Governor
Arnold Schwarzenegger during September signed numerous bills with tax or fee
implications among the 844 measures sent to his desk at the end of the session
in August. In all, he signed 571 and vetoed 273. Following are 30 bills of
interest to taxpayers that were signed:
Fee
Imposed on .50 Caliber Rifles. AB
50 (Koretz) authorizes the
Department of Justice to impose a $25 fee on legally-possessed .50 caliber BMG
rifles until April 30, 2006.
Partial
Deduction of Insurance Company Dividends. AB
263 (Oropeza) allows taxpayers to
deduct 80 percent of the amount of insurance company dividends received from
1997 to 2004, subject to a phase-out rule, and 85 percent of the amount of such
dividends for 2005 and beyond. The bill is in response to the 2000 Ceridian
decision that held that statutory provisions allowing a deduction only for
California source insurance dividends was unconstitutional. The bill also
contains an anti-stuffing provision as a disincentive for companies to transfer
unrealized gains to insurance subsidiaries or keep profits in insurance
subsidiaries to avoid corporate tax.
Recording
Tax Authorized. AB
578 (Leno) authorizes counties to
impose a $1 tax on every recording of an instrument in a county to pay for the
costs of an electronic recording system.
AQMDs
Authorized to Impose Increased Taxes on Cars; Tire Tax Increased. AB
923 (Firebaugh) authorizes
specified non-elected Air Quality Management Districts to increase the tax they
impose on vehicle registrations from $4 to $6. The bill also increases the tire
tax by $0.75 to fund tire air quality programs. The current tax is $1.00, so
this is a 75 percent increase.
Disaster
Relief; Local Bailouts. AB
1510 (Kehoe) bails out local
government for property tax losses due to the 2003 Southern California fires,
the Paso Robles earthquake and the 2004 Delta levee break. It also provides
taxpayers a 100 percent carryforward of losses attributable to the above
disasters.
San
Mateo County Car Tax Authorized Without Voter Approval. AB
1546 (Simitian) allows the
City/County Association of Governments of San Mateo County to impose a $4 car
tax, without getting voter approval. Funds will be used for management of
traffic congestion and storm-water pollution.
Senior
Citizens Property Tax Postponement Program Changes. AB
1886 (Pavley) makes changes in the
Senior Citizens Property Tax Postponement Program by allowing the state
Controller to make payments directly to lending institutions for property taxes
and by authorizing postponement of property taxes that have become delinquent.
Underground
Petroleum Storage Tank Tax Increase.
AB
1906 (Lowenthal) increases the
underground petroleum storage tank tax from $0.012 per gallon stored to $0.013
per gallon stored, through 2007. According to proponents, the increase is
needed to pay all of the projected claims.
Hotel
Tax: Added Taxpayer Rights. AB
1916 (Maddox) establishes additional
taxpayer rights in the administration of the local hotel tax, including a
four-year statute of limitations.
Higher
Fees for Marriage, Birth and Death Certificates in Two Counties. AB
2010 (Hancock) allows Alameda and
Solano Counties to add $2 to the cost of birth, death and marriage certificates
to fund government activities related to domestic violence. Critics said the
charge is inappropriate as such certificates have nothing to do with domestic
violence. The only legislative Republican to vote for the measure was Bonnie
Garcia. The bill was sponsored by the two counties and supported by elements of
the spending lobby. In a press release, Assembly Member Loni Hancock said,
"To achieve an end to domestic violence, we must commit resources to
educating families and to provide life-saving services to victims."
Cigarette
Tax Administration. AB
2030 (Cogdill) requires the State
Board of Equalization to hold at least two hearings a year to hear comments
from taxpayers about the administration of the cigarette tax. It also requires
the board to post on its web site quarterly a report on cigarette tax revenues
and their distribution.
Shift of
Property Tax to Schools Clean-Up. AB
2115 (Assembly Budget Committee)
makes a number of changes in earlier legislation shifting $1.3 billion of
city-county district property tax to schools. Among other things, it exempts
two Mosquito Abatement Districts from the shift and reduces the amount shifted
from the Laguna Niguel Community Service District from 10 percent to 4 percent.
Split
Roll for Tax Sale of Tax-Delinquent Properties. AB
2144 (Ridley-Thomas) establishes a
split roll for the tax sales of non-residential properties. They will be sold
after three years, while residential properties will be sold, pursuant to
current law, after five years.
Tax on
Life Insurance Policies. AB
2316 (Chan) imposes a one-time $1
tax on each now life insurance policy. Funds will be used to provide more state
employees who will be charged with protecting consumers from insurance fraud.
Built-In
Gains Tax Relief for Sub S Corps. AB
2328 (Wyland) provides that Sub S
Corps who were forced to make a state Sub S election in 2002 will determine
whether or not they are subject to the built-in gain tax on the basis of their
federal Sub S election date.
Property
Tax Allocation. AB
2558 (Plescia) changes the
allocation of property tax from state assessed property to benefit the city of
Escondido. The city will get a larger share of property tax revenue from a
proposed power plant.
National
Heritage Preservation Tax Credit. AB
2722 (Leno) allows bond funds to
reimburse the General Fund for losses from the 55 percent of value tax credit
for donations of qualified national heritage preservation properties. The
credit has been suspended, however, through June of 2005.
Santa
Clara Valley Transportation Authority Benefit Assessments. AB
2817 (Salinas) requires benefit
assessments imposed by the Santa Clara Valley Transportation Authority be
consistent with the requirements of Proposition 218.
Assessors
Assess Property Using Value of Low-Income Housing Tax Credit. AB
2846 (Salinas) prohibits assessors
from using the value of low-income housing tax credits when using the income
approach to assess such housing. The bill was sponsored by Controller Steve
Westly.
Property
Taxpayers: Protections If No Timely Appeals Board Decision Eroded. AB
2857 (Laird) erodes taxpayer
protections if an Assessment Appeals Board fails to decide a non-base year
value appeal within two years. For such appeals where there is no decision, the
taxpayer's opinion of value will be enrolled for the year of the appeal, and
not subsequent years. In Flight Safety International, the appellate
court said the taxpayer's opinion of value should be enrolled for each year
until the board made a decision. For appeals of Proposition 13 base-year
values, there is no change in current law if an appeals board fails to decide
an assessment appeal within two years, the taxpayers' opinion of value will be
enrolled for each year until the appeals board makes a decision.
Underground
Economy Strike Force Continued. AB
3020 (Koretz) repeals the 2006
sunset date on the Joint Enforcement Task Force on the Underground Economy. The
bill was supported by organized labor.
Electronic
Waste Tax Revisions. SB
50 (Sher) makes changes in the
state's electronic waste tax, by requiring quarterly payments, to be collected
by the State Board of Equalization. Retailers are required to collect the fee
beginning in January 2005.
No
Possessory Interest Assessments on Specified Military Housing. SB
451 (Ducheny) prohibits assessors
from assessing a possessory interest on military family housing under the
Military Housing Privatization Initiative, by stating non independent
possession or use of land or improvement exists.
Disaster
Relief. SB
1147 (Hollingsworth) permits
taxpayers to carryforward 100 percent of their losses due to the 2003 Southern
California fires and Paso Robles earthquake. It also provides that homes
damaged or destroyed as a result of the disasters and are going to be rebuilt
will maintain their homeowners' property tax exemption.
Library
Bond Placed on 2006 Ballot. SB
1161 (Alpert) places a $600 million
library bond on the 2006 ballot.
Surcharges
for Universal Telephone Service. SB
1276 (Bowen) extends for four years
the requirement that surcharges be placed on telephone bills to fund affordable
telephone service in rural, high-cost areas. The governor said, without the
general subsidy from taxpayers, the rates for rural telephone users could go up
to $100 a month. He also noted a legislative error in the drafting that
chaptered out provisions in the budget that continue funding for the Telephone
Reading for the Blind program. He asked the Legislature to correct this error
with urgency legislation next year.
Expanded
FTB Form 540 2EZ Required. SB
1534 (Johnson) requires the
Franchise Tax Board to expand the 540 2EZ form (the simplified form) by
increasing income levels eligible to use the form and expanding the types of
income that can be reported on the forms.
Accelerated
Sale of Tax-Defaulted Property. SB
1596 (Ducheny) allows public bodies
and certain non-profit agencies to request tax collectors to accelerate tax
sales of non-owner-occupied residential property to three years of delinquency,
rather than five years, if the property will provide housing for low-income
folk.
Armenian
Genocide Restitution Payments Exempt From Tax. SB
1689 (Poochigian) exempts from
income tax payments received as restitution for the Armenian genocide by the
Ottoman Turkish Empire.
Protest
Period Limited for LA Transit Assessments. SB
1773 (Soto) limits the period for
protesting a Los Angeles County Metropolitan Transit Authority Assessment to
two years after the original assessment is made. In 2003, an appellate court
(in the Hanjin case) said the four-year statutory deadline applied to
challenges of the authority's assessments.
Caltaxletter October 1, 2004
© 2004 California Taxpayers'
Association. All Rights Reserved.