Despite what a university, its lawyers and a Superior Court thought, an appellate court ruling has confirmed that 12 months really means 12 months.
The appellate ruling added some useful advice to disgruntled taxpayers who disagree with their tax bill: pay up now and then seek a refund. If you are right, you’ll get your money back. If you are wrong, at least you will avoid paying penalties and legal fees.
The case, decided by the California Court of Appeal’s Fifth Appellate District, involves a dispute between a nonprofit association affiliated with California State University at Fresno, and the County of Fresno.
The association runs the school’s dining services, bookstore, student union and other facilities, as well as the facility at the center of the dispute: an athletic arena that can seat up to 16,000 spectators.
In 2007, the association applied for a reduction in the valuation of the arena. Their application wound its way through the administrative process, and on November 4, 2010, the association was successful. The county’s assessment appeals board valued the property for the three prior years at an amount less than the assessor had set. The board sent a formal notice of its decision the same day (November 4, 2010).
On May 5, 2011, the association paid the taxes due for 2004, 2005 and 2006, plus penalties.
On February 24, 2012, more than 14 months after the appeals board’s decision, the association filed a claim with the county for a partial refund of the property taxes it had paid, based on the reduced assessment of the arena’s value.
The county rejected the claim. It said California law requires that refund claims be filed within 12 months of the time the county's appeals board mailed its decision.
The association sued in Superior Court, arguing that the one-year period should not begin until the taxes were actually paid. The lower court agreed, saying the association’s claim was timely, and reversed the county’s decision.
The county appealed. (California State University Fresno Association v County of Fresno.)
The appellate court, pointing to the plain text of the relevant statute, reversed the lower court’s decision and ruled in favor of the tax collector.
“It is clear that property taxes must be paid before litigation challenging them can occur,” the appellate judges ruled.
“The important public policy behind the ‘pay first, litigate later’ doctrine,” it said, is to make sure essential government services are not affected by the taxpayer’s litigation.
The ruling noted that the legislature established a three-step process for handling challenges to property tax assessments and refund requests: applying for an assessment reduction; paying the taxes and filing a refund claim; and if necessary, suing in superior court.
Refund requests must be filed within four years after the contested taxes are paid, or “within one year after mailing of notice” of the taxes due, the statute says.
So, did the statutory 12-month time to file a refund request start on November 4 of 2010, when the county sent its notice, or, as the association argued and the lower court agreed, on May 5 of 2011, when the association paid the bill?
The appellate judges looked to “the intent of the Legislature as expressed by the actual words of the statute.”
The language of the statute is clear, they ruled; a refund must be filed within 12 months of when the county assessment appeals board makes a final decision on a refund application and mails its decision to the applicant.
In this case, the school taxpayer got marked “tardy,” and it cost them a hefty refund.
Lynda I. Chung