Legal Entity Ownership Program (LEOP) – Discovery Methods for Changes in Control and Changes in Ownership
The Board of Equalization (Board) assists county assessors in the investigation and discovery of potential changes in control or changes in ownership of legal entities. Although the acquiring person or legal entity is required to report any transfers that result in a change in control or change in ownership, the Board relies on two primary sources of discovery for potential changes in control and ownership of legal entities.
The primary source of discovery utilized by the Board is information obtained from the Franchise Tax Board (FTB). The information provided by FTB consists of a listing of legal entities that have indicated on their state income tax return that their entity was involved in a change in control or ownership. FTB is required to assist the Board in determining whether or not a legal entity has undergone a change in control or ownership, as provided in Revenue and Taxation Code section 64(e). It does so by including certain questions on the state income tax returns for corporations, partnerships and limited liability companies: question C of form 100 and 100 W, and question B of form 100S for corporations, question J of form 565 for partnerships, and question J of form 568 for limited liability companies. (Note: for FTB tax returns prior to 2015; form 100 and form 100W, question J; form 100S, question B; form 568, question O; form 565, question T.) Based on the responses to those questions, FTB transmits information to the Board for further inquiry.
The second source of discovery is referrals from county assessors. County assessors refer potential changes in ownership or control of legal entities to the Board based on information obtained on a business property statement filed by the legal entity or news articles. The assessors' staff submits referrals on form BOE-100-BR, County Assessor Legal Entity Transfer Referral to the Board. Note: The BOE-100-BR is for county assessors� use only.
Upon discovery, the Board will send a legal entity form BOE-100-B for completion to obtain information on the transaction and determine if a change in ownership or control has occurred.