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State & Local Tax Bulletin (July 2000)

Appellate Court Rules that a Taxpayer Must
File Tax Refund Suit within Four Years from
the Date the Taxpayer First Had the Right
to Deem its Refund Claim Denied




By Richard E. Nielsen, of counsel in the San Francisco office of Pillsbury Winthrop Shaw Pittman LLP. If you have or can obtain the Acrobat Reader, or have an Acrobat-enabled web browser, you may wish to download or view our July 2000 State & Local Tax Bulletin (a 127K pdf file), containing a printed version of this article and also available via ftp at ftp.pmstax.com/state/bull0007.pdf.

This bulletin concerning California state and local tax matters is part of the Pillsbury Winthrop Shaw Pittman LLP Tax Page, a World Wide Web demonstration project, no portion of which is intended and cannot be construed as legal or tax advice. Comments are welcome on the design or content of this material.


In a decision which could have far-reaching ramifications, on June 14, 2000, a California Court of Appeal in Geneva Towers Limited Partnership v. City and County of San Francisco (No. A088355) 2000 Daily Journal D.A.R. 6335 ruled that when the Revenue and Taxation Code ("RTC") does not specify the length of limitations period to bring a tax refund action in a property tax matter, the court may rely on Code of Civil Procedure ("CCP") sections. This case involved the application of RTC § 5141(b) which provides that a claimant has the option of considering a claim rejected, and suing the county for the refund, if the board of supervisors takes no action within six months. No provision in the Revenue and Taxation Code sets forth a limitations period for bringing the action in this situation. RTC § 5141(a) provides that a complaint for refund shall be commenced within six months from and after the date that the board of supervisors or city council rejects a claim for refund.

In Geneva, the Court concluded that the statute of limitations for filing a lawsuit under RTC § 5141(b) commences to run on the first day on which the claimant could file suit without board action, i.e., six months after the refund claim was filed with the board of supervisors.

The Court next addressed the issue of how much time a claimant has to file suit after deeming the claim to be denied. The Court observed that CCP § 312 provides that civil actions, without exception, can only be commenced within periods prescribed in CCP §§ 312-366.2, after the cause of action shall have accrued, unless where, in special cases, a different limitations period is prescribed by statute. The Court concluded that since no limitations period is set forth for lawsuits filed under RTC § 5141, the CCP comes into play. The Court then selected CCP § 343. Under CCP § 343, an action for relief not otherwise provided for must be commenced within four years after the cause of action shall have accrued.

In other words, where a refund claim has been deemed denied by a claimant under RTC § 5141(b), the suit for refund must be commenced within four years from the date the cause of action accrued (six months from filing the claim)–or within four years and six months after the claim was filed.

The Court's conclusion in Geneva is significant since it imposes a statute of limitations in a situation where it was believed that there was no deadline to bring an action provided the taxing authority did not act to deny the claim. Since RTC § 5141(b) is similar to RTC §§ 19385 (corporation franchise tax and personal income tax) and 6934 (sales and use tax), its ramifications could be broad. Stay tuned.


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