HomeMy WebLinkAboutMINUTES - 12032002 - SD2 TO: BOARD OF SUPERVISORContra
FROM: Silvano B. Marchesi, County Counsel
Crista
DATE: December 3, 2002
", �,�County
SUBJECT: CLAIM OF PATRICK AND ISABEL KESLER
FOR REFUND OF TAXES FOR 1996 THROUGH 2000 TAX DEARS
SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATION: Based on the receipt of new information, GRANT the Keslers' request for
relief for 1996 through 2000 tax years.
BACKGROUND:
After consultation with legal counsel representing the Keslers, new information came to light
regarding the legal basis for the Assessor's position. It came to our attention that the Assessment
Appeals Board (AAB) had rendered findings on the Keslers' appeal, an unusual action for the AAB
to take. Moreover, while it is unusual also for the AAB to specify the legal basis for such a decision,
the AAB findings in this case actually did so. Those findings disclose that the basis of the AAB
decision was not the Revenue and Taxation Code Section 63.1 parent-child exclusion, as we had
understood, but instead the basic Revenue and Taxation Code Section 60 concept that the
transaction did not transfer beneficial use of the property from parent to child or child to parent.
In light of this new information, we recommend, and the County Administrator concurs, that the
Board grant the Keslers' claim for refund of taxes for the 1996 through 2000 tax years.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
- ----------------------------_--_®___..----------------------------------------_______
RECOMMENDATION OF COUNTYADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S). ' - ACTION OF
----------------------------------------------------------- ----------------_-_- _.
BOARD ON IWA i5j PPROVE AS RECOMMENDED OTHER
VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE
/� AND CORRECT COPYOF AN ACTION TAKEN
X UNANIMOUS(ABSENT_ ki___k-- } AND ENTERED ON THE MINUTES OF THE
BOARD OF SUPERVISORS ON THE DATE
AYES: NOES: SHOWN.
ABSENT: ABSTAIN:
ATTESTED �..��!`1i
CONTACT:Silvano Marches!(335-1810) JOHN SWEETEN,CLERK OF HE BOARD OF
SUPERVISORS AND COUNTYADMINISTRATOR
cc: John Sweeten,County Administrator
Gus Kramer,CountyAssessor
Kenneth J.Corcoran,Auditor-Controller
BY r - � tt DEPUTY
HAGENERALtKedw staff report-Fiml.wpd
Tad M. Heilig
Certified Public Accountant
E � �
November 21, 2002
DEC 3 2002
Supervisor Donna Gerber CLERK BOARD OF SUPERVISORS
District III CONTRA COSTA GO.
-;09 Diablo Road
Danville, CA 99526
Re: Patrick & Isabel Kesler Claims for Property Tax
Refunds for the years 1996 through 2000
Dear Supervisor Gerber,
As you know, the above referenced matter will again be
before the Board of Supervisors on December 3, 2002 . I am
enclosing for your review, copies of all correspondence
from James S . Bone, CPA, CMI of Ryan & Company who I
engaged, written to Dennis Graves of County Counsel .
It appears clear to me, both from the information that I
previously submitted and his secondary analysis provided
nerewith, the Keslers have a right to have their tax
overpayments refunded. Accordingly, I would appreciate any
additional help you could provide to the Keslers since they
are one of your constituents in your District .
At the risk of "oversimplifying" this issue I am again
providing you with the following factual circumstances and
information :
1 . In 1996 the County Assessor determined a change of
ownership occurred, based on information available
at the time, changed the roll and increased taxes .
2 . On February 7, 2002 the Assessment Appeals Board
ruled that a transfer of ownership did not take
place, thereby requiring County action to refund
overpaid taxes .
3 . This is further supported by an excerpt from a
State Board of Equalization letter dated February
11, 2002 (previously provided but enclosed for your
reference) .
939 Hartz 'may (925)8201-6848
Suite 106 Fax:(925)831-9189
Danville, CA 94526 Email:tmhcpa@aol.com
Donna Gerber
November 21, 2002
Page 2
4 . 1 have been advised by my counsel to file formal
claims for each of the years, which I am in the
process of preparing.
5 . However, it is my understanding the County may
issue refunds without processing such claims . Your
voluntarily instructing the Board of Supervisors
to do so is respectfully requested in this
correspondence. I believe sufficient time has
passed regarding this matter and that the refunds
should be processed as expediently as possible to
reduce further professional costs to my client and
interest accruing.
Needless to say, I believe the Keslers have a right to
their money back and would appreciate your helping the
Keslers in any way possible.
In the event I can be of further assistance, including
providing legal cases referenced or speaking with you
personally, please feel free to contact my office.
Sincerely,,,
Ln
Tad M. Heilig
TMH/as
Enclosures
cc: Dennis Graves, Wo enclosures
John Sweeten
Jim Bone, w/o enclosures
Patrick & Isabel Kesler
November 13, 2002
Dennis Graves, Senior Financial Counsel
County of Contra Costa
651 Pine Street, 9`h Floor
Martinez, CA 94553
RE: Kesler Assessment Appeal Refunds
Dear Mr. Graves
Tad Heilig, C.P.A., asked us to provide you with our analysis of the following factual
situation:
1. The Contra Costa County ("the County") Assessor determined that a change in
ownership occurred on parcel 208110-007 on February 13, 1996, and issued
supplemental assessments to reflect the then-current fair market value of the
property.
2. The taxpayer paid the supplemental property taxes on May 5, 1999 on the 1996
transfer.
3. The taxpayers filed assessment appeals with the County in August 2001
challenging the assessor's determination that a change in ownership had occurred.
4. The Contra Costa County Assessment Appeals Board (AAB) held a hearing on
the question of whether an event that occurred on February 13, 1996, constituted a
change in ownership as defined in Section 60 of the California Revenue and
Taxation Code ("R&T Code", or"code")
5. The AAB rendered a decision on February 7, 2002 that found that a change in
ownership did not occur on February 13, 1996.
6. The equalization by the AAB resulted in required corrections of errors to the
assessment rolls for each of the years including and following February 13, 1996.
The corrections will result in reductions in the assessor's roll values for the 1996,
1997, 1998, 1999, and 2000 years.
7. Tad Heilig, CPA representing the Keslers, was advised by the county assessor's
office to obtain payment authorization from the Board of Supervisors.
8. County officials have cited California R&T Code sections 80(a)(5) `Base Year
Value Appeals' and 63.1 `Parent/Child Transfers' as their authority for not
making the roll changes directed by the AAB.
9. The County did not commence a court action before August 8, 2002 to contest the
decision of the AAB.
10. The County has rescheduled a hearing (after continuances) before the Board of
Supervisors to review the matter on December 3, 2002.
Tad M. Heilig, CPA re: Kesler
November 13, 2002
Page 2
California Code of Regulations Title 18 Sections Governing AAB Decisions
We believe the sequence of California Revenue &Taxation Code sections that govern the
County's actions following a decision by the AAB are clear and mandatory. Briefly;
I. The taxpayers' application was a timely application filed under CCR Title 18 Sec.
305.5(3), claiming that an erroneous change in ownership determination had
occurred.
2. The AAB held a hearing on the matter in accordance with Sec. 1607.
3. The AAB equalized the assessment of the subject property in accordance with
Sec. 1610.8, as evidenced by their "Decision After Hearing" notice issued on
February 8, 2002.
4. The AAB determined that no change in ownership as defined in Sec. 60 had
occurred on February 13, 1996.
5. The AAB determination meets the definition of Sec. 4831 relating to incorrect
entries on the roll.
6. Under Sec. 1615, the County had until August 8, 2002 to file a Superior Court
action to challenge the AAB decision. The County did not file such an action.
Thus, the decision is final.
7. The clerk of the AAB should have recorded the changes in compliance with Sec.
1612.
8. The AAB could have directed the assessor to change the roll in accordance with
Sec. 1613.
9. The clerk of the AAB should have delivered a statement of roll changes to the
Auditor as required by Sec. 1614. [Note: No Board of Supervisors approval was
required.]
10. The auditor should have corrected the roll to reflect the changes made by the
county board as required by Sec. 1646.1.
11. The County can issue the applicable refunds for all years without the filing of a
claim, since the payment for all years was less than four years ago, in accordance
with Sec. 5097.2(e).
12. If the County does not issue the refunds voluntarily under Sec. 5097.2(e), then the
tax collector must issue the taxpayer notices for each year under Sec. 2635
advising the taxpayer of his rights to file a claim for refund under Sec. 5096 and
following.
13. Until the County Tax Collector issues the 2635 notices, the 1-year statute of that
section and Sec. 5097 does not start to run.
Tad M. Heilig, CPA re: Kesler
November 13, 2002
Page 3
California Code of Regulations Title 18 Sections Governing AAB Decisions
Sections 5096 and 5097 govern the refund process. Briefly;
1. The taxpayer may file a claim under Sec. 5097 based upon Sec. 5096(f). The time
for filing is the later of four years from the date of payment or one year from the
issuance of a notice under Sec. 2635.
2. Since Sec. 5096 is mandatory, after the taxpayer files a valid claim under Sec.
5097 the County must refund the overpaid taxes.
3. If the County does not refund the overpaid taxes, then the taxpayer may
commence an action in Superior Court.
4. If the taxpayer prevails, the court may also grant the taxpayer the right to recover
legal costs from the county.
The AAB ruling is based upon Sec. 60. and CCR Title 18 Sec. 462.240(x), where the
AAB found that the recorded transfer was one of bare legal title not including the
beneficial use of the property. Thus, no change in ownership occurred. However, County
counsel's analysis is based upon a parent/child change in ownership exclusion under Sec.
63.1.No change in ownership occurred,thus Sec. 63.1 could not apply.
Since the County did not file an action or proceeding requesting review of the AAB's
decision, the County must take the steps outlined above and ultimately refund the
overpaid taxes. The County can refund voluntarily, or the County may require the
taxpayer to file claims for each year.
In any event, the process is clear, and at this point all events through the issuance of the
notice under Sec. 2635 are mandatory for the County.
We refer you to Bunker v. County of Orange, 2002 and Sunrise Retirement Villa v. Dear, 58
Cal.App. 4th 948 for your review.
Thank you,
Sincerely,
James S. Bone, CPA', CMI * Ryan& Company is not a CPA firm
cc: Tad Heilig, CPA