Opinion
TAMURA, Acting P. J. Plaintiff appeals from an adverse judgment in its action for partial refund of ad valorem taxes on its business inventories which were assessed on the 1975-1976 tax roll as escaped [734]property for the fiscal years 1972-1973 and 1973-1974. Plaintiffs refund action is predicated solely on the claim that the assessor erroneously failed to apply to the assessment the 1974 amendment to Revenue and Taxation Code section 219 which extended the business inventories exemption to escaped assessments meeting the conditions specified by the amendment.1
The pertinent facts are not in dispute. For each of the fiscal years 1972-1973 and 1973-1974, plaintiff filed a business property statement with the county assessor showing inventory costs as of the respective tax lien date and the costs so reported were used as the basis for the business inventory assessment for each of those years. In late 1973, the assessor commenced an audit of plaintiffs books and records pursuant to section 469.2 The audit disclosed that plaintiffs 1972 and 1973 property statements failed to reflect accurately the cost of the business inventories and that such failure resulted in an underassessment for each of those years. Accordingly in June 1975, the assessor entered on the 1975-1976 tax roll escaped business inventory assessments for the fiscal years 1972-1973 and 1973-1974. The assessments were made without any allowance for the business inventories exemption provided for in section 219.
[735]Plaintiff took a timely appeal to an assessment appeals board on issues of valuation and exemption. The appeals board reduced the assessed value but declined to rule on the exemption claim on the ground it lacked jurisdiction to resolve the issue. Plaintiff paid the taxes under protest and brought the instant action. The trial court granted the county’s motion for summary judgment and plaintiff appeals from the ensuing judgment dismissing its action.
I
The controversy centers on the business inventories exemption provided by section 219. Legislation defining the term “business inventories” (§ 129) and granting such property partial exemption (§ 219) was first enacted in 1968. (Stats. 1969, First Ex. Sess. 1968, ch. 1, pp. 7-8.) Until the 1974 amendment to section 219, however, the exemption was specifically made inapplicable to business inventories assessed as escaped property. As enacted in 1972, section 219 provided that “30 percent of the assessed value of such property shall be exempt, from taxation through the 1972-1973 fiscal year, and such exemption shall be indicated on the assessment roll. For the 1973-1974 fiscal year, 45 percent of the assessed value of such property shall be exempt from taxation, and such exemption shall be indicated on the assessment roll.. For 1974-1975 fiscal year and fiscal years thereafter, 50 percent of the assessed value of such property shall be exempt from taxation, and such exemption shall be indicated on the assessment roll.... The exemption provided for in this section shall not apply to business inventories assessed as escaped property under the provisions of Sections 531.3, 531.4 or 531.5.” (Stats. 1972, ch. 1406, § 14.5, pp. 2959-2960, urgency eff. Dec. 26, 1972; italics added.)
In 1974, section 219 was amended by adding a clause to the provision quoted above so that it read: “The exemption provided for in this section shall not apply to business inventories assessed as escaped property under the provisions of Sections 531.3, 531.4 or 531.5 where (1) the omission is willful or fraudulent, (2) the failure to report the property accurately is willful or fraudulent, or (3) the exemption was incorrectly allowed because of erroneous or incorrect information submitted by the [736]taxpayer or his agent with knowledge that such information was erroneous.” (Italics added, Stats. 1974, ch. 1441, p. 3149, eff. Jan. 1, 1975.) Section 2 of the amending act provided: “The provisions of this act shall apply to the 1975-76 fiscal year and fiscal years thereafter.”
The county does not contend that plaintiff’s failure to report accurately the costs of its business inventories was either willful or fraudulent. Nor does plaintiff contest the legality of the escaped assessment other than as it relates to the availability of the exemption. Thus the resolution of this appeal turns on the effect to be given the 1974 amendment to section 219.
Plaintiff contends that section 2 of the amendatory action signifies a legislative intention to make the amendment applicable to escaped assessments entered on the 1975-1976 tax roll and the rolls of ensuing fiscal years irrespective of the year in which the escape occurred. The county, on the other hand, contends that the extent of the exemption must be determined in accordance with the law in effect on the lien date of the years in which the escape occurred. For reasons expressed below, we have concluded that the county’s position is correct and that the judgment should be affirmed.
II
It is a settled principle of the law of ad valorem taxation that the taxing agency’s right to the taxes becomes fixed on the lien date of the fiscal year to which they relate. (Couts v. Cornell (1905) 147 Cal. 560, 564 [82 P. 194]; San Diego v. Riverside (1899) 125 Cal. 495, 500 [58 P. 81]; City of Long Beach v. Aistrup (1958) 164 Cal.App.2d 41, 51 [330 P.2d 282]; Doctors Hospital v. County of Santa Clara (1957) 150 Cal.App.2d 53, 56 [309 P.2d 501]; City of Santa Monica v. Los Angeles Co. (1911) 15 Cal.App. 710, 712-713 [115 P. 945].) The principle applies to unsecured as well as secured taxes. (See Texas Co. v. County of Los Angeles (1959) 52 Cal.2d 55, 66 [338 P.2d 440]; Weber v. County of Santa Barbara (1940) 15 Cal.2d 82, 85-87 [98 P.2d 492].) “Taxes on unsecured property are due on the lien date.” (§ 2901.3) The subsequent assessment and levy are necessary in order to fix the amount of the tax but they do not result in the creation of a new obligation; they are simply administrative steps necessary to the enforcement of the [737]right which accrued on the lien date. (Couts v. Cornell, supra, 147 Cal. 560, 564; San Diego v. Riverside, supra, 125 Cal. 495, 500; City of Long Beach v. Aistrup, supra, 164 Cal.App.2d 41, 51.) When the amount is ascertained, it relates back to the time the lien became fixed.
It is an equally well settled principle of the law of taxation that the tax must be determined in accordance with the law in effect when the right to the tax vested. (Texas Co. v. County of Los Angeles, supra, 52 Cal.2d 55, 66; Estate of Skinker (1956) 47 Cal.2d 290, 296 [303 P.2d 745, 62 A.L.R.2d 1137]; Estate of Potter (1922) 188 Cal. 55, 66 [204 P. 826]; Estate of Martin (1908) 153 Cal. 225, 229 [94 P. 1053]; Trip-pet v. State (1906) 149 Cal. 521, 528 [86 P. 1084]; Estate of Cooke (1976) 57 Cal.App.3d 595, 602-603 [129 Cal.Rptr. 354]; Doctors Hospital v. County of Santa Clara, supra, 150 Cal.App.2d 53, 55.)
In the case at bench, the right to recover taxes on business inventories escaping assessment as a result of inaccuracies in the taxpayer’s property statement accrued on the lien date of the fiscal year in which the escape occurred and the law as it then existed must govern the assessment. The statutes governing escape assessments are in harmony with the foregoing principle. Escaped property must be assessed at its value as of the lien date of the year of the escape and the levy must be at the tax rate for the fiscal year in which the property escaped assessment. (§§ 531-534.) Where the escape was occasioned by the taxpayer’s failure to submit an accurate property statement, the statutes require payment of interest from the date the taxes would have been delinquent if they had been timely assessed. (§§ 506, 531.3, 531.4.) The code provides that escaped assessments “shall be entered on the roll prepared or being prepared in the assessment year when [they are] so discovered” and that if this is not the roll for the assessment year in which the escape occurred, the entry must contain the following information: “‘Escaped assessment for year 19— pursuant to Sections- - of the Revenue and Taxation Code.’” (§ 533.4) The statutory scheme for escaped assessments thus embodies the principle that the right to the taxes on escaped property accrues on the lien date, not on the date of entry on the tax roll.
[738]The fact that the taxes on escaped property cannot be collected until the escape has been discovered and an assessment and levy has been made is not inconsistent with the principle that the right vests as of the lien date of the year of the escape. As the Supreme Court stated with reference to inheritance taxes: “There is no legal inconsistency in the idea of a right being vested, although the possession may be postponed or contingent upon the performance of certain acts.” (Trippet v. State, supra, 149 Cal. 521, 529.) In the case at bench, the right which vested in the taxing agency on the lien date was the right to the taxes on plaintiffs business inventories which perforce included the right to levy an escaped assessment on any business inventories escaping assessment as a result of the taxpayer’s subsequent filing of an inaccurate business property statement.5
Our high court’s decision in Bauer-Schweitzer Malting Co. v. City and County of San Francisco (1973) 8 Cal.3d 942 [106 Cal.Rptr. 643, 506 P.2d 1019], is in accord with our conclusion that the exemption law in force at the time of the escape should govern. In Bauer-Schweitzer, the Assessor of the City and County of San Francisco had over a period of several years applied a 50 percent ratio in the assessment of business inventories except as to a small percentage of firms, including plaintiff, for which a lesser ratio was used. Pursuant to a writ of mandate in a taxpayer’s action, the assessor rendered escaped assessments against plaintiff on March 28, 1967, for the years 1964, 1965 and 1966 and entered escaped assessments on the 1966 tax roll. During the years in which plaintiff’s inventories were underassessed, section 401 required assessment of all property at “full cash value.” In 1966, the Legislature amended section 401 by providing for an assessment ratio of less than full cash value for lien dates from and after the fiscal year 1967-1968. (Stats. 1966, First Ex. Sess., ch. 147, § 34, p. 658, eff. Oct. 6, 1966.) The court held that the 1966 amendment to section 401 was inapplicable, stating: “But the escaped assessments here involved pertain to the years 1964, 1965, 1966, as a result of which section 401, as it was in effect during such years, applies.” (8 Cal.3d 942, 946.) While the escaped assessments in Bauer-Schweitzer were entered on the 1966 tax roll al[739]though they were made after the lien date for fiscal year 1967-1968, the court’s decision was not based on the fact that the assessments were entered on the prior fiscal year’s tax roll.6 All of which demonstrates the irrelevance of the roll on which the escaped assessment is entered insofar as the applicable law governing the assessment is concerned.
Plaintiff contends that section 2 of the 1974 amendatory act manifests a clear legislative intention that the expanded business inventories exemption should be applied to escaped assessments meeting the specified conditions which are entered on the 1975-1976 tax roll and on tax rolls in ensuing years irrespective of the year of the escape. We do not so read the section. Although the language is not free of ambiguity, we believe that it indicates that the Legislature intended the expanded exemption to apply only to business inventories escaping assessment in fiscal year 1975-1976 and thereafter. Indeed, any other interpretation would present a serious constitutional problem. It is an established principle of statutory construction that when two alternative interpretations are suggested, one of which would be constitutional and the other unconstitutional, the courts should choose that construction which will uphold the validity of the statute. (San Francisco Unified School Dist. v. Johnson (1971) 3 Cal.3d 937, 942 [92 Cal.Rptr. 309, 479 P.2d 669]; In re Kay (1970) 1 Cal.3d 930, 942 [83 Cal.Rptr. 686, 464 P.2d 142]; City of Los Angeles v. Belridge Oil Co. (1957) 48 Cal.2d 320, 324 [309 P.2d 417]; Estate of Skinker, supra, 47 Cal.2d 290, 297; Kortum v. Alkire (1977) 69 Cal.App.3d 325, 333 [138 Cal.Rptr. 26].) The interpretation advocated by plaintiff would authorize a gift of public funds in violation of article XVI, section 6 of the California Constitution. Where the taxing agency’s right to a tax becomes vested, any subsequent legislation reducing the tax by enlarging an exemption, reducing the tax rate, or in any other manner impairing or limiting the right theretofore fixed would constitute a gift of public funds in violation of the state Constitution. (Texas Co. v. County of Los Angeles, supra, 52 Cal.2d 55, 66; Estate of Skinker, supra, 47 Cal.2d 290, 296; Estate of Cooke, supra, 57 Cal.App.3d 595, 603.) Although the furtherance of a public purpose may provide a sufficient consideration for a tax remission (see Community Television of So. Cal. v. County of Los Angeles [740](1975) 44 Cal.App.3d 990, 997-998 [119 Cal.Rptr. 276]), in enacting the 1974 amendment to section 219, the Legislature made no attempt to declare a public purpose to be served by applying the expanded exemption retroactively to property escaping assessments in prior fiscal years. The failure to make such a declaration reinforces our conclusion that the Legislature did not intend a retrospective application of the 1974 amendment.
Finally, the construction urged by plaintiff would conflict with the state constitutional requirement of uniformity in the assessment of properties. The assessor’s duty to assess escaped property upon discovery is one which is imposed upon him not only by statute but by the self-executing provisions of the California Constitution requiring uniformity of assessments.7 (Bauer-Schweitzer Malting Co. v. City and County of San Francisco, supra, 8 Cal.3d 942, 946; Hewlett-Packard Co. v. County of Santa Clara (1975) 50 Cal.App.3d 74, 82 [123 Cal.Rptr. 195]; Ex-Cell-O Corp. v. County of Alameda (1973) 32 Cal. App.3d 135, 139-140 [107 Cal.Rptr. 839].) Plaintiffs interpretation of the 1974 amendment would result in unequal treatment of taxpayers whose business inventories escaped assessment in fiscal years 1972-1973 and 1973-1974 as a result of innocent misreporting of inventory costs. If the escape were discovered in time for the assessment to be entered on the 1973-1974 or 1974-1975 tax roll, the assessments would have to be made without regard to the exemption; if the escape were either not discovered in time or, because of the complexity of the audit, the assessment could not be completed in time for entry on an earlier roll so that it had to be entered on the 1975-1976 roll, the assessor would have had to allow for the exemption in making the assessment. This would violate the uniformity of assessments required by the Constitution. Properties escaping assessment in a particular tax year should receive uniform treatment irrespective of the date when the escape is discovered or the [741]tax roll on which the escaped assessment is entered. In a declaration filed in support of the county’s motion for summary judgment, a representative of the assessor’s office states: “[I]t was and is the policy of the Assessor to disallow the Business Inventory Exemption to any business inventories which escaped assessment in any fiscal year prior to the 1975-76 fiscal year and which were subsequently enrolled pursuant to Revenue and Taxation Code Sections 531.3, 531.4 and/or 531.5. This policy has been applied to all such escape assessments relating to fiscal years prior to 1975-76 regardless of when the escape assessment was enrolled.” The policy pursued by the assessor comports with constitutional requirements and accords with our interpretation of the effect to be given the 1974 amendment to section 219.8
[740]“(a) All property is taxable and shall be assessed at the same percentage of fair market value. When a value standard other than fair market value is prescribed by this Constitution or by statute authorized by this Constitution, the same percentage shall be applied to determine the assessed value. The value to which the percentage is applied, whether it be the fair market value or not, shall be known for property tax purposes as the full value.
“(b) All property so assessed shall be taxed in proportion to its full value.”
[741]The judgment is affirmed.
Morris, J., concurred.
A11 section references are to the Revenue and Taxation Code unless otherwise indicated.
As amended in 1974, section 219 provides in pertinent part: “Business inventories shall be assessed for taxation at the same ratio of assessed to full cash value as the ratio specified in Section 401. After such property has been so assessed, 30 percent of the assessed value of such property shall be exempt from taxation through the 1972-1973 fiscal year, and such exemption shall be indicated on the assessment roll. For the 1973-1974 fiscal year, 45 percent of the assessed value of such property shall be exempt from taxation, and such exemption shall be indicated on the assessment roll. For 1974-1975 fiscal year and fiscal years thereafter, 50 percent of the assessed value of such property shall be exempt from taxation, and such exemption shall be indicated on the assessment roll. The county assessor shall notify the auditor of the total assessed value of the exempt property within each city, district and revenue district wholly or partially within the county. The exemption provided for in this section shall not apply to business inventories assessed as escaped property under the provisions of Sections 531.3, 531.4 or 531.5 where (1) the omission is willful or fraudulent, (2) the failure to report the property accurately is willful or fraudulent, or (3) the exemption was incorrectly allowed because of erroneous or incorrect information submitted by the taxpayer or his agent with knowledge that such information was erroneous. The board shall prescribe all procedures and forms required to carry this exemption into effect and to insure accurate data for reimbursement calculations.”
Section 469 provides in relevant part: “In any case in which locally assessable business tangible personal property owned, claimed, possessed or controlled by a taxpayer engaged in a profession, trade, or business has a full value of one hundred thousand dollars ($100,000) or more, the assessor shall audit the books and records of such pro[735]fession, trade, or business at least once each four years. If the board determines the value of property pursuant to Chapter 2 (commencing with Section 1815) of Part 3 of this division, such determination may be deemed an audit by the assessor for the purposes of this section.”
The lien date is “the first day of March preceding the fiscal year for which the taxes are levied.” (§ 2192.)
Section 533 provides in pertinent part: “Assessments made pursuant to Article 3 (commencing with Section 501) of this chapter or pursuant to this article shall be entered on the roll prepared or being prepared in the assessment year when it is so discovered and, if this is not the roll for the assessment year in which it escaped assessment, the entry shall be followed with ‘Escaped assessment for year 19— pursuant to Sections-of the Revenue and Taxation Code.’”
The term “assessment year” is defined as “the period beginning with a lien date and [738]ending immediately prior to the succeeding lien date for taxes levied by the same agency.” (§118.)
The business property statement is not required to be filed until the last Friday in May or such earlier date as the assessor may designate but such date cannot be earlier than April 1. (§ 441.)
Section 533 provides that the assessment “shall be entered on the roll prepared or being prepared in the assessment year when it is so discovered.... ” It thus appears that the tax roll on which the escaped assessment should be entered is the tax roll of the year in which the escape was discovered and not the roll of the assessment year in which the escaped assessment is made. This may explain why in Bauer-Schweitzer the escaped assessment was entered on the 1966-1967 roll instead of the 1967-1968 roll.
The constitutional provision requiring uniformity of assessments was formerly contained in article XI, section 12, which provided in part: “All property subject to taxation shall be assessed for taxation at its full cash value.” The requirement is now contained in article XIII, section 1, which provides: “Unless otherwise provided by this Constitution or the laws of the United States:
We note that the Attorney General in a letter opinion dated December 11, 1974, to the State Director of Finance reaches the same conclusion we have reached on the effect to be given the 1974 amendment to section 219. The Director of Finance requested the opinion in connection with the preparation of the 1975-1976 budget for subventions to local government for revenue loss resulting from the business inventories exemption. The Attorney General concluded that the amendment had no application to business inventories which escaped taxation in prior years and that the extension of the exemption would first become applicable to property escaping assessment on the March 1, 1975, lien date. While the opinions of the Attorney General are not controlling, they have been accorded great respect by the courts. (Smith v. Anderson (1967) 67 Cal.2d 635, 641, fn. 5 [63 Cal.Rptr. 391, 433 P.2d 183]; Bruce v. Gregory (1967) 65 Cal.2d 666, 676 [56 Cal.Rptr. 265, 423 P.2d 193]; Wanee v. Board of Directors (1976) 56 Cal.App.3d 644, 648-649 [128 Cal.Rptr. 526].) Although the letter states that it is an informal opinion, it contains a complete analysis of the problem and was manifestly intended to be acted upon by the Director of Finance. As a contemporaneous interpretation of the 1974 amendment, the opinion is entitled to great respect.