City of Los Angeles v. A. Los Angeles

• Decision Date: 13 August 1973
• Citation: 109 Cal.Rptr. 519,33 Cal.App.3d 933
• Court: California Court of Appeals Court of Appeals
• Parties: The CITY OF LOS ANGELES, a municipal corporation, Plaintiff and Respondent, v. A.E.C. LOS ANGELES, a corporation, Defendant and Appellant. Civ. 40189.

Page 519

109 Cal.Rptr. 519

33 Cal.App.3d 933

The CITY OF LOS ANGELES, a municipal corporation, Plaintiff and Respondent, v. A.E.C. LOS ANGELES, a corporation, Defendant and Appellant.

Civ. 40189.

Court of Appeal, Second District, Division 1, California.

Aug. 13, 1973.

Hearing Denied Oct. 10, 1973.

Everett W. Maguire, Beverly Hills, Anthony Saul Alperin and Shapiro & Maguire, Law Corp., Beverly Hills, for defendant and appellant.

Roger Arnebergh, City Atty., Thomas C. Bonaventura, Asst. City Atty., and David J. Oliphant, Deputy City Atty., for plaintiff and respondent.

THOMPSON, Associate Justice.

In this appeal from a judgment in favor of the City of Los Angeles (City) for amounts found due to it from appellant A.E.C. Los Angeles (Taxpayer) for business tax, Taxpayer contends: (1) it is immune from municipal taxation measured by gross receipts on its business conducted with agencies of the State of California; and (2) recovery of taxes for the years 1962 and 1963 is barred by the statute of limitations.

The City of Los Angeles is a freeholders' charter city. Section 21.03 of the Los Angeles Municipal Code provides: '(a) Subject to the provisions of this Article, a business tax registration certificate must be obtained and a business tax must be paid by every person engaged in any of the businesses or occupations specified in sections 21.50 to 21.198, inclusive, of this Article; and a business tax is hereby imposed in the amount prescribed in the applicable section. No person shall engage in any business or occupation subject to tax . . . without obtaining a registration certificate and paying the tax . . . (b) The business tax registration certificate required to be obtained and the tax required to be paid are hereby declared to be required pursuant to the taxing power of the City of Los Angeles solely for the purpose of obtaining revenue. . . .'

Section 21.188 of the Los Angeles Municipal Code states: 'CONTRACTORS: (a) For every person engaged in business as a contractor the tax shall be $20.00 per year . . . for the first $12,000.00 or less of gross receipts, plus $0.65 per year for each additional $1,000.00 of gross receipts or fractional part thereof in excess of $12,000.00; . . . (c) . . . The term 'gross receipts,' . . . shall include only receipts from jobs or projects located within the city limits of Los Angeles.' Section 21.14 of that code provides that the gross receipts which are the measure of tax shall be those 'of the preceding year.'

Section 21.14 states: '(a) . . . . (S)tatements required hereunder shall be filed and payment of the tax made in the following manner: 1. Whenever an annual business tax is measured by gross receipts, . . . the person subject to the business tax shall, before the tax becomes delinquent, file with the City Clerk a written statement setting forth (the applicable basis of tax), and such person shall pay at such time the amount of the business tax computed upon the measure of the tax reported in the statement. (b) The written statements shall be made upon forms prescribed by the City Clerk and shall include a declaration (that they are true to the best of knowledge, information and belief under penalty of perjury). (c) Such statements shall not be conclusive against the City as to the information set forth therein, nor shall the filing of a statement preclude the City from collecting by appropriate action any additional tax that is later determined to be due and payable under the provisions of this Article.'

Section 21.05 of the Los Angeles Municipal Code states: '(a) Delinquent Dates. . . . (A)ll business taxes required to be paid thereby shall be deemed delinquent if not paid on or before or within the time hereinafter prescribed: 1. Annual Business Taxes--on or before the close of business on the last day of the month following the month in which the taxes become due. . . . 6. Deficiency Determinations--within 30 days from the date of notification. (b) Penalties. 1. Original Delinquency. Any person who fails to pay any tax required to be paid by this Article . . . excepting deficiency determinations made by the City Clerk under subsection (i) of Sec. 21.15 of this Article within the time required shall pay a penalty of 10% Of the amount of the tax. . . . 3. Deficiency Determinations. Any person who fails to pay a deficiency determination within 30 days after the City Clerk has notified him of the amount of the deficiency, shall pay a penalty of 10% Of the amount of the deficiency determination . . . (e) Interest. In addition to the penalties imposed, any person who fails to pay any tax required to be paid by this Article . . . shall pay interest at the rate of one-half of one percent per month, or fraction thereof, on the amount of the tax, exclusive of penalties, from the date on which the tax first became delinquent until paid. Any person who is required to pay any deficiency determination shall pay interest at the rate of one-half of one percent per month, or fraction thereof, on the amount of the deficiency of the tax, exclusive of any penalty imposed from the first day of delinquency following the period for which the tax or any portion thereof should have been paid until the date of payment. . . . (h) Penalties Merge With Tax. Every penalty imposed and such interest as accrues under the provisions of this section shall become a part of the tax herein required to be paid.'

Section 21.16 of the Los Angeles Municipal Code reads in pertinent part: 'ASSESSMENT--ADMINISTRATIVE REMEDY: (a) Under any of the following circumstances, the City Clerk may make and give notice of an assessment of the amount of tax owed by a person: . . . 2. If the person has not paid any tax due under the provisions of this Article . . . 3. If the person has not, after demand by the City Clerk . . . paid any additional amount of tax due under the provisions of this Article . . . The notice of assessment shall separately set forth the amount of any tax known by the City Clerk to be due or estimated by the City Clerk, after full consideration of all information within his knowledge concerning the business and activities of the person assessed, to be due . . . and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment. (b) The notice of assessment shall be served upon the person . . . Within 15 days after the date of service the person may apply in writing to the City Clerk for a hearing on the assessment. Within 30 days of the receipt of any such application the City Clerk shall cause the matter to be set for hearing before a Board of Review not later than 90 days after the date of application unless a later date is agreed (upon) . . . If no application for hearing is made within the prescribed time, the amount of the assessment shall be . . . immediately due and owing to the City of Los Angeles. . . . (c) The Board of Review . . . shall consider all evidence offered by the person requesting a hearing and by the City Clerk. . . . It shall make its findings in writing and serve a copy upon the person . . . The Board of Review may increase or decrease the amount of the assessment as the evidence introduced may require; . . . The person may, within 15 days from the date of service of the findings upon him, file written exceptions to the findings of the Board of Review. If no exceptions are filed within the prescribed time, the findings shall thereupon become final and any amount found by the Board of Review to be payable shall be immediately due and owing to the City of Los Angeles; . . . Within 30 days after the filing of any exceptions . . ., The Board of Review shall consider them and either deny the exceptions in writing or prepare such additional or modified written findings as the nature and merit of the exceptions require, and serve a copy thereof upon the person . . . Upon the serving of denial of exceptions or final findings, as the case may be, any amount found by the Board of Review to be payable shall be immediately due and owing to the City of Los Angeles; . . .'

Section 21.04 of the Los Angeles Municipal Code provides: 'DUE DATES: All business taxes . . . shall be due and payable at the following times: (a) Annual business taxes on the first day of January of each year; . . .'

Taxpayer is an electrical contractor whose principal place of business is in the City of Los Angeles. It performs contracting work for agencies of the State of California including school districts in addition to work for nongovernmental customers. During the calendar years 1961 through 1964 Taxpayer had gross receipts from construction projects within the City of Los Angeles performed for state agencies in the following amounts:

                1961  $424,934.00
                1962   782,679.00
                1963   629,473.00
                1964   144,349.00
                

It did not include those amounts in the measure of its business tax when filing its report with the City Clerk of Los Angeles for the years 1962 through 1965.

In February 1965, the City Clerk audited Taxpayer's records to determine the correctness of its business tax reports. On September 20, 1965, pursuant to section 21.16 of the Los Angeles Municipal Code, the City Clerk served a notice of assessment of a deficiency in tax for the years 1962 through 1965 in the total amount of $2,252.30. Of that sum $1,454.09 was attributable to the unreported measure of tax consisting of gross receipts...