RIVERSIDE – The Board of Supervisors today approved amendments to a Riverside County tax ordinance that will limit exemptions for corporate interests.
In a 5-0 vote without comment, the board implemented changes to the county’s nearly five-decade-old documentary transfer tax, which is collected anytime a title or other written instrument related to the transfer of real assets is recorded by the Assessor-Clerk-Recorder’s office.
Agency officials proposed amending the tax ordinance to prevent business entities from sidestepping payments.
According to county officials, in 2011 and 2012, the county was shorted an estimated $842,000 because of real estate transactions that went unreported, resulting in no documents being recorded and no transfer taxes being collected.
Assistant Assessor-Clerk-Recorder Michelle Martinez told City News Service that the agency is mainly concerned with ensuring that corporate entities do not get away with not paying the tax, which is established under the California Revenue & Taxation Code.
According to the ordinance, whenever real property valued at $100 or more changes hands, it must be recorded with the county. However, fees do not apply unless the property is valued at a minimum $500. The tax is then 55 cents per per every $500 in assets, according to the ordinance.
According to Martinez, document transfers often go unrecorded when proprietary shares in a corporation shift from one executive to another, leading to a new ”controlling interest.” The county doesn’t find out about it until after the California
Franchise Tax Board notifies the State Board of Equalization, after which word reaches the county, resulting in long delays.
”When an ownership interest changes, the property becomes re- appraisable,” Martinez said. ”We’re interested in those unrecorded changes of control of a property.”
The amendments authorized by the board curtailed what exemptions are available to corporations. The modified ordinance requires that if a controlling interest changes, the property held by the entity must be recorded with the county, unless the parties can show that ”proportional ownership interests in the realty … remain the same.”
Martinez said the revisions to the documentary transfer tax ordinance were intended to ”emulate” what Los Angeles, Monterey, San Diego, Santa Clara and other counties are doing to ferret out unreported changes in ownership.