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8520-8523 Distribution of Tax Sale Proceeds: Teeter Plan

8520. GENERAL INFORMATION
The concept of this alternative method of distribution was first introduced in an article entitled, "Let's Look at the Machinery," which was published in the Tax Digest of January 1949, by D.M. Teeter, the auditor of Contra Costa County.

Mr. Teeter said that the existing distribution system was cumbersome and involved and did not permit an apportionment of taxes to any fund until the actual collection of taxes occurred. He proposed allowing each fund involved to be credited with the full amount of the levied tax as soon as such amount was determined; the aggregate cash on hand in the county treasury would then be available to meet the drafts drawn on any of the funds. A statutory accounting procedure would be set up in connection with the system.

Mr. Teeter's proposal resulted in the addition of Chapter 3, consisting of Revenue and Taxation Code sections 4701-4716, inclusive, to Part 8 of Division 1 of the Revenue and Taxation Code in 1949 (Stats 1949 Chapter 1370).

8521. PURPOSE, ADOPTION AND DISCONTINUANCE
The purpose of this method is to provide an alternative procedure for the distribution of property tax levies on the secured roll made by counties on their own behalf or as the tax-levying and tax-collecting agency for other political subdivisions. The object is to accomplish a simplification of the tax-levying and tax-apportioning process and an increased flexibility in the use of available cash resources (Rev. and Tax. Code §4701).

This procedure may be placed in effect in any county by resolution of the board of supervisors. The resolution must be adopted no later than July 15 of the fiscal year for which it is first to apply, and it remains in effect until the board orders its discontinuance (Rev. and Tax. Code §4702).

NOTE: For the 1993-94 and 1994-95 fiscal years only, the procedure may be placed in effect in any county by a board resolution adopted not later than October 15 of the relevant fiscal year and remaining in effect unless otherwise discontinued.

8522. DISTRIBUTION OF AMOUNTS RECEIVED FOR REDEMPTION
After apportionment to the State of the amounts prescribed by Revenue and Taxation Code section 4656.5, amounts received for the redemption of tax-defaulted property shall be distributed as follows:

1) Any amounts levied but not apportioned to funds at the time of levy, and any redemption penalties collected on those amounts, shall be distributed to funds as prescribed in Chapter 1c (commencing with Rev. and Tax. Code §4656), except that assessments not apportioned previously shall be distributed to the funds for which they were levied (Rev. and Tax. Code §4710(a)).

2) Any amounts that were apportioned to funds at the time of the levy shall be distributed to the apportioned tax resources accounts. The pro rata share of redemption penalties or interest collected on any amounts levied, but not apportioned to funds at the time of levy, shall be distributed to the respective funds; the balance of the redemption penalties or interest, together with delinquency penalties, shall be apportioned to the tax losses reserve fund (Rev. and Tax. Code §4710(b)). 

3) Amounts collected as costs shall be distributed to a restricted county fund, to be allocated only for the following purposes (Rev. and Tax. Code §4710(c)):

a. Updating and improving information with respect to delinquent taxes; 

b. Redemption systems; 

c. Monthly settlements with the auditor, pursuant to Revenue and Taxation Code section 4108; and 

d. The collection of taxes by the tax collector.

When amounts are collected as redemption fees, five dollars ($5) shall be distributed to the State for deposit in the General Fund and ten dollars ($10) shall be deposited in the county's general fund. The total amount collected on the secured tax roll shall be entered on the secured taxes receivable accounts (Rev. and Tax. Code §4710).

8523. DISTRIBUTION OF PROCEEDS FROM A TAX SALE
The proceeds from the sale of tax-defaulted property that are deposited in the delinquent tax sale trust fund shall be distributed according to and commencing with Revenue and Taxation Code section 4671. However, the taxes and assessments that constitute the amounts required to redeem the tax-defaulted property shall be distributed as follows:

1) The amount available for distribution shall be prorated on the basis of those taxes and assessments between apportioned levies and unapportioned levies.

2) The pro rata share for unapportioned levies shall be prorated between the amount of tax levies and the amount of assessment levies. The pro rata share for unapportioned tax levies shall be distributed to funds on the basis prescribed in Chapter 1.3 (commencing with Rev. and Tax. Code §4671). The pro rata share for unapportioned assessment levies shall be distributed to the assessment funds on the basis prescribed in subdivision (a) of Revenue and Taxation Code section 4710. 

3) The pro rata share for apportioned levies shall be distributed to the tax losses reserve fund.

The amount cancelled by the sale shall be entered on the secured taxes receivable accounts. Any canceled amounts that were apportioned at the time of levy in the manner authorized by this chapter shall be entered on the apportioned tax resources accounts, and this cancellation shall be borne by the tax losses reserve fund (Rev. and Tax. Code §4711).

Additional information pertaining to excess proceeds distribution may be found in Revenue and Taxation Code sections 4701-4717.