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California Property Tax Refund Opportunity for Centrally Assessed Companies

Tax Development Feb 22, 2023

California Property Tax Refund Opportunity for Centrally Assessed Companies

A petition has been filed in the Supreme Court of California requesting review of a Sixth District Court of Appeals case1 that questionably conflicts with an earlier court decision involving property tax rates imposed on companies with centrally assessed property in California.

Three telecommunications companies2 challenged the County of Santa Clara’s assessment of property taxes that was in excess of the separately calculated rates applied by the county to locally assessed companies. Specifically, the companies maintain that each debt-service component rate applied to centrally assessed property in the county in 2014–2015 and 2015–2016 was 1.04% and 1.092%, respectively, when the rate applied to locally assessed property was .202% per year. The companies claim that the higher rate violated Article XIII, Section 19 of the California Constitution, which states, in part, that utility property “shall be subject to taxation to the same extent and in the same manner as other property.” The Court of Appeals interpreted this section to apply to the extent to which the property can be subject to taxation, not the extent to which it can be taxed, meaning the rates for centrally assessed and locally assessed property do not have to be the same.

Although the California Supreme Court ruled in 1985 in the ITT case3 that Article XIII, Section 19 of the California Constitution required that utilities receive the same property tax rates as non-utilities, the Court of Appeals dismissed this finding, stating that rate parity was not required under the section cited.  The court maintained that the language did not specifically state that the tax rates must be the same, which would be clear if that was the intent. 

The denial of the refund claims led to the petition for review by the California Supreme Court. This issue has led to legal battles involving 34 other counties, but those cases were put on hold pending a court decision involving Santa Clara County.

While this issue continues to play out in the courts, now is the time to file protective refund claims.  Please contact your Ryan tax professionals for further information before the statute of limitations expires, likely in early April 2023 for 2018–2019.

1 County of Santa Clara v. Superior Court of Santa Clara County (AT&T Mobility LLC Real Parties in Interest), No. H049161, Cal. Ct. App., 6th Dist., January 6, 2023.

2 AT&T Corp., T Mobile West LLC, and Sprint Communications Company, L.P.

3 ITT World Communications Inc. v. City and County of San Francisco, 37 Cal.3d 860, 870 (1985).


Jesse Noneman

Gina Rodriquez

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