Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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Superior Court (O'Hara & Kendall Aviation, Inc.); State Board of Equalization v. . . . (1985)

California Constitution Bars Taxpayer Action for Refund Before Full Payment

After the Board sent taxpayer a notice of determination of sales taxes and interest due of $187,000 for several different quarters, taxpayer sent the Board $250 and instructed the Board to apportion the partial payment to all of the transactions the Board claimed were taxable. Taxpayer later filed an action for refund of the $250 in Superior Court, while the taxpayer's petition for redetermination of the balance of $187,000 liability was still pending before the Board. After the trial court overruled the Board's demurrer and denied the motion to strike the complaint, the Board sought a writ of mandate.

The California Supreme Court granted the Board's petition for a writ of mandate. The court held that Article XIII, Section 32 of the California Constitution, which prohibits actions to prevent or enjoin the collection of any tax, barred an action for refund of a partial payment before the full amount of the disputed tax was paid. This action would require adjudication of the taxpayer's liability for each disputed quarter, since the doctrine of res judicata would bar any subsequent Board action to collect additional taxes, even though almost all the assessed taxes remain unpaid. Article XIII, Section 32 forbids this result. The court disapproved two earlier cases, Snoozie Shavings, Inc. v. State Board of Equalization (1979) 97 Cal.App.3d 771 and Schaffer v. State Board of Equalization (1952) 109 Cal.4th 574, to the extent they are inconsistent with this decision. State Board of Equalization v. Superior Court (O'Hara & Kendall Aviation, Inc.) (1985) 39 Cal.3d 633.