Bill Text: CA AB311 | 2009-2010 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Property taxation: certificated aircraft assessment.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Vetoed) 2010-01-14 - Consideration of Governor's veto stricken from file. [AB311 Detail]
Download: California-2009-AB311-Amended.html
Bill Title: Property taxation: certificated aircraft assessment.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Vetoed) 2010-01-14 - Consideration of Governor's veto stricken from file. [AB311 Detail]
Download: California-2009-AB311-Amended.html
BILL NUMBER: AB 311 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 2, 2009
INTRODUCED BY Assembly Member Ma
FEBRUARY 17, 2009
An act to amend Sections 401.17, 441, and 1153.5 of the Revenue
and Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 311, as amended, Ma. Property taxation: certificated aircraft
assessment.
Existing property tax law requires the personal property of an air
carrier be taxed at its fair market value, and the California
Constitution requires property subject to ad valorem property
taxation to be assessed in the county in which it is situated.
Existing law, for the 2005-06 fiscal year to the 2010-11 fiscal year,
inclusive, specifies a formula to determine the fair market value of
certificated aircraft of a commercial air carrier. Existing law
further requires , until December 31, 2010, the Aircraft
Advisory Subcommittee of the California Assessors' Association to
designate, after soliciting input from commercial air carriers
operating in the state, a lead county assessor's office for each
commercial air carrier operating certificated aircraft in this state
in an assessment year, and requires the lead county assessor to
calculate the value of the air carrier's personal property and to
transmit these calculations to other county assessors, but specifies
that each county assessor is responsible for assessing and enrolling
the taxable value of the property in his or her county, as provided.
Existing law also requires , until December 31, 2010, the
lead county assessor's office to lead a team to audit the books and
records of a commercial air carrier and authorizes these air carriers
to file a property statement solely with the lead county assessor's
office, as provided.
This bill would delete extend the
2010-11 fiscal year termination date to the 2015-
2016 fiscal year and the December 3 1, 2010,
repeal of date to December 31, 2015,
for the above-described provisions relating to the
determination of the value and taxation of certificated aircraft.
By extending the application of the aforementioned valuation
process for certificated aircraft beyond the 2010-11 fiscal year,
thereby imposing new duties upon a lead county assessor's office, the
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 401.17 of the Revenue and Taxation Code is
amended to read:
401.17. (a) The preallocated fair market value of each
401.17. (a) For the 2005-06
fiscal year to the 2015-16 fiscal year, inclusive, the preallocated
fair market value of each make, model, and series of mainline
jets, production freighters, and regional aircraft that has attained
situs within this state is the lesser of the sum total of the amounts
determined under paragraph (1) or the sum total of the amounts
determined under paragraph (2).
(1) (A) The original cost for the aircraft, which shall be
determined as follows and adjusted, as applicable, under
subparagraphs (B), (C), and (D):
(i) For owned and leased aircraft, the taxpayer's or lessor's
acquisition cost for that individual aircraft reported in accordance
with generally accepted accounting principles, and to the extent not
included in the acquisition cost, transportation costs and
capitalized interest and the cost of improvements made before a
transaction described in clause (ii). If the original cost for leased
aircraft cannot be determined from information reasonably available
to the taxpayer, original cost may be determined by reference to the
"average new prices" column of the Airliner Price Guide for that
model, series, and year of manufacture of aircraft. If information is
not available in the "average new prices" column for that model,
series, and year, the original cost may be determined using the best
indicator of original cost plus all conversion costs and improvement
costs incurred for that aircraft.
(ii) For sale/leaseback or assignment of purchase rights
transaction aircraft, the average of the taxpayer's cost established
pursuant to clause (i) and the cost established in a sale/leaseback
or assignment of purchase rights transaction for individual aircraft
that transfers the benefits and burdens of ownership to the lessor
for United States federal income tax purposes. In no event shall the
original cost for sale/leaseback aircraft be less than the taxpayer's
acquisition cost.
(iii) In the event of a merger, bankruptcy, or change in
accounting methods by the reporting airline, there shall be a
rebuttable presumption that the cost of the individual aircraft and
the acquisition date reported by the acquired company, if available,
or the cost reported prior to the change in accounting method, are
the original cost and the applicable acquisition date.
(B) (i) For mainline jets and production freighters, the original
cost described in subparagraph (A), plus the cost of any improvements
not otherwise included in the original cost, shall be adjusted from
the date of the acquisition of the aircraft to the lien date using
the monthly United States Department of Labor Producer Price Index
for aircraft and a 20-year straight-line percent-good table starting
from the delivery date of the aircraft to the current owner or, in
the case of a sale/leaseback or assignment of purchase rights
transaction, as described in this section, the current operator with
a minimum combined factor of 25 percent.
(ii) For regional aircraft, the original cost described in
subparagraph (A), plus the cost of any improvements not otherwise
included in the original cost, shall be adjusted from the date of the
acquisition of the aircraft to the lien date using the monthly
United States Department of Labor Producer Price Index for aircraft
and a 16-year straight-line percent-good table starting from the
delivery date of the aircraft to the current owner or, in the case of
a sale/leaseback or assignment of purchase rights transaction, as
described in this section, the current operator with a minimum
combined factor of 25 percent.
(iii) If original cost is determined by reference to the Airliner
Price Guide "average new prices" column, the adjustments required by
this paragraph shall be made by setting the acquisition date of the
aircraft to be the date of the aircraft's manufacture.
(C) (i) For mainline jets and regional aircraft, the assessor
shall analyze the adjusted original cost derived pursuant to
subparagraph (B), for application of an economic obsolescence
allowance which shall be determined as follows:
(I) For the applicable year, the assessor shall calculate the
average annual net revenue per available seat mile, the net load
factor, and the yield utilizing the Airline Quarterly Financial
Review published by the United States Department of Transportation,
and referring to the section descriptive of the passenger airline
industry, entitled "System Operations, System Pax. Majors" for the
calendar year ending December 31 immediately preceding the applicable
assessment date.
(II) For a 10-year benchmark, the assessor shall calculate as of
December 31 for each of the 10 calendar years preceding the
applicable year, the average annual net revenue per available seat
mile, the net load factor, and the yield utilizing the Airline
Quarterly Financial Review published by the United States Department
of Transportation, and referring to the section descriptive of the
passenger airline industry, entitled "System Operations, System Pax.
Majors" for the calendar year ending December 31 immediately
preceding the applicable assessment date.
(ii) (I) The assessor shall compare each factor calculated under
subclause (I) of clause (i) with the corresponding factor calculated
under subclause (II) of clause (i) to derive the percentage that each
of the factors calculated under subclause (I) of clause (i) deviated
from the 10-year benchmark calculated under subclause (II) of clause
(i). The assessor shall then calculate a weighted average of the
indicated percentage adjustments, weighted as follows:
(aa) Net revenue per available seat mile shall be weighted 35
percent.
(ab) Net load factor shall be weighted 35 percent.
(ac) Yield shall be weighted 30 percent.
(II) The assessor shall reduce the adjusted original costs derived
under subparagraph (B) by the percentage adjustment calculated in
subclause (I), but only if the final economic obsolescence determined
under that subclause exceeds 10 percent, otherwise no economic
obsolescence allowance shall be provided.
(D) (i) For production freighters, the assessor shall analyze the
adjusted original cost derived under subparagraph (B), for
application of an economic obsolescence allowance, as follows:
(I) For the applicable year, the assessor shall calculate the
industry average of net revenue per available ton mile and the ton
load factor based upon the Airline Quarterly Financial Review
published by the United States Department of Transportation, and
referring to the section descriptive of the cargo airline industry,
entitled "System Operations, System Cargo Majors" for the calendar
year ending December 31 preceding the relevant assessment date.
(II) For a 10-year benchmark, the assessor shall calculate as of
December 31 for each of the 10 calendar years preceding the
applicable year, the net revenue per available ton mile and the ton
load factor utilizing the Airline Quarterly Financial Review
published by the United States Department of Transportation and
referring to the section descriptive of the cargo airline industry,
entitled "System Operations, System Cargo Majors" as of December 31
for each of the 10 calendar years preceding the calendar year
utilized for the subject year, for the calendar year ending December
31 immediately preceding the applicable assessment date.
(ii) (I) The assessor shall compare each factor calculated under
subclause (I) of clause (i) with the corresponding factor calculated
under subclause (II) of clause (i) to derive the percentage that each
of the factors calculated under subclause (I) of clause (i) deviated
from the 10-year benchmark calculated under subclause (II) of clause
(i). The assessor shall then calculate a weighted average of the
indicated percentage adjustments so that the net revenue per
available ton mile is weighted 50 percent and the ton load factor is
weighted 50 percent.
(II) The assessor shall reduce the adjusted original costs derived
under subparagraph (B) by the percentage adjustment calculated in
subclause (I), but only if the final economic obsolescence determined
under that subclause exceeds 10 percent, otherwise no economic
obsolescence allowance shall be provided.
(2) (A) Except as otherwise provided in subparagraph (B), for each
individual mainline jet, production freighter, or regional aircraft,
the assessor shall identify the value referenced in the "Used Price
of Avg. Acft. Wholesale" column of the Winter edition of the Airliner
Price Guide by make, model, series, and year of manufacture, and
deduct 10 percent from that value for a fleet discount.
(B) For each individual mainline jet, production freighter, or
regional aircraft that is less than two years old and for which the
Airliner Price Guide does not list used wholesale values, the
original cost determined under paragraph (1) of subparagraph (A)
shall be decreased by the lesser of 5 percent or one-half of the
percentage decrease between original cost and 90 percent of the value
listed in the "Used Price of Avg. Acft. Wholesale" column of the
Winter edition of the Airliner Price Guide for a two-year old
aircraft of that same make, model, and series.
(b) The preallocated fair market value for each make,
(b) For the 2005-06 fiscal year to the
2015-16 fiscal year, inclusive, the preallocated fair market value
for each make, model, and series of converted freighters that
has attained situs within this state shall be determined as follows:
(1) (A) The assessor shall begin his or her appraisal of a
converted freighter as of the relevant lien date by identifying the
aircraft's original cost as a passenger aircraft prior to conversion.
The aircraft's original cost as a converted freighter shall be the
lesser of:
(i) Its trended original cost as a passenger aircraft prior to
conversion, less a downward adjustment of 10 percent to reflect tear
outs.
(ii) Its value described in the Winter edition of the Airliner
Price Guide in the "Used Price of Avg. Acft. Wholesale" column in
passenger configuration, less a downward adjustment of 10 percent to
reflect tear-outs.
(B) The amount determined under subparagraph (A) shall be adjusted
according to the following:
(i) If, on the relevant lien date, the frame of the aircraft is 15
years old or more, 50 percent of the cost to convert the aircraft to
a freighter shall be added to the value determined under
subparagraph (A).
(ii) If, on the relevant lien date, the frame of the aircraft is
less than 15 years old, 75 percent of the cost to convert the
aircraft to a freighter shall be added to the value determined under
subparagraph (A).
(iii) In addition, all other improvements, including capitalized
interest, to the aircraft that are not otherwise included in the
aircraft's original and conversion costs shall be added at full
value.
(2) The amount determined under paragraph (1) shall be adjusted
from the date of the conversion of the aircraft to the lien date
using the monthly United States Department of Labor Producer Price
Index for aircraft and a 16-year straight-line percent-good table,
however, the percent-good applied to the aircraft shall in no event
be less than 15 percent.
(3) If the Airliner Price Guide "Used Price of Avg. Acft.
Wholesale" is utilized under paragraph (1), only the improvements and
adjusted conversion costs pertaining to the converted freighter
shall be adjusted from the date of the conversion of the aircraft to
the relevant lien date using the monthly United States Department of
Labor Producer Price Index for aircraft and a 16-year straight-line
percent-good table. In no event, however, shall the percent-good
applied to the improvements and adjusted conversion costs be less
than 15 percent.
(4) (A) Except as otherwise provided in subparagraph (B), the
assessor shall reduce the adjusted original cost, plus improvements,
and adjusted conversion costs, derived under paragraphs (1) to (3),
inclusive, by the obsolescence percentage adjustment calculated for
production freighters under subparagraph (D) of paragraph (1) of
subdivision (a).
(B) If the Airliner Price Guide "Used Price of Avg. Acft.
Wholesale" is utilized under paragraph (1), only the improvements and
adjusted conversion costs pertaining to the converted freighter
shall be reduced by the obsolescence percentage adjustment described
in subparagraph (A).
(c) For purposes of this section, if the Airliner Price Guide
ceases to be published or the format significantly changes, a guide
or adjustment agreed to by commercial air carriers and the counties
in which certificated aircraft have situs shall be substituted. If
these parties do not agree on a guide or adjustment, the State Board
of Equalization shall determine the guide or adjustment.
(d) The taxpayer shall, to the extent that information is
reasonably available to the taxpayer, furnish the county assessor
with an annual property statement that includes the aircraft original
costs as defined in subparagraph (A) of paragraph (1) of subdivision
(a). If an air carrier that has this information reasonably
available to it fails to report original cost and improvements, as
required by Sections 441 and 442, an assessor may in that case make
an appropriate assessment pursuant to Section 501.
(e) For purposes of this section, all of the following apply:
(1) "Converted freighter" means a certificated aircraft, as
defined in Section 1150, that, following its original manufacture,
was used for passenger transportation, but was later converted to be
used primarily for cargo transportation purposes.
(2) "Mainline jet" means a certificated aircraft, as defined in
Section 1150, that is either of the following:
(A) Manufactured by Boeing, Airbus, or McDonnell Douglas.
(B) Capable of being configured with approximately 100 seats or
more.
(3) "Production Freighter" means a certificated aircraft, as
defined in Section 1150, that immediately following its manufacture
is deployed primarily for cargo transportation purposes.
(4) "Regional aircraft" means a certificated aircraft, as defined
in Section 1150, that is either of the following:
(A) Manufactured by ATR (Avions De Transport Regional), Beech,
British Aerospace Jetstream, Canadair Regional Jet, Cessna,
DeHaviland, Embraer, Fairchild, or Saab.
(B) Generally configured with fewer than 100 seats.
(5) "Improvements" means the cost of any modifications or capital
additions that materially add to the value of or substantially
prolong the useful life of the aircraft, or make it adaptable to a
different use. "Improvements" include modification costs incurred
during a heavy maintenance visit to the extent that they materially
add to the value of or substantially prolong the useful life of the
aircraft. "Improvements" do not include repair and maintenance costs
incurred for the purpose of keeping the aircraft in an ordinarily
efficient operating condition.
(6) "Net revenue per available seat mile" means operating revenue
per available seat mile less cost per available seat mile as
determined by the United States Department of Transportation.
(7) "Net load factor" means actual passenger load factor less
breakeven passenger load factor, as determined by the United States
Department of Transportation.
(8) "Net revenue per available ton mile" means operating revenue
per ton mile less cost per available ton mile as determined by the
United States Department of Transportation.
(9) "Yield" means average revenue per revenue passenger mile as
determined by the United States Department of Transportation.
(10) "Ton Load Factor" means that percentage of effective use of
cargo capacity as determined by the United States Department of
Transportation.
SEC. 2. Section 441 of the Revenue and Taxation Code is amended to
read:
441. (a) Each person owning taxable personal property, other than
a manufactured home subject to Part 13 (commencing with Section
5800), having an aggregate cost of one hundred thousand dollars
($100,000) or more for any assessment year shall file a signed
property statement with the assessor. Every person owning personal
property that does not require the filing of a property statement or
real property shall, upon request of the assessor, file a signed
property statement. Failure of the assessor to request or secure the
property statement does not render any assessment invalid.
(b) The property statement shall be declared to be true under the
penalty of perjury and filed annually with the assessor between the
lien date and 5 p.m. on April 1. The penalty provided by Section 463
applies for property statements not filed by May 7. If May 7 falls on
a Saturday, Sunday, or legal holiday, a property statement that is
mailed and postmarked on the next business day shall be deemed to
have been filed between the lien date and 5 p.m. on May 7. If, on the
dates specified in this subdivision, the county's offices are closed
for the entire day, that day is considered a legal holiday for
purposes of this section.
(c) The property statement may be filed with the assessor through
the United States mail, properly addressed with postage prepaid. For
purposes of determining the date upon which the property statement is
deemed filed with the assessor, the date of postmark as affixed by
the United States Postal Service, or the date certified by a bona
fide private courier service on the envelope containing the
application, shall control. This subdivision shall be applicable to
every taxing agency, including, but not limited to, a chartered city
and county, or chartered city.
(d) (1) At any time, as required by the assessor for assessment
purposes, every person shall make available for examination
information or records regarding his or her property or any other
personal property located on premises he or she owns or controls. In
this connection details of property acquisition transactions,
construction and development costs, rental income, and other data
relevant to the determination of an estimate of value are to be
considered as information essential to the proper discharge of the
assessor's duties.
(2) (A) This subdivision shall also apply to an owner-builder or
an owner-developer of new construction that is sold to a third party,
is constructed on behalf of a third party, or is constructed for the
purpose of selling that property to a third party.
(B) The owner-builder or owner-developer of new construction
described in subparagraph (A), shall, within 45 days of receipt of a
written request by the assessor for information or records, provide
the assessor with all information and records regarding that
property. The information and records provided to the assessor shall
include the total consideration provided either by the purchaser or
on behalf of the purchaser that was paid or provided either, as part
of or outside of the purchase agreement, including, but not limited
to, consideration paid or provided for the purchase or acquisition of
upgrades, additions, or for any other additional or supplemental
work performed or arranged for by the owner-builder or
owner-developer on behalf of the purchaser.
(e) In the case of a corporate owner of property, the property
statement shall be signed either by an officer of the corporation or
an employee or agent who has been designated in writing by the board
of directors to sign the statements on behalf of the corporation.
(f) In the case of property owned by a bank or other financial
institution and leased to an entity other than a bank or other
financial institution, the property statement shall be submitted by
the owner bank or other financial institution.
(g) The assessor may refuse to accept any property statement he or
she determines to be in error.
(h) If a taxpayer fails to provide information to the assessor
pursuant to subdivision (d) and introduces any requested materials or
information at any assessment appeals board hearing, the assessor
may request and shall be granted a continuance for a reasonable
period of time. The continuance shall extend the two-year period
specified in subdivision (c) of Section 1604 for a period of time
equal to the period of the continuance.
(i) Notwithstanding any other provision of law, every person
required to file a property statement pursuant to this section shall
be permitted to amend that property statement until May 31 of the
year in which the property statement is due, for errors and omissions
not the result of willful intent to erroneously report. The penalty
authorized by Section 463 does not apply to an amended statement
received prior to May 31, provided the original statement is not
subject to penalty pursuant to subdivision (b). The amended property
statement shall otherwise conform to the requirements of a property
statement as provided in this article.
(j) This subdivision shall apply to the oil, gas, and mineral
extraction industry only. Any information that is necessary to file a
true, correct, and complete statement shall be made available by the
assessor, upon request, to the taxpayer by mail or at the office of
the assessor by February 28. For each business day beyond February 28
that the information is unavailable, the filing deadline in
subdivision (b) shall be extended in that county by one business day,
for those statements affected by the delay. In no case shall the
filing deadline be extended beyond June 1 or the first business day
thereafter.
(k) The assessor may accept the filing of a property statement by
the use of electronic media. In lieu of the signature required by
subdivision (a) and the declaration under penalty of perjury required
by subdivision (b), property statements filed using electronic media
shall be authenticated pursuant to methods specified by the assessor
and approved by the board. Electronic media includes, but is not
limited to, computer modem, magnetic media, optical disk, and
facsimile machine.
() (1) After receiving the notice required by Section 1162, the
manager in control of a fleet of fractionally owned aircraft shall
file with the lead county assessor's office one signed property
statement for all of its aircraft that have acquired situs in the
state, as described in Section 1161.
(2) Flight data required to compute fractionally owned aircraft
allocation under Section 1161 shall be segregated by airport.
(m) (1) After receiving the notice required by paragraph (5) of
subdivision (b) of Section 1153.5, a commercial air carrier whose
certificated aircraft is subject to Article 6 (commencing with
Section 1150) of Chapter 5 shall file with the lead county assessor's
office designated under Section 1153.5 one signed property statement
for its personal property at all airport locations and fixtures at
all airport locations.
(2) Each commercial air carrier may file one schedule for all of
its certificated aircraft that have acquired situs in this state
under Section 1151.
(3) Flight data required to compute certificated aircraft
allocation under Section 1152 and subdivision (g) of Section 202 of
Title 18 of the California Code of Regulations shall be segregated by
airport location.
(4) Beginning with the 2006 assessment year, a commercial air
carrier may file a statement described in this subdivision
electronically by means of the California Assessor's Standard Data
Record (SDR) network. If the SDR is not equipped to accept electronic
filings for the 2006 assessment year, an air carrier may file a
printed version of its property statement for that year with its lead
county assessor's office.
(5) This subdivision shall remain in effect only until December
31, 2015, and as of that date is repealed.
SEC. 3. Section 1153.5 of the Revenue and Taxation Code is amended
to read:
1153.5. (a) The Aircraft Advisory Subcommittee of the California
Assessors' Association shall, after soliciting input from commercial
air carriers operating in the state, do both of the following:
(1) On or before March 1, 2006, and on or before each March 1
thereafter, designate a lead county assessor's office for each
commercial air carrier operating certificated aircraft in this state
in that assessment year.
(2) Every third year thereafter, redesignate a lead county
assessor's office for each of these air carriers, unless an air
carrier and its existing lead county assessor's office concur to
waive this redesignation.
(b) The lead county assessor's office described in subdivision (a)
shall do all of the following:
(1) Calculate, pursuant to Section 401.17, an unallocated value of
the certificated aircraft of each commercial air carrier to which he
or she is designated.
(2) Electronically transmit to the assessor of each county in
which the property described in paragraph (1) has situs for the
assessment year the values determined by the lead county assessor's
office under paragraph (1).
(3) Receive the property statement, as described in subdivision
(l) of Section 441, of each commercial air carrier to which he or she
is designated.
(4) Lead the audit team described in subdivision (d) when that
team is conducting an audit of a commercial air carrier to which he
or she is designated.
(5) Notify, in writing, each commercial air carrier for which he
or she has been designated of this designation on or before the first
March 15 that follows that designation.
(c) (1) Notwithstanding subdivision (b), the county assessor of
each county in which the personal property of a commercial air
carrier has situs for an assessment year is solely responsible for
assessing that property, applying the allocation formula set forth in
Section 1152, and enrolling the value of the property in that
county, but, in determining the unallocated fleet value for each
make, model, and series of certificated aircraft of a commercial air
carrier, the assessor may consult with the lead county assessor's
office designated for that commercial air carrier.
(2) The lead county assessor's office is subject to Section 322 of
Title 18 of the California Code of Regulations and Sections 408,
451, and 1606 to the same extent as the assessor described in
paragraph (1).
(d) Notwithstanding Section 469, an audit of a commercial air
carrier shall be conducted once every four years on a centralized
basis by an audit team of auditor-appraisers from at least one, but
not more than three, counties, as determined by the Aircraft Advisory
Subcommittee of the California Assessors' Association. An audit, so
conducted, shall encompass all of
the California Personal Property and fixtures of the air
carrier and is deemed to be made on behalf of each county for which
an audit would otherwise be required under Section 469.
(c) This subdivision shall remain in effect only until December
31, 2015, and as of that date is repealed.
SEC. 4. 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.
