Laws, Regulations & Annotations
Property Taxes Law Guide – Revision 2017
Revenue and Taxation Code
Part 9. Corrections, Cancellations, and Refunds
Chapter 4. Cancellations
Article 1. Generally
4985.2. Delinquent penalties; cancellation. Any penalty, costs, or other charges resulting from tax delinquency may be canceled by the auditor or the tax collector upon a finding of any of the following:
(a) Failure to make a timely payment is due to reasonable cause and circumstances beyond the taxpayer's control, and occurred notwithstanding the exercise of ordinary care in the absence of willful neglect, provided the principal payment for the proper amount of the tax due is made no later than June 30 of the fourth fiscal year following the fiscal year in which the tax became delinquent.
(b) There was an inadvertent error in the amount of payment made by the taxpayer, provided the principal payment for the proper amount of the tax due is made within 10 days after the notice of shortage is mailed by the tax collector.
(c) The cancellation was ordered by a local, state, or federal court.
History.—Added by Stats. 1978, Ch. 808, in effect January 1, 1979. This section amended old section 2617.5 and was renumbered to section 4985.2. The "(1)" was added between the words "that" and "the"; also the phrase "for the proper amount of the tax due" was added after the word "payment". In addition, the phrase beginning with "(2) there was" was added and replaced the phrase "within 30 days after the second delinquency date." Stats. 1979, Ch. 242, in effect July 10, 1979, substituted "penalty or costs" for "delinquent penalty on property", added "2621," after "2618,", added "2706," after "2705,", deleted "assessee's" after "(1) the", and substituted "taxpayer" for "assessee" in subdivision (a); substituted "taxpayer" for "assessee" in the first sentence, and deleted "or within 60 days following the effective date of this Act, whichever is later" after "paid" in the second sentence of subdivision (b); and deleted "or redemption officer" after "tax collector" in subdivision (c). Stats. 1983, Ch. 1224, in effect January 1, 1984, substituted "Any penalty . . . tax delinquency" for "(a) Any uncollected penalty or costs provided for in Sections 2617, 2618, 2621, 2704, 2705, 2706, or 2922" before "may be", substituted "auditor or the tax collector" for "tax collector or the auditor" after "by the", substituted "no later than . . . became delinquent" for "within 90 days after the first delinquency date or within 30 days after the second delinquency date" before "or, (2)", and deleted former subdivisions (b) and (c). Stats. 1990, Ch. 992, in effect January 1, 1991, substituted "of any of the following:" for "that" after "finding", substituted new subdivision (a) for "(1)", substituted "Failure" for "the failure", after "(a)", substituted "in" for "and" after "ordinary care", and substituted a period for ", or," after "became delinquent" in subdivision (a), substituted new subdivision (b) for "(2)", substituted "There" for "there" after "(b)" in subdivision (b), and added subdivision (c). Stats. 1991, Ch. 532, in effect January 1, 1992, deleted "with the approval of the board of supervisors" in the first paragraph. Stats. 1996, Ch. 800, in effect January 1, 1997, added "fourth" after "June 30 of the" in subdivision (a).
Construction.—Subdivision (c), which allows tax collector to cancel property tax delinquency charges when cancellation is ordered by a court, applies only when a court issues such cancellation pursuant to other statutory provisions and does not independently authorize trial courts to make orders requiring counties to cancel delinquency penalties. People ex rel. Strumpfer v. Westoaks Inv. #27, 139 Cal.App.4th 1038. The auditor or tax collector does not have discretion whether to cancel delinquency penalties or to ignore a court order. If a taxpayer presents conclusive proof that it has established the factual predicates set out in subdivisions (a) and (b), but the official refuses to make the corresponding subdivision (a) or (b) finding, or if the corresponding finding is made but the official then refuses to exercise the authority to cancel the penalties, such refusal would be grounds for a Code of Civil Procedure Section 1085 petition for traditional mandamus. Id. The collector may not cancel tax penalties unless the delinquent tax payments are made by the end of the fourth tax year following the delinquency tax year. Marlton Recovery Partners, LLC v. County of Los Angeles (2015) 242 Cal.App.4th 510.
Taxpayer error. Taxpayer was not entitled to penalty relief under Section 4985.2 because the late payment was caused by an error within the taxpayer's control. Taxpayer was not entitled to relief under Section 4985.2, subdivision (a), because the late payment was caused by the taxpayer's cash manager overlooking a wire transfer request that had been authorized by its upper management. The taxpayer failed to institute proper control mechanisms, which could have prevented the late payment. Further, subdivision (b) of Section 4985.2 was not applicable because this provision only allows for relief where there is an inadvertent error in the amount of payment. AvalonBay Communities, Inc. v. County of Los Angeles (2011) 197 Cal.App.4th 890.
Tax Service company error. Tax services company is not entitled to penalty relief under Section 4985.2 because the late payment was caused by an error within its control. Tax services company was not entitled to relief under Section 4985.2, subdivision (a), even though the late payment was caused by the company's inadvertent clerical error in formatting its spreadsheet, because the error was within the company's control and could have been avoided. Subdivision (b) of this section was inapplicable because the company did not make an inadvertent error in the amount of payment; but, instead, failed to make a timely payment in any amount on behalf of the taxpayer. First American Commercial Real Estate Services, Inc. v. County of San Diego (2011) 196 Cal.App.4th 218.
Tax Service company error—incorrect address. Tax services provider was not entitled to relief under Section 4985.2 for a late payment caused by service provider's failure to send its client's property tax payments to the correct address, and its failure to discover such error in time to prevent the delinquency from occurring. Service provider failed to establish that it had an adequate system in place to prevent and timely discover this type of clerical mistake. A higher level of ordinary care applies to a professional office providing tax payment services than to an individual taxpayer. ZC Real Estate Tax Solutions Ltd. v. Ford (2010) 191 Cal.App.4th 378.
Economic recession.—A property owner is not entitled to relief from penalties for delinquent taxes under Revenue and Taxation Code Section 4985.2, subdivision (a), based on the previous owners' alleged inability to pay taxes on shopping center property due to the economic recession because such hardship was not due to reasonable cause and circumstances beyond the taxpayer's control. Section 4985.2, subdivision (a) was not intended as a broad-ranging remedy for a particular taxpayer’s adverse financial situation or for a general economic recession. Ashlan Park Center LLC v. Vicki Crow (2015) 233 Cal.App.4th 1274.