Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

California Constitutional Provisions

ARTICLE XIII Revenue and Taxation

Section 14

Sec. 14. Property to be assessed where situated. All property taxed by local government shall be assessed in the county, city, and district in which it is situated.

Property tax.—Government Code Section 26912 and former Revenue and Taxation Code Section 2237, now Revenue and Taxation Code Sections 93 and 95 et seq., which were enacted to implement Article XIII A of the Constitution and under which counties could levy the 1 percent property tax allowed under Article XIII A and distribute the revenues to local agencies but only to those agencies that levied a property tax during the 1977–78 fiscal year, did not violate the tax situs requirements of this section. As used therein, "situated" is synonymous with "situs," meaning having such contacts as confer jurisdiction to tax, and under the tax situs rule, property situated in one county or city should be taxable in that county or city for local purposes for its actual value, and that local subdivision alone should have the benefit of this value for the purpose of raising its revenue. Under the challenged legislation, the only entity that imposed a property tax, with one exception, was the county, and the county had jurisdiction to tax real property situated within its borders. City of Rancho Cucamonga v. Mackum, 228 Cal.App.3d 929.

Decisions Under Former Article XIII, Section 10.

Effect of temporary removal.—The term "situated" connotes a more or less permanent location or situs and the requirement of permanency must attach before tangible property which has been removed from the domicile of the owner will attain a situs elsewhere. Thus, where personal property was removed from the State shortly prior to the first Monday in March for the purpose of sale and of reducing the owner's personal property tax and returned shortly thereafter, it remained taxable at its permanent situs in the State. The State's jurisdiction was not lost by virtue of the temporary excursion out of the State. Brock and Co. v. Board of Supervisors, 8 Cal.2d 286, 110 A. L. R. 700. Accord Brock & Co. v. Board of Supervisors, 32 Cal.App.2d 550.

Migrating animals.—Permanent situs, as distinguished from place of temporary sojourn, is the controlling force in the assessment of property in transit, migrating herds, or rolling stock. When cattle are brought permanently into one county, they are to be assessed there irrespective of the residence of the owner. Rosasco v. Tuolumne County, 143 Cal. 430. See also People v. Townsend, 56 Cal. 633.

Race horses are to be taxed in the county where they are raised, trained and located when not being raced. Church v. City of Los Angeles, 96 Cal.App.2d 89.

Water rights.—The situs of a right to divert water from a stream is at the point of diversion as distinguished from the location of the riparian lands as against which the right exists by virtue of grants from the owners North Kern Water Storage Dist. v. Kern County, 179 Cal.App.2d 268; Spring Valley Water Co. v. Alameda County, 88 Cal.App. 157. But cf. San Francisco v. Alameda County, 5 Cal.2d 243 and Spring Valley Water Co. v. Alameda County, 24 Cal.App. 278, 281.

The taxable situs of an appropriative water right is the point at which the water is diverted from its natural course and not where the water is received and measured by the owner. Jurupa Ditch Co. v. San Bernardino County, 256 Cal.App.2d 35.

A municipal corporation has the right to assess that part of the property of a water company located within the municipality although the system is appurtenant to land situated outside the municipality. Temescal Water Co. v. Niemann, 22 Cal.App. 174.

Intangibles.—Solvent credits are taxable at the residence of the creditor. Pacific Coast etc. Society v. San Francisco, 133 Cal. 14. Accounts receivable of a foreign corporation are not subject to taxation here merely because they arise out of the business of the corporation's California agency. Westinghouse Electric & Mfg. Co. v. Los Angeles County, 188 Cal. 491. Cf. Wheeling Steel Corp. v. Fox, 298 U.S. 193; Newark Fire Insurance Co. v. State Board of Tax Appeals, 307 U.S. 313.

Funds of a decedent are taxable in the county in which he resided at the time of his death, even though they are placed on deposit in a bank in another county. San Francisco v. Lux, 64 Cal. 481. Intangibles in ancillary administration in another state are not subject to taxation here. Hinckley v. San Diego County, 49 Cal.App. 668.

Intangibles held in trust are taxable at the residence of the trustee. See Safe Deposit & Trust Co. v. Virginia, 280 U. S. 83; Mackay v. San Francisco, 128 Cal. 678; Lowry v. Los Angeles County, 38 Cal.App. 158. Cf. First Trust & Savings Bank v. Los Angeles County, 206 Cal. 240.

Franchise.—The franchise of a gas and electric company to erect poles in or along the streets is in its nature, when exercised, an easement in real property and taxable only where the right is actually exercised. Stockton Gas & Electric Co. v. San Joaquin County, 148 Cal. 313. Valuation of such franchises by the number of miles of line in each district is not prohibited by this section. Kern River Co. v. Los Angeles County, 164 Cal. 751.

Special types of property.—See Revenue and Taxation Code, Section 981 et seq.

Foreign aircraft.—The "home port" doctrine was held applicable to aircraft owned by a foreign airline and flown solely in foreign commerce between sovereign nations and, consequently, apportioned county and city property taxes levied thereon were invalid. Scandinavian Airlines System, Inc. v. Los Angeles County, 56 Cal.2d 11, cert. denied, 368 U.S. 899.

Flight equipment of air carrier.—Equipment in use in interstate and intrastate commerce is subject to an apportioned tax in California. "Situated" as used in this section and Revenue and Taxation Code section 404 does not connote a permanent situs, but only such as is sufficient to confer a jurisdiction to tax. Zantop Air Transport, Inc. v. San Bernardino County, 246 Cal.App.2d 433.

Vessel.—Liberian vessel in California port for nine years from the date of lay-up with apparent refusal to engage in foreign commerce held to have lost its status as one engaging in foreign commerce and to be subject to imposition of county property tax. Continental Dredging Co. v. Los Angeles County, 366 F.Supp. 1133. The taxable situs of a vessel is not determined by the owner's designation of a home port but depends upon the existence of sufficient contacts, such as the use and employment of the vessel within the jurisdiction and the opportunities, benefits or protection afforded the vessel by the jurisdiction, between the situs and the vessel to satisfy due process. Thus, a vessel registered in Alaska but moored in a California port for the taxable year and sold through escrow in California the next year was subject to imposition of county property tax for the taxable year. San Diego County v. Lafayette Steel Co., 164 Cal.App.3d 690.

Cargo containers of shipping company.—Cargo containers used exclusively for transportation of cargo for hire in interstate and foreign commerce are subject to an apportioned local tax. The habitual presence of such containers creates a taxable situs, even though the identical containers are not within the county every day and even though none of the containers is continuously within the county. Sea-Land Service, Inc. v. Alameda County, 12 Cal.3d 772.

Apportionment.—Where the movable property of a domiciliary corporation engaged in interstate commerce has acquired an out of state tax situs, the county of domicile must apportion the tax by excluding such property values that are subject to potential out of state taxation. Ice Capades, Inc. v. Los Angeles County, 56 Cal.App.3d 745.