011-12 fiscal year, it is rebuttably presumed that,
as of January 1, 2011, the real property directly or indirectly owned
by each publicly traded company has undergone a change in ownership,
as described in this subdivision, since January 1, 2008. There is a
further rebuttable presumption that a change in ownership, as
described in this subdivision, occurs as of January 1, 2014, and
every three years thereafter. The assessor or assessee may rebut
these presumptions in the manner described in Section 64.1.
(e) Any corporate reorganization, where all of the corporations
involved are members of an affiliated group, and that qualifies as a
reorganization under Section 368 of the United States Internal
Revenue Code and that is accepted as a nontaxable event by similar
California statutes, or any transfer of real property among members
of an affiliated group, or any reorganization of farm credit
institutions pursuant to the federal Farm Credit Act of 1971 (Public
Law 92-181), as amended, shall not be a change of ownership. The
taxpayer shall furnish proof, under penalty of perjury, to the
assessor that the transfer meets the requirements of this
subdivision.
For purposes of this subdivision, "affiliated group" means one or
more chains of corporations connected through stock ownership with a
common parent corporation if both of the following conditions are
met:
(1) One hundred percent of the voting stock, exclusive of any
share owned by directors, of each of the corporations, except the
parent corporation, is owned by one or more of the other
corporations.
(2) The common parent corporation owns, directly, 100 percent of
the voting stock, exclusive of any shares owned by directors, of at
least one of the other corporations.
(f) To assist in the determination of whether a change of
ownership has occurred under subdivisions (c) and (d), the Franchise
Tax Board shall include a question in substantially the following
form on returns for
legal entities and publicly traded companies:
"If the legal entity or publicly traded company owns or leases
real property in California, have any ownership interests in the
legal entity or publicly traded company been transferred since the
last change in ownership of the real property directly or indirectly
controlled by the legal entity or corporation?"
If the legal entity or publicly traded company answers "yes" to
the above question or does not respond, the Franchise Tax Board shall
furnish to the State Board of Equalization the name and address of
the legal entity or publicly traded company and, if known, the names
and addresses of the ownership interest transferees.
(g) The State Board of Equalization shall promulgate regulations
to implement this section.
SEC. 4. Section 64.1 is added to the Revenue
and Taxation Code, to read:
64.1. (a) (1) A publicly traded company may rebut the presumption
set forth in paragraph (2) of subdivision (d) of Section 64 that the
real property directly or indirectly owned by the company has
undergone a change in ownership, as described in subdivision (d) of
Section 64, by submitting to the assessor, on or before 60 days after
the mailing date of a "Notice of Deemed Change in Ownership and
Proposed Reappraisal" as described in Section 64.5, either of the
following:
(A) A statement certifying under penalty of perjury that the real
property directly or indirectly owned by the company in the county
has not undergone a change in ownership, as described in subdivision
(d) of Section 64.
(B) Evidence that demonstrates, by a preponderance, that the real
property directly or indirectly owned by the company in the county
has not undergone a change in ownership, as described in subdivision
(d) of Section 64. On or before 60 days after the publicly traded
company submits evidence pursuant to this subparagraph, the assessor
shall determine and notify the publicly traded company regarding
whether the presumption has been rebutted.
(2) If a publicly traded company willfully misrepresents, either
in the statement described in subparagraph (A) of paragraph (1) or in
the evidence provided to the assessor pursuant to subparagraph (B)
of that paragraph, that a change in ownership as described in
subdivision (d) of Section 64 has not occurred, that company shall
pay a penalty equal to the greater of (A) two thousand five hundred
dollars ($2,500) on each property directly or indirectly owned by the
company in the county, or (B) 25 percent of the current year's taxes
on the real property directly or indirectly owned by the company in
the county. This penalty shall be added to the assessment roll, be
collected in the same manner as any other delinquent property taxes,
and is subject to the same penalties for nonpayment.
(b) The assessor may rebut the presumption that the real property
directly or indirectly owned by a publicly traded company has
undergone a change in ownership by submitting to the assessee, on or
before 60 days after the mailing date of a "Notice of Deemed Change
in Ownership and Proposed Reappraisal" as described in Section 64.5,
evidence that, in the view of the assessor, demonstrates by a
preponderance that the real property directly or indirectly owned by
the company in the county has not undergone a change in ownership, as
described in subdivision (d) of Section 64.
(c) (1) The real property directly or indirectly owned by a
publicly traded company has undergone a change in ownership and the
assessor shall reappraise the real property directly or indirectly
owned by the publicly traded company and establish a new base year
value for that real property if one of the following applies:
(A) The publicly traded company does not provide the statement or
evidence described in subdivision (a) within the time period
specified in that subdivision.
(B) The assessor determines that the evidence submitted by the
publicly traded company under subparagraph (B) of paragraph (1) of
subdivision (a) has not rebutted the presumption by a preponderance
of the evidence.
(2) For purposes of this subdivision:
(A) The date of the change in ownership and the valuation date is
the lien date of the fiscal year for which the rebuttable presumption
applies. The assessor shall complete the reappraisal of the publicly
traded company's real property within three years of the valuation
date for which the change in ownership occurred.
(B) The new base year value shall be enrolled as of the valuation
date and there will be one supplemental assessment placed on the
supplemental roll and the assessee will receive one notice of
supplemental assessment as otherwise provided by law.
(C) If the new base year value resulting from the reappraisal of
the real property directly or indirectly owned by the publicly traded
company, as a result of a change in ownership as described in
subdivision (d) of Section 64, is less than the former base year
value, appropriate cancellations or refunds of tax shall be granted
in accordance with this division. If the new base year value is
greater than the former base year value, appropriate escape
assessments shall be imposed in accordance with this division.
(d) The State Board of Equalization shall promulgate regulations
to implement this section and shall develop and make available to
assessors and assessees a form to be used to rebut the presumption
described in paragraph (2) of subdivision (d) of Section 64.
SEC. 5. Section 64.5 is added to the Revenue
and Taxation Code, to read:
64.5. On or before January 31, 2011, and on or before 30 days
prior to the lien date of each fiscal year thereafter for which the
rebuttable presumption specified in paragraph (2) of subdivision (d)
of Section 64 applies, the assessor shall provide a written "Notice
of Deemed Change in Ownership and Proposed Reappraisal," as developed
by the State Board of Equalization, to each publicly traded company
that directly or indirectly owns taxable real property in the county.
The title of this notice shall be printed in at least 12-point
boldface type and the body of this notice shall be printed in at
least 8-point boldface type, in substantially the following form:
"Notice of Deemed Change in Ownership and Proposed Reappraisal"
"(a) There exists a rebuttable presumption that cumulatively more
than 50 percent of the total ownership interests in a publicly traded
company have been transferred since the last change in ownership of
the company's real property which results in a change in ownership of
all of the real property directly or indirectly owned by that
company.
(b) The assessor is required to reappraise all real property owned
either directly or indirectly by the publicly traded company unless
the company or the assessor rebuts the presumption no later than 60
days after the mailing date of this notice.
(c) (1) A publicly traded company may rebut the presumption that
the real property directly or indirectly owned by the publicly traded
company has undergone a change in ownership by submitting to the
assessor within 60 days after the mailing date of this notice either
of the following:
(A) A statement certifying under penalty of perjury that the real
property directly or indirectly owned by the company in the county
has not undergone a change in ownership, as described in subdivision
(d) of Section 64 of the Revenue and Taxation Code.
(B) Evidence that demonstrates, by a preponderance, that the real
property directly or indirectly owned by the company in the county
has not undergone a change in ownership, as described in subdivision
(d) of Section 64 of the Revenue and Taxation Code. On or before 60
days after the publicly traded company submits this evidence, the
assessor shall determine and notify the publicly traded company
regarding whether the presumption has been rebutted.
(2) If a publicly traded company willfully misrepresents, either
in the statement described in paragraph (1) or in the information
provided to the assessor pursuant to that paragraph, that a change in
ownership as described in subdivision (d) of Section 64 of the
Revenue and Taxation Code has not occurred, the company shall pay a
penalty equal to the greater of (A) two thousand five hundred dollars
($2,500) on each property directly or indirectly owned by the
company in the county, or (B) 25 percent of the current year's taxes
on the real property directly or indirectly owned by the company in
the county. This penalty shall be added to the assessment roll and be
collected like any other delinquent property taxes, and is subject
to the same penalties for nonpayment.
(d) The assessor may rebut the presumption that the real property
directly or indirectly owned by the publicly traded company has
undergone a change in ownership by submitting to the assessee, within
60 days after the mailing date of this notice, evidence that in the
view of the assessor demonstrates, by a preponderance, that the real
property directly or indirectly owned by the company in the county
has not undergone a change in ownership, as described in subdivision
(d) of Section 64 of the Revenue and Taxation Code.
(e) If the assessee or the assessor does not rebut the
presumption, the assessor shall reappraise the real property directly
or indirectly owned by the publicly traded company and establish a
new base year value as of the lien date for the applicable fiscal
year."
SEC. 6. Section 65.1 of the Revenue and
Taxation Code is amended to read:
65.1. (a) Except for a joint tenancy interest described in
subdivision (f) of Section 62 and except as otherwise provided in
Section 64, when an interest in a portion of real property is
purchased or changes ownership, only the interest or portion
transferred shall be reappraised. Except as provided in Section 64, a
purchase or change in ownership of an interest with a market value
of less than 5 percent of the value of the total property shall not
be reappraised if the market value of the interest transferred is
less than ten thousand dollars ($10,000) provided, however, that
transfers during any one assessment year shall be cumulated for the
purpose of determining the percentage interests and value
transferred.
(b) (1) If a unit or lot within a cooperative housing corporation,
community apartment project, condominium, planned unit development,
shopping center, industrial park, or other residential, commercial,
or industrial land subdivision complex with common areas or
facilities is purchased or changes ownership, then only the unit or
lot transferred and the share in the common area reserved as an
appurtenance of the unit or lot shall be reappraised.
(2) Notwithstanding any other provision of law, the increase in
property taxes resulting from this reappraisal shall be applied by
the owner of the property to the tenant-shareholder, lessee, or
occupant of the individual unit or lot only, and shall not be
prorated among all other units or lots of such property.
SEC. 7. If the Commission on State Mandates
determines that this act contains costs mandated by the state,
reimbursement to local agencies and school districts for those costs
shall be made pursuant to Part 7 (commencing with Section 17500) of
Division 4 of Title 2 of the Government Code.
SEC. 8. This act provides for a tax levy within
the meaning of Article IV of the Constitution and shall go into
immediate effect. However, the provisions of this act shall become
operative on January 1, 2011.