Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2013
 

Revenue and Taxation Code

Property Taxation

Part 2. Assessment

Chapter 3. Assessment Generally

Article 4. Property Escaping Assessment

Section 532

532. Statute of limitations. (a) Except as provided in subdivision (b), any assessment made pursuant to either Article 3 (commencing with Section 501) or this article shall be made within four years after July 1 of the assessment year in which the property escaped taxation or was underassessed.

(b) (1) Any assessment to which the penalty provided for in Section 504 must be added shall be made within eight years after July 1 of the assessment year in which the property escaped taxation or was underassessed.

(2) Any assessment resulting from an unrecorded change in ownership for which either a change in ownership statement, as required by Section 480 or a preliminary change in ownership report, as required by Section 480.3, is not timely filed with respect to the event giving rise to the escape assessment or underassessment shall be made within eight years after July 1 of the assessment year in which the property escaped taxation or was underassessed. For purposes of this paragraph, an "unrecorded change in ownership" means a deed or other document evidencing a change in ownership that was not filed with the county recorder's office at the time the event took place.

(3) Notwithstanding paragraphs (1) and (2), in the case where property has escaped taxation, in whole or in part, or has been underassessed, following a change in ownership or change in control and either the penalty provided for in Section 503 must be added or a change in ownership statement, as required by Section 480.1 or 480.2 was not filed with respect to the event giving rise to the escape assessment or underassessment, an escape assessment shall be made for each year in which the property escaped taxation or was underassessed.

(c) For purposes of this section, "assessment year" means the period defined in Section 118.

History.—Added by Stats. 1966, p. 663 (First Extra Session), in effect October 6, 1966, Stats. 1967, p. 3338, in effect November 8, 1967, substituted present language from beginning of the section to ". . . shall not create . . ." in the first sentence of the second paragraph. Stats. 1968, p. 1238, in effect November 13, 1968, substituted "July 1 of the assessment year" for "the lien date" in the first and second sentences of the first paragraph. Stats. 1969, p. 2192, in effect November 10, 1969, added "provided . . . October 6, 1971" in the first paragraph. Stats. 1970, p. 1072, in effect November 23, 1970, substituted "(commencing with Section 501) of this chapter, or pursuant to this article" for "or Article 4 of this Chapter 3", and substituted "for the fiscal years . . ." for "in an assessment year commencing on July 1, 1966, and ending on June 30, 1967, such assessment shall be made on or before October 6, 1971," in the first paragraph. Stats. 1971, p. 1540, in effect March 4, 1972, added the fourth and fifth sentences commencing with "Assessments made pursuant . . ." in the second paragraph. Stats. 1973, Ch. 1190, p. 2504, in effect January 1, 1974, deleted former second, third and fourth paragraphs referring to an escape where the property has been transferred to or encumbered by a bona fide purchaser for value; the latter provisions were transferred with changes to section 531.2. Stats. 1981, Ch. 261, in effect January 1, 1982, deleted the balance of the second sentence, pertaining to property which had escaped taxation in the 1966–67 and 1967–68 fiscal years, after "underassessed". Stats. 1987, Ch. 537, in effect January 1, 1988, deleted "of this chapter" after "Section 501)" in the second sentence, and added the third sentence. Stats. 1994, Ch. 544, in effect January 1, 1995, substituted "(a) Except . . . any" for "Any" before "assessment", substituted "and any" for ". Any" after "underassessed", added "either" after "pursuant to", deleted comma after "501)", and substituted a comma for "pursuant to" after "or" in the first sentence of subdivision (a); deleted former third sentence of subdivision (a) which provided, " 'Assessment year' means the period defined in Section 118."; and added subdivisions (b) and (c). Stats. 1995, Ch. 497, in effect January 1, 1996, added "either" after "in which" and added "or a preliminary change in ownership report, as required by Section 480.3," after "or 480.2," in subdivision (b). Stats. 2000, Ch. 647 (SB 2170), in effect January 1, 2001, deleted "to which the penalty provided for in Section 504 must be added shall be made within six years after July 1 of the assessment year in which the property escaped taxation or was underassessed and any other assessment" after "any assessment" and deleted a comma after "or" in the first sentence of subdivision (a); deleted former subdivision (b) which provided, "In the case where property has escaped taxation, in whole or in part, or has been underassessed, following a change in ownership, the applicable limitations period specified in subdivision (a) shall not commence until July 1 of the assessment year in which either a change in ownership statement, as required by Section 480, 480.1, or 480.2, or a preliminary change in ownership report, as required by Section 480.3, is filed with respect to the event giving rise to the escape assessment or underassessment.", and added new subdivision (b). Stats. 2001, Ch. 613 (SB 1184), in effect January 1, 2002, substituted "eight" for "six" after "within" in the first sentence of paragraph (1) and added "or change in control" after the first "ownership" in the first sentence of paragraph (3) of subdivision (b). Stats. 2003, Ch. 471 (SB 1062), in effect January 1, 2004, deleted "or change in control" after "change in ownership" and added "timely" after "480.3 is not" in the first sentence and deleted "or change in control" after "change in ownership" in the second sentence of paragraph (2) of subdivision (b).

Note.—Section 1(b) of Stats. 1987, Ch. 537, provided that the Legislature further finds and declares that the provisions of law relating to escape assessments are in no way inconsistent with Article XIII A of the California Constitution. An escape assessment merely reflects the amount by which the property has been underassessed and is a mechanism which permits the correction of the effects of that underassessment. The amount of the underassessment must be determined, however, in accordance with the applicable statutory valuation standards. Thus, an escape assessment is merely a mechanism for implementing existing property tax law and cannot be in conflict with it. Accordingly, the amendments to Sections 531.2 and 532 of the Revenue and Taxation Code made by this act are necessary to make clear that an escape assessment resulting from the correction of an error in a base-year value may be made within four, six, or eight years, as applicable, after the first day of July of the assessment year, as defined in Section 118 of the Revenue and Taxation Code, in which the property either wholly escaped taxation or was underassessed, as determined by applying the applicable Article XIII A valuation standards.

Note.—Section 5 of Stats. 2001, Ch. 613 (SB 1184) provided that notwithstanding Section 2229 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any property tax revenues lost by it pursuant to this act. Sec. 6 therein provided that notwithstanding Section 17610 of the Government Code, if the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code. If the statewide cost of the claim for reimbursement does not exceed one million dollars ($1,000,000), reimbursement shall be made from the State Mandates Claims Fund.

Construction.—The fact that section 532 provides two periods of limitation, a six-year period where there has been fraud and a shorter period in the absence of fraud, indicates the legislative intent to set a six-year limit irrespective of the time of discovery; therefore, there can be no implied extension of the period of undiscovered fraud. Silver v. Watson, 26 Cal.App.3d 905. As the result of Article XIII A of the Constitution, "assessment year" as used in this section must be construed as the year when the base value of the property was determined. Thus, where the base year value of a newly constructed warehouse was determined as of March 1, 1976, any error giving rise to an escape assessment is deemed to have occurred at that time, and to be timely the escape assessment had to have been made before March 1, 1980. Dreyer's Grand Ice Cream, Inc. v. Alameda County, 178 Cal.App.3d 1174.

This section does not conflict with Article XIII A of the Constitution. Under this section, escape assessments must be made within four years of July 1 of the assessment year, as defined in Section 118, in which property escaped taxation or was underassessed. Thus, escape assessments levied before July 1, 1987, based upon a change in ownership which resulted from a corporate reorganization on July 31, 1982, were made within four years of July 1, 1983, and hence, were not barred by the statute of limitations. Blackwell Homes v. Santa Clara County, 226 Cal.App.3d 1009. The provisions governing time limitations for supplemental assessments do not affect the existing statutes of limitations for making escape assessments. Thus, even if supplemental assessments are barred as untimely, escape assessments may be made within the time limitations of this section. Montgomery Ward & Co. Inc. v. Santa Clara County, 47 Cal.App.4th 1122.

The four-year limit did not bar a possessory interest assessment against a cable television company for the 1982 base year, notwithstanding that the county assessor had never acted to levy such an assessment for that year, where in 1982 and 1983 the company had received statements for taxes attributed to its possessory interests and paid those taxes, and where, although in 1985 the county board of supervisors had adopted a resolution to delete possessory interest assessments levied against the company for 1982 through 1985, the company had not received a corresponding refund. Stanislaus County v. Assessment Appeals Board, 213 Cal.App.3d 1445.