The Council on State Taxation (COST) has applied for permission to file an amicus brief in a case before the California Supreme Court on the issue of whether a county recorder could impose a documentary transfer tax (DTT) based on a transfer of more than 50% of the interest in a partnership that was the sole member of a limited liability company (LLC) that held title to realty. The state Court of Appeal upheld imposition of the tax on the transfer, which admittedly constituted a change of ownership under the state’s property tax code, as reported. (TAXDAY, 2014/10/07, S.5)
COST contends that by upholding the imposition of the tax relying on change of ownership rules in the state ad valorem tax, the appellate court expanded the documentary transfer tax far beyond its historic scope. In addition, the transfer tax had been in place for almost a half century, and it was inappropriate for tax administrators to extend its scope without going through the appropriate legislative process.
926 North Ardmore Avenue LLC v. County of Los Angeles, Supreme Court of California, No. S222329, petition filed October 2, 2015