TO: Board of Supervisors
FROM: Tracy A. Schulze - Auditor-Controller
REPORT BY: Edward Brown - Accountant-Auditor I
SUBJECT: Authorization for the Auditor-Controller to deny State assessed unitary property tax refund claim for Tax Year 2020-21
RECOMMENDATION
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Deny State assessed unitary property tax refund claim for return of 2020-21 taxes paid on Assessor Parcel No. 799-000-161-000 in accordance with Revenue and Taxation Code section 100 and Sections 5096 and 5097 (Utility company). (No Fiscal Impact)
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BACKGROUND
The Auditor-Controller’s Office has received property tax refund claim from unitary property owner (PG&E) for paid 2020-21 taxes. The property owner’s claim states the unitary property tax rate is in excess of the rate allowed by the California Constitution and have requested a refund of $3,269,775 plus interest.
The claimants have challenged the State requirements and state they are entitled to a partial refund on the grounds the taxes were erroneously or illegally collected, or illegally assessed or levied and gave the following reasons:
a. Property tax rate applied to compute claimant’s property taxes was in excess of the rate applied in the same year to property in the county assessed by the assessor of Napa County, in violation of Article XIII, Section 19 of the California Constitution.
b. The property tax rate applied to compute claimant’s property taxes exceeded the rate allowed by Article XIIIA, Section 1 of the California Constitution.
c. The property tax assessment violates the Equal Protection Clause of the United States Constitution.
d. The property tax collected exceeds the amount allowed by Proposition 13.
The Auditor-Controller’s Office has followed all the requirements of the Revenue and Taxation Code Section 100 directing the establishment and calculation of the unitary tax rate for tax year 2020-21. The unitary tax rate process has been previously audited by the State Controller’s Office and deemed calculated in compliance with State law. Similar unitary claims have recently been litigated by telephone utilities in Napa, Placer, Merced and Santa Clara Counties, resulting in published court opinions rejecting their allegations as grounds for a refund and upholding state law as constitutional. (Pacific Bell Telephone Co. v. County of Napa, 112 Cal.App.5th 952 (2025); Pacific Bell Telephone Co. v. County of Placer, 111 Cal.App.5th 634 (2025); Pacific Bell Telephone Co. v. County of Merced, 109 Call.App.5th 844 (2025); County of Santa Clara v. Superior Court, 87 Cal.App.5th 347 (2023).)
In consultation with the County Counsel, the Auditor-Controller’s Office has reviewed the claim and audited County practices for unitary taxation. Napa County follows the requirements of Revenue and Taxation Code section 100 for the calculation of unitary tax rate. Therefore, the Auditor-Controller has determined that no refund is allowable to the property owner and requests the Board to instruct the Auditor-Controller’s Office to deny the claim. This is the seventh year of this request.
Requested Action: The Auditor-Controller is requesting the Board’s authorization to deny the claim.
FISCAL & STRATEGIC PLAN IMPACT
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Is there a Fiscal Impact? |
No |
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Is it currently budgeted? |
No |
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Is it Mandatory or Discretionary? |
Discretionary |
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Is the general fund affected? |
No |
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Future fiscal impact: |
No future impact at this time. However, if the courts ultimately decide in favor of the refund request, the County would have to process the tax refunds accordingly. |
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Consequences if not approved: |
The County would not be in compliance with Revenue and Taxation Code 100. |
ENVIRONMENTAL IMPACT
ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.