Snoozie Shavings, Inc. v. State Board of Equalization

Opinion

NEWSOM, J.

The instant appeal presents the single question of whether the appellant-taxpayer has the right to maintain an action for a refund without having first made full payment of the tax liability. The trial court answered the question negatively, sustaining respondent State Board of Equalization’s demurrer without leave to amend.

The factual background shows that appellant, a California corporation with principal offices in Crescent City, California, incurred a use tax liability in the amount of $28,342.08 plus interest for certain personal property purchased outside the state but committed to use in interstate

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commerce, and since used both within and without the State of California.

Appellant protested the tax and sought redeterminations before the Board of Equalization. Thereafter, appellant made partial payment of the taxes, making two payments of $250 each, and eventually arriving at a compromise agreement to pay, under protest, the total tax liability in monthly installments of $1,000. The instant action was filed during the pendency of the installment agreement after a claim for refund was made for amounts actually paid.

Respondent’s position is that the exclusive remedy available to the taxpayer under such circumstances is to first pay the entire tax claim, then seek judicial review of the legality of the assessment through a suit for refund, citing in that connection numerous case authorities, California Constitution article XIII, section 32, and Revenue and Taxation Code section 6931 as prohibiting use of the legal or equitable process to prevent or enjoin the assessment or collection of a tax, and precluding judicial review of tax liability before payment. (Cf.

Flora

v.

United States

(1960) 362 U.S. 145 [4 L.Ed.2d 623, 80 S. Ct. 630];

Bull

v.

United States