BILL NUMBER: SB 661 AMENDED
BILL TEXT
AMENDED IN SENATE APRIL 13, 2015
INTRODUCED BY Senator Hill
FEBRUARY 27, 2015
An act to amend Sections 755 and 756 of, to amend, repeal, and add
Sections 401.17, 1152, 1153, and 1155 of, and
to add Sections 100.51, 721.51, and 828.1
828.1, and 1157 to, and to amend and repeal
Section 1153.5 of, the Revenue and Taxation Code, relating to
taxation.
LEGISLATIVE COUNSEL'S DIGEST
SB 661, as amended, Hill. Property taxation: state assessment:
commercial air carrier personal property.
Existing property tax law requires the personal property of an air
carrier to be taxed at its fair market value, and the California
Constitution requires property subject to ad valorem property
taxation to be assessed in the county in which it is situated.
Existing law, through the 2015-16 fiscal year, specifies a formula to
determine the fair market value of certificated aircraft of a
commercial air carrier, and rebuttably presumes that the amount
determined pursuant to this formula is the fair market value of the
certificated aircraft.
The California Constitution requires the State Board of
Equalization to assess specified properties owned by specified
entities. Existing property tax law provides for the valuation of
properties of a state assessee that owns property in more than one
county. Existing law also provides, pursuant to specified formulas,
for the application in each county of specified tax rates to the
allocated assessed value of a state assessee's property, and for the
allocation among jurisdictions in that county of the resulting
revenues.
This bill would, from the lien date for the 2016-17
2017-18 fiscal year and each fiscal year
thereafter, require the board to assess personal property that is
owned by a commercial air carrier, as defined, in a manner consistent
with currently specified procedures that determine the extent that
the certificated aircraft is physically present in each county within
the state. The bill would require the board to determine the
fair market value of certificated aircraft according to the
formula described above. This bill would require the board
to notify county assessors, as specified, if a commercial air
carrier's taxable personal property includes fixtures that are to be
locally assessed as real property. This bill would require that the
revenues derived from the assessment of this property be allocated in
the same percentage shares as revenues derived from locally assessed
property among the jurisdictions in which the property is located.
This bill would also make conforming changes to related provisions.
The bill would also require the board to conduct an audit of a
commercial air carrier every four years, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 100.51 is added to the Revenue and Taxation
Code, to read:
100.51. Notwithstanding any other law, for the 2016-17
2017-18 fiscal year and each fiscal year
thereafter, all of the following apply:
(a) The property tax assessed value of taxable personal property
that is owned by a commercial air carrier, as defined in Section
721.51, and that is assessed by the board, shall be allocated
entirely to that tax rate area in the county in which the property is
located.
(b) The tax rate applied to the assessed value allocated pursuant
to subdivision (a) shall be the rate calculated pursuant to Section
93.
(c) The revenues derived from the application of the tax rate to
the assessed value allocated to a tax rate area pursuant to
subdivision (a) shall be allocated among the jurisdictions in that
tax rate area, in those same percentage shares that property tax
revenues derived from locally assessed property are allocated to
those jurisdictions in that tax rate area, subject to any allocation
and payment of funds as provided in subdivision (b) of Section 33670
of the Health and Safety Code, and subject to any modifications or
adjustments made pursuant to Sections 99 and 99.2.
SEC. 2. Section 401.17 of the Revenue
and Taxation Code is amended to read:
401.17. (a) For the 2005-06 fiscal year to the 2015-16
2016-17 fiscal year, inclusive, it shall be
rebuttably presumed that the preallocated fair market value of each
make, model, and series of mainline jets, production freighters, and
regional aircraft that has attained situs within this state is the
lesser of the sum total of the amounts determined under paragraph (1)
or the sum total of the amounts determined under paragraph (2). The
value of an individual aircraft assessed to the original owner of
that aircraft shall not exceed its original cost from the
manufacturer. The preallocated fair market value of an aircraft may
be rebutted by evidence including, but not limited to, appraisals,
invoices, and expert testimony.
(1) (A) The original cost for the aircraft, which shall be
determined as follows and adjusted, as applicable, under
subparagraphs (B), (C), and (D):
(i) For owned and leased aircraft, the taxpayer's or lessor's
acquisition cost for that individual aircraft reported in accordance
with generally accepted accounting principles, and to the extent not
included in the acquisition cost, transportation costs and
capitalized interest and the cost of improvements made before a
transaction described in clause (ii). If the original cost for leased
aircraft cannot be determined from information reasonably available
to the taxpayer, original cost may be determined by reference to the
"average new prices" column of the Airliner Price Guide for that
model, series, and year of manufacture of aircraft. If information is
not available in the "average new prices" column for that model,
series, and year, the original cost may be determined using the best
indicator of original cost plus all conversion costs and improvement
costs incurred for that aircraft.
(ii) For sale/leaseback or assignment of purchase rights
transaction aircraft, the average of the taxpayer's cost established
pursuant to clause (i) and the cost established in a sale/leaseback
or assignment of purchase rights transaction for individual aircraft
that transfers the benefits and burdens of ownership to the lessor
for United States federal income tax purposes. In no event shall the
original cost for sale/leaseback aircraft be less than the taxpayer's
acquisition cost.
(iii) In the event of a merger, bankruptcy, or change in
accounting methods by the reporting airline, there shall be a
rebuttable presumption that the cost of the individual aircraft and
the acquisition date reported by the acquired company, if available,
or the cost reported prior to the change in accounting method, are
the original cost and the applicable acquisition date.
(B) (i) For mainline jets and production freighters, the original
cost described in subparagraph (A), plus the cost of any improvements
not otherwise included in the original cost, shall be adjusted from
the date of the acquisition of the aircraft to the lien date using
the monthly United States Department of Labor Producer Price Index
for aircraft and a 20-year straight-line percent-good table starting
from the delivery date of the aircraft to the current owner or, in
the case of a sale/leaseback or assignment of purchase rights
transaction, as described in this section, the current operator with
a minimum combined factor of 25 percent.
(ii) For regional aircraft, the original cost described in
subparagraph (A), plus the cost of any improvements not otherwise
included in the original cost, shall be adjusted from the date of the
acquisition of the aircraft to the lien date using the monthly
United States Department of Labor Producer Price Index for aircraft
and a 16-year straight-line percent-good table starting from the
delivery date of the aircraft to the current owner or, in the case of
a sale/leaseback or assignment of purchase rights transaction, as
described in this section, the current operator with a minimum
combined factor of 25 percent.
(iii) If original cost is determined by reference to the Airliner
Price Guide "average new prices" column, the adjustments required by
this paragraph shall be made by setting the acquisition date of the
aircraft to be the date of the aircraft's manufacture.
(C) (i) For mainline jets and regional aircraft, the assessor
shall analyze the adjusted original cost derived pursuant to
subparagraph (B), for application of an economic obsolescence
allowance which shall be determined as follows:
(I) For the applicable year, the assessor shall calculate the
average annual net revenue per available seat mile, the net load
factor, and the yield utilizing the Airline Quarterly Financial
Review published by the United States Department of Transportation,
and referring to the section descriptive of the passenger airline
industry, entitled "System Operations, System Pax. Majors" for the
calendar year ending December 31 immediately preceding the applicable
assessment date.
(II) For a 10-year benchmark, the assessor shall calculate as of
December 31 for each of the 10 calendar years preceding the
applicable year, the average annual net revenue per available seat
mile, the net load factor, and the yield utilizing the Airline
Quarterly Financial Review published by the United States Department
of Transportation, and referring to the section descriptive of the
passenger airline industry, entitled "System Operations, System Pax.
Majors" for the calendar year ending December 31 immediately
preceding the applicable assessment date.
(ii) (I) The assessor shall compare each factor calculated under
subclause (I) of clause (i) with the corresponding factor calculated
under subclause (II) of clause (i) to derive the percentage that each
of the factors calculated under subclause (I) of clause (i) deviated
from the 10-year benchmark calculated under subclause (II) of clause
(i). The assessor shall then calculate a weighted average of the
indicated percentage adjustments, weighted as follows:
(aa) Net revenue per available seat mile shall be weighted 35
percent.
(ab) Net load factor shall be weighted 35 percent.
(ac) Yield shall be weighted 30 percent.
(II) The assessor shall reduce the adjusted original costs derived
under subparagraph (B) by the percentage adjustment calculated in
subclause (I), but only if the final economic obsolescence determined
under that subclause exceeds 10 percent, otherwise no economic
obsolescence allowance shall be provided.
(D) (i) For production freighters, the assessor shall analyze the
adjusted original cost derived under subparagraph (B), for
application of an economic obsolescence allowance, as follows:
(I) For the applicable year, the assessor shall calculate the
industry average of net revenue per available ton mile and the ton
load factor based upon the Airline Quarterly Financial Review
published by the United States Department of Transportation, and
referring to the section descriptive of the cargo airline industry,
entitled "System Operations, System Cargo Majors" for the calendar
year ending December 31 preceding the relevant assessment date.
(II) For a 10-year benchmark, the assessor shall calculate as of
December 31 for each of the 10 calendar years preceding the
applicable year, the net revenue per available ton mile and the ton
load factor utilizing the Airline Quarterly Financial Review
published by the United States Department of Transportation and
referring to the section descriptive of the cargo airline industry,
entitled "System Operations, System Cargo Majors" as of December 31
for each of the 10 calendar years preceding the calendar year
utilized for the subject year, for the calendar year ending December
31 immediately preceding the applicable assessment date.
(ii) (I) The assessor shall compare each factor calculated under
subclause (I) of clause (i) with the corresponding factor calculated
under subclause (II) of clause (i) to derive the percentage that each
of the factors calculated under subclause (I) of clause (i) deviated
from the 10-year benchmark calculated under subclause (II) of clause
(i). The assessor shall then calculate a weighted average of the
indicated percentage adjustments so that the net revenue per
available ton mile is weighted 50 percent and the ton load factor is
weighted 50 percent.
(II) The assessor shall reduce the adjusted original costs derived
under subparagraph (B) by the percentage adjustment calculated in
subclause (I), but only if the final economic obsolescence determined
under that subclause exceeds 10 percent, otherwise no economic
obsolescence allowance shall be provided.
(2) (A) Except as otherwise provided in subparagraph (B), for each
individual mainline jet, production freighter, or regional aircraft,
the assessor shall identify the value referenced in the "Used Price
of Avg. Acft. Wholesale" column of the Winter edition of the Airliner
Price Guide by make, model, series, and year of manufacture, and
deduct 10 percent from that value for a fleet discount.
(B) For each individual mainline jet, production freighter, or
regional aircraft that is less than two years old and for which the
Airliner Price Guide does not list used wholesale values, the
original cost determined under paragraph (1) of subparagraph (A)
shall be decreased by the lesser of 5 percent or one-half of the
percentage decrease between original cost and 90 percent of the value
listed in the "Used Price of Avg. Acft. Wholesale" column of the
Winter edition of the Airliner Price Guide for a two-year-old
aircraft of that same make, model, and series.
(b) For the 2005-06 fiscal year to the 2015-16
2016-17 fiscal year, inclusive, it shall be rebuttably
presumed that the preallocated fair market value for each make,
model, and series of converted freighters that has attained situs
within this state is the amount that is determined as follows:
(1) (A) The assessor shall begin his or her appraisal of a
converted freighter as of the relevant lien date by identifying the
aircraft's original cost as a passenger aircraft prior to conversion.
The aircraft's original cost as a converted freighter shall be the
lesser of:
(i) Its trended original cost as a passenger aircraft prior to
conversion, less a downward adjustment of 10 percent to reflect
tear-outs.
(ii) Its value described in the Winter edition of the Airliner
Price Guide in the "Used Price of Avg. Acft. Wholesale" column in
passenger configuration, less a downward adjustment of 10 percent to
reflect tear-outs.
(B) The amount determined under subparagraph (A) shall be adjusted
according to the following:
(i) If, on the relevant lien date, the frame of the aircraft is 15
years old or more, 50 percent of the cost to convert the aircraft to
a freighter shall be added to the value determined under
subparagraph (A).
(ii) If, on the relevant lien date, the frame of the aircraft is
less than 15 years old, 75 percent of the cost to convert the
aircraft to a freighter shall be added to the value determined under
subparagraph (A).
(iii) In addition, all other improvements, including capitalized
interest, to the aircraft that are not otherwise included in the
aircraft's original and conversion costs shall be added at full
value.
(2) The amount determined under paragraph (1) shall be adjusted
from the date of the conversion of the aircraft to the lien date
using the monthly United States Department of Labor Producer Price
Index for aircraft and a 16-year straight-line percent-good table,
however, the percent-good applied to the aircraft shall in no event
be less than 15 percent.
(3) If the Airliner Price Guide "Used Price of Avg. Acft.
Wholesale" is utilized under paragraph (1), only the improvements and
adjusted conversion costs pertaining to the converted freighter
shall be adjusted from the date of the conversion of the aircraft to
the relevant lien date using the monthly United States Department of
Labor Producer Price Index for aircraft and a 16-year straight-line
percent-good table. In no event, however, shall the percent-good
applied to the improvements and adjusted conversion costs be less
than 15 percent.
(4) (A) Except as otherwise provided in subparagraph (B), the
assessor shall reduce the adjusted original cost, plus improvements,
and adjusted conversion costs, derived under paragraphs (1) to (3),
inclusive, by the obsolescence percentage adjustment calculated for
production freighters under subparagraph (D) of paragraph (1) of
subdivision (a).
(B) If the Airliner Price Guide "Used Price of Avg. Acft.
Wholesale" is utilized under paragraph (1), only the improvements and
adjusted conversion costs pertaining to the converted freighter
shall be reduced by the obsolescence percentage adjustment described
in subparagraph (A).
(c) For purposes of this section, if the Airliner Price Guide
ceases to be published or the format significantly changes, a guide
or adjustment agreed to by commercial air carriers and the counties
in which certificated aircraft have situs shall be substituted. If
these parties do not agree on a guide or adjustment, the State Board
of Equalization shall determine the guide or adjustment.
(d) The taxpayer shall, to the extent that information is
reasonably available to the taxpayer, furnish the county assessor
with an annual property statement that includes the aircraft original
costs as defined in subparagraph (A) of paragraph (1) of subdivision
(a). If an air carrier that has this information reasonably
available to it fails to report original cost and improvements, as
required by Sections 441 and 442, an assessor may in that case make
an appropriate assessment pursuant to Section 501.
(e) For purposes of this section, all of the following apply:
(1) "Converted freighter" means a certificated aircraft, as
defined in Section 1150, that, following its original manufacture,
was used for passenger transportation, but was later converted to be
used primarily for cargo transportation purposes.
(2) "Mainline jet" means a certificated aircraft, as defined in
Section 1150, that is either of the following:
(A) Manufactured by Boeing, Airbus, or McDonnell Douglas.
(B) Capable of being configured with approximately 100 seats or
more.
(3) "Production Freighter" means a certificated aircraft, as
defined in Section 1150, that immediately following its manufacture
is deployed primarily for cargo transportation purposes.
(4) "Regional aircraft" means a certificated aircraft, as defined
in Section 1150, that is either of the following:
(A) Manufactured by ATR (Avions De Transport Regional), Beech,
British Aerospace Jetstream, Canadair Regional Jet, Cessna,
DeHaviland, Embraer, Fairchild, or Saab.
(B) Generally configured with fewer than 100 seats.
(5) "Improvements" means the cost of any modifications or capital
additions that materially add to the value of or substantially
prolong the useful life of the aircraft, or make it adaptable to a
different use. "Improvements" include modification costs incurred
during a heavy maintenance visit to the extent that they materially
add to the value of or substantially prolong the useful life of the
aircraft. "Improvements" do not include repair and maintenance costs
incurred for the purpose of keeping the aircraft in an ordinarily
efficient operating condition.
(6) "Net revenue per available seat mile" means operating revenue
per available seat mile less cost per available seat mile as
determined by the United States Department of Transportation.
(7) "Net load factor" means actual passenger load factor less
break-even passenger load factor, as determined by the United States
Department of Transportation.
(8) "Net revenue per available ton mile" means operating revenue
per ton mile less cost per available ton mile as determined by the
United States Department of Transportation.
(9) "Yield" means average revenue per revenue passenger mile as
determined by the United States Department of Transportation.
(10) "Ton Load Factor" means that percentage of effective use of
cargo capacity as determined by the United States Department of
Transportation.
(f) The amendments made by the act adding this subdivision shall
apply with respect to lien dates occurring on and after January 1,
2011.
(g) This section shall remain in effect only until July 1, 2017,
and as of that date is repealed.
SEC. 3. Section 401.17 is added to the
Revenue and Taxation Code , to read:
401.17. (a) For the 2017-18 fiscal year and each fiscal year
thereafter, it shall be rebuttably presumed that the preallocated
fair market value of each make, model, and series of mainline jets,
production freighters, and regional aircraft that has attained situs
within this state is the lesser of the sum total of the amounts
determined under paragraph (1) or the sum total of the amounts
determined under paragraph (2). The value of an individual aircraft
assessed to the original owner of that aircraft shall not exceed its
original cost from the manufacturer. The preallocated fair market
value of an aircraft may be rebutted by evidence including, but not
limited to, appraisals, invoices, and expert testimony.
(1) (A) The original cost for the aircraft, which shall be
determined as follows and adjusted, as applicable, under
subparagraphs (B), (C), and (D):
(i) For owned and leased aircraft, the taxpayer's or lessor's
acquisition cost for that individual aircraft reported in accordance
with generally accepted accounting principles, and to the extent not
included in the acquisition cost, transportation costs and
capitalized interest and the cost of improvements made before a
transaction described in clause (ii). If the original cost for leased
aircraft cannot be determined from information reasonably available
to the taxpayer, original cost may be determined by reference to the
"average new prices" column of the Airliner Price Guide for that
model, series, and year of manufacture of aircraft. If information is
not available in the "average new prices" column for that model,
series, and year, the original cost may be determined using the best
indicator of original cost plus all conversion costs and improvement
costs incurred for that aircraft.
(ii) For sale/leaseback or assignment of purchase rights
transaction aircraft, the average of the taxpayer's cost established
pursuant to clause (i) and the cost established in a sale/leaseback
or assignment of purchase rights transaction for individual aircraft
that transfers the benefits and burdens of ownership to the lessor
for United States federal income tax purposes. In no event shall the
original cost for sale/leaseback aircraft be less than the taxpayer's
acquisition cost.
(iii) In the event of a merger, bankruptcy, or change in
accounting methods by the reporting airline, there shall be a
rebuttable presumption that the cost of the individual aircraft and
the acquisition date reported by the acquired company, if available,
or the cost reported prior to the change in accounting method, are
the original cost and the applicable acquisition date.
(B) (i) For mainline jets and production freighters, the original
cost described in subparagraph (A), plus the cost of any improvements
not otherwise included in the original cost, shall be adjusted from
the date of the acquisition of the aircraft to the lien date using
the monthly United States Department of Labor Producer Price Index
for aircraft and a 20-year straight-line percent-good table starting
from the delivery date of the aircraft to the current owner or, in
the case of a sale/leaseback or assignment of purchase rights
transaction, as described in this section, the current operator with
a minimum combined factor of 25 percent.
(ii) For regional aircraft, the original cost described in
subparagraph (A), plus the cost of any improvements not otherwise
included in the original cost, shall be adjusted from the date of the
acquisition of the aircraft to the lien date using the monthly
United States Department of Labor Producer Price Index for aircraft
and a 16-year straight-line percent-good table starting from the
delivery date of the aircraft to the current owner or, in the case of
a sale/leaseback or assignment of purchase rights transaction, as
described in this section, the current operator with a minimum
combined factor of 25 percent.
(iii) If original cost is determined by reference to the Airliner
Price Guide "average new prices" column, the adjustments required by
this paragraph shall be made by setting the acquisition date of the
aircraft to be the date of the aircraft's manufacture.
(C) (i) For mainline jets and regional aircraft, the board shall
analyze the adjusted original cost derived pursuant to subparagraph
(B), for application of an economic obsolescence allowance which
shall be determined as follows:
(I) For the applicable year, the board shall calculate the average
annual net revenue per available seat mile, the net load factor, and
the yield utilizing the Airline Quarterly Financial Review published
by the United States Department of Transportation, and referring to
the section descriptive of the passenger airline industry, entitled
"System Operations, System Pax. Majors" for the calendar year ending
December 31 immediately preceding the applicable assessment date.
(II) For a 10-year benchmark, the board shall calculate as of
December 31 for each of the 10 calendar years preceding the
applicable year, the average annual net revenue per available seat
mile, the net load factor, and the yield utilizing the Airline
Quarterly Financial Review published by the United States Department
of Transportation, and referring to the section descriptive of the
passenger airline industry, entitled "System Operations, System Pax.
Majors" for the calendar year ending December 31 immediately
preceding the applicable assessment date.
(ii) (I) The board shall compare each factor calculated under
subclause (I) of clause (i) with the corresponding factor calculated
under subclause (II) of clause (i) to derive the percentage that each
of the factors calculated under subclause (I) of clause (i) deviated
from the 10-year benchmark calculated under subclause (II) of clause
(i). The board shall then calculate a weighted average of the
indicated percentage adjustments, weighted as follows:
(ia) Net revenue per available seat mile shall be weighted 35
percent.
(ib) Net load factor shall be weighted 35 percent.
(ic) Yield shall be weighted 30 percent.
(II) The board shall reduce the adjusted original costs derived
under subparagraph (B) by the percentage adjustment calculated in
subclause (I), but only if the final economic obsolescence determined
under that subclause exceeds 10 percent, otherwise no economic
obsolescence allowance shall be provided.
(D) (i) For production freighters, the board shall analyze the
adjusted original cost derived under subparagraph (B), for
application of an economic obsolescence allowance, as follows:
(I) For the applicable year, the board shall calculate the
industry average of net revenue per available ton mile and the ton
load factor based upon the Airline Quarterly Financial Review
published by the United States Department of Transportation, and
referring to the section descriptive of the cargo airline industry,
entitled "System Operations, System Cargo Majors" for the calendar
year ending December 31 preceding the relevant assessment date.
(II) For a 10-year benchmark, the board shall calculate as of
December 31 for each of the 10 calendar years preceding the
applicable year, the net revenue per available ton mile and the ton
load factor utilizing the Airline Quarterly Financial Review
published by the United States Department of Transportation and
referring to the section descriptive of the cargo airline industry,
entitled "System Operations, System Cargo Majors" as of December 31
for each of the 10 calendar years preceding the calendar year
utilized for the subject year, for the calendar year ending December
31 immediately preceding the applicable assessment date.
(ii) (I) The board shall compare each factor calculated under
subclause (I) of clause (i) with the corresponding factor calculated
under subclause (II) of clause (i) to
derive the percentage that each of the factors
calculated under subclause (I) of clause (i) deviated from the
10-year benchmark calculated under subclause (II) of clause (i). The
board shall then calculate a weighted average of the indicated
percentage adjustments so that the net revenue per available ton mile
is weighted 50 percent and the ton load factor is weighted 50
percent.
(II) The board shall reduce the adjusted original costs derived
under subparagraph (B) by the percentage adjustment calculated in
subclause (I), but only if the final economic obsolescence determined
under that subclause exceeds 10 percent, otherwise no economic
obsolescence allowance shall be provided.
(2) (A) Except as otherwise provided in subparagraph (B), for each
individual mainline jet, production freighter, or regional aircraft,
the board shall identify the value referenced in the "Used Price of
Avg. Acft. Wholesale" column of the Winter edition of the Airliner
Price Guide by make, model, series, and year of manufacture, and
deduct 10 percent from that value for a fleet discount.
(B) For each individual mainline jet, production freighter, or
regional aircraft that is less than two years old and for which the
Airliner Price Guide does not list used wholesale values, the
original cost determined under paragraph (1) of subparagraph (A)
shall be decreased by the lesser of 5 percent or one-half of the
percentage decrease between original cost and 90 percent of the value
listed in the "Used Price of Avg. Acft. Wholesale" column of the
Winter edition of the Airliner Price Guide for a two-year-old
aircraft of that same make, model, and series.
(b) For the 2017-18 fiscal year and each fiscal year thereafter it
shall be rebuttably presumed that the preallocated fair market value
for each make, model, and series of converted freighters that has
attained situs within this state is the amount that is determined as
follows:
(1) (A) The board shall begin its appraisal of a converted
freighter as of the relevant lien date by identifying the aircraft's
original cost as a passenger aircraft prior to conversion. The
aircraft's original cost as a converted freighter shall be the lesser
of:
(i) Its trended original cost as a passenger aircraft prior to
conversion, less a downward adjustment of 10 percent to reflect
tear-outs.
(ii) Its value described in the Winter edition of the Airliner
Price Guide in the "Used Price of Avg. Acft. Wholesale" column in
passenger configuration, less a downward adjustment of 10 percent to
reflect tear-outs.
(B) The amount determined under subparagraph (A) shall be adjusted
according to the following:
(i) If, on the relevant lien date, the frame of the aircraft is 15
years old or more, 50 percent of the cost to convert the aircraft to
a freighter shall be added to the value determined under
subparagraph (A).
(ii) If, on the relevant lien date, the frame of the aircraft is
less than 15 years old, 75 percent of the cost to convert the
aircraft to a freighter shall be added to the value determined under
subparagraph (A).
(iii) In addition, all other improvements, including capitalized
interest, to the aircraft that are not otherwise included in the
aircraft's original and conversion costs shall be added at full
value.
(2) The amount determined under paragraph (1) shall be adjusted
from the date of the conversion of the aircraft to the lien date
using the monthly United States Department of Labor Producer Price
Index for aircraft and a 16-year straight-line percent-good table,
however, the percent-good applied to the aircraft shall in no event
be less than 15 percent.
(3) If the Airliner Price Guide "Used Price of Avg. Acft.
Wholesale" is utilized under paragraph (1), only the improvements and
adjusted conversion costs pertaining to the converted freighter
shall be adjusted from the date of the conversion of the aircraft to
the relevant lien date using the monthly United States Department of
Labor Producer Price Index for aircraft and a 16-year straight-line
percent-good table. In no event, however, shall the percent-good
applied to the improvements and adjusted conversion costs be less
than 15 percent.
(4) (A) Except as otherwise provided in subparagraph (B), the
board shall reduce the adjusted original cost, plus improvements, and
adjusted conversion costs, derived under paragraphs (1) to (3),
inclusive, by the obsolescence percentage adjustment calculated for
production freighters under subparagraph (D) of paragraph (1) of
subdivision (a).
(B) If the Airliner Price Guide "Used Price of Avg. Acft.
Wholesale" is utilized under paragraph (1), only the improvements and
adjusted conversion costs pertaining to the converted freighter
shall be reduced by the obsolescence percentage adjustment described
in subparagraph (A).
(c) For purposes of this section, if the Airliner Price Guide
ceases to be published or the format significantly changes, a guide
or adjustment agreed to by commercial air carriers and the counties
in which certificated aircraft have situs shall be substituted. If
these parties do not agree on a guide or adjustment, the State Board
of Equalization shall determine the guide or adjustment.
(d) The taxpayer shall, to the extent that information is
reasonably available to the taxpayer, furnish the board with an
annual property statement that includes the aircraft original costs
as defined in subparagraph (A) of paragraph (1) of subdivision (a).
If an air carrier that has this information reasonably available to
it fails to report original cost and improvements, as required by
Sections 441 and 442, the board may in that case make an appropriate
assessment pursuant to Section 501.
(e) For purposes of this section, all of the following apply:
(1) "Converted freighter" means a certificated aircraft, as
defined in Section 1150, that, following its original manufacture,
was used for passenger transportation, but was later converted to be
used primarily for cargo transportation purposes.
(2) "Mainline jet" means a certificated aircraft, as defined in
Section 1150, that is either of the following:
(A) Manufactured by Boeing, Airbus, or McDonnell Douglas.
(B) Capable of being configured with approximately 100 seats or
more.
(3) "Production Freighter" means a certificated aircraft, as
defined in Section 1150, that immediately following its manufacture
is deployed primarily for cargo transportation purposes.
(4) "Regional aircraft" means a certificated aircraft, as defined
in Section 1150, that is either of the following:
(A) Manufactured by ATR (Avions De Transport Regional), Beech,
British Aerospace Jetstream, Canadair Regional Jet, Cessna,
DeHaviland, Embraer, Fairchild, or Saab.
(B) Generally configured with fewer than 100 seats.
(5) "Improvements" means the cost of any modifications or capital
additions that materially add to the value of or substantially
prolong the useful life of the aircraft, or make it adaptable to a
different use. "Improvements" include modification costs incurred
during a heavy maintenance visit to the extent that they materially
add to the value of or substantially prolong the useful life of the
aircraft. "Improvements" do not include repair and maintenance costs
incurred for the purpose of keeping the aircraft in an ordinarily
efficient operating condition.
(6) "Net revenue per available seat mile" means operating revenue
per available seat mile less cost per available seat mile as
determined by the United States Department of Transportation.
(7) "Net load factor" means actual passenger load factor less
break-even passenger load factor, as determined by the United States
Department of Transportation.
(8) "Net revenue per available ton mile" means operating revenue
per ton mile less cost per available ton mile as determined by the
United States Department of Transportation.
(9) "Yield" means average revenue per revenue passenger mile as
determined by the United States Department of Transportation.
(10) "Ton Load Factor" means that percentage of effective use of
cargo capacity as determined by the United States Department of
Transportation.
(f) This section shall become operative on July 1, 2017.
SEC. 2. SEC. 4. Section 721.51 is
added to the Revenue and Taxation Code, to read:
721.51. (a) Notwithstanding any other law, commencing with the
lien date for the 2016-17 2017-18 fiscal
year and for each fiscal year thereafter, the board shall annually
assess all personal property that is owned, claimed, possessed, used,
controlled, or managed by a commercial air carrier as defined in
subdivision (b).
(b) (1) For purposes of this section, "commercial air carrier"
means an air carrier or foreign air carrier engaged in air
transportation as defined in Section 1150.
(2) Certificated aircraft owned or used by a commercial air
carrier shall be assessed in a manner consistent with the procedures
set forth in Article 6 (commencing with Section 1150) of Chapter 5
that determines the extent that the certificated aircraft is
physically present in each county within this state.
(c) The board may audit a commercial air carrier as otherwise
provided by law.
SEC. 3. SEC. 5. Section 755 of the
Revenue and Taxation Code is amended to read:
755. (a) On or before July 15, the board shall transmit to each
county auditor an estimate of the total unitary value and operating
nonunitary value of state-assessed property in the county and of
nonunitary state-assessed property in each revenue district in the
county. An estimate need not be made for a revenue district that did
not levy a tax or assessment during the preceding year unless the
board receives on or before January 1 preceding the fiscal year for
which the levy is to be made a notice in writing of the proposed
levy. The estimate shall be regarded as establishing the total
assessed value of state-assessed property in the county and each
revenue district in the county for the purpose of determining tax
rates, subject only to those changes as may be transmitted on or
prior to July 31. All information furnished pursuant to this section
is at all times during office hours open to inspection by any
interested person or entity.
(b) Notwithstanding subdivision (a), in making the estimate
referred to in subdivision (a), the value of property described in
paragraph (1) of subdivision (a) of Section 100.1 and the nonunitary
value of the property of regulated railway companies, property
subject to subdivisions (i), (j), (k), and (l) of Section 100,
property subject to Section 100.9, and property subject to Section
100.51 shall be allocated by revenue district.
(c) The amendments made to this section by the act that added this
subdivision apply for the 2007-08 fiscal year and for each fiscal
year thereafter.
SEC. 4. SEC. 6. Section 756 of the
Revenue and Taxation Code is amended to read:
756. (a) On or before July 31, the board shall transmit to each
county auditor a roll showing the unitary and operating nonunitary
assessments made by the board in the county and the nonoperating
nonunitary assessments made by the board in each city and revenue
district in the county; provided, however, that the roll need not
show the assessments made by the board in a revenue district which
did not levy a tax or assessment during the preceding year. The roll
is at all times, during office hours, open to the inspection of any
person representing any taxing agency or revenue district, or any
district described in Section 2131. If the roll does not show the
assessments in a revenue district as herein provided and a notice of
a proposed levy is furnished to the board in writing, on or before
January 1 preceding the fiscal year for which the levy is to be made,
the board shall furnish an estimate of the total assessed value of
nonoperating nonunitary state-assessed property in the district and
shall transmit thereafter to the county auditor a statement of roll
change showing the nonoperating nonunitary assessments made by the
board in the district.
(b) Notwithstanding subdivision (a), in making the roll referred
to in subdivision (a), the value of property described in paragraph
(1) of subdivision (a) of Section 100.11 and the nonunitary value of
the property of regulated railway companies, property subject to
subdivisions (i), (j), (k), and (l) of Section 100, property subject
to Section 100.9, and property subject to Section 100.51 shall be
enrolled by revenue district.
(c) The amendments made to this section by the act that added this
subdivision apply for the 2007-08 fiscal year and for each fiscal
year thereafter.
SEC. 5. SEC. 7. Section 828.1 is
added to the Revenue and Taxation Code, to read:
828.1. (a) All of the following apply to a property statement
submitted by a commercial air carrier:
(1) Personal property located in this state, other than
certificated aircraft, shall be reported by reference to the tax rate
area in order to allocate assessed value by tax rate area as
required by Section 100.51.
(2) Information related to certificated aircraft that normally
make physical contact in counties shall be reported in the form
prescribed by the board.
(b) If a commercial air carrier's property statement includes
fixtures that are to be locally assessed as fixtures, the board shall
provide information regarding the fixtures to the county assessor
for the county in which the fixtures are located.
SEC. 6. SEC. 8. Section 1152 of the
Revenue and Taxation Code is amended to read:
1152. The allocation formula to be used by each assessor is as
follows:
(a) The time in state factor is the proportionate amount of time,
both in the air and on the ground, that certificated aircraft have
spent within the state during a representative period as compared to
the total time in the representative period. For purposes of this
subdivision, all time, both in the air and on the ground, that
certificated aircraft have spent within the state prior to the
aircraft's first entry into the revenue service of the air carrier in
control of the aircraft on the current lien date shall be excluded
from the time in state factor. This factor shall be multiplied by 75
percent.
(b) The arrivals and departures factor is the proportionate number
of arrivals in and departures from airports within the state of
certificated aircraft during a representative period as compared to
the total number of arrivals in and departures from airports during
the representative period. This factor shall be multiplied by 25
percent.
(c) For the 1983-84 fiscal year and fiscal years thereafter, in
computing the time-in-state factor, on each occasion during the
representative period that a certificated aircraft has spent 720 or
more consecutive hours on the ground, all ground time in excess of
168 hours shall be excluded from the time in state attributable to
that aircraft.
(d) The time-in-state factor shall be added to the arrivals and
departures factor.
(e) The figure produced by application of subdivision (d) equals
the allocation to be applied to full cash value to determine the
value to which the assessment ratio shall be applied.
(f) This section shall remain in effect only until
January 1, 2016, July 1, 2017, and as of that
date is repealed.
SEC. 7. SEC. 9. Section 1152 is
added to the Revenue and Taxation Code, to read:
1152. The allocation formula to be used by the board is as
follows:
(a) The time in state factor is the proportionate amount of time,
both in the air and on the ground, that certificated aircraft have
spent within the state during a representative period as compared to
the total time in the representative period. For purposes of this
subdivision, all time, both in the air and on the ground, that
certificated aircraft have spent within the state prior to the
aircraft's first entry into the revenue service of the air carrier in
control of the aircraft on the current lien date shall be excluded
from the time in state factor. This factor shall be multiplied by 75
percent.
(b) The arrivals and departures factor is the proportionate number
of arrivals in and departures from airports within the state of
certificated aircraft during a representative period as compared to
the total number of arrivals in and departures from airports during
the representative period. This factor shall be multiplied by 25
percent.
(c) For the 2016-17 2017-18 fiscal
year and each fiscal year thereafter, in computing the time-in-state
factor, on each occasion during the representative period that a
certificated aircraft has spent 720 or more consecutive hours on the
ground, all ground time in excess of 168 hours shall be excluded from
the time in state attributable to that aircraft.
(d) The time-in-state factor shall be added to the arrivals and
departures factor.
(e) The figure produced by application of subdivision (d) equals
the allocation to be applied to full cash value to determine the
value to which the assessment ratio shall be applied.
(f) This section shall become operative on January 1,
2016. July 1, 2017.
SEC. 8. SEC. 10. Section 1153 of the
Revenue and Taxation Code is amended to read:
1153. (a) After consulting with the assessors of the counties in
which aircraft of an air carrier normally make physical contact, the
board shall designate for each assessment year the representative
period to be used by the assessors in assessing the aircraft of the
carrier.
(b) This section shall remain in effect only until
January 1, 2016, July 1, 2017, and as of that
date is repealed.
SEC. 9. SEC. 11. Section 1153 is
added to the Revenue and Taxation Code, to read:
1153. (a) Notwithstanding any other law, for the 2016-17
2017-18 fiscal year and for each fiscal year
thereafter, the representative period to be used by the board in
assessing the certificated aircraft of a commercial air carrier shall
be the second full week of January annually.
(b) This section shall become operative on January 1,
2016. July 1, 2017.
SEC. 12. Section 1153.5 of the Revenue
and Taxation Code is amended to read:
1153.5. (a) The Aircraft Advisory Subcommittee of the California
Assessors' Association shall, after soliciting input from commercial
air carriers operating in the state, do both of the following:
(1) On or before March 1, 2006, and on or before each March 1
thereafter, designate a lead county assessor's office for each
commercial air carrier operating certificated aircraft in this state
in that assessment year.
(2) Every third year thereafter, redesignate a lead county
assessor's office for each of these air carriers, unless an air
carrier and its existing lead county assessor's office concur to
waive this redesignation.
(b) The lead county assessor's office described in subdivision (a)
shall do all of the following:
(1) Calculate, pursuant to Section 401.17, an unallocated value of
the certificated aircraft of each commercial air carrier to which he
or she is designated.
(2) Electronically transmit to the assessor of each county in
which the property described in paragraph (1) has situs for the
assessment year the values determined by the lead county assessor's
office under paragraph (1).
(3) Receive the property statement, as described in subdivision
(l) of Section 441, of each commercial air carrier to which he or she
is designated.
(4) Lead the audit team described in subdivision (d) when that
team is conducting an audit of a commercial air carrier to which he
or she is designated.
(5) Notify, in writing, each commercial air carrier for which he
or she has been designated of this designation on or before the first
March 15 that follows that designation.
(c) (1) Notwithstanding subdivision (b), the county assessor of
each county in which the personal property of a commercial air
carrier has situs for an assessment year is solely responsible for
assessing that property, applying the allocation formula set forth in
Section 1152, and enrolling the value of the property in that
county, but, in determining the unallocated fleet value for each
make, model, and series of certificated aircraft of a commercial air
carrier, the assessor may consult with the lead county assessor's
office designated for that commercial air carrier.
(2) The lead county assessor's office is subject to Section 322 of
Title 18 of the California Code of Regulations and Sections 408,
451, and 1606 to the same extent as the assessor described in
paragraph (1).
(d) Notwithstanding Section 469, an audit of a commercial air
carrier shall be conducted once every four years on a centralized
basis by an audit team of auditor-appraisers from at least one, but
not more than three, counties, as determined by the Aircraft Advisory
Subcommittee of the California Assessors' Association. An audit, so
conducted, shall encompass all of the California Personal Property
and fixtures of the air carrier and is deemed to be made on behalf of
each county for which an audit would otherwise be required under
Section 469.
(e) This section shall remain in effect only until
December 31, 2015, July 1, 2017, and as of that
date is repealed.
SEC. 10. SEC. 13. Section 1155 of
the Revenue and Taxation Code is amended to read:
1155. For purposes of Section 404, certificated aircraft shall be
deemed to be situated only in those taxing agencies in which the
aircraft normally make physical contact with sufficient regularity to
entitle such agencies to tax the aircraft under the laws and
Constitution of the United States. Flight time within the state shall
be allocated as follows:
(a) If the aircraft takes off in one taxing agency which is
entitled to tax (within the meaning of the preceding sentence) and
lands in another agency which is entitled to tax, the flight time
between such taxing agencies shall be allocated one-half to each such
agency.
(b) If the aircraft arrives from out of state or leaves the state,
the flight time from or to the state boundary shall be allocated to
the taxing agency entitled to tax in which the aircraft first lands
or last takes off, as the case may be.
(c) This section shall remain in effect only until
January 1, 2016, July 1, 2017, and as of that
date is repealed.
SEC. 11. SEC. 14. Section 1155 is
added to the Revenue and Taxation Code, to read:
1155. (a) For purposes of Section 100.51, certificated aircraft
shall be deemed to be situated only in those tax rate areas in which
the aircraft normally make physical contact with sufficient
regularity to entitle that tax rate area to the assessed value of the
aircraft under the laws and Constitution of the United States.
Flight time within the state shall be allocated as follows:
(1) If the aircraft takes off in one tax rate area that is
entitled to the assessed value of the aircraft and lands in another
tax rate area that is entitled to the assessed value of the aircraft,
the flight time between the two tax rate areas shall be allocated
one-half to each of the two tax rate areas.
(2) If the aircraft arrives from out of state or leaves the state,
the flight time from or to the state boundary shall be allocated to
the tax rate area entitled to the assessed value of the aircraft in
which the aircraft first lands or last takes off, as the case may be.
(b) This section shall become operative on January 1,
2016. July 1, 2017.
SEC. 15. Section 1157 is added to the
Revenue and Taxation Code , to read:
1157. (a) Notwithstanding Section 469, the board shall conduct an
audit of a commercial air carrier that has a full value of four
hundred thousand dollars ($400,000) or more of assessable California
personal property once every four years. An audit, so conducted,
shall encompass all of the California personal property of the air
carrier and is deemed to be made on behalf of each county for which
an audit would otherwise be required under Section 469.
(b) This section shall become operative on July 1, 2017.