On February 18, Assemblyman Mike Gipson (D-Carson) introduced Assembly Bill 1199, to impose an annual excise tax for the privilege of renting or leasing out qualified property. The bill would add Article 8 (commencing with Section 12280) to Chapter 3 of Part 2 of Division 3 of Title 2 of the Government Code, and to add Part 6.8 (commencing with Section 11951) to Division 2 of the Revenue and Taxation Code. The bill contains an urgency clause, which means the bill would need a 2/3 vote by each house of the Legislature and that it would take effect immediately upon being signed by the Governor.
Section One of the bill would add Article 8, which would be titled “Reporting Requirements for Qualified Entities.” Prior to February 1, 2023, and annually thereafter, a qualified entity that owns qualified property would be required to report specified information to the Secretary of State in the form and manner as required by the Secretary of State. The information would include:
- The identity of the beneficial owner of each qualified property owned by the qualified entity in the previous calendar year.
- The number of units for each qualified property owned by the qualified entity in the previous calendar year that were offered for rent or lease.
The Secretary of State would be required to create a searchable database, updated annually, on its internet website, with the information provided by qualified entities. A “qualified entity” is defined as a limited liability company or a limited partnership.
Section Two of the bill would add Part 6.8, which would be titled “Homes for Families and Corporate Monopoly Transparency Excise Tax.” The bill defines numerous terms such as “affordable housing unit,” “multifamily dwelling,” “persons and families of low or moderate income,” “qualified property,” and “qualified taxpayer.”
The bill would impose an annual excise tax upon a qualified taxpayer for the privilege of renting or leasing out qualified property in this state at a rate of ___ percent of the gross receipts of the qualified taxpayer that are derived from rental income. Moreover, it states that it is “the intent of the Legislature to enact legislation that would increase the rate specified if the qualified taxpayer receives a certain number of code violations issued by the building department or health department of a city or county.”
The California Department of Tax and Fee Administration would administer and collect the excise tax and would be able to adopt regulations to implement this law. The bill also specified that this excise cannot be passed through to tenants by way of higher rents. The measure would also create in the State Treasury “The Homes for Families Fund.” Monies deposited in this fund would be appropriated for specified purpose.
AB 1199 contains an urgency clause that is deemed necessary “in order to discourage landlords from raising rents and displacing tenants, to provide relief to tenants facing evictions, and to provide support for home ownership during a health and economic crisis. The bill would get its first hearing in March.