Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2014
 

Revenue and Taxation Code

Property Taxation

Part 9. Corrections, Cancellations, and Refunds

Chapter 4. Cancellations

Article 1. Generally

Section 4986

4986. Cancellation of uncollected taxes; cancellation of taxes on property acquired by public agencies. (a) All or any portion of any tax, penalty, or costs, heretofore or hereafter levied, shall, on satisfactory proof, be canceled by the auditor if it was levied or charged:

(1) More than once.

(2) Erroneously or illegally.

(3) On the canceled portion of an assessment that has been decreased pursuant to a correction authorized by Article 2 (commencing with Section 4876) of Chapter 2.

(4) On property that did not exist on the lien date.

(5) On property annexed after the lien date by the public entity owning it.

(6) On property acquired by the United States, the state, or by any county, city, school district or other public entity, to the extent provided in Article 5 (commencing with Section 5081).

(7) On that portion of an assessment in excess of the value of the property as determined by the assessor pursuant to Section 469.

(b) No cancellation under paragraph (2) of subdivision (a) may be made in respect of all or any portion of any tax, or penalties or costs attached thereto, collectible by county officers on behalf of a city without the written consent of the city attorney or other officer designated by the city council unless the city council has authorized the cancellation by county officers. The resolution shall remain effective until rescinded by the city council.

(c) If the tax, penalty, or costs, are collected more than four years following the enrollment of the tax bill, the cancellation authorized pursuant to subdivision (a) may be performed if the cancellation action is initiated within 120 days of the payment.

History.—Stats. 1941, p. 2641, in effect September 13, 1941, added to former subdivision (e) a reference to the United States of America, and added the last two sentences. Stats. 1945 p. 31 (Third Extra Session 1944), in effect May 1, 1944, deleted "United States of America" from former subdivision (e) and added former subdivision (f). Stats. 1947, p. 2023, in effect September 19, 1947, added former subdivision (g) and provisions pertaining to former subdivision (g), dealing with uncollected taxes, etc., on personal property or improvements assessed as a lien against real property which passed into public ownership after the lien date. Stats. 1955, p. 1460, in effect September 7, 1955, added to former subdivision (e) "and on property annexed after the lien date by the city owning it." Stats. 1959, p. 3045, in effect September 18, 1959, rearranged the section, added (2)(a), the first paragraph of which in part only is a rearrangement of portions of the former section, and added (2)(b). Stats. 1961, p. 1849, in effect September 15, 1961, added (1)(e) and deleted the identical language from the first sentence of (2)(a). Stats. 1963, p. 2531, in effect September 20, 1963, added (f) under (1), and substituted "entity" for "agency" wherever it appears, and substituted "district attorney" for "county legal advisor" in the first paragraph, and added "gift, or devise" and substituted "shall be canceled" for "shall not be transferred" in the second paragraph under (2)(a), and added the last paragraph under (2)(a) and the last paragraph under (2)(b). Stats. 1966, p. 679 (First Extra Session), in effect October 6, 1966, substituted "ratio of assessed value to the full cash value of the property as provided in Section 401" for "cash value of the property" in (1)(c). Stats. 1967, p. 1902, in effect November 8, 1967, deleted "thereof" and added "or other officer designated by the city council . . . the cancellation by county officers." after "city attorney" at the end of the first sentence in the next to the last paragraph; and added the last sentence of said paragraph. Stats. 1970, p. 357, in effect November 23, 1970, deleted "uncollected" in the first sentence; substituted "property" for "improvements when the improvements" in (1)(d); and added the phrases "shall be paid through escrow at the close of escrow, or if unpaid for any reason, they shall be collected like any other taxes on the unsecured roll. If unpaid at the time set for the sale of property on the unsecured roll to the state, "they" in (2)(a). Stats. 1973, Ch. 1190, p. 2506, in effect January 1, 1974, substituted (a) for (1) at beginning of the first paragraph, substituted (1) for (a), (2) for (b), and (3) for former (c) relating to excess assessment caused by assessor's error as to ratio, substituted (4), (5) and (6) for former (d), (e) and (f) respectively, substituted (b) for former (2)(a), deleted "or" after "gift" and added "or eminent domain proceeding" after "devise" in the first sentence of the second paragraph of subdivision (b), deleted "(a)" after "subdivision" in the first sentence of the fourth paragraph of subdivision (b), deleted several sentences at the beginning of the fifth paragraph of subdivision (b) relating to proration of taxes and payment thereof out of condemnation award, substituted (2) for (b) after "paragraph" and (a) for (1) after "subdivision" in the first sentence of the sixth paragraph of subdivision (b), and substituted "section and Section 4986.9" for "subdivision" in the last sentence of the sixth paragraph of subdivision (b). Stats. 1974, Ch. 1101, p. 2349, in effect January 1, 1975, added "shall be paid through escrow at the close of escrow, or if unpaid for any reason, they" after "before the date of acquisition of the property", and substituted "pursuant to Section 2921.5 and shall be" for "and be" in the second sentence of the second paragraph of subdivision (b). Stats. 1978, Ch. 732, in effect January 1, 1979, added paragraph (7) of subdivision (a). Stats. 1979, Ch. 31, in effect January 1, 1980, substituted "shall" for "may" after "levied" in subdivision (a), deleted "of this part" after "Chapter 2" in paragraph (3) thereof, and deleted "prior to September 18, 1959,"after "acquired", deleted "of America" after "United States", and substituted "public entity, to the extent provided in Article 5 (commencing with Section 5081)" for "political subdivision and which, because of such public ownership, became not subject to sale for delinquent taxes" after "other" in paragraph (6) thereof; and deleted the first five former paragraphs of subdivision (b), and deleted "of this section" after "subdivision (a)" in the first sentence and deleted the former third sentence of the former sixth paragraph thereof. Stats. 1985, Ch. 186, effective January 1, 1986, substituted "Article 2" for "Article 1" after "authorized by" in paragraph 3 of subdivision (a). Stats. 1991, Ch. 532, in effect January 1, 1992, deleted "on order of the board of supervisors with the written consent of the county legal adviser" after "canceled by the auditor" in subdivision (a) and deleted ", by resolution filed with the board of supervisors," after "unless the city council" in the first sentence of subdivision (b). Stats. 2004, Ch. 407 (SB 1831), in effect January 1, 2005, substituted "that" for "which" after "On property" in paragraph (4) of subdivision (a); substituted "may" for "shall" after "subdivision (a)" in the first sentence of subdivision (b); and added subdivision (c).

Note.—This section was also amended by Stats. 1941, p. 1739, which added to (e) the reference to the United States of America.

Not exclusive remedy.—Regardless of this section, county tax liens on lands acquired by a city prior to and after the lien date are discharged upon annexation of the lands by the city within the tax year and the city is entitled to refund of the taxes paid by it under protest. City of Long Beach v. Board of Supervisors, 50 Cal.2d 674.

Cancellation mandatory.—The use of the word "may" in this section does not confer any option or discretion in the matter of the cancellation of assessments. If an assessment is shown to be invalid, its cancellation is mandatory. City of Los Angeles v. Board of Supervisors, 108 Cal.App. 655.

See also, San Diego County v. United States, 251 F.2d 534.

Private property.—This section does not afford relief against a mere overevaluation by the assessor. Rittersbacher v. Board of Supervisors, 220 Cal. 535.

Public property.—Constitutionality.—Subdivision (e) of this section does not violate Article XIII, Section 6 of the Constitution. People v. Board of Supervisors, 126 Cal.App. 670.

Cancellation of taxes on property acquired by the United States in condemnation proceedings does not constitute a gift of public money or other thing of value in contravention of Article IV, Section 31, of the State Constitution. San Diego County v. United States, 251 F.2d 534.

Construction.—A municipality is entitled to a cancellation of delinquent taxes upon property acquired by it. It is immaterial that the property is only a portion of a larger parcel taxed as a unit, that it is acquired for a temporary purpose, and that the title is to revert to the grantor upon accomplishment of the purpose. City of Los Angeles v. Ford, 12 Cal.2d 407.

Taxes on improvements as well as realty acquired by the United States in condemnation proceedings after the lien date are canceled under this section. San Diego County v. United States, 251 F.2d 534.

A city acquiring property on which taxes are past due is not required to apply for a cancellation under this section, and in the absence of such an application the taxes are not cancellable. City of Pasadena v. Chamberlain, 1 Cal.App.2d 125.

A state agency acquiring land subject to a tax lien, and selling the land under a conditional contract of sale before any action is taken to cancel the taxes, is not entitled to obtain a cancellation of the taxes. Department of Veterans Affairs of the State of California v. The Board of Supervisors of San Joaquin County, 31 Cal.2d 657.

A state agency which has acquired property can obtain a cancellation of the taxes of other state agencies which were a lien on the property at the time of acquisition only if the property is impressed with a public use. Thus, an irrigation district which has acquired property for delinquent irrigation district assessments cannot compel the cancellation of county taxes which were a lien on the property at the time of acquisition. La Mesa, etc., Irrigation District v. Hornbeck, 216 Cal. 730. Cf. Anderson-Cottonwood Irrigation District v. Klukkert, 13 Cal.2d 191, 198.

An assessee of improvements is not entitled to cancellation of the assessments because of misclassification of similar property of others as personal property where the assessor has adopted a reasonable reclassification procedure eliminating the more serious errors existing in prior years and sufficient time was not available to correct the remaining errors. Security-First National Bank v. Board of Supervisors, 35 Cal.2d 323.

Between a condemnee and the taxing agency taxes should not be considered to be canceled under this section if the procedure prescribed by the statute is not followed. City of Long Beach v. Aistrup, 164 Cal.App.2d 41. See also State of California v. Clyne, 175 Cal.App.2d 204.

A stipulation whereby a condemner in an eminent domain proceeding agreed to assume all taxes and penalties on the condemned property up to a specified sum, and the condemnees agree to waive interest up to the same amount, was not made illegal by the 1959 amendment to 4986, since nothing in the statute prohibits a condemner from paying such taxes and penalties. City of Burbank v. Nordahl, 199 Cal.App.2d 311.

This section does not apply to delinquency penalties. People ex rel. Strumpfer v. Westoaks Inv. #27, 139 Cal.App.4th 1038.

Condemnation proceedings.—Where property is ultimately taken in condemnation proceedings property taxes are canceled only from the date of the condemnation order, and the fact that taxpayer was unable to continue a construction project on the land pending the condemnation hearing did not constitute constructive possession by the state which would justify an earlier date for cancellation of taxes. Consumers Holding Co. v. Los Angeles County, 204 Cal.App.2d 324. The date of the condemnation order is the date the final order of condemnation is recorded, and absent an order of possession, a taxpayer is responsible for property taxes on condemned property until such date, even though liability therefor accrues during the pendency of the condemnor's unsuccessful appeal from the judgment on the jury's award. City of Ontario v. Kelber, 35 Cal.App.3d 751.