Justia Tax Law Opinion Summaries

Articles Posted in California Courts of Appeal
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Humboldt County Ballot Measure S proposed a tax on commercial cultivators of marijuana and was approved by the voters. The tax became operative on January 1, 2017. Measure S allows the Board of Supervisors to amend the law or approve enforcement regulations promulgated by the administrative officer if the action “does not result in an increase in the amount of the tax or broaden the scope of the tax.” The Supervisors amended Measure S in June 2017, and again in April 2018, making the tax applicable to all persons with a cultivation permit, as opposed to just those engaged in cultivation; redefining “cultivation area”; and changing the time when the taxes start to accrue.Silva owns property in Humboldt County. No one cultivated cannabis on the property in 2017. The County sent her an invoice of $40,000 in commercial cannabis cultivation taxes under Measure S for the year 2017–2018. Silva paid the invoice. The County sent an invoice of $54,025 for the year 2018–2019. Silva again paid the invoice.A 2018 petition argued that the amendments impermissibly broadened Measure S. The court of appeal affirmed a ruling in Silva's favor. The trial court was not procedurally barred from considering the challenge to the Board’s amendments. The doctrine of exhaustion of administrative remedies does not apply and the amendments expanded, rather than just clarifying, Measure S. View "Silva v. Humboldt County" on Justia Law

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The tax at issue in this case related to the State Water Project ("SWP"): California’s vast system of storage and conveyance facilities designed to provide water to its millions of residents and farmers. In 2013, the Coachella Valley Water District (the water district) passed a resolution adopting a two-cent increase to the rate of its ad valorem property tax, which the water district levies annually to satisfy its contractual financial obligations to the SWP. In 2018, Randall Roberts filed a lawsuit against the water district and the County of Riverside, seeking to invalidate the tax under the Burns-Porter Act of 1960, and the California Constitution, and to obtain a refund. The water district demurred, arguing the entire action was time-barred because Roberts was required under the validation statutes to present his claims in a “reverse validation action” no later than 60 days after the water district adopted the tax, which it does annually by resolution. The trial court concluded the validation statutes did not apply to the SWP tax and overruled the demurrer. The Court of Appeal concurred with the water district that the validation statutes applied to the SWP tax by operation of the County Water District Law, which made the validation statutes applicable to any action to determine the validity of a county water district's "assessment" (and defined a property tax as an "assessment"). View "Coachella Valley Water Dist. v. Super. Ct." on Justia Law

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Ashford San Francisco owns the 2nd Street property. In 2013, a majority ownership interest in Ashford San Francisco was acquired by Ashford Hospitality. The transfer resulted in a change in ownership of the property, which the city determined triggered the imposition of the transfer tax. Ashford paid $3,348,025 in transfer taxes based upon the $133,920,700 self-reported value of the property, then filed an administrative claim for a refund. The transfer tax has five tiered (graduated) tax rates.When the city did not timely act, Ashford filed suit. seeking a refund, alleging that the transfer tax “imposes different tax rates on taxpayers for performing the same exact function” and arbitrarily classifies property transfer instruments for the imposition of a varying rate of taxation, solely by reference to the amount of the consideration in the transactions in violation of the Equal Protection Clause.The court of appeal affirmed a judgment in favor of the city. The city rationally chose to treat the sale or transfer of a higher-valued property differently from the sale of a lower-valued property; the transfer tax “taxes all transfers of the same consideration or value equally.” The court noted the city’s justifications: the owner’s ability to pay and that time and costs associated with the city’s audits for the self-reported transfer tax may increase depending on the value of the property. View "Ashford Hospitality v. City and County of San Francisco" on Justia Law

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San Rafael voters approved by a two-thirds vote a Paramedic Services Special Tax, imposing an annual special tax up to a maximum of 14 cents per square foot on all nonresidential structures in the city to fund paramedic services. In 2015-2016, the city determined that the Assessor had been inadvertently omitted certain properties from the Paramedic Tax assessment. City officials rectified this oversight prospectively and sought to collect a portion of the Tax that had gone unpaid. One property owner that received notice of the levy was Valley Baptist, a nonprofit religious organization that operates a church on property within city boundaries. The city requested payment of $13,644.Valley Baptist filed suit, challenging the constitutionality of the Tax as applied to a place of worship. Valley Baptist argued that it is exempted from payment of all property taxes under article XIII, section 3(f) of the California Constitution, including the Paramedic Tax. Reversing the trial court, the court of appeal held that the religious exemption does not extend to non-ad valorem special property taxes like the Paramedic Tax. The constitutional articles added by Propositions 13 and 218 do not evince an intent by the electorate to extend the scope of article XIII exemptions to special property taxes. View "Valley Baptist Church v. City of San Rafael" on Justia Law

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After paying the taxes due under escape assessments, LA Live brought a tax refund action against the County seeking a refund of those taxes. LA Live claimed that the Assessor failed to comply with the procedural requirements of Revenue and Taxation Code section 531.8. The trial court entered judgment for the County, finding that the Assessor's failure to wait 10 days before enrolling the escape assessments did not render them void, and LA Live had failed to exhaust its administrative remedies before pursuing the present action.The Court of Appeal affirmed and concluded that the trial court correctly concluded that LA Live's claim is not reviewable on the merits because LA Live did not exhaust its administrative remedies. The court explained that, by statute, a taxpayer is required to file administrative requests for reassessment and refund before filing a refund action in court. Furthermore, the administrative exhaustion requirement is jurisdictional unless the assessment is a nullity as a matter of law. In this case, the assessment was not legally null: Even if the Assessor failed to follow the statutory procedure set out in section 531.8, that failure did not render the assessment a nullity because the real property at issue was not tax exempt, nonexistent, or outside the County's jurisdiction. View "LA Live Properties, LLC v. County of Los Angeles" on Justia Law

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After the passage of Proposition 218, Sacramento voters approved a requirement that city enterprises providing water, sewer, storm drainage, and solid waste services pay a total tax of 11% of their gross revenues from user fees and charges. Nineteen years later, plaintiff-respondent Russell Wyatt brought a petition for writ of mandate and complaint for declaratory relief against the City challenging its fees and charges for utility services under article XIII D, section 6, subdivision (b) of the California Constitution (added by Prop. 218, as approved by voters, Gen. Elec. (Nov. 5, 1996)). It was undisputed that the City set these fees and charges at rates sufficient to fund the payment of the tax to its general fund. The trial court issued a writ of mandate and judgment in Wyatt’s favor. The Court of Appeal reversed the judgment and directed the trial court to vacate its writ of mandate. By approving the tax in 1998, Sacramento voters increased the cost of providing utility services, rendering those costs recoverable as part of their utility rates and the subsequent transfer of funds permissible under article XIII D. View "Wyatt v. City of Sacramento" on Justia Law

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After garnering sufficient voter signatures to qualify, a proposed initiative entitled “Universal Childcare for San Francisco Families Initiative” was placed on the city’s June 2018 ballot as Proposition C. The initiative sought to impose an additional tax on certain commercial rents to fund early childcare and education. Approximately 51 percent of the votes cast were in favor of Proposition C. In August 2018, opponents filed suit to invalidate Proposition C on the ground that it needed a two-thirds majority vote to pass.The court of appeal affirmed summary judgment in favor of the city. While Proposition C imposes the type of tax that, if submitted to the voters by the Board of Supervisors, would need a two-thirds majority vote to pass, neither Proposition 13 nor Proposition 218 imposed such a requirement on a tax imposed by initiative. The absence of a constitutional provision expressly authorizing majority approval of local voter initiatives is immaterial. The City Charter does not impose a super-majority requirement View "Howard Jarvis Taxpayers Association v. City and County of San Francisco" on Justia Law

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Bernard and Sheila created the Family Trust and transferred their home to themselves as trustees. The trust became irrevocable upon the death of the surviving spouse, when the estate would be distributed to Sheila’s 13 children, including Bohnett. Sheila died in 2003. Bernard died in 2008. The property was rented out. The rent was deposited into the trust’s bank account. In 2012, the trustee filed a successful Claim for Reassessment Exclusion for Transfer Between Parent and Child (Proposition 58 claim), listing Sheila and Bernard as transferors, her children as transferees, and the date of Bernard’s death as the date of transfer.In 2013, the property was transferred by the trustee to Bohnett. A Preliminary Change of Ownership Report listed the trust as the seller/transferor, stated that the purchase was a transfer between parent(s) and child(ren), and listed the sale price as $1,030,000. The trustee distributed the money in equal shares to the 13 siblings. A second Proposition 58 claim listed Sheila and Bernard as transferors and Bohnett as transferee, leaving blank the date of transfer.The county found that there was a 12/13 change in ownership and reassessed the property from $157,731 to $962,873 for 2012/2013, and $963,114 for 2013/2014. Bohnett filed unsuccessful Applications for Changed Assessment. The court of appeal affirmed in favor of the County. The purchase by one beneficiary from his siblings and co-beneficiaries was not a parent-child transfer exempt from reassessment for property tax purposes. View "Bohnett v. County of Santa Barbara" on Justia Law

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This appeal arose out of a property tax refund action brought by Chinese Theatres against the County. After remanding to the Los Angeles County Assessment Appeals Board to reduce the value of real property owned by Chinese Theatres and to correct the tax roll, the trial court awarded Chinese Theatres attorney fees under Revenue and Taxation Code section 1611.6.The Court of Appeal reversed the postjudgment order awarding Chinese Theatres fees, holding that Chinese Theatres was not entitled to attorney fees under section 1611.6. The court explained that, under a plain reading of section 1611.6, attorney fees are permitted in a tax refund action where: (1) a county board fails to make requested findings; or (2) the court concludes the board's findings are so deficient that it remands the matter with directions for the board to make findings that "fairly disclose [its] determination" on the point at issue, including a "statement of the method or methods of valuation used in appraising the property." In this case, neither of these circumstances exists and thus Chinese Theatres is not entitled to attorney fees under section 1611.6. View "Chinese Theatres, LLC v. County of Los Angeles" on Justia Law

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In 2013, Phillips purchased Humboldt County property at a public trustee sale for $153.806.41, comprising two 80-acre parcels, two miles from a public road. The terrain is mostly steep and wooded. There is a 1,508-square-foot, three-bedroom manufactured home on a permanent foundation that uses a solar generator system, a spring-fed water system, and a septic system. The property was previously purchased in 2000 for $125,000; in 2001 the modular home was added, costing $85,000. Phillips filed multiple applications challenging the prior owner’s $469,976 assessment.The Assessor reappraised the property at $415,000. Phillips cited Revenue and Taxation Code 110(b): the purchase price of real property is rebuttably presumed to be its “fair market value” “if the terms of the transaction were negotiated at arms-length between a knowledgeable transferor and transferee neither of which could take advantage of exigencies. Phillips argued that the price he paid for the property had to be treated as its taxable value and challenged the Assessor’s comparable sales analysis, The Board determined the value to be $250,000. Phillips filed a tax refund action. On remand, the Board found the 2013 fair market value was $335,000.The court of appeal affirmed that the property was not obtained in an open market transaction, there was substantial evidence to support the Board’s conclusion as to its assessed value of the property, and Phillips’ due process rights were not violated. A foreclosure sale is by nature not an open market transaction supporting the application of the section 110 presumption; even where that presumption applies, it may be rebutted by evidence that the property's fair market value is otherwise. View "Phillis v. County of Humboldt" on Justia Law