Minutes from the 2016 Meeting of Eagle Lodge West

Publication year2016
Minutes from the 2016 Meeting of Eagle Lodge West

May 6-7, 2016

I. INTRODUCTION

On May 6 and 7, 2016, the Taxation Section of the State Bar of California, including the State and Local Tax Committee of the Taxation Section, sponsored the 2016 Eagle Lodge West Conference at the Vintner's Inn located in Sonoma County. Eagle Lodge West is an annual assembly of government and private tax practitioners brought together for the purpose of discussing current topics in California taxation and suggesting reforms. In 2016, two committees convened at Eagle Lodge West, namely, the Property Tax Committee and the Franchise and Income Tax Committee. The Property Tax Committee included Richard Moon, Leslie Ang, Robert Gomez, Todd Gillman, Jeffrey Olson, Richard Ayoob, Robert Slavin, Christopher Campbell, Bradley Marsh, Mark Sutter, and Jason DeMille. The Franchise and Income Tax Committee included Jozel Brunett, Bruce Langston, Jaclyn Zumaeta, Michael Cornez, Oksana Jaffe, Troy Van Dongen, Mike Shaikh, Scott Ewing, Kim Bott, Greg Zbylut, and Kurt Kawafuchi. The following represents the minutes of the committees:

II. PROPERTY TAX COMMITTEE

During the 2016 Eagles Lodge West event in Santa Rosa the participants addressed the following topics within the purview of the Board of Equalization ("BOE"):

  • Senior Citizen Base Year Transfers under Section 69.5
  • Statutes of Limitation for Taxable Possessory Interest Escape Assessments
  • Change in Ownership Rescissions
  • Assessment Appeals Board Jurisdiction following Issuance of a Notice of Proposed Escape Assessment
1. Section 69.5 Base Year Value Transfers

Section 69.5 allows senior citizens over 55 years of age and the permanently disabled to transfer the Proposition 13 base year values of their home to a replacement home of equal or lesser value that they have "purchased."

Stated Problem: Section 69.5 has no express provisions regarding the buyer's interests in the replacement property. Despite that lack of express statutory language, the BOE and county assessors have routinely interpreted the "purchase" requirement to mean that the buyer purchased 100 percent of the replacement property. For example, if a person inherits 50 percent of their replacement home from their parents (subject to the parent-child exclusion), and purchases the remaining 50 percent from their siblings, they cannot use section 69.5 base year value transfer for the 50 percent tenancy in common interests that they purchased from their siblings.

Proposed Resolution: The group agreed that the statutory language was confusing and should be amended to define "purchased. Group members also agreed that this topic should be addressed during the BOE's Property Taxpayers' Bill of Rights hearings scheduled for May 24. Lastly, the group concluded that the BOE staff could take more immediate action by amending Assessors' Handbook Section 401, Change in Ownership ("AH 401") to define "purchased." While amendments to AH 401 are not binding on county assessors, such amendments would give meaningful input to county assessors and assessment appeals boards.

2. Possessory Interest Statutes of Limitations for Escape Assessments

Section 532 defines the limitations period for escape assessments (under-assessed property taxes for prior years): For unrecorded changes in ownership, escape assessments are limited to either four years (§ 532(a)) or eight years (§ 532(b)(2)). Taxable possessory interests occur when private persons obtain rights to use and otherwise occupy tax-exempt land owned by federal, state or local governments. To assist county assessors in the discovery of these possessory interests, section 480.6 requires state and local government entities to annually report renewals of taxable possessory...

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