Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales And Use Tax Court Decisions


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Javor v. State Board of Equalization . . . (1974)

Consumer Permitted to Include Board in Suit Against Retailer for Sales Tax Reimbursement Refund

On December 11, 1971, the U.S. Congress repealed the federal manufacturer's excise tax imposed on the sale of specified new motor vehicles and accessories retroactively to August 15, 1971, and required manufacturers to refund taxes collected during this four month period. The Board had promulgated a regulation that provided that repayment of the federal tax by the manufacturer to the consumer would be regarded as a price adjustment. Since the federal tax was originally included in the gross sales price by which sales tax was measured, the reduction in the federal tax resulted in a reduced measure of sales tax. A purchaser of a new automobile during the four-month period who was unable to obtain a refund of sales tax reimbursement he had paid brought a class action suit against his retailer and all California retailers of the product for refund of the excess sales tax reimbursement the retailers and paid to the Board.

The Board argued, and the court agreed, that the customers should not be allowed a direct cause of action against the Board; only a retailer who had paid the tax would have a direct cause of action. Instead, the court compelled defendant retailers to make refund applications to the Board, and required the Board to respond to these applications by paying into court all sums, if any, due defendant retailers. Javor v. State Board of Equalization (1974) 12 Cal.3d 790.