Property Tax Refund Claims May Be Filed Directly In Superior Court When The Assessed Property Was Not Owned By The Taxpayer; Such Claims Are Governed By A Four-Year Limitations Period

January 27, 2015 | Bulletin No. 1173988.2

When a taxpayer requests a property tax reduction, the taxpayer must ordinarily first request a reduction with the county board of equalization or assessment appeals board before the taxpayer may file in superior court. However, in Williams & Fickett v. County of Fresno (January 9, 2015, F068652) ___ Cal.App.4th ___, the Fifth District Court of Appeal held that this requirement does not apply when a taxpayer claims it does not own the assessed real property or that the property didn't exist on the lien date in question. Instead, the taxpayer may file a complaint directly with the superior court and the action is governed by a four-year limitations period.

Facts

In 2010, Williams & Fickett ("Williams"), a general partnership, filed a complaint in superior court for relief against the County of Fresno ("County"). The complaint alleged that the County attributed properties to Williams that did not exist, and therefore, the assessments on such properties should be canceled. The County demurred, alleging that Williams failed to exhaust its administrative remedies, and that the action was time-barred. The superior court agreed that Williams failed to exhaust its administrative remedies, and dismissed the complaint. Williams appealed.

The Decision

wThe Fifth District Court of Appeal ("Court") held that the Williams' complaint was not barred for failure to exhaust administrative remedies, and that it was not time-barred.

Regarding exhaustion, the Court held that Revenue and Taxation Code section 1603 did not apply because Williams alleged that it did not own the assessed property. Section 1603 requires taxpayers seeking a tax reduction to first file a request for refund with the county , but Section 1603 also requires that the taxpayer seeking the refund "certify, under penalty of perjury" that the taxpayer is the owner of the property. As such, the Court reasoned that Section 1603 does not apply when the taxpayer does not own the property. Since Williams alleged that it did not own the assessed property, Williams' complaint was not barred because of failure to exhaust its administrative remedies under section 1603. The rationale is that there is no question of value to submit to the assessment appeals board for consideration; there is only a legal issue relating to the existence or taxability of the property (i.e., is the assessment void as a matter of law?).
Regarding the statute of limitations, the Court held that the general four-year limitations period under Revenue and Taxation Code section 5097(a)(2) governs Williams' claims for refund. The shorter limitations period cited by the County under Revenue and Taxation Code section 5097(a)(3) only applies if an application for reduction is filed with the County pursuant to Section 1603. Since Williams filed no such application, the action was not time-barred.

What This Means To You

This case clarifies that refund-seeking taxpayers do not always need to first file an application for equalization with the county assessment appeals board, if the reason for the requested refund is that they did not own the taxed property or that such property did not exist in the jurisdiction on the assessment date in question. Instead, they may seek relief directly from the superior court if they meet all of the other conditions for a refund of taxes paid. Furthermore, such claims for refund are usually governed by the four-year limitations period set forth in Revenue and  Taxation Code section 5097(a)(2).  County officials cannot always assume that the failure to file an application for equalization with the county assessment appeals board or board of equalization is dispositive of a taxpayer’s right to a refund of property taxes.

Questions

If you have any questions concerning this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Maggie Stern | 916.321.4500