TO: Board of Supervisors
FROM: Tracy A. Schulze - Auditor-Controller
REPORT BY: Jobina Toh - Assistant Auditor-Controller
SUBJECT: Authorization for the Auditor-Controller to process an Assessor Division assessment roll correction in excess of $10,000,000 limit permitted under Resolution No. 2013-137 (Revenue and Taxation Code Section 4831 et seq.)
RECOMMENDATION
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Request authorization for the Auditor-Controller to process an Assessor Division assessment roll correction for Assessor Parcel Number (APN) 031-020-007-000 tax years 2022, 2023 and 2024 in the amount of $39,621,294 for underassessed business property and a penalty for late filing in 2022. (Fiscal Impact: Various Funds Increase Revenue, Mandatory)
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BACKGROUND
Resolution No. 2013-137 authorizes the Auditor-Controller to perform, on behalf of the Board of Supervisors, corrections to the local assessment roll as set forth in Section 4831 et seq. of Revenue and Taxation Code where the amount of the correction does not exceed ten million ($10,000,000) in assessed valuation.
The County Assessor has submitted roll corrections to the Auditor-Controller that exceed the authorized $10,000,000 limit. The roll corrections for APN 031-020-007-000 cover three tax years 2022, 2023, and 2024 and increase the business property roll values for a total correction, including penalties of $39,621,294.
This correction was caused by a combination of reporting errors by the property owner and processing errors by assessor staff resulting in an underassessment of winery tanks and equipment. In addition, the County Assessor did not receive the required business property statement in assessment year 2022 which led to a penalty. A penalty under California Revenue and Taxation Code Section 463 was applied by the Assessor to the original (prior to audit) escaped assessment for the 2022 roll year. During the audit, which resulted in the additional large escape assessments, it was discovered that the original 10% penalty for failure to file the 2022 business property statement failed to include a penalty on leased equipment of $744,360 in value. Therefore, the total penalty applied includes both the increased assessed value plus the value of the leased equipment.
The breakdown by year for underassessment of $38,420,720 and penalties of $1,200,574 are as follows:
2022 - $11,261,380 assessment roll correction A1460, $1,200,574 in penalties
2023 - $12,807,870 assessment roll correction A1461
2024 - $14,351,470 assessment roll correction A1462
Attachment A provides the distribution of the related 1% ad valorem tax revenues that will be received as a result of this correction, calculated using the AB8 factor for each of the tax years being corrected.
Requested Action: Authorize the Auditor-Controller to process the roll correction (increase), including penalties, in the amount of $39,621,294.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
Yes |
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Is it currently budgeted? |
No |
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Is it Mandatory or Discretionary? |
Mandatory |
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Is the general fund affected? |
Yes |
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Future fiscal impact: |
An assessment roll increase will affect future years tax revenues for the AB8 taxing entities. |
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Consequences if not approved: |
Napa County Assessor is required to assess the fair market value of all land, improvements, fixtures, and personal property in the County. If these increases are not made, such a requirement will not be met. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.