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Avoiding Costly Penalties

June 30, 2002

Most property owners provide information requested by the assessor and pay their property taxes on time. California law sets forth several penalties for those property owners who fail to meet these obligations in a timely manner. There are two reasons for imposing penalties: first to be fair to those property owners who do follow the rules and, second, to ensure compliance with the laws governing the assessment and taxation of property. Because the job of the assessor is to enroll fair assessments, not to collect revenue, this office makes every effort to ensure that property owners are given the opportunity to meet their reporting and taxpaying obligations.

The most common penalty is for late payment of secured property taxes (after the end of the grace periods December 10 and April 10 of each year). The initial penalty is 10 percent of the installment amount due. If the second installment is late, a $10.00 cost is added as a result of state law. If the payment is still outstanding by the beginning of the next fiscal year (July 1), then a 1.5 percent per month penalty begins to accrue until paid.

For unsecured taxes, which are mailed in July, the penalty is 10 percent if received after August 31 and 1.5 percent per month if still unpaid 60 days after that. Supplemental bills also have similar penalties but the dates can vary. Administration of these penalties is the responsibility of the Treasurer-Tax Collector.

The next most frequent penalty is for failure to file or to file in a timely manner the Business Property Statements and Aircraft Owner Reports mailed by the Assessor to property owners. These reports are used to gather the most current information about the property so that an accurate and fair assessment can be enrolled. The law authorizes the assessor to enroll an arbitrary assessment, including a penalty of ten percent of the value, for those assessments for which the statement or report was not filed, improperly signed or filed late. In addition, in the case of business property, the assessor does not apply the valuation factors based on age of the equipment, which further raises the assessment for owners who do not file at all. It always pays to file a statement, even if late, so that the assessor can apply the correct factor to all the equipment. This penalty is included in the value shown on the tax bill. The bill also carries an indication that a penalty has been applied.

California law requires parties transferring property or handling the estate of a person who owned real property in Napa County to file a Preliminary Change of Ownership Report (PCOR) or a Change of Ownership Statement with the assessor. To help the transferee avoid imposition of the penalty, the assessor mails transferees an original statement. If that is not filed within 30 days, a second notice is sent by certified mail. Failure to file the statement results in a penalty of ten percent of the taxes based on reappraised value, but not less than $100 or more than $2,500.

Finally, people who own and occupy a principal residence are entitled to a homeowner exemption of $7,000 in value. This exemption works out to approximately $71 in reduced taxes each year. The homeowner claim form only needs to be filed once for a given property. The law requires persons entitled to the homeowner exemption or their heirs to notify the assessor if their eligibility terminates prior to December 10 of year following termination. Reasons for termination can be converting the residence to a rental or the death of the claimant(s). If the assessor learns after the fact that an exemption should have been terminated, a penalty of 25 percent of the exemption or $1,750 is added when the $7,000 exemption is cancelled and bills are issued for the repayment of the taxes that should have been collected.

Should you have any questions please contact Napa County Assessor John Tuteur at 707.253.4459 or by e-mail

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