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Business Taxes Law Guide—Revision 2024
Transactions and Use Tax Court Decisions
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C.O.D. Gas and Oil Co., Inc. v. State Board of Equalization … (1997)
Coleman v. County of Santa Clara … (1998)
Monterey Peninsula Taxpayers Association v. County of Monterey … (1992)
Rider v. County of San Diego … (1991)
C.O.D. Gas and Oil Co., Inc. v. State Board of Equalization … (1997)
Claim for Refund of Unconstitutional District TaxesPlaintiff motor vehicle fuel retailers sought refund of district taxes they had paid to the state which were later declared to be unconstitutional. Plaintiffs argued that they had the right to file an action for refund of such taxes even though the Legislature had adopted a comprehensive statutory scheme whereby it is the purchasers who have the right to file the claims for refund of unconstitutional district taxes, rather than retailers as is generally the case. The Court of Appeal held that the statutory scheme was constitutional and that it clearly prohibited these retailers from filing claims. Since plaintiffs had no statutory basis for maintaining an action for refund, the trial court’s dismissal of the suit was upheld. C.O.D. Gas and Oil Co., Inc. v. State Board of Equalization (1997) 59 Cal.App.4th 756.
Coleman v. County of Santa Clara … (1998)
A District Tax Adopted by a Simple Majority Vote Is Valid Because It Is Not a Special TaxThe voters of Santa Clara County adopted a new district tax during the 1996 general election by a simple majority vote (51.8 percent). This tax was adopted as Measure B, which specified that the ½ percent sales and use tax would be used for general county purposes. During the same election, the voters also approved Measure A by 77.6 percent of the vote. This was characterized in the measure itself and in the voter pamphlet as advisory only. It specified the voters' intent that any new sales tax revenue should be spent on certain projects specified in that measure.
Plaintiffs challenged the new tax as an attempt to circumvent the supermajority requirement for special taxes in that the measures were inseparably linked, meaning that Measure B was actually a special tax requiring a two-thirds vote to be validly adopted rather than a mere majority vote as required for a general tax. The Court of Appeal held that, although the two ballot measures were closely related to each other, they were not, in fact, legally connected. By itself, Measure B was a general tax which could be adopted by majority vote. Despite the passage of Measure A, the County was free to spend Measure B revenue on any and all County purposes without restriction, and the validity of neither measure was dependent on the passage of the other. The court therefore upheld the validity of the new tax. Coleman v. County of Santa Clara (1998) 64 Cal.App.4th 662.
Monterey Peninsula Taxpayers Association v. County of Monterey … (1992)
The Imposition of a Sales Tax by the Monterey County Public Repair and Improvement Authority after Approval of the Tax by a Simple Majority of the Voters Violated Proposition 13The Monterey Peninsula Taxpayers Association (MPTA) filed an action against the County of Monterey and the Monterey County Public Repair and Improvement Projects Authority challenging the validity of a sales tax that was approved by only a simple majority of the voters. MPTA claimed, among other things, that article XIII A, section 4 of the California Constitution, commonly known as Proposition 13, required that the tax be approved by two-thirds of the voters. The Authority was governed by four active members of the County Board of Supervisors. It was authorized to impose a sales tax increase and its purpose was to spend certain amounts of the new tax revenue on 27 specific improvement and repair projects throughout the County. The court of appeal concluded that the Authority was a "special district" and that stacking of several special projects was camouflage and did not suddenly convert a multi-specific-purpose tax into a "general tax" for "general governmental purposes." Therefore, the appellate court concluded that MPTA’s tax violated Proposition 13. Monterey Peninsula Taxpayers Assn. v. County of Monterey (1992) 8 Cal.App.4th 1520.
Rider v. County of San Diego … (1991)
The Imposition of Sales Tax by the San Diego county Regional Justice Facility Financing Agency After Approval of the Tax by a Simple Majority of the Voters Violated Proposition 13Plaintiff county taxpayers filed a suit challenging the validity of a tax imposed on sales occurring in the county because the tax violated the supermajority vote requirements of California Constitution article XIII A, §4. The California Supreme Court affirmed judgment in favor of the taxpayers, holding that a "special district" within the meaning of Section 4 would include any local taxing agency created to raise funds for city or county purposes to replace revenues lost by reason of the restrictions of Proposition 13. The Court further held that a "special tax" is one levied to fund a specific governmental project or program, such as the construction and financing of a county's justice facilities. The Court recognized under the foregoing principle, every tax levied by a "special purpose" district or agency would be deemed a "special tax," but found that this interpretation seemed most consistent with the probable intent of the framers of Proposition 13. Rider v. County of San Diego (1991) 1 Cal.4th 1.