Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

Revenue and Taxation Code

Property Taxation

Part 9. Corrections, Cancellations, and Refunds

Chapter 5. Refunds

Article 2. Refund Actions by Taxpayers*

Section 5140

5140. Action for refund. The person who paid the tax, his or her guardian or conservator, the executor of his or her will, or the administrator of his or her estate may bring an action only in the superior court, but not in the small claims division of the superior court, against a county or a city to recover a tax which the board of supervisors of the county or the city council of the city has refused to refund on a claim filed pursuant to Article 1 (commencing with Section 5096) of this chapter. No other person may bring such an action; but if another should do so, judgment shall not be rendered for the plaintiff.

History.—Stats. 1979, Ch. 730, in effect January 1, 1980, operative January 1, 1981, added "or conservator" after "guardian" in the first sentence. Stats. 1990, Ch. 992, in effect January 1, 1991, added "or her" after "his" throughout text and added "only" after "action" in the first sentence. Stats. 2007, Ch. 340 (AB 1745), in effect January 1, 2008, added ", but not in the small claims division of the superior court," after "the superior court" in the first sentence.

Note.—Section 14.5 of Stats. 1976, Ch. 499, p. 1244, provided no payment by state to local governments because of this act. Sec. 15 thereof provided that the provisions of this act shall be operative with respect to taxes which become due and payable on or after the lien date in 1977.

Construction.—Only the person who has actually paid the tax may bring action for refund. This section does not affect the determination of what property is taxable and what property is exempt. It merely sets forth the procedure for refunding taxes improperly collected. Mayhew Tech Center, Phase II v. Sacramento County, 4 Cal.App.4th 497.

Construction.—Failure to follow the correct procedural rules can result in forfeiture of the power to enforce the constitutional right to a refund. IBM Personal Pension Plan v. City and County of San Francisco, 131 Cal.App.4th 1291. Section 5140 applies to actions for refund of fraud penalties imposed under Sections 503 and 504 of the Revenue and Taxation Code as well as actions for refund of taxes. Id.

Construction.—Where a lessee under a 55-year lease filed an action against the county seeking a refund on property taxes paid, the Court of Appeal concluded that the lessee had standing to pursue the refund claim under Sections 469(b)(3), 1603(f), and 5140 of the Revenue and Taxation Code. As a tenant under a long-term lease that extended over 35 years and the party who paid the property taxes for the years at issue, the lessee was considered the beneficial owner of the property for property tax purposes and an affected party. Los Angeles County v. Raytheon Co., 159 Cal.App.4th 27.

Real parties in interest barred from bringing refund action.—Real parties in interest, such as a pension plan lacked standing to file an action for refund of property taxes and penalties paid by the trustee of the plan on its behalf; although the plan was the real party in interest as to the taxes paid by trustee, the plan's failure to pay the taxes barred it from bringing refund action. IBM Personal Pension Plan v. City and County of San Francisco, 131 Cal.App.4th 1291.

Exhaustion of administrative remedies.—A partner in a cable television partnership was not precluded from bringing an action against a county seeking judicial relief from an assessment appeals board decision even though it was not an applicant in the board proceedings. The board treated the partner as if it were an applicant, the decision listed it in the caption and designated it as one of the applicants, the county never objected to the board's characterization of the partner as an "applicant", and the county itself referred to the partner as an applicant. The policies underlying the exhaustion requirement were fully satisfied even though the partner was not a formal applicant in the proceeding before the board. CAT Partnership v. Santa Cruz County, 63 Cal.App.4th 1071. The doctrine provides that when an administrative remedy is provided by statute, relief must be sought from the administrative body and this remedy exhausted before the courts will act. The doctrine prevents interference with the subject matter jurisdiction of another tribunal when an administrative tribunal was created by law to adjudicate the issue sought to be presented to the court and the claim is within the special jurisdiction of the administrative tribunal. Plaza Hollister Limited Partnership v. San Benito County, 72 Cal.App.4th 1.

The Legislature has statutorily established a three-step process for handling challenges to local property tax assessments and refund requests. A taxpayer seeking judicial relief must first exhaust his remedies before the administrative body empowered initially to correct the error. In the local property tax context, application of the exhaustion principle means that a taxpayer ordinarily may not file or pursue a court action for a tax refund without first applying to the local board of equalization for assessment reduction under Revenue and Taxation Code Section 1603 and filing an administrative tax refund claim under Revenue and Taxation Code Section 5097. For purposes of the exhaustion requirement, the filing of a refund claim under Section 5097 generally does not excuse a taxpayer's failure first to file with the local board of equalization an application for assessment reduction under Section 1603. The third and final step in the process is the filing of an action in superior court pursuant to Revenue and Taxation Code Section 5140. Steinhart v. County of Los Angeles (2010) 47 Cal. 4th 1298.

Mandamus.—Administrative mandamus, Cal. Civil Code, sec. 1094.5, does not lie to review the validity of a decision before the assessment appeals board. Mystery Mesa Christian Church, Inc. v. Assessment Appeals Bd. No. 1, 63 Cal.App.3d 37. A petition for writ of mandate under Code of Civil Procedure Section 1086, is not available to obtain review of an appeals board's assessment decision on the merits (as distinguished from, for example, review of its ministerial duties). Mandate is proper only when there is no adequate remedy at law, and taxpayer had a remedy at law in the form of a tax refund action. Schoenberg v. County of Los Angeles Assessment Appeals Board (2009) 179 Cal. App. 4th 1347.

Class action.—Taxpayer had no standing to bring a class action for refund because such actions are not authorized unless specifically provided for by statute. This section does not provide for a class action. Neecke v. City of Mill Valley, 39 Cal.App.4th 946.

Standing when tax paid by other than assessee.—Lessor has standing under Revenue and Taxation Code Section 5140 to bring a refund action because it paid a lessee's property tax as an authorized payer in accordance with Revenue and Taxation Code Section 2910.7. It is irrelevant whether the lessor, a state entity that is itself exempt from property tax, acted as a volunteer in paying the lessee's property tax. California State Teachers’ Retirement System v. County of Los Angeles (2013) 216 Cal.App.4th 41.

Refund Action after Denial of Claim.—The Legislature has enacted a specific statutory refund procedure for taxpayers whose property has been improperly assessed. Revenue and Taxation Code section 5096 provides for the refund of taxes paid before or after delinquency if they were erroneously or illegally collected. Revenue and Taxation Code section 5097 requires that this refund be based on a claim that is verified by the person who paid the tax. If a refund claim filed pursuant to Section 5097 is denied, Revenue and Taxation Code section 5140 authorizes an action for refund of the taxes paid. Chevron USA, Inc., et al v. County of Kern (2014) 230 Cal.App.4th 1315.

Standing—Person Who Paid Tax.—The limitation contained in Revenue and Taxation Code section 5140 simply means that only a person who has actually paid the tax may bring an action as opposed to the situation where someone else pays the property taxes of an owner of property. The procedure provides for refund to the person who, or entity which, paid the tax if the property was exempt. Chevron USA, Inc., et al. v. County of Kern (2014) 230 Cal.App.4th 1315.

Decisions Under Former Section 5098, Court Actions.

Payment by lessee.—A lessor may not recover taxes paid upon his property by the lessee pursuant to the provisions of the lease. Easton v. Alameda County, 9 Cal.2d 301.

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