SAN FRANCISCO — The California Supreme Court recently ruled that California taxpayers will no longer be able to claim that they do not own a property to avoid the assessment appeal process when seeking a reduction of a tax assessment.
The high court's June 5 ruling came on the heels of its ruling to grant a request by farming company Williams and Fickett to void property tax assessments on equipment it claimed they didn’t own.
The case stems from an audit that Williams and Fickett underwent in 1997. Fresno County claimed that the company owned farming equipment that was not reported on its personal property statement. The company, however, claimed that it did not own the property on the dates in question, and when it failed to pay the assessed amount, the county placed liens on the plaintiff’s real and personal property.
Williams and Fickett then filed suit after the county denied its appeals for a refund. The company paid the disputed liens, including interest and penalties, in 2012.
The superior court sustained the county’s demurrer in 2013 because the plaintiff had failed to exhaust its administrative remedies by not filing timely applications for reductions of the challenged assessments. The appellate court, however, reversed, concluding that “the taxpayer claims an assessment is void because the taxpayer does not own the assessed property, [so] the taxpayer is not required to apply for an assessment reduction to exhaust its administrative remedies.”
The state's high court affirmed the appeals court, with Chief Justice Tani Cantil-Sakauye delivering the decision.
“We recognize that a taxpayer in plaintiff’s position might have reasonably relied on our decision in Parr-Richmond (Parr-Richmond Industrial Corp. v. Boyd, supra, 43 Cal.2d 157) to believe it was unnecessary to timely exhaust its administrative remedies through the assessment appeal process before filing a tax refund claim and bringing a refund action pressing a claim of no ownership of the assessed property," the high court said in its ruling. "For this reason, we conclude that our holding should apply only prospectively.”