California Legislature—2015–16 Regular Session

Assembly Bill No. 867

Introduced by Assembly Member Wagner

February 26, 2015

An act to amend Section 5148 of, and to add Section 42 to, the Revenue and Taxation Code, relating to taxation.

LEGISLATIVE COUNSEL’S DIGEST

AB 867, as introduced, Wagner. Tax administration: refunds: property tax: state assessment: actions.

(1) The Franchise Tax Board administers the Personal Income Tax Law and the Corporation Tax Law and the State Board of Equalization administers the Sales and Use Tax Law and various other tax and fee laws. Counties, cities, and districts, as specified, are authorized to impose local sales or transactions and use taxes in conformity with the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local laws. Those laws generally require a claim for refund to be filed within specified timeframes based on the date of overpayment or specified board action if any amount has been overpaid, as specified. Under those laws, the rule of res judicata, which provides that a matter that has been adjudicated by a court of competent jurisdiction may not be pursued further by the same parties is applicable only if the liability involved is for the same reporting period as was involved in the case previously determined.

This bill would, notwithstanding existing law regarding the rule of res judicata, where a tax, fee, assessment, surcharge, or other amount levied or collected by the tax agency, which this bill would define to include the board and the Franchise Tax Board, has been determined to have been illegally levied or collected in a final and nonappealable decision of a court of competent jurisdiction, authorize any person who paid that tax, fee, assessment, surcharge, or other amount to file with the tax agency a claim for refund, within one year after the date of the final and nonappealable decision and would require the tax agency to refund the amount so paid. This bill would also require the tax agency to refund these amounts without the person filing a claim for refund when information in the tax agencies’ records is sufficient to identify the person. This bill would, upon appropriation by the Legislature, allocate the amounts necessary to make these refunds to the applicable tax agency.

(2) Existing law requires an action to recover property taxes levied on state-assessed property arising out of a dispute as to an assessment to be commenced only after payment of the taxes in issue and within 4 years after the latest of the dates that the State Board of Equalization mailed its decision or its written findings and conclusions, as provided.

This bill would instead require, where the tax assessed or allocated has been determined to have been illegally assessed or allocated in a final and nonappealable decision of a court of competent jurisdiction, the action to commence no later than one year from the date the court rendered that decision.

(3) This bill would make a legislative finding and declaration regarding the public purpose served by the bill.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 42 is added to the Revenue and Taxation
Code, to read:

42.  

(a) Where a tax, fee, assessment, surcharge, or other
amount levied or collected by the tax agency has been determined
to have been illegally levied or collected in a final and
nonappealable decision of a court of competent jurisdiction, any
person who paid that tax, fee, assessment, surcharge, or other
amount may file with the tax agency a claim for refund of the
amount so paid in accordance with this section and the tax agency
shall refund the amount so paid.

(b) Notwithstanding subdivision (a), a person who has paid to
the tax agency a tax, fee, assessment, surcharge, or other amount
described in subdivision (a) that filed a claim for refund prior to
the effective date of the act adding this section that the tax agency
has not refunded before that date shall be refunded by the tax
agency to the person in accordance with the provisions of this
section. The act adding this section shall not be construed to require
refiling of those previously filed claims for refund.

(c) Notwithstanding any other law relating to the limitations
period for filing a claim for refund, this section shall apply to any
claims for refund of any amounts described in subdivision (a) paid
to the tax agency.

(d) A claim for refund for any amounts described in subdivision
(a) shall be filed within one year after the date upon which the
court decision described in subdivision (a) becomes final and
nonappealable.

(e) Interest shall be paid on the refunds provided by this section
in accordance with applicable provisions of this code related to
the tax, fee, assessment, surcharge, or other amount subject to
refund.

(f) For the purposes of bringing an action against the tax agency
for recovery of the whole or any part of the amount claimed as an
overpayment of an amount described in subdivision (a), the period
for filing such action provided in this code and applicable to the
tax, fee, assessment, surcharge, or other amount, shall not
commence until the one-year claim period provided in subdivision
(d) has expired pursuant to the terms of this section. Suits for
refund shall be brought in accordance with the applicable
provisions in this code.

(g) When information in the tax agencies’ records is sufficient
to identify the person that paid an amount described in subdivision
(a), and the person’s current address, the date of payment, and the
amount paid, the tax agency shall refund that amount. The person
shall not be required to file a claim for refund.

(h) Except as provided in Chapter 4 (commencing with Section
7275) of Part 1.6, this section shall apply to the tax, fee,
assessment, surcharge, or other amount paid to the tax agency and
collected or levied pursuant to applicable provisions of this code.

(i) Upon appropriation by the Legislature, the amounts necessary
to make refunds pursuant to this section shall be allocated to the
applicable tax agency.

(j) For purposes of this section, “tax agency” includes the board
and the Franchise Tax Board.

SEC. 2.  

Section 5148 of the Revenue and Taxation Code is
amended to read:

5148.  

Notwithstanding Section 5140, an action to recover taxes
levied on state-assessed property arising out of a dispute as to an
assessment made pursuant to Section 721, including a dispute as
to valuation, assessment ratio, or allocation of value for assessment
purposes, shall be brought under this section. In any action brought
under this section, the following requirements shall apply:

(a) The action shall be brought by the state assessee. There shall
be a single complaint with all parties joined therein with respect
to disputes for any year.

(b) The action shall name the board and the county or counties.
When a county is named which collected taxes on behalf of a city
or cities, the county shall give notice of that action to the city or
cities within 30 days of receipt of advice from the board of the
action. A fee shall be payable by the state assessee in an amount
prescribed by the court to cover the reasonable costs incurred by
a county or counties in giving that notice. Any city receiving notice
of the action filed against the board and the county may, within
30 days of the receipt of that notice, intervene in that action.
Whether or not a city intervenes in the action, any judgment
rendered for an assessee shall be entered exclusively against the
county; however, the county shall be entitled to recover separately
from the city or cities and other tax entities those taxes collected
by the county on behalf of the city or cities and other tax entities
which are subject to refund to the assessee as the result of the
judgment. Payment to the taxpayer upon the judgment and any
interest thereon may be deferred by the county until the
apportionment of property tax revenue next following the date of
the judgment, or as the county and the taxpayer may otherwise
agree. Interest shall accrue during any deferral period unless the
county and taxpayer otherwise agree. The county may if it chooses
to do so offset the amount of the judgment and interest recoverable
by it from the city or cities and other tax entities against amounts
held in the county treasury therefor or against amounts due and
payable thereto, including, but not limited to, property tax
apportionments. The amount of the fee required by this section
shall not be recoverable by the assessee in the action and no
judgment entered in the action in favor of the assessee shall provide
for the recovery of the fee.

As used in this section, “county” includes a city and county.

(c) Service of the summons and complaint shall be only upon
the board. The board shall serve as agent of the defendant county
or counties for the purpose of service of process. A fee shall be
payable by the state assessee in an amount prescribed by the court
to cover all reasonable costs incurred by the board while acting in
its capacity as agent for the defendant counties.

(d) Venue of the action shall be in any county in which the
Attorney General of California has an office or in which the state
assessee has a significant presence.

(e) The action shall be limited in the case of valuation and
allocation disputes to the grounds specified in the following:

(1) A petition for reassessment filed under Section 741, or any
proceeding thereon.

(2) A petition for correction of allocated assessment filed under
Section 747, or any proceeding thereon.

(f) A timely filed petition for reassessment or petition for
correction of allocated assessment shall constitute a claim for
refund if the petitioner states in the petition it is intended to so
serve.

(g)  begin delete The end delete begin insert Except as otherwise provided in subdivision (j), the end insert
action shall be commenced only after payment of the taxes in issue
and within four years after the latest of the dates that the State
Board of Equalization mailed its decision or its written findings
and conclusions on the following:

(1) A petition for reassessment filed under Section 741 and
intended to constitute a claim for refund.

(2) A petition for correction of allocated assessment filed under
Section 747 and intended to constitute a claim for refund.

(h) The action shall not be joined with any action filed under
Section 5140.

(i) Any refund of tax overpayments and any interest thereon,
determined in any action brought under this section to be due shall
be made by the defendant county or counties.

begin insert

(j) Where the tax assessed or allocated has been determined to
have been illegally assessed or allocated in a final and
nonappealable decision of a court of competent jurisdiction, the
action shall commence no later than one year from the date the
court rendered that decision.

end insert

SEC. 3.  

The Legislature finds and declares that the refunds
allowed to persons by this act with respect to taxes, fees,
assessments, surcharges, or other amounts levied or collected by
the Franchise Tax Board or the State Board of Equalization, as
applicable, that have been determined to be illegally levied or
collected in a final and nonappealable decision of a court of
competent jurisdiction, serves a public purpose and does not
constitute a gift of public funds within the meaning of Section 6
of Article XVI of the California Constitution.