State Board of Equalization:
New Problem Implementing Fire Tax - Many Property Owners Have Been Billed Twice

At its November 15 meeting in Sacramento, the State Board of Equalization received an update on the new fire tax that is being protested by many property owners who received bills for the controversial tax in recent weeks.

David Gau, deputy director of the Property and Special Taxes Department, said that as of November 9, approximately 598,000 advance notices have been sent out to the estimated 800,000 residents in "state responsibility areas" – zones where the state is responsible for providing firefighting services. Additionally, 375,000 bills have been sent out, alphabetically by county, with the last county receiving bills being San Luis Obispo.

The fire tax has brought in $31 million so far, Mr. Gau said. However, the BOE has received 38,000 appeals – 22 percent of these appeals were filed without payment of the tax, 77 percent were appealed after the tax was paid in full, and 1 percent were filed after partial payment. Approximately 6,200 of the appeals have been considered, and 15 percent of the completed appeals have required an adjustment in the tax amount.

Mr. Gau said many owners of manufactured homes have been double-billed, and this is one of the major implementation problems. "The data that the third-party vendor for CalFire (the California Department of Forestry and Fire Protection) received in combination from Housing and Community Development, and also then the data that they get on property tax roll, when they're merged, … if they don't line up quite precisely, these differences have resulted in double billings to some of these owners," he said.

Mr. Gau said the BOE is trying to alleviate this problem by anticipating which properties are going to be double-billed, so staff can stop the extra bills from going out. This has prevented 19,000 erroneous bills from going out, but the procedure has not been able to catch them all, he said.

Mr. Gau recommended that people receiving two bills appeal both, but only pay the one that is believed to be correct. He also said that those who receive two bills are not restricted by the normal appeals deadline.

BOE Chairman Jerome Horton asked if the burden on taxpayers to appeal both bills can be reduced. Mr. Gau said that due to procedural issues, this might not be possible.

BOE Vice Chair Michelle Steel told Mr. Gau that she and BOE Member George Runner receive numerous complaints about the tax every day. As an example, she cited complaints she has received regarding homes that have burned down, where property owners still received a fire tax bill. Mr. Gau responded that taxpayers should be patient, and that CalFire will resolve petitions within 60 days.

BOE Member Betty Yee commented on the amount of resources the BOE is spending on processing the fire tax, and said this is creating a long-term problem. She said seasonal employees are working overtime, which is causing a significant drain on the department's ability to facilitate normal activities. Chairman Horton agreed, and said the short-term issues caused by the additional overtime will create "long-term deficiencies."

Mr. Runner also agreed, and noted that there currently is a 32 percent noncompliance rate with the tax. The noncompliance estimates before implementation of the tax were between 7 percent and 8 percent. Mr. Runner noted that the BOE soon will have to decide how many resources it will use to engage in the costly collection of bills that amount to $115 to $150 each. Mr. Horton suggested that the BOE keep the Legislature aware of its experience with the fire tax collection by sending quarterly reports.

In other BOE news:

Former CalTax Vice President Michele Pielsticker Appointed BOE Division Chief. Michele Pielsticker, former vice president and general counsel for CalTax, and most recently an attorney with the law firm of Sutherland Asbill & Brennan LLP, was appointed chief of the Legislative and Research Division, effective December 1. She fills a vacancy left by Margaret Shedd, also a former CalTax staff member, who retired earlier this year.

November 16, 2012
2012 California Taxpayers Association. All Rights Reserved.