2023 California Code › Revenue and Taxation Code - RTC › DIVISION 1 - PROPERTY TAXATION › PART 2 - ASSESSMENT › CHAPTER 1 - Taxation Base › ARTICLE 2 - Procedure to Claim Exemptions › Section 254.5.

254.5. (a) Claims for the welfare exemption and the veterans’ organization exemption shall be filed on or before February 15 of each year with the assessor.
The assessor may not approve a property tax exemption claim until the claimant has been issued a valid organizational clearance certificate pursuant to Section 254.6. Financial statements shall be submitted only if requested in writing by the assessor.
(b) (1) The assessor shall review all claims for the welfare exemption to ascertain whether the property on which the exemption is claimed meets the requirements of Section 214. The assessor shall also review all claims for the veterans’ organization exemption to ascertain whether the property on which the exemption is claimed meets the requirements of Section 215.1. In this connection, the assessor shall consider, among other matters, whether:
(A) Any capital investment of the owner or operator for expansion of a physical plant is justified by the contemplated return thereon, and required to serve the interests of the community.
(B) The property on which the exemption is claimed is used for the actual operation of an exempt activity and does not exceed an amount of property reasonably necessary to the accomplishment of the exempt purpose.
(2) The assessor may institute an audit or verification of the operations of the owner or operator of the applicant’s property to ascertain whether both the owner and operator meet the requirements of Section 214.
(c) (1) The assessor may deny a claim for the welfare exemption on a property, notwithstanding that the claimant has been granted an organizational clearance certificate by the board.
(2) If the assessor finds that the claimant’s property is ineligible for the welfare exemption or the veterans’ organization exemption, the assessor shall notify the claimant in writing of all of the following:
(A) That the property is ineligible for the exemption.
(B) That the claimant may seek a refund of property taxes paid by filing a refund claim with the county.
(C) That if the claimant’s refund claim with the county is denied, the claimant may file a refund action in superior court.
(d) Notwithstanding subdivision (a), an applicant, granted a welfare exemption and owning any property exempted pursuant to Section 214.15 or Section 231, shall not be required to reapply for the welfare exemption in any subsequent year in which there has been no transfer of, or other change in title to, the exempted property and the property is used exclusively by a governmental entity or by a nonprofit corporation described in Section 214.15 for its interest and benefit. The applicant shall notify the assessor on or before February 15 if, on or before the preceding lien date, the applicant became ineligible for the welfare exemption or if, on or before that lien date, the property was no longer owned by the applicant or otherwise failed to meet all requirements for the welfare exemption.
Prior to the lien date, the assessor shall annually mail a notice to every applicant relieved of the requirement of filing an annual application by this subdivision.
The notice shall be in a form and contain that information that the board may prescribe, after consultation with the California Assessors’ Association, and shall set forth the circumstances under which the property may no longer be eligible for exemption, and advise the applicant of the duty to inform the assessor if the property is no longer eligible for exemption.
The notice shall inform any applicant desiring to maintain eligibility for the welfare exemption under Section 214.15 or Section 231 for the next fiscal year of the procedure to reaffirm exemption eligibility. The failure to reaffirm eligibility for the exemption does not of itself constitute a waiver of exemption as called for by the California Constitution, but may result in additional contact by the assessor to verify exempt activity.
(e) Upon any indication that a welfare exemption or veterans’ organization exemption on the property has been incorrectly granted, the assessor shall redetermine eligibility for the exemption. If the assessor determines that the property, or any portion thereof, is no longer eligible for the exemption, he or she shall immediately cancel the exemption on so much of the property as is no longer eligible for the exemption.
(f) If a welfare exemption or veterans’ organization exemption on the property has been incorrectly allowed, an escape assessment as provided by Article 4 (commencing with Section 531) of Chapter 3 in the amount of the exemption, with interest as provided in Section 506, shall be made, and a penalty shall be assessed for any failure to notify the assessor as required by this section in an amount equaling 10 percent of the escape assessment, but may not exceed two hundred fifty dollars ($250).
(g) Pursuant to Section 15640 of the Government Code, the board shall review the assessor’s administration of the welfare exemption and the veterans’ organization exemption as part of the board’s survey of the county assessment roll to ensure the proper administration of the exemption.
(h) Notwithstanding Section 20, for purposes of this section “board” means the State Board of Equalization.
(Amended by Stats. 2018, Ch. 37, Sec. 56. (AB 1817) Effective June 27, 2018.)