(1)Existing property tax law specifies the date on which a remittance to a taxing agency is deemed to be received depending on the method of delivery, as provided, including for items mailed with an official postmark.

This bill would require, in the absence of any specified dates, the remittance to be deemed received on the date the remittance is received by the county treasurer-tax collector, except as provided.

(2)Existing property tax law authorizes a tax collector to sell property that has become tax defaulted, as provided, and has not been redeemed. Existing law requires the tax collector to sell the property at a public auction to the highest bidder and prohibits the tax collector from accepting an offer less than the minimum price approved, as provided, except that the tax collector may reduce the minimum price if there has been a partial redemption or partial cancellation, as specified.

This bill would also authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.

(3)The Transactions and Use Tax Law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy transactions and use taxes as special taxes in accordance with the procedures and requirements set forth in that law. The Transactions and Use Tax Law prohibits an ordinance adopted under its provisions from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the adoption of the ordinance.

This bill would instead prohibit an ordinance adopted under the Transactions and Use Tax Law from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the election on the ordinance proposing the tax.

(4)The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including various motion picture credits, commonly referred to as motion picture credit 1.0, 2.0, 3.0, and 4.0, and the certified studio credit, to be allocated by the California Film Commission in differing amounts equal to specified percentages of the qualified expenditures of a qualified motion picture in this state. Existing law allows a qualified taxpayer, if a motion picture credit exceeds the taxpayers tax liability, to elect to assign a portion of the credit to one or more affiliated corporations for each taxable year in which the credit is allowed, as specified. AB 1138 (Chapter 27 of the Statutes of 2025), effective July 3, 2025, among other things, for purposes of the motion picture credit 3.0 and 4.0 and for purposes of the certified studio credit, expands the definition of a qualified taxpayer to include a single member limited liability company that is disregarded for tax purposes. AB 1138 prohibits a motion picture credit 1.0 and 2.0 or certified studio credit generated by a disregarded single member limited liability company from being ineligible for certain reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

This bill would additionally prohibit a motion picture credit 3.0 generated by a disregarded single member limited liability company from being ineligible for those same reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

(5)The California Constitution provides for the establishment of the State Board of Equalization, which, before July 1, 2017, had primary responsibility for most of the states duties, powers, and responsibilities regarding the administration of taxes and fees. Existing law, on July 1, 2017, transferred to the California Department of Tax and Fee Administration various duties, powers, and responsibilities of the State Board of Equalization, including enforcing specified licensing and tax provisions of the Cigarette and Tobacco Products Tax Law and providing information to the Attorney General relative to a sellers failure or attempt to comply with specified provisions of federal law.

This bill would change references in these provisions of the Cigarette and Tobacco Products Tax Law from the State Board of Equalization or board to the California Department of Tax and Fee Administration or department, as applicable, to reflect the transfer of the boards duties, powers, and responsibilities to the department.

(1)Existing property tax law specifies the date on which a remittance to a taxing agency is deemed to be received depending on the method of delivery, as provided, including for items mailed with an official postmark.

This bill would require, in the absence of any specified dates, the remittance to be deemed received on the date the remittance is received by the county treasurer-tax collector, except as provided.

(2)Existing property tax law authorizes a tax collector to sell property that has become tax defaulted, as provided, and has not been redeemed. Existing law requires the tax collector to sell the property at a public auction to the highest bidder and prohibits the tax collector from accepting an offer less than the minimum price approved, as provided, except that the tax collector may reduce the minimum price if there has been a partial redemption or partial cancellation, as specified.

This bill would also authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.

(3)The Transactions and Use Tax Law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy transactions and use taxes as special taxes in accordance with the procedures and requirements set forth in that law. The Transactions and Use Tax Law prohibits an ordinance adopted under its provisions from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the adoption of the ordinance.

This bill would instead prohibit an ordinance adopted under the Transactions and Use Tax Law from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the election on the ordinance proposing the tax.

(4)The Personal Income Tax Law and the Corporation Tax Law allow various credits against the taxes imposed by those laws, including various motion picture credits, commonly referred to as motion picture credit 1.0, 2.0, 3.0, and 4.0, and the certified studio credit, to be allocated by the California Film Commission in differing amounts equal to specified percentages of the qualified expenditures of a qualified motion picture in this state. Existing law allows a qualified taxpayer, if a motion picture credit exceeds the taxpayers tax liability, to elect to assign a portion of the credit to one or more affiliated corporations for each taxable year in which the credit is allowed, as specified. AB 1138 (Chapter 27 of the Statutes of 2025), effective July 3, 2025, among other things, for purposes of the motion picture credit 3.0 and 4.0 and for purposes of the certified studio credit, expands the definition of a qualified taxpayer to include a single member limited liability company that is disregarded for tax purposes. AB 1138 prohibits a motion picture credit 1.0 and 2.0 or certified studio credit generated by a disregarded single member limited liability company from being ineligible for certain reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

This bill would additionally prohibit a motion picture credit 3.0 generated by a disregarded single member limited liability company from being ineligible for those same reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

(5)The California Constitution provides for the establishment of the State Board of Equalization, which, before July 1, 2017, had primary responsibility for most of the states duties, powers, and responsibilities regarding the administration of taxes and fees. Existing law, on July 1, 2017, transferred to the California Department of Tax and Fee Administration various duties, powers, and responsibilities of the State Board of Equalization, including enforcing specified licensing and tax provisions of the Cigarette and Tobacco Products Tax Law and providing information to the Attorney General relative to a sellers failure or attempt to comply with specified provisions of federal law.

This bill would change references in these provisions of the Cigarette and Tobacco Products Tax Law from the State Board of Equalization or board to the California Department of Tax and Fee Administration or department, as applicable, to reflect the transfer of the boards duties, powers, and responsibilities to the department.

(1)Existing property tax law specifies the date on which a remittance to a taxing agency is deemed to be received depending on the method of delivery, as provided, including for items mailed with an official postmark.

This bill would require, in the absence of any specified dates, the remittance to be deemed received on the date the remittance is received by the county treasurer-tax collector, except as provided.

(2)Existing property tax law authorizes a tax collector to sell property that has become tax defaulted, as provided, and has not been redeemed. Existing law requires the tax collector to sell the property at a public auction to the highest bidder and prohibits the tax collector from accepting an offer less than the minimum price approved, as provided, except that the tax collector may reduce the minimum price if there has been a partial redemption or partial cancellation, as specified.

This bill would also authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.

(3)The Transactions and Use Tax Law authorizes various local governmental entities, subject to certain limitations and approval requirements, to levy transactions and use taxes as special taxes in accordance with the procedures and requirements set forth in that law. The Transactions and Use Tax Law prohibits an ordinance adopted under its provisions from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the adoption of the ordinance.

This bill would instead prohibit an ordinance adopted under the Transactions and Use Tax Law from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the election on the ordinance proposing the tax.

(5)The California Constitution provides for the establishment of the State Board of Equalization, which, before July 1, 2017, had primary responsibility for most of the states duties, powers, and responsibilities regarding the administration of taxes and fees. Existing law, on July 1, 2017, transferred to the California Department of Tax and Fee Administration various duties, powers, and responsibilities of the State Board of Equalization, including enforcing specified licensing and tax provisions of the Cigarette and Tobacco Products Tax Law and providing information to the Attorney General relative to a sellers failure or attempt to comply with specified provisions of federal law.

This bill would change references in these provisions of the Cigarette and Tobacco Products Tax Law from the State Board of Equalization or board to the California Department of Tax and Fee Administration or department, as applicable, to reflect the transfer of the boards duties, powers, and responsibilities to the department.

(1)Existing property tax law specifies the date on which a remittance to a taxing agency is deemed to be received depending on the method of delivery, as provided, including for items mailed with an official postmark.

This bill would provide that if the remittance deposited in the United States mail does not contain an official postmark, require, in the absence of any specified dates, the remittance shall be credited against any amount due as of to be deemed received on the date the remittance is received. received by the county treasurer-tax collector, except as provided.

(2)Existing property tax law authorizes a tax collector to sell property that has become tax defaulted, as provided, and has not been redeemed. Existing law requires the tax collector to sell the property at a public auction to the highest bidder and prohibits the tax collector from accepting an offer less than the minimum price approved, as provided, except that the tax collector may reduce the minimum price if there has been a partial redemption or partial cancellation, as specified.

This bill would also authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.

(1)Existing property tax law specifies the date on which a remittance to a taxing agency is deemed to be received depending on the method of delivery, as provided, including for items mailed with an official postmark.

This bill would provide that if the remittance deposited in the United States mail does not contain an official postmark, the remittance shall be credited against any amount due as of the date the remittance is received.

(2)Existing property tax law authorizes a tax collector to sell property that has become tax defaulted, as provided, and has not been redeemed. Existing law requires the tax collector to sell the property at a public auction to the highest bidder and prohibits the tax collector from accepting an offer less than the minimum price approved, as provided, except that the tax collector may reduce the minimum price if there has been a partial redemption or partial cancellation, as specified.

This bill would also authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.

 UNFINISHED BUSINESS  

Bill No: SB 863

Author: Committee on Revenue and Taxation

Amended: 8/28/25

Vote: 21

SENATE REVENUE AND TAXATION COMMITTEE: 5-0, 4/23/25

AYES: McNerney, Valladares, Ashby, Grayson, Umberg

SENATE FLOOR: 37-0, 5/1/25 (Consent)

AYES: Allen, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

NO VOTE RECORDED: Alvarado-Gil, Reyes, Rubio

ASSEMBLY FLOOR: 78-0, 9/4/25 - See last page for vote

SUBJECT: Taxation

SOURCE: California Association of County Treasurer-Tax Collectors

California Department of Tax & Fee Administration

DIGEST:

This bill makes four changes to improve tax administration suggested by the California Association of County Treasurer-Tax Collectors and the California Department of Tax & Fee Administration (CDTFA), among others.

Assembly Amendments

(1) clarify that the measure’s deemed received date for property tax payments applies in absence of other dates mentioned in law, (2) add a provision to change the operative date of a new district tax ordinance to commence after the vote on the ordinance instead of the local agency’s adoption of the ordinance, (3) update references in one section of the Cigarette and Tobacco Products Law from the Board of Equalization (BOE) to CDTFA, and (4) add references to Motion Picture and Television Production Credit 3.0 to a section of the Corporation Tax Law to clarify credit assignments made by single member limited liability companies disregarded for federal purposes.

ANALYSIS:

Existing law:

1. Provides that property taxes are due in two installments, the first on November 1 and the second on February 1, with delinquency for the second installment occurring on April 10.
2. Requires county tax collectors to begin imposing penalties for nonpayment of property taxes for each amount due, plus administrative charges, once taxes become delinquent.
3. Deems mailed remittances received as of the date of the postmark on the envelope containing the remittance, or the date on the packing slip or air bill from an independent delivery service.
4. Permits tax collectors to also deem the remittance received if it can be proved that the mailing occurred on an earlier date.
5. Provides that if payments are made through the tax collector’s authorized website or telephone number, the payment is deemed received on the date the taxpayer completes the electronic payment.
6. Deems all other electronic payments received on the date the tax collector actually receives the payment.
7. States that a property becomes tax defaulted if a property owner does not pay the property taxes due in the current fiscal year before June 30.
8. Allows the tax collector to sell a residential property that has been in default for five years, or a commercial property after three years in default, unless the Board of Supervisors sets a five-year period for commercial property.
9. Directs tax collectors to sell properties at public auction, but only when bids exceed the “minimum bid,” which is equal to the total amount of outstanding taxes, assessments, penalties, and fees.
10. Requires tax collectors to obtain approval from the Board of Supervisors to reduce a minimum bid, unless a partial redemption or cancellation has been made.
11. Imposes the sales tax on every retailer engaged in business in this state that sells tangible personal property, and requires them to collect the appropriate tax from the purchase and remit the amount to CDTFA.
12. States that taxes levied by local governments are either general taxes, subject to majority approval of its voters, or special taxes, subject to 2/3 vote (California Constitution, Article XIII C).
13. Allows cities, counties, and specified special districts, including the San Francisco Bay Area Rapid Transit District and the Santa Cruz County Metropolitan Transit District, to increase the sales and use tax applied within their jurisdictions, also known as district or transactions and use taxes, for either specific or general purposes pursuant to the California Constitution’s voter approval requirements.
14. Precludes a district tax ordinance from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the adoption of the ordinance.
15. Under federal law, provides that a Limited Liability Company (LLC) can either be “disregarded” and considered inseparable from its owner, with income and expenses integrated into its owner’s returns, or be treated as a corporation, and taxed separately.
16. Conforms to federal tax treatment of LLCs, but requires entities to make the same election for state purposes as they did for federal, file a tax return, and pay an annual minimum tax of $800 despite their disregarded status.
17. Limits the value of credits attributable to a disregarded entity.
18. Enacts “Motion Picture and Television Production Tax Credit 1.0,” which directs the California Film Commission (CFC) to annually allocate $100 million in credits until the 2012-13 fiscal year (SB 15 X3, Calderon, Chapter 17, Statutes of 2009-10 Third Extraordinary Session and AB 15 X3, Krekorian, Chapter 10, Statutes of the 2009-10 Third Extraordinary Session).
19. Enacts “Motion Picture and Television Production Tax Credit 2.0,” which increased the amount of credit to $330 million each fiscal year through 2019-20, among other changes (AB 1839, Gatto, Chapter 413, Statutes of 2020).
20. Enacts “Motion Picture and Television Production Tax Credit 3.0” which authorizes CFC to allocate $330 million in tax credits each fiscal year from 2020-21 to 2024-25, among other changes (SB 878, Committee on Budget & Fiscal Review, Chapter 456, Statutes of 2018), subsequently amended to also allow a credit for qualified motion pictures produced at a certified studio construction project (SB 144, Portantino, Chapter 114, Statutes of 2021).
21. Enacts “Motion Picture and Television Production Tax Credit 4.0” extending the CFC authorization from 2025-26 and continuing through 2029-30 (SB 132 Committee on Budget & Fiscal Review, Chapter 56, Statutes of 2023).
22. Defines a “qualified taxpayer” as a taxpayer who has paid or incurred qualified expenditures, participated in the Career Readiness requirement, and has been issued a credit certificate by the California Film Commission.
23. Permits corporation taxpayers to assign the credit to one or more affiliated corporations within their unitary groups, so long as the value of the credit exceeds the qualified taxpayer’s liability. Taxpayers may assign credits notwithstanding limits placed on credits generated by disregarded entities. Defines “affiliated corporation” as one in the same unitary group for Corporation Tax purposes, where 100% of the voting stock is owned, directly or indirectly, by members of the unitary group and the unitary group is engaged in the same general line of business.
24. Enacts several provisions to clarify the ability of Single Member LLCs (SMLLCs) disregarded for tax purposes to assign Motion Picture and Television Production Tax Credits to affiliated corporations (AB 1138, Zbur, Chapter 27, Statutes of 2025), among other provisions amending and expanding Motion Picture and Television Production Tax Credit, including to:
    1. Amend the Corporations Tax Law sections for the Motion Picture and Television Production Tax 3.0 and 4.0 Credit programs to:
       1. Add to the definition of “qualified taxpayer” a disregarded SMLLC.
       2. Provide that a SMLLC disregarded for tax purposes may elect to assign any portion of the credit allowed to one or more affiliated corporations if such single member limited liability company made the federal election to be classified as an association taxable as a corporation.
       3. Disconnect the requirement that, for a qualified taxpayer to assign a credit, the amount of credit must exceed the taxpayer’s liability.
    2. Enact a new section of the Corporation Tax Law to provide that under the Motion Picture and Television Production Tax 1.0 and 2.0 Credit programs, so long as credits were assigned and claimed on a timely filed tax return with the FTB on or before January 1, 2025, credits generated by a SMLLC disregarded for tax purposes shall not be ineligible for assignment to either a corporation that owns the SMLLC or to its affiliate based on:
       1. The SMLLC not being considered a qualified taxpayer.
       2. The amount of credit not exceeding the SMLLC’s tax liability.
25. Enacts the California Cigarette and Tobacco Products Tax Law, which imposes a tax of $2.87 per package of 20 cigarettes.
26. Enacts Taxpayer Transparency and Fairness Act of 2017, which created the CDTFA, and shifted all of BOE’s statutory tax administration functions to CDTFA (AB 102, Committee on Budget, Chapter 16, Statutes of 2017).

This bill:

1. Deems a property tax payment received as of the date of delivery if it does not contain an official postmark in the absence of any other date mentioned in law.
2. Allows the tax collector to reduce the minimum bid at a tax sale when defaulted taxes decrease due to the removal or reduction of a special assessment or a direct charge against the property.
3. Modifies the period that precludes a district tax ordinance from becoming operative to provide that it is measured from the date voters approve the ordinance at an election, not from the adoption of the ordinance.
4. Adds references to the Corporation Tax Law section for Motion Picture and Production Tax Credit 3.0, as it read on January 1, 2025, into AB 1138’s new section of the Corporation Tax Law that clarifies SMLLC assignment of tax credits under the Motion Picture and Television Production Tax 1.0 and 2.0 Credit programs, and makes conforming changes.
5. Replaces references in one section of the Cigarette and Tobacco Products Licensing Law from BOE to CDTFA.

Background

Minimum Bids. In addition to unpaid property taxes, outstanding taxes and assessments can include direct charges imposed by a county, city, or local agency, such as parcel taxes, benefit assessments, or taxes to repay outstanding bonds. When a local agency wants to cancel or reduce a direct charge, state law does not allow the tax collector to reduce the minimum bid without returning to the Board of Supervisors for approval. In this case, the tax sale must generally wait another year, and all the costs incurred to conduct a tax sale for that property are wasted.

District Tax Ordinances. Existing law provides that a district tax ordinance becomes operative no sooner than the first day of the first calendar quarter commencing more than 110 days after the ordinance’s adoption. Historically, cities and counties have generally adopted district tax ordinances on the election date. This provision was intended to allow the CDTFA sufficient time to prepare to administer the new district tax. However, in recent years, more cities and counties have adopted ordinances at various times following voter approval. These delayed adoptions have led to commensurate delays in administration of newly adopted district taxes. For example, the City of Grass Valley obtained voter approval for a district tax on March 5, 2024, and requested an operative date of July 1, 2024. However, the ordinance was not adopted until April 9, 2024, leaving less time than was required by law for the tax to become operative on July 1. Accordingly, the CDTFA was forced to delay the operative date to October 1, 2024, delaying expected revenues.

AB 1138 Clarification. AB 1138 sought to prospectively and retroactively clarify the ability of a Single-Member Limited Liability Company (SMLLC) disregarded for federal tax purposes to assign tax credits to affiliated corporations, and to do so without the limitation imposed on disregarded entities. Credit assignment had been part of the Film and Television Production Credit since its enactment in 2009, but the statute didn’t clearly identify SMLLCs as entities that could generate tax credits, or whether the limit applied.

Specifically, AB 1138 made two changes to clarify assignments and ensure consistent treatment across all four credit statutes in the Corporation Tax. First, it amended film and television production tax credit 3.0 and 4.0 statutes in the Corporation Tax. Second, AB 1138 enacted a new stand-alone section in the Corporation Tax to make these same clarifications under the 1.0 and 2.0 film and television production tax credits.

However, AB 1138’s changes to the 3.0 statute did not contain an explicit effective date, so it’s unclear whether AB 1138’s clarification applies to 3.0 credits claimed before the 2025 taxable year. As a result, they will not likely be treated in the same way as other credits claimed in the 2025 taxable year and after, contrary to the intent of the program and AB 1138. As amended, this bill provides further clarification by adding references to AB 1138’s changes to the 3.0 statute into its standalone section, and make conforming changes, which ensures 3.0 credits are treated the same regardless of the taxable year in which they’re claimed.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

SUPPORT: (Verified 9/2/25)

California Association of County Treasurer-Tax Collectors (Co-Source)

California Department of Tax & Fee Administration (Co-Source)

OPPOSITION: (Verified 9/2/25)

None received

ARGUMENTS IN SUPPORT: According to the California Association of County Treasurer-Tax Collectors, “SB 863 … will provide tax collectors the ability to credit the remittance against any amount due as of the date the remittance is received, thereby offering greater clarity and ensuring a fair and transparent process for taxpayers. CACTTC also supports SB 863 because it will authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property. SB 863 provides tax collectors with a more practical approach to resolving tax-defaulted properties by offering much-needed flexibility in property tax auctions. This helps ensure that properties are sold at fair and reasonable prices, particularly in situations where a portion of the delinquency has been mitigated.”

ASSEMBLY FLOOR: 78-0, 9/4/25

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO VOTE RECORDED: Ahrens

ASSEMBLY FLOOR: 77-0, 7/14/25

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO VOTE RECORDED: Ávila Farías, Schultz

Prepared by: Colin Grinnell / REV. & TAX. / (916) 651-4117

9/6/25 10:40:17

**** END ****

SENATE THIRD READING

STR Bill Id:SB 863

Author:(Committee on Revenue and Taxation)

As Amended Ver:August 28, 2025

Majority vote

SUMMARY

Makes various technical and conforming changes to the Revenue and Taxation Code (R&TC) relating to the administration of property taxes, district tax ordinances, cigarette and tobacco products taxes, and motion picture credits under the Corporate Tax (CT) Law.

Major Provisions

1. Provides that a property tax remittance (payment) sent by mail is deemed to be received on the date it is received by the county treasurer-tax collector if there is no date shown on the post office cancellation mark stamp or packing slip attached to the outside of the envelope or package containing the remittance.
2. Authorizes a county tax collector, when selling a tax-defaulted property at public auction, to reduce the minimum price for the property below the price approved in the resolution by the county's Board of Supervisors when any of the following occur:
   1. A partial redemption has been made under R&TC Section 4131;
   2. A partial cancellation has been made under R&TC Section 4985 after that price was fixed by not more than the ratio that the delinquency on the portion so redeemed or canceled bears to the delinquency upon the whole; or,
   3. The total amount necessary to redeem is decreased due to the removal or reduction of default taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.
3. Changes the operative date of a new district ordinance from the first day of a calendar quarter commencing more than 110 days after the adoption of the ordinance to the first day of a calendar quarter commencing more than 110 days after the election where the ordinance proposing the tax was voted on.
4. Updates references under the Cigarette and Tobacco Products Tax Law from the "State Board of Equalization" or "board" to the "California Department of Tax and Fee Administration" or "department," as applicable, to reflect the transfer of the board's duties, powers, and responsibilities to the department.
5. Clarifies, for purposes of the Corporation Tax Law, that a motion picture credit 3.0 generated by a disregarded single member limited liability company is eligible for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

COMMENTS

1. Postmarks: This bill provides a clarification in situations where a mailed property tax payment does not have a postmark or packing slip, which has led to disputes between taxpayers and tax collectors. By clarifying that payments that do not have a dated postmark or packing slip are considered received when they are actually received by the tax collector, this bill seeks to reduce disputes and ensure consistent application of the law for taxpayers.
2. Tax-defaulted property sales: Property becomes tax-defaulted land if the property taxes remain unpaid, typically as of 12:01 a.m. on July 1. Property that has become tax-defaulted after five years (or three years in the case of property that is also subject to a nuisance abatement lien) becomes subject to the county tax collector's power to sell in order to satisfy the defaulted property taxes. This process is commonly referred to as a "Chapter 7 Tax Sale".

The county tax collector must attempt to sell the property within four years of becoming subject to sale. The county tax collector may offer the property for sale at public auction, a sealed bid sale, or a negotiated sale to a public agency or qualified nonprofit organization. If no bids are received at a tax sale, an attempt must be made to sell the property at intervals of no more than six year, until it is sold.

Public auctions are the most common way of selling tax-defaulted property. The auction is conducted by the county tax collector, and the property is sold to the highest bidder.

Tax-defaulted properties rendered unusable by their size, location, or other condition, may be offered under a sealed bid to owners of contiguous properties or to holders of a predominant easement or right-of-way easement. After the tax collector notifies eligible bidders of a sealed bid, the bidders respond by mail with a bid price and the highest bidder purchases the property.

County tax collectors are required to notify the State Controller's Office "not less than 45 days nor more than 120 days before the proposed sale." Additionally, R&TC Section 3702 requires the tax collector to publish the intended sale three times in a newspaper of general circulation within the county, at least three weeks prior to the tax sale.

1. District tax ordinance operative dates: Existing law provides that a district tax ordinance becomes operative no sooner than the first day of the first calendar quarter commencing more than 110 days after the ordinance's adoption. Historically, cities and counties have generally adopted district tax ordinances on the election date. This provision was intended to allow the CDTFA sufficient time to prepare to administer the new district tax. However, in recent years, more cities and counties have adopted ordinances at various times following voter approval.

This bill changes the operative date of a new district ordinance from the first day of a calendar quarter commencing more than 110 days after the adoption of the ordinance to the first day of a calendar quarter commencing more than 110 days after the election on the ordinance proposing the tax.

1. Taxpayer Transparency and Fairness Act of 2017: AB 102 (Committee on Budget), Chapter 16, Statutes of 2017, shifted the responsibility of collecting and administering various excise taxes from the Board of Equalization to the newly created CDTFA, including the Cigarette and Tobacco Products taxes. This bill simply updates references from the "State Board of Equalization" or "board" to the "California Department of Tax and Fee Administration" or "department," as applicable, to reflect the transfer of the board's duties, powers, and responsibilities to the department.
2. Motion picture credit cleanup: The Personal Income Tax Law and the CT Law allow various credits against the taxes imposed by those laws, including various motion picture credits, commonly referred to as motion picture credit 1.0, 2.0, 3.0, and 4.0, and the certified studio credit, to be allocated by the California Film Commission. Existing law allows a qualified taxpayer, if a motion picture credit exceeds the taxpayer's tax liability, to elect to assign a portion of the credit to one or more affiliated corporations for each taxable year in which the credit is allowed, as specified. AB 1138 (Zbur) Chapter 27 of the Statutes of 2025, effective July 3, 2025, among other things, for purposes of the motion picture credit 3.0 and 4.0 and for purposes of the certified studio credit, expands the definition of a qualified taxpayer to include a single member limited liability company that is disregarded for tax purposes. AB 1138 prohibits a motion picture credit 1.0 and 2.0 or certified studio credit generated by a disregarded single member limited liability company from being ineligible for certain reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

This bill would additionally prohibit a motion picture credit 3.0 generated by a disregarded single member limited liability company from being ineligible for those same reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

According to the Author

The Senate Committee on Revenue and Taxation has submitted the following statement in support of this bill:

This year, the Senate Committee on Revenue and Taxation introduced SB 863 to make technical, non-controversial changes to improve tax administration suggested by the California Department of Tax and Fee Administration (CDTFA) and the California Association of County Treasurers and Tax Collectors. SB 863 combines noncontroversial statutory changes into one single bill. Moving these proposals as separate bills, even if technical and noncontroversial, through the legislative process would be much less efficient than consolidating them into one measure. Committee staff distributed these proposals to affected parties to review each proposal before including it in the bill. Should anyone object to an item in the bill, it will be removed.

Arguments in Support

Writing in support of this bill, the California Association of County Treasurers and Tax Collectors notes, in part:

CACTTC is proud to co-sponsor and support SB 863 because it will provide tax collectors the ability to credit the remittance against any amount due as of the date the remittance is received, thereby offering greater clarity and ensuring a fair and transparent process for taxpayers. CACTTC also supports SB 863 because it will authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property. SB 863 provides tax collectors with a more practical approach to resolving tax-defaulted properties by offering much-needed flexibility in property tax auctions. This helps ensure that properties are sold at fair and reasonable prices, particularly in situations where a portion of the delinquency has been mitigated.

Arguments in Opposition

None on file.

FISCAL COMMENTS

None.

VOTES

SENATE FLOOR: 37-0-3

YES: Allen, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

ABS, ABST OR NV: Alvarado-Gil, Reyes, Rubio

ASM REVENUE AND TAXATION: 7-0-0

YES: Gipson, Ta, Bains, Carrillo, DeMaio, McKinnor, Quirk-Silva

ASSEMBLY FLOOR: 77-0-2

YES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

ABS, ABST OR NV: Ávila Farías, Schultz

UPDATED

VERSION: August 28, 2025

CONSULTANT: Wesley Whitaker / REV. & TAX. / (916) 319-2098 FN: 0001288

SENATE THIRD READING

STR Bill Id:SB 863

Author:(Committee on Revenue and Taxation)

As Amended Ver:August 28, 2025

Majority vote

SUMMARY

Makes various technical and conforming changes to the Revenue and Taxation Code (R&TC) relating to the administration of property taxes, district tax ordinances, cigarette and tobacco products taxes, and motion picture credits under the Corporate Tax (CT) Law.

Major Provisions

1. Provides that a property tax remittance (payment) sent by mail is deemed to be received on the date it is received by the county treasurer-tax collector if there is no date shown on the post office cancellation mark stamp or packing slip attached to the outside of the envelope or package containing the remittance.
2. Authorizes a county tax collector, when selling a tax-defaulted property at public auction, to reduce the minimum price for the property below the price approved in the resolution by the county's Board of Supervisors when any of the following occur:
   1. A partial redemption has been made under R&TC Section 4131;
   2. A partial cancellation has been made under R&TC Section 4985 after that price was fixed by not more than the ratio that the delinquency on the portion so redeemed or canceled bears to the delinquency upon the whole; or,
   3. The total amount necessary to redeem is decreased due to the removal or reduction of default taxes resulting from the removal or reduction of a special assessment or a direct charge against the property.
3. Changes the operative date of a new district ordinance from the first day of a calendar quarter commencing more than 110 days after the adoption of the ordinance to the first day of a calendar quarter commencing more than 110 days after the election where the ordinance proposing the tax was voted on.
4. Updates references under the Cigarette and Tobacco Products Tax Law from the "State Board of Equalization" or "board" to the "California Department of Tax and Fee Administration" or "department," as applicable, to reflect the transfer of the board's duties, powers, and responsibilities to the department.
5. Clarifies, for purposes of the Corporation Tax Law, that a motion picture credit 3.0 generated by a disregarded single member limited liability company is eligible for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

COMMENTS

1. Postmarks: This bill provides a clarification in situations where a mailed property tax payment does not have a postmark or packing slip, which has led to disputes between taxpayers and tax collectors. By clarifying that payments that do not have a dated postmark or packing slip are considered received when they are actually received by the tax collector, this bill seeks to reduce disputes and ensure consistent application of the law for taxpayers.
2. Tax-defaulted property sales: Property becomes tax-defaulted land if the property taxes remain unpaid, typically as of 12:01 a.m. on July 1. Property that has become tax-defaulted after five years (or three years in the case of property that is also subject to a nuisance abatement lien) becomes subject to the county tax collector's power to sell in order to satisfy the defaulted property taxes. This process is commonly referred to as a "Chapter 7 Tax Sale".

The county tax collector must attempt to sell the property within four years of becoming subject to sale. The county tax collector may offer the property for sale at public auction, a sealed bid sale, or a negotiated sale to a public agency or qualified nonprofit organization. If no bids are received at a tax sale, an attempt must be made to sell the property at intervals of no more than six year, until it is sold.

Public auctions are the most common way of selling tax-defaulted property. The auction is conducted by the county tax collector, and the property is sold to the highest bidder.

Tax-defaulted properties rendered unusable by their size, location, or other condition, may be offered under a sealed bid to owners of contiguous properties or to holders of a predominant easement or right-of-way easement. After the tax collector notifies eligible bidders of a sealed bid, the bidders respond by mail with a bid price and the highest bidder purchases the property.

County tax collectors are required to notify the State Controller's Office "not less than 45 days nor more than 120 days before the proposed sale." Additionally, R&TC Section 3702 requires the tax collector to publish the intended sale three times in a newspaper of general circulation within the county, at least three weeks prior to the tax sale.

1. District tax ordinance operative dates: Existing law provides that a district tax ordinance becomes operative no sooner than the first day of the first calendar quarter commencing more than 110 days after the ordinance's adoption. Historically, cities and counties have generally adopted district tax ordinances on the election date. This provision was intended to allow the CDTFA sufficient time to prepare to administer the new district tax. However, in recent years, more cities and counties have adopted ordinances at various times following voter approval.

This bill changes the operative date of a new district ordinance from the first day of a calendar quarter commencing more than 110 days after the adoption of the ordinance to the first day of a calendar quarter commencing more than 110 days after the election on the ordinance proposing the tax.

1. Taxpayer Transparency and Fairness Act of 2017: AB 102 (Committee on Budget), Chapter 16, Statutes of 2017, shifted the responsibility of collecting and administering various excise taxes from the Board of Equalization to the newly created CDTFA, including the Cigarette and Tobacco Products taxes. This bill simply updates references from the "State Board of Equalization" or "board" to the "California Department of Tax and Fee Administration" or "department," as applicable, to reflect the transfer of the board's duties, powers, and responsibilities to the department.
2. Motion picture credit cleanup: The Personal Income Tax Law and the CT Law allow various credits against the taxes imposed by those laws, including various motion picture credits, commonly referred to as motion picture credit 1.0, 2.0, 3.0, and 4.0, and the certified studio credit, to be allocated by the California Film Commission. Existing law allows a qualified taxpayer, if a motion picture credit exceeds the taxpayer's tax liability, to elect to assign a portion of the credit to one or more affiliated corporations for each taxable year in which the credit is allowed, as specified. AB 1138 (Chapter 27 of the Statutes of 2025), effective July 3, 2025, among other things, for purposes of the motion picture credit 3.0 and 4.0 and for purposes of the certified studio credit, expands the definition of a qualified taxpayer to include a single member limited liability company that is disregarded for tax purposes. AB 1138 prohibits a motion picture credit 1.0 and 2.0 or certified studio credit generated by a disregarded single member limited liability company from being ineligible for certain reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

This bill would additionally prohibit a motion picture credit 3.0 generated by a disregarded single member limited liability company from being ineligible for those same reasons for assignment to a corporation that, directly or indirectly, owns the disregarded single member limited liability company, or to an affiliated corporation of that corporation.

According to the Author

The Senate Committee on Revenue and Taxation has submitted the following statement in support of this bill:

This year, the Senate Committee on Revenue and Taxation introduced SB 863 to make technical, non-controversial changes to improve tax administration suggested by the California Department of Tax and Fee Administration (CDTFA) and the California Association of County Treasurers and Tax Collectors. SB 863 combines noncontroversial statutory changes into one single bill. Moving these proposals as separate bills, even if technical and noncontroversial, through the legislative process would be much less efficient than consolidating them into one measure. Committee staff distributed these proposals to affected parties to review each proposal before including it in the bill. Should anyone object to an item in the bill, it will be removed.

Arguments in Support

Writing in support of this bill, the California Association of County Treasurers and Tax Collectors notes, in part:

CACTTC is proud to co-sponsor and support SB 863 because it will provide tax collectors the ability to credit the remittance against any amount due as of the date the remittance is received, thereby offering greater clarity and ensuring a fair and transparent process for taxpayers. CACTTC also supports SB 863 because it will authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property. SB 863 provides tax collectors with a more practical approach to resolving tax-defaulted properties by offering much-needed flexibility in property tax auctions. This helps ensure that properties are sold at fair and reasonable prices, particularly in situations where a portion of the delinquency has been mitigated.

Arguments in Opposition

None on file.

FISCAL COMMENTS

None.

VOTES

SENATE FLOOR: 37-0-3

YES: Allen, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

ABS, ABST OR NV: Alvarado-Gil, Reyes, Rubio

ASM REVENUE AND TAXATION: 7-0-0

YES: Gipson, Ta, Bains, Carrillo, DeMaio, McKinnor, Quirk-Silva

ASSEMBLY FLOOR: 77-0-2

YES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

ABS, ABST OR NV: Ávila Farías, Schultz

UPDATED

VERSION: August 28, 2025

CONSULTANT: Wesley Whitaker / REV. & TAX. / (916) 319-2098 FN: 0001288

 UNFINISHED BUSINESS  

Bill No: SB 863

Author: Committee on Revenue and Taxation

Amended: 6/27/25 in Assembly

Vote: 21

SENATE REVENUE AND TAXATION COMMITTEE: 5-0, 4/23/25

AYES: McNerney, Valladares, Ashby, Grayson, Umberg

SENATE FLOOR: 37-0, 5/1/25 (Consent)

AYES: Allen, Archuleta, Arreguín, Ashby, Becker, Blakespear, Cabaldon, Caballero, Cervantes, Choi, Cortese, Dahle, Durazo, Gonzalez, Grayson, Grove, Hurtado, Jones, Laird, Limón, McGuire, McNerney, Menjivar, Niello, Ochoa Bogh, Padilla, Pérez, Richardson, Seyarto, Smallwood-Cuevas, Stern, Strickland, Umberg, Valladares, Wahab, Weber Pierson, Wiener

NO VOTE RECORDED: Alvarado-Gil, Reyes, Rubio

ASSEMBLY FLOOR: 77-0, 7/14/25 (Consent) - See last page for vote

SUBJECT: Taxation

SOURCE: California Association of County Treasurer-Tax Collectors; California Department of Tax & Fee Administration.

DIGEST:

This bill makes four changes to improve tax administration suggested by the California Association of County Treasurer-Tax Collectors and the California Department of Tax & Fee Administration (CDTFA).

Assembly Amendments

(1) clarify that the measure’s deemed received date for property tax payments applies in absence of other dates mentioned in law, (2) add a provision to change the operative date of a new district tax ordinance to commence after the vote on the ordinance instead of the local agency’s adoption of the ordinance, and (3) update references in one section of the Cigarette and Tobacco Products Law from the Board of Equalization (BOE) to CDTFA.

ANALYSIS:

Existing law:

1. Provides that property taxes are due in two installments, the first on November 1 and the second on February 1, with delinquency for the second installment occurring on April 10.
2. Requires county tax collectors to begin imposing penalties for nonpayment of property taxes for each amount due, plus administrative charges, once taxes become delinquent.
3. Deems mailed remittances received as of the date of the postmark on the envelope containing the remittance, or the date on the packing slip or air bill from an independent delivery service.
4. Permits tax collectors to also deem the remittance received if it can be proved that the mailing occurred on an earlier date.
5. Provides that if payments are made through the tax collector's authorized website or telephone number, the payment is deemed received on the date the taxpayer completes the electronic payment.
6. Deems all other electronic payments received on the date the tax collector actually receives the payment.
7. States that a property becomes tax defaulted if a property owner does not pay the property taxes due in the current fiscal year before June 30.
8. Allows the tax collector to sell a residential property that has been in default for five years, or a commercial property after three years in default, unless the Board of Supervisors sets a five-year period for commercial property.
9. Directs tax collectors to sell properties at public auction, but only when bids exceed the “minimum bid,” which is equal to the total amount of outstanding taxes, assessments, penalties, and fees.
10. Requires tax collectors to obtain approval from the Board of Supervisors to reduce a minimum bid, unless a partial redemption or cancellation has been made.
11. Imposes the sales tax on every retailer engaged in business in this state that sells tangible personal property, and requires them to collect the appropriate tax from the purchase and remit the amount to the California Department of Tax and Fee Administration.
12. States that taxes levied by local governments are either general taxes, subject to majority approval of its voters, or special taxes, subject to 2/3 vote (California Constitution, Article XIII C).
13. Allows cities, counties, and specified special districts, including the San Francisco Bay Area Rapid Transit District and the Santa Cruz County Metropolitan Transit District, to increase the sales and use tax applied within their jurisdictions, also known as district or transactions and use taxes, for either specific or general purposes pursuant to the California Constitution’s voter approval requirements.
14. Precludes a district tax ordinance from becoming operative on other than the first day of a calendar quarter, or prior to the first day of the first calendar quarter, commencing more than 110 days after the adoption of the ordinance.
15. Enacts the California Cigarette and Tobacco Products Tax Law, which imposes a tax of $2.87 per package of 20 cigarettes.
16. Enacts Taxpayer Transparency and Fairness Act of 2017, which created the CDTFA, and shifted all of the BOE’s statutory tax administration functions to CDTFA (AB 102, Committee on Budget, Chapter 16, Statutes of 2017).

This bill:

1. Deems a property tax payment received as of the date of delivery if it does not contain an official postmark in the absence of any other date mentioned in law.
2. Allows the tax collector to reduce the minimum bid at a tax sale when defaulted taxes decrease due to the removal or reduction of a special assessment or a direct charge against the property.
3. Modifies the period that precludes a district tax ordinance from becoming operative to provide that it is measured from the date voters approve the ordinance at an election, not from the adoption of the ordinance.
4. Replace references in one section of the Cigarette and Tobacco Products Licensing Law from BOE to CDTFA.

Background

Minimum Bids. In addition to unpaid property taxes, outstanding taxes and assessments can include direct charges imposed by a county, city, or local agency, such as parcel taxes, benefit assessments, or taxes to repay outstanding bonds. When a local agency wants to cancel or reduce a direct charge, state law does not allow the tax collector to reduce the minimum bid without returning to the Board of Supervisors for approval. In this case, the tax sale must generally wait another year, and all the costs incurred to conduct a tax sale for that property are wasted.

District Tax Ordinances. Existing law provides that a district tax ordinance becomes operative no sooner than the first day of the first calendar quarter commencing more than 110 days after the ordinance's adoption. Historically, cities and counties have generally adopted district tax ordinances on the election date. This provision was intended to allow the CDTFA sufficient time to prepare to administer the new district tax. However, in recent years, more cities and counties have adopted ordinances at various times following voter approval.

These delayed adoptions have led to commensurate delays in administration of newly adopted district taxes. For example, the City of Grass Valley obtained voter approval for a district tax on March 5, 2024, and requested an operative date of July 1, 2024. However, the ordinance was not adopted until April 9, 2024, less time than was required by law for the tax to become operative on July 1. Accordingly, the CDTFA was forced to delay the operative date to October 1, 2024, delaying expected revenues.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

Legislative Counsel keyed this bill non-fiscal.

SUPPORT: (Verified 7/16/25)

California Association of County Treasurer-Tax Collectors (co-sponsor)

California Department of Tax & Fee Administration (co-sponsor)

OPPOSITION: (Verified 7/16/25)

None received

ARGUMENTS IN SUPPORT: According to the California Association of County Treasurer-Tax Collectors, “SB 863 … will provide tax collectors the ability to credit the remittance against any amount due as of the date the remittance is received, thereby offering greater clarity and ensuring a fair and transparent process for taxpayers. CACTTC also supports SB 863 because it will authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property. SB 863 provides tax collectors with a more practical approach to resolving tax-defaulted properties by offering much-needed flexibility in property tax auctions. This helps ensure that properties are sold at fair and reasonable prices, particularly in situations where a portion of the delinquency has been mitigated.”

ASSEMBLY FLOOR: 77-0, 7/14/25

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, DeMaio, Dixon, Elhawary, Ellis, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Jeff Gonzalez, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Nguyen, Ortega, Pacheco, Papan, Patel, Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO VOTE RECORDED: Ávila Farías, Schultz

Prepared by: Colin Grinnell / REV. & TAX. / (916) 651-4117

7/16/25 12:52:41

**** END ****

 CONSENT  

Bill No: SB 863

Author: Committee on Revenue and Taxation

Introduced: 3/19/25

Vote: 21

SENATE REVENUE AND TAXATION COMMITTEE: 5-0, 4/23/25

AYES: McNerney, Valladares, Ashby, Grayson, Umberg

SUBJECT: Real property taxation: tax administration

SOURCE: California Association of County Treasurer-Tax Collectors

DIGEST:

This bill makes two changes to property tax collection law regarding treatment of tax payments without postmarks, and permission for tax collectors to reduce a minimum bid for a property at tax sale.

ANALYSIS:

Existing law:

1. Provides that property taxes are due in two installments, the first on November 1 and the second on February 1, with delinquency for the second installment occurring on April 10.
2. Requires county tax collectors to begin imposing penalties for nonpayment of property taxes for each amount due, plus administrative charges, once taxes become delinquent.
3. Deems mailed remittances received as of the date of the postmark on the envelope containing the remittance, or the date on the packing slip or air bill from an independent delivery service.
4. Permits tax collectors to also deem the remittance received if it can be proved that the mailing occurred on an earlier date.
5. Provides that if payments are made through the tax collector's authorized website or telephone number, the payment is deemed received on the date the taxpayer completes the electronic payment.
6. Deems all other electronic payments received on the date the tax collector actually receives the payment.
7. States that a property becomes tax defaulted if a property owner does not pay the property taxes due in the current fiscal year before June 30.
8. Allows the tax collector to sell a residential property that has been in default for five years, or a commercial property after three years in default, unless the Board of Supervisors sets a five-year period for commercial property.
9. Directs tax collectors to sell properties at public auction, but only when bids exceed the “minimum bid,” which is equal to the total amount of outstanding taxes, assessments, penalties, and fees.
10. Requires tax collectors to obtain approval from the Board of Supervisors to reduce a minimum bid, unless a partial redemption or cancellation has been made.

This bill:

1. Deems a property tax payment received as of the date of delivery if it does not contain an official postmark.
2. Allows the tax collector to reduce the minimum bid at a tax sale when defaulted taxes decrease due to the removal or reduction of a special assessment or a direct charge against the property.

Background

In addition to unpaid property taxes, outstanding taxes and assessments can include direct charges imposed by a county, city, or local agency, such as parcel taxes, benefit assessments, or taxes to repay outstanding bonds. When a local agency wants to cancel or reduce a direct charge, state law does not allow the tax collector to reduce the minimum bid without returning to the Board of Supervisors for approval. In this case, the tax sale must generally wait another year, and all the costs incurred to conduct a tax sale for that property are wasted.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

This bill is keyed non-fiscal by Legislative Counsel.

SUPPORT: (Verified 4/24/25)

California Association of County Treasurer-Tax Collectors (source).

OPPOSITION: (Verified 4/24/25)

None received.

ARGUMENTS IN SUPPORT: According to the California Association of County Treasurer-Tax Collectors, “SB 863 … will provide tax collectors the ability to credit the remittance against any amount due as of the date the remittance is received, thereby offering greater clarity and ensuring a fair and transparent process for taxpayers. CACTTC also supports SB 863 because it will authorize a tax collector to reduce the minimum price where the minimum necessary to redeem is decreased due to the removal or reduction of defaulted taxes resulting from the removal or reduction of a special assessment or a direct charge against the property. SB 863 provides tax collectors with a more practical approach to resolving tax-defaulted properties by offering much-needed flexibility in property tax auctions. This helps ensure that properties are sold at fair and reasonable prices, particularly in situations where a portion of the delinquency has been mitigated.”

Prepared by: Colin Grinnell / REV. & TAX. / (916) 651-4117

4/28/25 17:15:01

**** END ****

SENATE COMMITTEE ON REVENUE AND TAXATION

Senator Jerry McNerney, Chair

2025 - 2026 Regular

Real property taxation: tax administration

Makes two changes to property tax collection law regarding tax payments without postmarks and flexibility for tax collectors to continue a tax sale when a taxing entity agrees to reduce or remove a direct charge from the tax bill.

Background

Property taxes are due in two installments, the first on November 1 and the second on February 1, with delinquency for the second installment occurring on April 10. Generally, state law requires county tax collectors to begin imposing penalties of 10% for nonpayment of property taxes for each amount due, plus administrative charges, once taxes become delinquent.

Date of payment received: no postmark. In most cases, the law deems mailed remittances “received” as of the date of the postmark on the envelope containing the remittance, or the date on the packing slip or air bill from an independent delivery service. Tax collectors can also deem the remittance received if it can be proved that the mailing occurred on an earlier date. Additionally, state statutes also provide that if payments are made through the tax collector's authorized website or telephone number, the payment is deemed received on the date the taxpayer completes the electronic payment. For all other electronic payments, the payment is deemed received on the date the tax collector actually receives the payment (SB 823, Committee on Revenue & Taxation, 2009).

Tax-default sales: minimum bid adjustment. If a property owner does not pay the property taxes due in the current fiscal year before June 30, their property becomes tax-defaulted. The tax collector can sell a residential property that has been in default for five years, or a commercial property after three years in default—unless the Board of Supervisors sets a five-year period for commercial property. Upon approval of the sale by the Board of Supervisors, tax collectors sell properties at public auction, but can only accept bids above the “minimum bid,” that is, the total amount of outstanding taxes, assessments, penalties, and fees. In addition to unpaid property taxes, outstanding taxes and assessments can include direct charges imposed by a county, city, or local agency, such as parcel taxes, benefit assessments, or taxes to repay outstanding bonds.

When a local agency wants to cancel or reduce a direct charge, state law does not allow the tax collector to reduce the minimum bid without returning to the Board of Supervisors for approval. In this case, the tax sale must generally wait another year, and all the costs incurred to conduct a tax sale for that property are wasted.

The California Association of County Treasurer-Tax Collectors want to make two changes to property tax law to provides clear statewide guidance to taxpayers and tax collectors when they receive payments without postmarks, and create a modest amount of flexibility for tax collectors to continue a tax sale, should a taxing entity agree to reduce or remove a direct charge from the tax bill.

Proposed Law

Senate Bill 863 deems a property tax payment received as of the date of delivery if it does not contain an official postmark. The measure also allows the tax collector to reduce the minimum bid when defaulted taxes decrease due to the removal or reduction of a special assessment or a direct charge against the property.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. The California Association of Country Treasurer-Tax Collectors recently identified changes in property tax law necessary to improve tax collection and tax sales. SB 863 combines these two noncontroversial statutory changes into one single bill. Moving individual proposals as separate bills, even if technical and noncontroversial, through the legislative process is less efficient than consolidating them into one measure. Committee staff distributed these proposals to affected parties to review each proposal before inclusion in the bill. Should anyone object to an item in the bill, the Committee will remove said item.

Support and Opposition

(4/20/25)

Support: California Association of County Treasurers and Tax Collectors (Co-Sponsor)

Opposition: None received.

-- END --