Osco Drug, Inc. v. County of Orange

• Decision Date: 13 June 1990
• Docket Number: No. G007961,G007961
• Court: California Court of Appeals Court of Appeals
• Parties: OSCO DRUG, INC., Plaintiff and Appellant, v. COUNTY OF ORANGE et al., Defendants and Respondents.

Page 14

272 Cal.Rptr. 14

221 Cal.App.3d 189

OSCO DRUG, INC., Plaintiff and Appellant, v. COUNTY OF ORANGE et al., Defendants and Respondents.

No. G007961.

Court of Appeal, Fourth District, Division 3, California.

June 13, 1990.

Review Denied Aug. 22, 1990.

[221 Cal.App.3d 191] Stephens, Berg, Lasater, Schulman & Rogers, Mark G. Ancel and Jeffrey P. Guyton, Los Angeles, for plaintiff and appellant.

Adrian Kuyper, County Counsel, and David R. Chaffee, Deputy County Counsel, for defendants and respondents.

OPINION

SONENSHINE, Acting Presiding Justice.

We are asked to decide whether a downward adjustment to a base-year value on the current tax roll entitles a taxpayer to a refund of taxes paid for years prior to the adjustment. We conclude it does not.

I.

Following a change in ownership in November 1980 (Rev. & Tax.Code, § 64, subd. (c)), two parcels of real property owned by Osco Drugs, Inc., were reassessed by the Orange County Assessor. The new base year for both properties became 1981.

In 1984, Osco filed an application for change in the 1984 secured roll assessment, controverting the assessor's market valuations. After Osco and the assessor stipulated to recalculated 1984 full values, the assessment appeals board directed the assessed values be reduced and enrolled on the 1984 tax roll. The properties' base-year values were also reduced and enrolled on the 1984-85 tax roll.

Osco thereafter filed a claim for refund for the 1981 through 1983 tax years. ¹ When the claim was deemed denied, Osco filed suit against the County of Orange and the cities of Santa Ana and Tustin.

A judgment pursuant to stipulation of facts was granted in favor of defendants. The trial court found Revenue and Taxation Code section 80, subdivisions (a)(3) and (a)(5) ² allowed reduction in assessments only for the year in which the appeal was taken and prospectively thereafter, but not retroactively. This appeal followed.

II.

Article XIII A of the California Constitution revised the real property taxation system by limiting taxes to one percent of a property's base-year value compounded by an inflation factor. Base-year values are reestablished only if property is purchased, is newly constructed, or if there is a change in ownership. ³

Property owners have four years within which to appeal new base-year value determinations by filing an application for reduction with the county assessment appeals board. (§§ 80, subd. (a)(3), 1603.) Should the application result in a reduction in the base-year value, the taxpayer may seek a refund of taxes paid. (§§ 5097, 5097.2.)

There is a distinction between the reduction in a base-year value and a right to a refund of taxes. The base-year value is a control figure from which an assessment is determined. The correction of the base-year value allows the assessor to determine whether there has been an overassessment or an underassessment. Thereafter, an application must be made for a refund. It does not follow that a reduction in a later year's base value requires a similar lowering of previous years' values.

Determining whether Osco is entitled to a refund predicated on a base-year value reduction is actually a two-step process. We must first determine the year in which the base-year value reduction became effective. Then, having established the effective date, we must examine whether Osco has a right to a refund and, if so, if it timely filed its claim.

III.

To determine the year in which the reduction in the base-year value became effective, we look first to the language of the statute. Section 80, subdivision (a)(3) provides: "Once an application [for reduction in the base-year value] is filed, the base-year value determined pursuant to that application shall be conclusively presumed to be the base-year value for that assessment." (Emphasis added.) The same subdivision also states application for reduction must be filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the three succeeding years.

Osco maintains the base-year value determined pursuant to the application is conclusively presumed to be the base-year value for the year in which it was first placed on the assessment roll--in this case, 1981. ⁴ Our interpretation of the language of this statute leads us to believe the base-year value determined pursuant to an application is conclusively presumed to be the base-year value for the year in which the application for reduction was filed--here, 1984.

"[T]he intent of the Legislature is the end and aim of all statutory construction [citations]...." (Title Ins. & Trust Co. v. County of Riverside (1989) 48 Cal.3d 84, 95, 255 Cal.Rptr. 670, 767 P.2d 1148.) A report issued by the Assembly Revenue and Taxation Committee set forth the following example in its analysis of assessment appeals: "[I]f a taxpayer wishes to appeal as too high a base value established in 1980, the last year in which to make such an appeal would be 1984; if successful, the change would be effective for 1984-85 and thereafter ...." (1 Assem.Rev. & Tax.Com.Rep. on Property Tax Assessment, "Implementation of Proposition 13," October 29, 1979, p. 35, emphasis added.)

The Legislature's intent is clearly expressed in section 80. ⁵ Subdivision (a)(5) provides that any reduction in assessment made as the result of a reduction in base-year value shall apply for the assessment year in which the appeal is taken and prospectively thereafter. ⁶ So, while new 1981 base-year values were established, they did not affect any assessment prior to 1984.

Section 81 also supports this interpretation. It provides that where real property has been assessed using a base value other than the 1975 base value, the applicant in equalization proceedings pursuant to section 1603 may establish the correct base-year value applicable to the current year's assessment, subject to the limitations of section 80.

The effect of section 80 is to reduce base-year values effective only in the year or years in which the taxpayer applied for a reduction, and prospectively thereafter. ⁷ Thus, in our case, the reduced base-year value is effective only for 1984 and thereafter.

IV.

Between 1981 and 1983, Osco was assessed using base-year values higher than those entered on the 1984 tax roll. Although the reduced 1981 base-year value will not be entered on prior rolls, the reduction reveals an overassessment for the 1981 through 1983 tax years. Because the right to a refund of taxes is purely statutory, we must look to the terms of the governing statutes to determine whether Osco has a remedy and, if so, whether it properly filed its claim for refund. (Chrysler Credit Corp. v. Ostly (1974) 42 Cal.App.3d 663, 680, 117 Cal.Rptr. 167.) ⁸

Statutes pertaining to refunds are found in section 5096 et seq. ⁹ The refund statutes provide fairly specific grounds for refunds. We find they do not entitle Osco to a refund of taxes paid on assessments prior to 1984.

Sections 5097 ¹⁰ and 5097.2 ¹¹ establish a taxpayer's right to a refund when an application for reduction in assessment is filed. ¹² Section 5097 limits a refund claim to "taxes extended on the assessment which the applicant applied to have reduced pursuant to Section 1603...." Regardless of any change in base-year value, Osco filed an application for reduction of the 1984 assessment only. Thus, under section 5097, Osco would be limited to a refund of taxes extended from the 1984 assessment.

Notwithstanding section 5097, section 5097.2 provides for a refund within four years of payment if the amount paid exceeds the amount due on the property as the result of a reduction attributable to a hearing before an assessment appeals board. Osco's hearing before the assessment appeals board resulted in a reduction of the 1984 assessments. It also resulted in reduced 1981 base-year values. However, as discussed above, pursuant to section 80, those base-year values are effective only for 1984 and prospectively thereafter. Though reduction of the base-year value reveals an over-assessment, section 80 prohibits the retroactive application of the adjusted base-year value. Because we cannot relate the base-year value back to 1981, the reduction attributable to the hearing before the assessment appeals board affects only 1984. Therefore, Osco's failure to file for assessment reductions before 1984 precludes a refund under section 5097.2 for those prior years. ¹³

Judgment affirmed.

CROSBY and COX, ^* JJ., concur.

1 Osco sought refunds for three tax years: 1981-1982, 1982-1983, and 1983-1984. These tax years will be referred to herein as 1981, 1982 and 1983, respectively.

2 All further statutory references are to the Revenue and Taxation Code unless otherwise indicated.

Section 80 provides, in pertinent part: "(a) An application for reduction in the base-year value of an assessment on the current local roll may be filed during the regular filing period for that year as set forth in Section 1603 or Section 1840, subject to the following limitations: .... (3) The base-year value determined pursuant to paragraph (2) of subdivision (a) of Section 110.1 shall be conclusively presumed to be the base-year value, unless an application for equalization is filed during the regular equalization period for the year in which the assessment is placed on the assessment roll or in any of the three succeeding years. Once an application is filed, the base-year value determined pursuant to that application shall be conclusively presumed to be the base-year value for that assessment.... [p] (5) Any reduction in assessment made as the result of an appeal under this section shall apply for the assessment year in which the appeal is taken and prospectively thereafter."

Section 80 was amended in 1987 to reflect the addition of section 51.5. The amendment left section 80 intact, except that paragraph (4) of subdivision (a) became paragraph (5). We refer to the amended...