Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2010
 

Revenue and Taxation Code

Property Taxation

Part 9. Corrections, Cancellations, and Refunds

Chapter 5. Refunds

Article 2.5. Interest on Refunds

Section 5151

5151. Other interest payable. (a) Interest at the greater of 3 percent per annum or the county pool apportioned rate shall be paid, when that interest is ten dollars ($10) or more, on any amount refunded under Section 5096.7, or refunded to a taxpayer for any reason whatsoever. However, no interest shall be paid under the provisions of this section if the taxpayer has been given the notice required by Section 2635 and has failed to apply for the refund within 30 days after the mailing of that notice. For purposes of this section, "county pool apportioned rate" means the annualized rate of interest earned on the total amount of pooled idle funds from all accounts held by the county treasurer, in excess of the county treasurer's administrative costs with respect to that amount, as of June 30 of the fiscal year preceding the date the refund is calculated by the auditor. For each fiscal year, the county treasurer shall advise the Controller of the county pool apportioned rate, and of computations made in deriving that rate, no later than 60 days after the end of that fiscal year. Any interest paid on a refund at a rate provided for by this subdivision as it read prior to January 1, 2009, shall be deemed to be correct.

(b) The interest rate provided for in subdivision (a) does not apply to interest on refunds of those amounts of tax that became due and payable before March 1, 1993. Interest on refunds of amounts of a qualified tax shall be paid at that rate provided for by this section as it read prior to January 1, 1993. As used in this section, a "qualified tax" means a tax that became due and payable before March 1, 1993, and had not been refunded as of April 6, 1995. This subdivision shall not be construed to affect the interest paid on refunds of those amounts of tax that became due and payable before March 1, 1993, and have been refunded as of April 6, 1995.

(c) (1) The interest computation period shall commence with the date of payment of the tax when any of the following applies:

(A) A timely application for reduction in an assessment was filed, without regard to whether the refund ultimately results from a judgment or order of a court, an order of a board of equalization or assessment appeals board, or an assessor's correction to the assessment roll.

(B) The refund is pursuant to a roll correction resulting from the determination or adjustment by the assessor or a local assessment appeals board of a base year value.

(C) The refund results from a correction to the assessment roll pursuant to Section 4831 or 4876.

(2) Interest on refunds of taxes on property acquired by a public agency in eminent domain shall accrue from the date of recordation of the deed.

(3) In all other cases the interest computation period shall commence on the date of filing a claim for refund or payment of the tax, whichever is later. However, in the event of the granting of property tax relief pursuant to Section 69, 69.3, or 170, interest is not payable on any resulting refund of taxes, provided that payment of that refund of taxes is made within 120 days after the county assessor has sent authorization for the reduction to the county auditor.

(d) The computation of interest shall terminate as of a date within 30 days of the date of mailing or personal delivery of the refund payment.

(e) The interest charged shall be apportioned to the appropriate funds, as determined by the county auditor.

(f) The amendments made to this section by Section 4 of Chapter 801 of the Statutes of 1996 shall apply to all refunds made after January 1, 1997.

History.—Added by Stats. 1970, p. 1255, in effect November 23, 1970. Stats. 1976, Ch. 499, p. 1240, in effect January 1, 1977, renumbered the section which was formerly numbered 5108. Stats. 1978, Ch. 740, in effect September 26, 1978, added "or as a consequence of an assessor's clerical error" after "taxes" in the first sentence of the first paragraph; and added "whichever of the three following dates provides the longest period:". After "computed from" in the first sentence of the second paragraph, deleted "or from" after "refund", and substituted "or a date preceding by 30 days the date of paying the refund." for "provided, however that no interest shall be paid under the provisions of this section if such period of time is 30 days or less" after "property" in subsection (b) thereof. Stats. 1980, Ch. 411, in effect July 11, 1980, operative January 1, 1981, substituted "9 percent" for "6 percent" and deleted "5096.3 or" after "Section" in the first sentence of the first paragraph. Stats. 1982, Ch. 690, in effect January 1, 1983, substituted "using" for "from" and "periods" for "dates" in the first sentence of, added the subsection letters, and substituted subsection (c) for "or a date preceding by 30 days the date of paying the refund" in the second paragraph. Stats. 1983, Ch. 737, in effect January 1, 1984, substituted "that" for "such" after "when", substituted "any amount" for "amounts" after "on", deleted "clerical" after "assessor's", and added ", or as the result . . . assessee" after "error" in the first sentence, and substituted "that" for "such" after "mailing of" in the second sentence of the first paragraph; and deleted "three" after "of the" in the first sentence of the second paragraph, and added subsection (d) thereto. Stats. 1992, Ch. 523, in effect January 1, 1993, added "county pool apportioned" after "the", deleted "of 9 percent per annum" after "rate" in the first sentence of the first paragraph; added "For purposes . . . calculated." as the third sentence in the first paragraph; added "that was . . . decision," after "tax roll" in subsection (c). Stats. 1995, Ch. 498, in effect January 1, 1996, added subdivision letter (a) before "Interest at", added "greater of 3 percent per annum or the" after "Interest at the", substituted "to a taxpayer for any reason whatsoever" for "as a result of the reduction of assessed value following an application for equalization by a board of equalization or by a court action to recover taxes, or as a consequence of an assessor's error, or as the result of an incorrect assessment not occasioned by the act or omission of the assessee" after "or refunded" in the first sentence, and substituted "is" for "was" after "the refund" in the third sentence of subdivision (a); added subdivision (b); and added subdivision letter (c) before "Interest allowed", and substituted paragraph numbers (1), (2), (3), and (4) for (a), (b), (c), and (d), respectively, in subdivision (c). Stats. 1996, Ch. 171, in effect July 17, 1996, substituted "county pool apportioned rate" for "county pooled apportioned rate" in the second sentence and added the third sentence commencing with "For each fiscal" of subdivision (a); substituted "The interest rate provided for in subdivision (a)" for "Subdivision (a)" before "does not apply" in the first sentence, substituted "refunds of amounts of a qualified tax" for "refunds of those amounts of tax that became due and payable before March 1, 1993, and have not been refunded as of April 6, 1995," after "interest on" in the second sentence, and added the third sentence commencing with "As used in" of subdivision (b); deleted former subdivision (c) related to determining the interest rate computation period and added new subdivision (c); lettered the former second sentence of former subdivision (c) as subdivision (e); and added subdivision (f). Stats. 1996, Ch. 801, in effect September, 24, 1996, added the second sentence of subparagraph (3) of paragraph (1) of subdivision (c). Stats. 2008, Ch. 329 (AB 2411), in effect January 1, 2009, substituted "fiscal year preceding the date" for "preceding fiscal year for which" after "June 30 of the" and added "by the auditor" after "refund is calculated" in the third sentence and added the fifth sentence commencing with "Any interest paid" in the first paragraph of subdivision (a); substituted "applies" for "apply" in the first sentence of paragraph (1) and added "the" after "or payment of" in the first sentence of paragraph (3) of subdivision (c); and substituted "Section 4 of Chapter 801 of the Statutes of 1996" for "the act adding this subdivision" after "this section by" in the first sentence of subdivision (f).

Note.—Section 19 of Stats. 1995, Ch. 498, stated that the addition of subdivision (b) was declaratory, not a change to, existing law.

Construction.—The de minimus ten dollar ($10) classification scheme of the section is reasonably related to the legitimate state interest of easing administrative burdens, and violates neither the constitutional right to equality of taxation nor the right to equal protection under either state or federal law. Cohan v. Alvord, 162 Cal.App.3d 176. This section and Section 5150 are in pari materia and should be construed harmoniously if reasonably possible. Thus, it must be concluded that this section does not apply when interest is included in a judgment for recovery of taxes but rather, it was intended to provide for inclusion of interest in refunds made directly by the assessing and taxing authorities. So where taxes were due after March 1, 1977, and before March 1, 1981, the interest to be included in the judgment pursuant to Section 5150 was 6 percent, running from the dates the claims for refund were filed. And where postjudgment interest accrued, as the result of Government Code Section 970.1, which provides that Code of Civil Procedure Section 685.010 is inapplicable to money judgments against local governments, the constitutional rate of 7 percent was applicable. Union Pacific Railroad Co. v. State Board of Equalization, 231 Cal.App.3d 983.

Note.—Section 4 of Stats. 2008, Ch. 329 (AB 2411), provided that: (a) The amendments made by this act to Sections 5097 and 5151 of the Revenue and Taxation Code shall not affect any litigation involving property tax refunds pending before January 1, 2009, that assert either of the following:

(1) Claims of miscalculation of interest paid under Section 5151 of the Revenue and Taxation Code.

(2) Claims interposing noncompliance with Section 2635 of the Revenue and Taxation Code to revive property tax refund claims otherwise outside the tax refund limitation period of Section 5097 of the Revenue and Taxation Code.

(b) Nothing in the legislative history of the amendments made by this act shall be construed as any indication of the meaning of the law as it existed prior to the effective date of the amendments made by this act.

Section 5 thereof, provided that: If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.

* Article 2 was added by Stats. 1976, Ch. 499, p. 1240, in effect January 1, 1977.