SeeSALT BlogIn “California Seeks Input on Clean Energy Equipment Tax Exemption,” an article that originally appeared in Law360, Carley Roberts, Robert P. Merten III and Jessica N. Allen summarize the sales and use tax exemption’s scope and qualifying requirements, the 2017 legislative changes to it, the CDTFA’s proposed amendments and why stakeholders may want to participate in the IPM process.
Articles Posted in California
Ballot Initiative Seeks to Eliminate Prop 13 for Commercial and Industrial Real Estate
Posted
TAKEAWAYS
Initiative 17-0055 seeks to put two significant changes to California’s property tax system before voters in November—(1) the elimination of Proposition 13 protection for commercial and industrial properties in favor of reassessment at least every three years and (2) the addition of a tangible personal property tax exemption of $500,000 for all taxpayers and a full tangible personal property tax exemption for taxpayers with less than 50 California employees. Proponents of the Initiative claim these revisions are needed to raise funding to support California schools.
Continue Reading ›
Dueling Rent Taxes Come Up before San Francisco Voters in June
Posted
TAKEAWAYS
- It is estimated that about $65 million annually would be collected from the commercial real estate industry under the Housing for All tax.
- It is estimated that about $150 million annually would be collected from the commercial real estate industry under the Universal Childcare for San Francisco Families tax.
- The election presents commercial landlords with the prospect of a massive tax increase from the current 0.3% rent tax, though the Housing for all Measure is clearly the less burdensome of the two.
There will be competing commercial rent tax measures on San Francisco’s June 2018 ballot. The “Housing for All” measure would impose a new 1.7% tax on commercial rents in San Francisco, effective January 1, 2019. The “Universal Childcare for San Francisco Families” measure would impose a new 3.5% tax on commercial rents (1% on rents from warehouses) in San Francisco (also operative January 1, 2019). Both measures specify that only one measure can be adopted, and that if both measures secure sufficient votes for passage, the measure with the most votes will prevail. If either of these measures were to be adopted it would be in addition to San Francisco’s existing 0.3% gross receipts tax on rentals.
Continue Reading ›
California Supreme Court Expands the California Real Estate Transfer Tax to Entity Transfers that Cause Property Tax Re-Assessments under Proposition 13
Posted
State and local real estate transfer taxes have become larger planning concerns for investors in U.S. real property, particularly in gateway cities like New York, Los Angeles and San Francisco. This article by colleagues Craig A. Becker, Richard E. Nielsen, Breann E. Robowski and Andrew J. Weiner describes a recent expansion of the scope of California real estate transfer taxes.
Many Questions Unanswered After California’s Tax Shakeup
Posted
(This article originally was published by Law360 on October 7, 2017.)
On Sept. 16, 2017, California Governor Jerry Brown signed Assembly Bill (A.B.) 131 into law,[1] which takes effect immediately and makes various changes to the Taxpayer Transparency and Fairness Act of 2017 enacted on June 27, 2017.[2] The Act overhauled the California State Board of Equalization (BOE) and created two new tax agencies.
New California Tax Agencies’ Roles Clarified
Posted
On September 16, 2017, California Governor Jerry Brown signed Assembly Bill (A.B.) 131 into law, making various changes to the Taxpayer Transparency and Fairness Act of 2017 (Act) enacted on June 27, 2017. The Act overhauled the California State Board of Equalization (BOE) and created two new tax agencies.
Blazing a Trail for More Local Taxes by Ballot Initiative
Posted
(This article originally was published by Law360 on September 7, 2017.)
On Aug. 28, 2017, in California Cannabis Coalition v. City of Upland, the California Supreme Court held local taxes imposed by taxpayers via initiative are subject to less stringent requirements than taxes imposed by local governments pursuant to Proposition 218.[1] This opinion has far-flung ramifications on how local taxes can be imposed in California.
California Supreme Court Decision Changes the Transfer Tax World
Posted
TAKEAWAYS
In 926 North Ardmore Avenue LLC v. County of Los Angeles,1 the California Supreme Court concluded that, subject to certain limitations, California’s Documentary Transfer Tax Act (the California DTTA), applicable to direct sales of real estate, is also applicable to transfers of entity interests in entities holding real estate if those transfers result in a Proposition 13 “change in ownership” under Revenue and Taxation Code (R&TC) sections 64(c) or (d). In its 6-1 decision, the California Supreme Court reasoned that Proposition 13’s property tax “change in ownership rules are designed to identify precisely the types of indirect real property transfers that the Transfer Tax Act [(California DTTA)] is designed to tax.”2
Continue Reading ›
Imposing Documentary Transfer Taxes in California After Ardmore
Posted
(This article originally was published by Law360 on July 7, 2016.)
Rarely does a subject as mundane as a documentary transfer tax become worthy of its own article. However, the June 29, 2017, decision of the California Supreme Court in 926 North Ardmore Avenue LLC v. County of Los Angeles (Ardmore)[1] is a worthy exception. Affirming the Court of Appeal, the California Supreme Court held in Ardmore that California’s documentary transfer tax may be imposed by localities on transfers of interests in legal entities holding title to real property when three criteria are met: (1) the legal entity interest transfer is memorialized in writing; (2) the transfer is made for consideration; and (3) the transfer constitutes a “change of ownership” in the legal entity within the meaning of “change of ownership” for property tax reassessment purposes as set forth in Cal. Rev. & Tax. Code[2] § 64, subds. (c) or (d).[3] Under the Ardmore holding, it is irrelevant whether the written instrument at issue memorializing the legal entity interest transfer is recorded or directly references the real property.[4] Moving forward, every transaction involving a transfer of an interest in a legal entity holding title to real property in California is going to require thorough investigation and due diligence concerning the possible triggering of Ardmore documentary transfer tax imposition.
Taxes, Fees and “Something Else”: California’s Morning Star Decision
Posted
On April 6, the Third District California Court of Appeal decided Morning Star Packing Company v. California Air Resources Board, a case that challenged California’s cap-and-trade auction process as an unconstitutional tax because it was not enacted by two-thirds majorities in both chambers of the State Legislature, as required for new taxes by the California Constitution (propositions 13 and 26). The appeal pursued by Morning Star Packing Company against State Air Resources Board et al. was consolidated with a separate suit filed by the California Chamber of Commerce and by intervener National Association of Manufacturers. That decision is important not only to the future of the auction process, but also as to the key question of what is a tax as opposed to a fee or, in this case, as opposed to a “something else.”