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Property Tax

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In City & County of San Francisco v. All Persons Interested in the Matter of Proposition C, Dkt. A158645 (Cal. App., June 30, 2020), the California Court of Appeal upheld Proposition C—a voter initiative that created a new local business tax in San Francisco.  The court upheld the initiative that was enacted by a simple majority of electors.  This ruling answers a question that was been heavily debated since the California Supreme Court’s decision in California Cannabis Coalition v. City of Upland, 3 Cal. 5th 924 (Cal. 2017).  That is, do special taxes proposed by voter initiative require a supermajority of voters to pass?  This decision expressly narrows the supermajority requirement to only those tax measures proposed directly by local governments and will likely trigger more tax initiatives proposed and passed by citizen groups.

On Wednesday, March 24, the Texas Comptroller’s Office announced several important measures in response to the current conditions caused by COVID-19.  The Comptroller’s Office has been preparing these measures for several weeks, particularly after Governor Abbott declared a state of disaster, applicable to all 254 counties, on March 13.  These updated measures include:

States continue to provide relief in response to the spread of the COVID-19 virus.  This week, numerous states responded to the federal income tax filing extension, and we expect additional states to respond in the coming days.  Some states are also offering relief for non-income business taxes, and much of the relief is limited to small- to mid-size businesses.  Furthermore, COVID-19 is causing complications in property tax assessments, payments, and appeals.

With the 2017 Tax Cuts and Jobs Act (“Tax Reform”) fully enacted, taxpayers and practitioners are racing to find last-minute planning opportunities prior to the new year, and states are looking for ways to assist their residents prospectively.  The most talked about planning opportunity, currently, is prepaying property taxes for 2018 to create a 2017 tax benefit around Section 11042(a)(6), which limits the state and local tax deduction to $10,000 beginning in 2018.  However, imprecise wording contained within Section 11042(a)(6) could feasibly be interpreted to permit a deduction for state and local income taxes as well – depending on how you read the provision.