Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2014
 

Revenue and Taxation Code

Property Taxation

Part 9. Corrections, Cancellations, and Refunds

CHAPTER 4. Cancellations


Article 2 Cancellation of Assessments on Public Lands on Application of State Lands Commission

Article 3 Cancellation of Assessments on Public Lands on Application of Property Owner

Article 4 Cancellation of Tax Liens on Any Sixteenth or Thirty- Sixth Section or Legal Subdivision Thereof

Chapter 4. Cancellations

Article 1. Generally

4985. Tax collector's or assessor's errors. Any delinquent penalty, cost, redemption penalty, interest, or redemption fee, heretofore or hereafter attached, shall upon satisfactory proof submitted by the tax collector, the auditor, or the assessor, be canceled by the auditor upon a showing that the delinquent penalty, cost, redemption penalty, interest, or redemption fee has attached because of either of the following:

(a) An error of the tax collector, the auditor, or the assessor.

(b) They were unable to complete valid procedures initiated prior to the delinquency date. The collection shall be made upon the further showing that payment of the corrected or additional amount was made within 30 days from the date that the correction was entered on the roll or abstract record.

History.—Added by Stats. 1968, p. 790, in effect November 13, 1968, formerly Section 4833. Stats. 1974, Ch. 414, p. 1003, in effect January 1, 1975, added "either:" after "upon a showing that" in the first sentence; added the subdivision letters; added "; or" at the end of subdivision (a); and added subdivision (b). Stats. 1983, Ch. 1224, in effect January 1, 1984, deleted "uncollected" after "Any", substituted "the" for "either:" after "showing that", deleted "(a) Such" before the second "delinquent", deleted "or" after "record", and deleted former subdivision (b). Stats. 1991, Ch. 532, in effect January 1, 1992, deleted "on order of the board of supervisors with the written consent of the district attorney" after "cancelled by the auditor". Stats. 1999, Ch. 941 (SB 1231), in effect January 1, 2000, added "either of the following: (a)"after "because of" in the first sentence, and substituted a period for ", or because of their inability" after "assessor" in subdivision (a); added "(b) They were unable" before "to complete valid procedures", deleted "and" after "delinquency date" and added a period after "date;" and added "The collection shall be made" before "upon the further showing" to create the second sentence of subdivision (b).

4985.1. Transfer of auditor's duties to tax collector. In charter counties with a population of over 1,300,000, all or a portion of the duties imposed upon the auditor pursuant to Section 4985 may, upon approval of the auditor and by resolution of the board of supervisors, be transferred to the tax collector.

The tax collector shall make a report to the auditor in the manner prescribed by the auditor of any cancellation made pursuant to this section.

History.—Added by Stats. 1972, p. 1391, in effect March 7, 1973.

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4985.2. Delinquent penalties; cancellation. Any penalty, costs, or other charges resulting from tax delinquency may be canceled by the auditor or the tax collector upon a finding of any of the following:

(a) Failure to make a timely payment is due to reasonable cause and circumstances beyond the taxpayer's control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect, provided the principal payment for the proper amount of the tax due is made no later than June 30 of the fourth fiscal year following the fiscal year in which the tax became delinquent.

(b) There was an inadvertent error in the amount of payment made by the taxpayer, provided the principal payment for the proper amount of the tax due is made within 10 days after the notice of shortage is mailed by the tax collector.

(c) The cancellation was ordered by a local, state, or federal court.

History.—Added by Stats. 1978, Ch. 808, in effect January 1, 1979. This section amended old section 2617.5 and was renumbered to section 4985.2. The "(1)" was added between the words "that" and "the"; also the phrase "for the proper amount of the tax due" was added after the word "payment". In addition, the phrase beginning with "(2) there was" was added and replaced the phrase "within 30 days after the second delinquency date." Stats. 1979, Ch. 242, in effect July 10, 1979, substituted "penalty or costs" for "delinquent penalty on property", added "2621," after "2618,", added "2706," after "2705,", deleted "assessee's" after "(1) the", and substituted "taxpayer" for "assessee" in subdivision (a); substituted "taxpayer" for "assessee" in the first sentence, and deleted "or within 60 days following the effective date of this Act, whichever is later" after "paid" in the second sentence of subdivision (b); and deleted "or redemption officer" after "tax collector" in subdivision (c). Stats. 1983, Ch. 1224, in effect January 1, 1984, substituted "Any penalty . . . tax delinquency" for "(a) Any uncollected penalty or costs provided for in Sections 2617, 2618, 2621, 2704, 2705, 2706, or 2922" before "may be", substituted "auditor or the tax collector" for "tax collector or the auditor" after "by the", substituted "no later than . . . became delinquent" for "within 90 days after the first delinquency date or within 30 days after the second delinquency date" before "or, (2)", and deleted former subdivisions (b) and (c). Stats. 1990, Ch. 992, in effect January 1, 1991, substituted "of any of the following:" for "that" after "finding", substituted new subdivision (a) for "(1)", substituted "Failure" for "the failure", after "(a)", substituted "in" for "and" after "ordinary care", and substituted a period for ", or," after "became delinquent" in subdivision (a), substituted new subdivision (b) for "(2)", substituted "There" for "there" after "(b)" in subdivision (b), and added subdivision (c). Stats. 1991, Ch. 532, in effect January 1, 1992, deleted "with the approval of the board of supervisors" in the first paragraph. Stats. 1996, Ch. 800, in effect January 1, 1997, added "fourth" after "June 30 of the" in subdivision (a).

Construction.—Subdivision (c), which allows tax collector to cancel property tax delinquency charges when cancellation is ordered by a court, applies only when a court issues such cancellation pursuant to other statutory provisions and does not independently authorize trial courts to make orders requiring counties to cancel delinquency penalties. People ex rel. Strumpfer v. Westoaks Inv. #27, 139 Cal.App.4th 1038. The auditor or tax collector does not have discretion whether to cancel delinquency penalties or to ignore a court order. If a taxpayer presents conclusive proof that it has established the factual predicates set out in subdivisions (a) and (b), but the official refuses to make the corresponding subdivision (a) or (b) finding, or if the corresponding finding is made but the official then refuses to exercise the authority to cancel the penalties, such refusal would be grounds for a Code of Civil Procedure Section 1085 petition for traditional mandamus. Id.

Taxpayer error. Taxpayer was not entitled to penalty relief under Section 4985.2 because the late payment was caused by an error within the taxpayer's control. Taxpayer was not entitled to relief under Section 4985.2, subdivision (a), because the late payment was caused by the taxpayer's cash manager overlooking a wire transfer request that had been authorized by its upper management. The taxpayer failed to institute proper control mechanisms, which could have prevented the late payment. Further, subdivision (b) of Section 4985.2 was not applicable because this provision only allows for relief where there is an inadvertent error in the amount of payment. AvalonBay Communities, Inc. v. County of Los Angeles (2011) 197 Cal.App.4th 890.

Tax Service company error. Tax services company is not entitled to penalty relief under Section 4985.2 because the late payment was caused by an error within its control. Tax services company was not entitled to relief under Section 4985.2, subdivision (a), even though the late payment was caused by the company's inadvertent clerical error in formatting its spreadsheet, because the error was within the company's control and could have been avoided. Subdivision (b) of this section was inapplicable because the company did not make an inadvertent error in the amount of payment; but, instead, failed to make a timely payment in any amount on behalf of the taxpayer. First American Commercial Real Estate Services, Inc. v. County of San Diego (2011) 196 Cal.App.4th 218.

Tax Service company error—incorrect address. Tax services provider was not entitled to relief under Section 4985.2 for a late payment caused by service provider's failure to send its client's property tax payments to the correct address, and its failure to discover such error in time to prevent the delinquency from occurring. Service provider failed to establish that it had an adequate system in place to prevent and timely discover this type of clerical mistake. A higher level of ordinary care applies to a professional office providing tax payment services than to an individual taxpayer. ZC Real Estate Tax Solutions Ltd. v. Ford (2010) 191 Cal.App.4th 378.

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4985.3. Relief from penalties; pending assessment appeal. (a) Notwithstanding Section 2610.5, in the case of cancellations made to the roll pursuant to Section 1646.1, where a taxpayer has failed to pay an amount of tax computed upon assessed value that is the subject of a pending assessment appeal, the relief from penalties shall apply only to the difference between the county board's final determination of value and the value on the assessment roll for the fiscal year covered by the application. For purposes of this section, "county board" means either a county board of supervisors that meets as a county board of equalization or an assessment appeals board.

(b) The county board shall cause notice of the requirements of this section to be mailed to each taxpayer or to be presented to each taxpayer upon filing an application for reduction in assessment with the county board if that taxpayer will be impacted by the penalty provisions of this section.

(c) For any taxpayer who has paid at least 80 percent of the amount of tax finally determined due by the county board within 60 days of mailing or presentation of the notice prescribed in subdivision (b), the tax collector shall accept payment of the balance of the tax due without penalties or interest.

(d) This section shall apply only to those properties upon which an application for reduction in assessment is pending before the county board on the effective date of the act adding this section or those applications for reduction in assessment that are filed with the county board after the effective date of the act adding this section.

(e) This section shall only become operative if the board of supervisors of a county, with the approval of the county's tax collector and the county's auditor, adopts a resolution or ordinance approving this section.

History.—Added by Stats. 1994, Ch. 856, in effect September 27, 1994.

4985.5. Relief from penalties; pending informal review. (a) Notwithstanding Section 2610.5, in the case of cancellations made to the roll pursuant to Section 1646.1, where a taxpayer has failed to pay an amount of tax computed upon assessed value that is the subject of a pending informal review based upon paragraph (2) of subdivision (a) of Section 51, the relief from penalties shall apply only to the difference between the county assessor's final determination of value and the value on the assessment roll for the fiscal year covered by the application.

(b) This section shall apply only to those properties upon which an application for an informal review based upon paragraph (2) of subdivision (a) of Section 51 is pending before the county assessor on the effective date of the act adding this section or those applications for an informal review based upon paragraph (2) of subdivision (a) of Section 51 that are filed with the county board after the effective date of the act adding this section.

(c) For any taxpayer that has paid at least 80 percent of the amount of tax finally determined due by the county assessor within 30 days of filing an application for reassessment, the tax collector shall accept payment of the balance of the tax due without penalties or interest.

(d) The county tax collector shall notify all taxpayers that receive a tax bill of the provisions of this section.

(e) This section shall only become operative if the board of supervisors of a county, with the approval of the county's tax collector and the county's auditor, adopts a resolution or ordinance approving this section.

History.—Added by Stats. 2012, Ch. 161 (AB 2643), in effect January 1, 2013.

4986. Cancellation of uncollected taxes; cancellation of taxes on property acquired by public agencies. (a) All or any portion of any tax, penalty, or costs, heretofore or hereafter levied, shall, on satisfactory proof, be canceled by the auditor if it was levied or charged:

(1) More than once.

(2) Erroneously or illegally.

(3) On the canceled portion of an assessment that has been decreased pursuant to a correction authorized by Article 2 (commencing with Section 4876) of Chapter 2.

(4) On property that did not exist on the lien date.

(5) On property annexed after the lien date by the public entity owning it.

(6) On property acquired by the United States, the state, or by any county, city, school district or other public entity, to the extent provided in Article 5 (commencing with Section 5081).

(7) On that portion of an assessment in excess of the value of the property as determined by the assessor pursuant to Section 469.

(b) No cancellation under paragraph (2) of subdivision (a) may be made in respect of all or any portion of any tax, or penalties or costs attached thereto, collectible by county officers on behalf of a city without the written consent of the city attorney or other officer designated by the city council unless the city council has authorized the cancellation by county officers. The resolution shall remain effective until rescinded by the city council.

(c) If the tax, penalty, or costs, are collected more than four years following the enrollment of the tax bill, the cancellation authorized pursuant to subdivision (a) may be performed if the cancellation action is initiated within 120 days of the payment.

History.—Stats. 1941, p. 2641, in effect September 13, 1941, added to former subdivision (e) a reference to the United States of America, and added the last two sentences. Stats. 1945 p. 31 (Third Extra Session 1944), in effect May 1, 1944, deleted "United States of America" from former subdivision (e) and added former subdivision (f). Stats. 1947, p. 2023, in effect September 19, 1947, added former subdivision (g) and provisions pertaining to former subdivision (g), dealing with uncollected taxes, etc., on personal property or improvements assessed as a lien against real property which passed into public ownership after the lien date. Stats. 1955, p. 1460, in effect September 7, 1955, added to former subdivision (e) "and on property annexed after the lien date by the city owning it." Stats. 1959, p. 3045, in effect September 18, 1959, rearranged the section, added (2)(a), the first paragraph of which in part only is a rearrangement of portions of the former section, and added (2)(b). Stats. 1961, p. 1849, in effect September 15, 1961, added (1)(e) and deleted the identical language from the first sentence of (2)(a). Stats. 1963, p. 2531, in effect September 20, 1963, added (f) under (1), and substituted "entity" for "agency" wherever it appears, and substituted "district attorney" for "county legal advisor" in the first paragraph, and added "gift, or devise" and substituted "shall be canceled" for "shall not be transferred" in the second paragraph under (2)(a), and added the last paragraph under (2)(a) and the last paragraph under (2)(b). Stats. 1966, p. 679 (First Extra Session), in effect October 6, 1966, substituted "ratio of assessed value to the full cash value of the property as provided in Section 401" for "cash value of the property" in (1)(c). Stats. 1967, p. 1902, in effect November 8, 1967, deleted "thereof" and added "or other officer designated by the city council . . . the cancellation by county officers." after "city attorney" at the end of the first sentence in the next to the last paragraph; and added the last sentence of said paragraph. Stats. 1970, p. 357, in effect November 23, 1970, deleted "uncollected" in the first sentence; substituted "property" for "improvements when the improvements" in (1)(d); and added the phrases "shall be paid through escrow at the close of escrow, or if unpaid for any reason, they shall be collected like any other taxes on the unsecured roll. If unpaid at the time set for the sale of property on the unsecured roll to the state, "they" in (2)(a). Stats. 1973, Ch. 1190, p. 2506, in effect January 1, 1974, substituted (a) for (1) at beginning of the first paragraph, substituted (1) for (a), (2) for (b), and (3) for former (c) relating to excess assessment caused by assessor's error as to ratio, substituted (4), (5) and (6) for former (d), (e) and (f) respectively, substituted (b) for former (2)(a), deleted "or" after "gift" and added "or eminent domain proceeding" after "devise" in the first sentence of the second paragraph of subdivision (b), deleted "(a)" after "subdivision" in the first sentence of the fourth paragraph of subdivision (b), deleted several sentences at the beginning of the fifth paragraph of subdivision (b) relating to proration of taxes and payment thereof out of condemnation award, substituted (2) for (b) after "paragraph" and (a) for (1) after "subdivision" in the first sentence of the sixth paragraph of subdivision (b), and substituted "section and Section 4986.9" for "subdivision" in the last sentence of the sixth paragraph of subdivision (b). Stats. 1974, Ch. 1101, p. 2349, in effect January 1, 1975, added "shall be paid through escrow at the close of escrow, or if unpaid for any reason, they" after "before the date of acquisition of the property", and substituted "pursuant to Section 2921.5 and shall be" for "and be" in the second sentence of the second paragraph of subdivision (b). Stats. 1978, Ch. 732, in effect January 1, 1979, added paragraph (7) of subdivision (a). Stats. 1979, Ch. 31, in effect January 1, 1980, substituted "shall" for "may" after "levied" in subdivision (a), deleted "of this part" after "Chapter 2" in paragraph (3) thereof, and deleted "prior to September 18, 1959,"after "acquired", deleted "of America" after "United States", and substituted "public entity, to the extent provided in Article 5 (commencing with Section 5081)" for "political subdivision and which, because of such public ownership, became not subject to sale for delinquent taxes" after "other" in paragraph (6) thereof; and deleted the first five former paragraphs of subdivision (b), and deleted "of this section" after "subdivision (a)" in the first sentence and deleted the former third sentence of the former sixth paragraph thereof. Stats. 1985, Ch. 186, effective January 1, 1986, substituted "Article 2" for "Article 1" after "authorized by" in paragraph 3 of subdivision (a). Stats. 1991, Ch. 532, in effect January 1, 1992, deleted "on order of the board of supervisors with the written consent of the county legal adviser" after "canceled by the auditor" in subdivision (a) and deleted ", by resolution filed with the board of supervisors," after "unless the city council" in the first sentence of subdivision (b). Stats. 2004, Ch. 407 (SB 1831), in effect January 1, 2005, substituted "that" for "which" after "On property" in paragraph (4) of subdivision (a); substituted "may" for "shall" after "subdivision (a)" in the first sentence of subdivision (b); and added subdivision (c).

Note.—This section was also amended by Stats. 1941, p. 1739, which added to (e) the reference to the United States of America.

Not exclusive remedy.—Regardless of this section, county tax liens on lands acquired by a city prior to and after the lien date are discharged upon annexation of the lands by the city within the tax year and the city is entitled to refund of the taxes paid by it under protest. City of Long Beach v. Board of Supervisors, 50 Cal.2d 674.

Cancellation mandatory.—The use of the word "may" in this section does not confer any option or discretion in the matter of the cancellation of assessments. If an assessment is shown to be invalid, its cancellation is mandatory. City of Los Angeles v. Board of Supervisors, 108 Cal.App. 655.

See also, San Diego County v. United States, 251 F.2d 534.

Private property.—This section does not afford relief against a mere overevaluation by the assessor. Rittersbacher v. Board of Supervisors, 220 Cal. 535.

Public property.—Constitutionality.—Subdivision (e) of this section does not violate Article XIII, Section 6 of the Constitution. People v. Board of Supervisors, 126 Cal.App. 670.

Cancellation of taxes on property acquired by the United States in condemnation proceedings does not constitute a gift of public money or other thing of value in contravention of Article IV, Section 31, of the State Constitution. San Diego County v. United States, 251 F.2d 534.

Construction.—A municipality is entitled to a cancellation of delinquent taxes upon property acquired by it. It is immaterial that the property is only a portion of a larger parcel taxed as a unit, that it is acquired for a temporary purpose, and that the title is to revert to the grantor upon accomplishment of the purpose. City of Los Angeles v. Ford, 12 Cal.2d 407.

Taxes on improvements as well as realty acquired by the United States in condemnation proceedings after the lien date are canceled under this section. San Diego County v. United States, 251 F.2d 534.

A city acquiring property on which taxes are past due is not required to apply for a cancellation under this section, and in the absence of such an application the taxes are not cancellable. City of Pasadena v. Chamberlain, 1 Cal.App.2d 125.

A state agency acquiring land subject to a tax lien, and selling the land under a conditional contract of sale before any action is taken to cancel the taxes, is not entitled to obtain a cancellation of the taxes. Department of Veterans Affairs of the State of California v. The Board of Supervisors of San Joaquin County, 31 Cal.2d 657.

A state agency which has acquired property can obtain a cancellation of the taxes of other state agencies which were a lien on the property at the time of acquisition only if the property is impressed with a public use. Thus, an irrigation district which has acquired property for delinquent irrigation district assessments cannot compel the cancellation of county taxes which were a lien on the property at the time of acquisition. La Mesa, etc., Irrigation District v. Hornbeck, 216 Cal. 730. Cf. Anderson-Cottonwood Irrigation District v. Klukkert, 13 Cal.2d 191, 198.

An assessee of improvements is not entitled to cancellation of the assessments because of misclassification of similar property of others as personal property where the assessor has adopted a reasonable reclassification procedure eliminating the more serious errors existing in prior years and sufficient time was not available to correct the remaining errors. Security-First National Bank v. Board of Supervisors, 35 Cal.2d 323.

Between a condemnee and the taxing agency taxes should not be considered to be canceled under this section if the procedure prescribed by the statute is not followed. City of Long Beach v. Aistrup, 164 Cal.App.2d 41. See also State of California v. Clyne, 175 Cal.App.2d 204.

A stipulation whereby a condemner in an eminent domain proceeding agreed to assume all taxes and penalties on the condemned property up to a specified sum, and the condemnees agree to waive interest up to the same amount, was not made illegal by the 1959 amendment to § 4986, since nothing in the statute prohibits a condemner from paying such taxes and penalties. City of Burbank v. Nordahl, 199 Cal.App.2d 311.

This section does not apply to delinquency penalties. People ex rel. Strumpfer v. Westoaks Inv. #27, 139 Cal.App.4th 1038.

Condemnation proceedings.—Where property is ultimately taken in condemnation proceedings property taxes are canceled only from the date of the condemnation order, and the fact that taxpayer was unable to continue a construction project on the land pending the condemnation hearing did not constitute constructive possession by the state which would justify an earlier date for cancellation of taxes. Consumers Holding Co. v. Los Angeles County, 204 Cal.App.2d 324. The date of the condemnation order is the date the final order of condemnation is recorded, and absent an order of possession, a taxpayer is responsible for property taxes on condemned property until such date, even though liability therefor accrues during the pendency of the condemnor's unsuccessful appeal from the judgment on the jury's award. City of Ontario v. Kelber, 35 Cal.App.3d 751.

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4986.1. Amount transferred to unsecured roll; limitation. [Repealed by Stats. 1979, Ch. 31, in effect January 1, 1980.]

4986.2. City taxes. All or any portion of uncollected city taxes, penalties or costs may be canceled on any of the grounds specified in Section 4986. If the city taxes are collected by the county, the procedure outlined in Section 4986 for the cancellation of taxes, penalties or costs shall be followed, except that the consent of the city attorney, in lieu of the consent of the county legal advisor, is necessary before cancellation. If the taxes are collected by the city, the taxes, penalties, or costs shall be canceled by the officer having custody of the records thereof on order of the governing body of the city, with the written consent of the city attorney.

History.—Added by Stats. 1941, p. 1753, in effect May 30, 1941. Stats. 1979, Ch. 31, in effect January 1, 1980 substituted "county legal advisor" for "district attorney".

Note.—See County of San Diego v. United States, 251 F.2d 534, noted under Section 4986.

4986.3. Cancellation after assessment bond foreclosure. All or any portion of any uncollected tax, penalty, or costs, heretofore or hereafter levied, and not heretofore validly canceled, may, on satisfactory proof, be canceled by the auditor on order of the board of supervisors with the written consent of the district attorney if it was levied or charged on property subject to assessment or special taxes for the payment of bonds issued under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500) of the Streets and Highways Code) or the Mello-Roos Community Facilities Act of 1982 (Chapter 2.5 (commencing with Section 53311) of Division 2 of Part 1 of Title 5 of the Government Code) where that property was acquired after the lien date by a city on foreclosure proceedings under the Improvement Bond Act of 1915 or the Mello-Roos Community Facilities Act of 1982. If a city is entitled to bring foreclosure proceedings under the Improvement Bond Act of 1915 or the Mello-Roos Community Facilities Act of 1982 against any property and the city acquires the property in any other manner than by foreclosure and the governing body of the city by resolution, covering any number of parcels acquired, declares that the acquisition was in lieu of acquisition under foreclosure proceedings, that acquisition is, for the purposes of this section, an acquisition by foreclosure proceedings under the Improvement Bond Act of 1915 or the Mello-Roos Community Facilities Act of 1982. This section applies regardless of whether the property acquired by the city is impressed with a public trust or is acquired for the purpose of resale. As used in this section, "city" means any city, county, city and county, special district, school district, joint powers authority, or any other municipal corporation, district, or political subdivision of the state.

History.—Stats. 1997, Ch. 946 (AB 1224) in effect January 1, 1998, added "or special taxes" after "assessment" and substituted "that" for "such" after "where" in the first sentence, substituted "the" for "such" after "declares that" and substituted "that" for "such" after "proceedings", in the second sentence and added "or the Mello-Roos Community Facilities Act of 1982 (Ch. 2.5 (commencing with Sec. 53311), Div. 2, Pt. 1, Title 5, Gov. C.)" after "1915" throughout the text. Stats. 1999, Ch. 550 (SB 275) , in effect September 28, 1999, extended abbreviated code section references in the first sentence, deleted "(Ch. 2.5 (commencing with Sec. 53311), Div. 2, Pt. 1, Title 5, Gov. C.)" after "1982" in the first sentence and in both places in the second sentence, and added the last sentence.

Constitutionality.—This section is valid. City of Ojai v. Chaffee, 60 Cal.App.2d 54.

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4986.4. Veterans' Welfare Board property. Whenever any property has been deeded to the Veterans' Welfare Board pursuant to Division 4 of the Military and Veterans Code and a petition has been filed with any county or city for the cancellation of taxes pursuant to this article, the district attorney or city attorney, as the case may be, shall investigate the facts stated in the petition, and if he finds them to be true, shall approve the petition and recommend to the legislative body that the taxes described in the petition be canceled.

History.—Added by Stats. 1945, p. 782, in effect September 15, 1945.

Authority to cancel taxes.—While this section allows the Department of Veterans Affairs to apply for and receive a cancellation of taxes that are a lien on property acquired by it, the section does not otherwise enlarge the authority to cancel taxes granted under Section 4986 of the Revenue and Taxation Code. Department of Veterans Affairs of the State of California v. Board of Supervisors of San Joaquin County, 31 Cal.2d 657.

4986.5. Property distributed to State. When real property is distributed by description to the State after the lien date because there are no known heirs or because the estate or any portion thereof is to be distributed to heirs, devisees, or legatees whose whereabouts are unknown, taxes upon such real property shall not be paid for a period of five years after the date of entry of the decree of distribution except as provided in this section.

(a) If five years after the date of entry of the decree of distribution elapse without claim by the heirs of decedent or other persons entitled to make such claim, all taxes shall be canceled by the auditor on order of the board of supervisors with the written consent of the district attorney.

(b) If during the five-year period the real property is claimed by the heirs of decedent or other persons entitled to make such claim, all taxes upon such real property become due upon the approval of the claim, and shall be collected in the manner provided by law.

(c) If during the five-year period the State sells the real property it shall credit the proceeds of the sale to the particular estate and all taxes thereon shall be canceled. If the proceeds are claimed within the five-year period and the claim is allowed, the Controller shall deduct from the amount allowed to be paid to the claimant and remit to the taxing agency an amount equal to all taxes canceled plus any other amounts which would have been necessary to redeem the property at the time of cancellation, in accordance with an estimate thereof by the redemption officer.

History.—Added by Stats. 1951, p. 377, in effect September 22, 1951. Stats. 1959, p. 4653, in effect September 18, 1959, added "after the lien date" following "State" in the first paragraph, deleted "upon which taxes may be canceled pursuant to subdivision (e) of Section 4986" following "When real property," deleted "pursuant to Section 4986" in subdivision (a) following "canceled" and added the remainder of the sentence.

4986.6. Escheated property; tax sale. (a) When any real property escheats to the state after the lien date and is not distributed by description, either because it is unknown, or is included in a general distribution clause without description, or is property as to which no probate proceedings have been taken, all taxes levied upon the real property are valid and any tax sale for those taxes conveys the same title thereto as if no escheat had occurred, notwithstanding any provision of law to the contrary. All those taxes levied upon the real property and tax sales duly taken pursuant to law occurring before the effective date of this section are hereby validated.

(b) If real property as described in subdivision (a) is discovered prior to tax sale by delivery to the tax collector of a certified death certificate, the public administrator of the county where the decedent resided at the time of death, and in the county in which the property is situated, if different, shall be notified of the decedent's property that is subject to loss, injury, waste or misappropriation under Section 7600 of the Probate Code. The public administrator of the county where the decedent resided at the time of death shall take possession or control of the property under Section 7601 of Probate Code and conduct a probate investigation as authorized under Sections 7602 and 7603 of the Probate Code. Following the probate investigation, the public administrator shall do one of the following:

(1) If a person with a higher priority cannot be found to assume responsibility for the estate, the public administrator of the county where the decedent resided at the time of death shall immediately commence probate proceedings with respect to the property, and the tax sale may not be made. The probate proceedings may be summary proceedings, as authorized by Section 7660 of the Probate Code, or formal proceedings as authorized by Letters of Administration from the Superior Court under Section 7620 of the Probate Code. A tax sale may not be made until the probate process is completed.

(2) If a person with a higher priority cannot be found to assume responsibility for the estate, and the value of the estate will not cover the taxes, the secured liens, and the cost of probate, the public administrator of the county where the decedent resided at the time of death, as authorized by Section 7603 of Probate Code, shall notify the tax collector in writing that the public administrator has investigated the estate and has determined that the anticipated equity in the property after settlement of all secured liens and taxes does not warrant opening estate administration, at which time the tax sale may proceed.

History.—Added by Stats. 1951, p. 378, in effect September 22, 1951. Stats. 1959, p. 4654, in effect September 18, 1959, deleted "upon which taxes may be canceled pursuant to subdivision (e) of Section 4986" following "When any real property" and added "after the lien date," following "escheats to the State." Stats. 1985, Ch. 316, effective January 1, 1986, substituted "the" or "those" for "such" throughout the section; deleted "by the State" after "tax sale" in the first sentence, and deleted "by the State" after "tax sales" in the second sentence in the first paragraph; and deleted "by the State" after "tax sale" in the second paragraph. Amended by Stats. 2004, Ch. 888 (AB 2687), in effect January 1, 2005.

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4986.7. Acquisition of private property for public use. [Repealed by Stats. 1979, Ch. 31, in effect January 1, 1980.]

4986.8. Tax collector's right to cancel small amounts. (a) On recommendation of the tax collector, the auditor may cancel any tax bill if the amount is so small as not to justify the cost of collection.

(b) Any penalties, costs, fees, or special assessments, excluding improvement bonds, that are the result of nonpayment of any tax bill which is cancelled pursuant to this section may also be cancelled.

History.—Added by Stats. 1978, Ch. 1126, in effect January 1, 1979. Stats. 1990, Ch. 126, in effect June 11, 1990, added a comma after "district tax" in subdivision (a), added "total" after "The", substituted "all taxes due" for "any tax" after "amount of", substituted "twenty" for "ten" after "exceed", and substituted "($20) per parcel'' for "($10)" after "dollars" in subdivision (b), added a comma after "costs" and substituted "result" for "results" after "are the" in subdivision (c). Stats. 1991, Ch. 532, in effect January 1, 1992, deleted "of all taxes due" after "amount" in subdivision (b). Stats. 1994, Ch. 705, in effect January 1, 1995, substituted "bill" for "parcel" after "dollars ($20) per" in subdivision (b). Stats. 1995, Ch. 527, in effect January 1, 1996, substituted "bill" for "assessment, special district tax, or special assessment" after "any tax" in subdivision (a); deleted former subdivision (b) which read: "The total amount which may be canceled pursuant to this section shall not exceed twenty dollars ($20) per bill."; relettered former subdivision (c) as (b), substituted "fees, or special assessments, excluding improvement bonds," for "or fees" after "penalties, costs,", and added "bill" after "any tax" in subdivision (b).

4986.9. Court order to tax collector for tax information on property condemned; prorated taxes paid out of award; tax lienor need not be named a party; extinguished lien transferred to purchase price or award. [Repealed by Stats. 1979, Ch. 31, in effect January 1, 1980.]

4987. Exempt property. No cancellation shall be made of charges on tax exempt property if there has not been compliance with the statutory procedure for claiming the exemption.

Inapplicable to Public Property.—Section 4987 concerns the cancellation of taxes, penalties, or costs that were wrongly imposed. By its terms, its application to tax exempt property is dependent on the existence of statutory procedures for claiming an exemption. The only statutory procedures for doing so are found in Sections 201 through 241, which do not include government-owned property. Because Section 5082.1 does not provide a procedure for claiming a tax exemption for public property, Section 4987 is not made applicable to public property by Section 5082.1. L&B Real Estate v. Housing Authority of the County of Los Angeles, 149 Cal.App.4th 950.

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4988. Assessment by more than one county. Where real property is assessed by the assessors of two or more counties for the same year the owner may file an action in the superior court of one of these counties against the conflicting claimants, discharge the obligation by paying the largest amount of taxes levied on the property by any of the counties into court, and compel the counties to interplead and litigate their several claims among themselves under Section 386 of the Code of Civil Procedure.

4990. Certification; cancellation. On discovery that any property is assessed by the same taxing agency more than once for the same year, after payment of all charges justly due on the property the county assessor or the person having custody of the roll shall certify the facts to the board of supervisors. The board of supervisors shall then order the auditor to cancel the other charges and assessments by an entry on the margin of the roll and, if carried there, the delinquent and current roll.

History.—Stats. 1941, p. 410, operative February 1, 1941, added words "by the same taxing agency" to first sentence. Stats. 1943, p. 1941, in effect August 4, 1943, substituted "delinquent and current roll" for "delinquent list." Stats. 1970, p. 359, in effect November 23, 1970, added "the county assessor or" to the first sentence.

4990.3. Quiet title suit. An action may be brought at any time against this State or any county or city to quiet title against the lien of any taxes which have been canceled in accordance with this division.

Note.—Service of process in such actions against the State is made under Section 160.

4991. Erroneous sale or deed. [Repealed by Stats. 1975, Ch. 214,p. 586, in effect January 1, 1976.]

4991. Erroneous declaration of tax default. If the tax collector declares property to be tax defaulted for taxes which were a lien on the property for any year, and:

(a) The taxes for that year had been paid prior to that date, or

(b) The taxes have been legally canceled, or

(c) The taxes are valid but an error subsequent to the levy of the taxes renders void the declaration; the tax collector, with the approval of the auditor, shall cancel the declaration. The fact and date of the cancellation shall be entered on the abstract or electronic data processing records.

If the tax collector is not operating under the provisions of Article 2 (commencing with Section 3446) of Chapter 2 of Part 6, the tax collector shall transmit a copy of the cancellation to the Controller in the form prescribed by the Controller.

History.—Added by Stats. 1975, Ch. 214, p. 586, in effect January 1, 1976. Stats. 1983, Ch. 1281, in effect September 30, 1983, deleted "of Division 1" after "Chapter 2", and deleted "State" after "to the" and after "by the" in the second paragraph. Stats. 1985, Ch. 316, effective January 1, 1986, substituted "declares" for "sells" after "tax collector" and substituted "be tax defaulted" for "the state" after "property to" in the first paragraph, substituted "the" for "that" after "prior to" and deleted "of sale" after "date" in subsection (a) thereof; and substituted "declaration" for "sale to the state" after "void the", and substituted "declaration" for "sale" after "cancel the" in the first sentence of subsection (c) thereof.

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4992. Cancellation of sale, etc., with tax. [Repealed by Stats. 1975, Ch. 214, p. 586, in effect January 1, 1976.]

4992. Erroneous declaration of power of sale. If the tax collector declares property subject to a power of sale pursuant to Section 3691 and, either (a) the declaration that the property is tax defaulted is canceled under Section 4991, or (b) the power to sell is void because of any error occurring subsequent to the declaration, then the tax collector, with the approval of the auditor, shall cancel the power to sell in the form prescribed by the Controller. The cancellation shall be acknowledged, without charge, and shall be recorded with the county recorder, without charge.

The fact and date of the cancellation shall be entered on the abstract or electronic data processing records.

History.—Added by Stats. 1975, Ch. 214, p. 586, in effect January 1, 1976. Stats. 1985, Ch. 316, effective January 1, 1986, substituted "declares property subject to a power of sale pursuant to Section 3691" for "deeds property to the state" after "tax collector", added "either" after "and", substituted "declaration that the property is tax defaulted" for "sale to the state of such property" after "the", substituted "power to sell" for "deed to the state" after "the", substituted "declaration, then" for "sale to the state, the" after "the", substituted "power to sell" for "deed to the state" after "the", and deleted "state" before "Controller" in the first sentence of the first paragraph; and deleted "state" before "Controller" in the second paragraph. Stats. 1998, Ch. 497 (SB 2233), in effect January 1, 1999, deleted ", and the tax collector shall transmit a copy of the recorded cancellation to the Controller" after "records" in the first sentence of the second paragraph.

4993. Canceling sale. [Repealed by Stats. 1975, Ch. 214, p. 586, in effect January 1, 1976.]

4994. Canceling deed. [Repealed by Stats. 1975, Ch. 214, p. 586, in effect January 1, 1976.]

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Article 1.5. Cancellation of Assessments on State-assessed Property

5011. Grounds for cancellation. All or any portion of any assessment of state-assessed property heretofore or hereafter levied may, on satisfactory proof, be canceled by the board if it was made:

(a) More than once.

(b) Erroneously or illegally.

(c) On improvements when the improvements did not exist on the lien date.

History.—Added by Stats. 1951, p. 3218, in effect September 22, 1951. Stats. 1957, p. 768, in effect September 11, 1957, added "of state assessed property" following "assessment."

5012. Entry in records. The date and nature of the cancellation shall be entered in the records of the board.

History.—Added by Stats. 1951, p. 3219, in effect September 22, 1951.

5013. Notification to auditor. The board shall transmit a statement of the cancellation to the auditor of the county or city in which the property is located.

History.—Added by Stats. 1951, p. 3219, in effect September 22, 1951.

5014. Duties of auditor. The auditor shall enter the cancellation on the roll of the county or city and shall file and preserve the statement of the cancellation as a public record. The auditor shall make any necessary changes in his account with the tax collector.

History.—Added by Stats. 1951, p. 3219, in effect September 22, 1951.

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Article 2. Cancellation of Assessments on Public Lands on Application of State Lands Commission

5026. Cancellation procedure. On application by the State Lands Commission, accompanied by its certificate that no valid patent has ever been issued for the land described in the application and that the land is public land of the State, the board of supervisors shall order the auditor to cancel all assessments for taxes levied on the land. On the making of the order all the assessments and the taxes levied on the assessments are null.

5027. Effect on deed. If the land has been deeded to the State for taxes, the cancellation of assessment does not affect the validity of the deed to the State.

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5028. Lands subject. This article applies to all public lands sold by the State at public auction which, at the time of the sale, were subject to a lien for taxes.

5029. Lands not subject. This article does not apply to:

(a) Lands acquired by the State on a sale for taxes, when the deed is required to be filed with the Controller.

(b) Swamp and overflowed lands.

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Article 3. Cancellation of Assessments on Public Lands on Application of Property Owner

5061. "Public land." As used in this article, "public land" means:

(a) The possession of, claim to, or right to the possession of land belonging to the United States.

(b) Land on which final payment had not been made to the United States at the time of assessment.

(c) Land sold by this State on which the full purchase price has not been paid.

5062. Cancellation procedure. If any public land is heretofore or hereafter assessed and the taxes are not paid, the board of supervisors shall order the auditor to cancel the assessment if:

(a) Verified application is made by the owner of the land, and

(b) The applicant files with the board of supervisors a certificate of the Register of the United States Land Office, or of the State Lands Commission, showing that the assessee or his successor in interest never received a patent or otherwise acquired title to the land.

5063. Persons not subject. This article does not apply if the assessed of the public land, after the assessment:

(a) Obtained from the United States or this State a patent or the absolute title to the land.

(b) Retains any interest in the land.

(c) Has been in possession of the land.

5064. Effect on assessee. A cancellation of assessment under this article does not relieve any person or his successor in interest from paying taxes on the property for the full time he had the possession of the property, no matter in whose name the property was assessed, nor does it give the assessee any rights he would not have had if the assessment had not been canceled.

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Article 4. Cancellation of Tax Liens on Any Sixteenth or Thirty-Sixth Section or Legal Subdivision Thereof

5071. Procedure. On petition of the State Lands Commission, the board of supervisors, at its first meeting after receipt of the petition, shall order the cancellation of all liens for taxes on any sixteenth or thirty-sixth section, or legal subdivision thereof, which, subsequent to March 24, 1909, is used as the base for lieu selections.

History.—Added by Stats. 1955, p. 508, in effect September 7, 1955.

5072. Certificate of use. A certificate from the State Lands Commission certifying that any sixteenth or thirty-sixth section is to be used as the base for lieu selections is authority for the action of the board of supervisors in ordering the cancellation of liens for taxes on such lands.

History.—Added by Stats. 1955, p. 508, in effect September 7, 1955.

5073. Notification. The board of supervisors shall report the cancellation of the liens to the State Lands Commission and to the county auditor.

History.—Added by Stats. 1955, p. 508, in effect September 7, 1955; Stats. 1955, p. 950, in effect September 7, 1955, substituted "auditor" for "recorder" and deleted reference to notation on records of recorder.

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Article 5. Cancellation of Taxes on Exempt Property*

* Article 5 was added by Stats. 1979, Ch. 31, in effect January 1, 1980.

5081. Exempt property defined. As used in this article, "exempt property" means:

(a) Property acquired by the United States that becomes exempt from taxation under the laws of the United States.

(b) Property acquired by the state or by a county, city, school district, or other public entity, that becomes exempt from taxation under the laws of the state.

5082. Date of apportionment defined. For purposes of this article, the "date of apportionment" is the earliest of the following times:

(a) The date the conveyance to the acquiring entity or the final order of condemnation is recorded.

(b) The date of actual possession by the acquiring entity.

(c) The date upon or after which the acquiring entity may take possession as authorized by an order for possession or by a declaration of taking.

5082.1. Duties of public entities. Every public entity shall do all of the following:

(a) Provide the local assessor and auditor a copy of the instrument evidencing the acquisition of property by the entity.

(b) Indicate on the instrument referred to in subdivision (a) the date of apportionment.

(c) Request the auditor to cancel taxes for the remaining portion of the fiscal year after the date of apportionment.

(d) Provide a map of the acquired property.

History.—Added by Stats. 1985, Ch. 650, effective January 1, 1986.

Construction.—This section does not provide a procedure for claiming a tax exemption for public property, and, therefore, does not make Section 4987 applicable to public property. L&B Real Estate v. Housing Authority of the County of Los Angeles, 149 Cal.App.4th 950.

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5083. Lien extinguished. If exempt property is acquired either by negotiated purchase or eminent domain any lien on the property for ad valorem taxes is extinguished as a matter of law upon the acquisition of the property, and the lien immediately transfers and attaches to the proceeds constituting the purchase price or award.

5084. Cancellation of taxes. (a) No cancellation shall be made of all or any portion of any unpaid taxes or any penalties or costs levied for prior tax years that constitute a lien at the time of acquisition of exempt property.

(b) Such unpaid taxes, penalties, and costs shall be paid through escrow at the close of escrow or from the award in eminent domain, or if unpaid for any reason, shall be transferred to the unsecured roll pursuant to Section 5090 and are collectible from either the person from whom the property was acquired or the public entity that acquired the property.

5085. Acquisition prior to beginning of fiscal year. If exempt property is acquired by negotiated purchase, gift, devise, or eminent domain after the lien date but prior to the commencement of the fiscal year for which taxes are a lien on the property, the amount of the taxes for that fiscal year shall be canceled and are not collectible from either the person from whom the property was acquired or the public entity that acquired the property.

5086. Acquisition after beginning of fiscal year. If exempt property is acquired by negotiated purchase, gift, devise, or eminent domain after commencement of the fiscal year for which the current taxes are a lien on the property:

(a) The portion of the current taxes and any penalties and costs that are allocable to the part of the fiscal year that ends on the day before the date of apportionment shall be paid through escrow at the close of escrow or from the award in eminent domain.

(b) The portion of the current taxes and any penalties and costs that are allocable to the part of the fiscal year that begins on the date of apportionment shall be canceled and are not collectible either from the person from whom the property was acquired or from the public entity that acquired the property.

(c) If the amount of taxes or special assessment liens is unknown, the portion of the current taxes attributable to the period of the fiscal year that ends on the day before the date of apportionment shall be ascertained by the auditor on a pro rata basis of the previous year's taxes, and shall be paid to the tax collector. The auditor shall adjust the assessment roll and the tax charge accordingly.

History.—Stats. 1988, Ch. 830, in effect January 1, 1989, deleted "or, if unpaid for any reason, shall be transferred to the unsecured roll pursuant to Section 5090 and are collectible from either the person from whom the property was acquired or the public entity that acquired the property" after "eminent domain" in subdivision (a) and added subdivision (c).

Note.—Section 31 of Stats. 1988, Ch. 830, provided that this act shall be applicable to the 1989–90 fiscal year and fiscal years thereafter.

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5086.1. Cancellation on date of apportionment. The auditor shall cancel taxes on the date of apportionment provided in the notice required by Section 5082.1.

History.—Added by Stats. 1985, Ch. 650, effective January 1, 1986.

5087. Optional payment plan. The board of supervisors of a county may provide that all unpaid taxes, penalties, and costs and the allocable portion of current taxes, penalties, and costs computed in accordance with this article shall not be paid through escrow at the close of escrow or from the award in eminent domain, but shall be transferred to the unsecured roll pursuant to Section 5090 and are collectible from the person from whom the property was acquired.

5088. Taxes not transferred to unsecured roll. Notwithstanding any other provision of this article, unpaid taxes, penalties, or costs shall not be transferred to the unsecured roll with respect to property that has become subject to a power of sale pursuant to Section 3691.

History.—Added by Stats. 1979, Ch. 31, effective January 1, 1980; Stats. 1985, Ch. 316, effective January 1, 1986 substituted "become subject to . . . Section 3691" for "been tax deeded to the state for delinquency" after "that has".

5089. Cancellation of taxes if less than $10.00. The board of supervisors of a county may prescribe that, where the amount of unpaid taxes, penalties, and costs to be transferred to the unsecured roll pursuant to this article is less than twenty dollars ($20) with respect to a given fiscal year, the unpaid taxes, penalties, and costs shall be canceled rather than transferred to the unsecured roll.

History.—Stats. 1991, Ch. 532, in effect January 1, 1992, substituted "twenty dollars ($20) with respect to a given fiscal year" for "ten dollars ($10)" after "less than".

5090. Taxes not subject to cancellation. (a) If taxes, penalties, and costs that are not subject to cancellation pursuant to this article are unpaid at the time set for the declaration of default of property on the secured roll, they shall be transferred to the unsecured roll pursuant to Section 2921.5, and collected as provided therein.

(b) The statute of limitations on any suit brought to collect taxes, penalties, and costs transferred to the unsecured roll commences to run on the date of transfer, which date shall be entered on the unsecured roll by the auditor opposite the name of the assessee at the time the transfer is made.

(c) The amount of taxes, penalties, and costs collectible on the unsecured roll from a public entity pursuant to this article shall not exceed the amount paid for the property or awarded in the proceeding.

(d) The person from whom the property was acquired is liable to the public entity that acquired the property for any taxes, penalties, and costs collected on the unsecured roll from the public entity.

History.—Added by Stats. 1979, Ch. 31, effective January 1, 1980; Stats. 1985, Ch. 316, effective January 1, 1986, substituted "declaration of default" for "sale" after "set for the" deleted "to the state" after "secured roll" in subdivision (a).

5091. Required notice by public entity. (a) If a public entity proposes to acquire property for a public use that will make the property exempt from taxation, the public entity shall give notice to the county tax collector and to any public entities whose taxes are not collected by the county tax collector but who at the time exercise the right of assessment and taxation.

(b) The notice shall be given within a reasonable time following the initial budgeting of funds for the proposed acquisition, and shall state all of the following:

(1) The approximate extent of the proposed project.

(2) The estimated time of completion of all acquisitions necessary for the proposed project.

(c) This section creates no rights or liabilities and does not affect the validity of any property acquisitions by negotiated purchase or eminent domain.

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