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1630-1632 Refunds: Alternative Procedures

1630. COURT ACTION
If a claim, in whole or in part, is rejected by the board of supervisors, the person who paid the taxes or the person's guardian, executor or administrator may, within six months after the rejection, bring an action only in the superior court, but not in the small claims division of the superior court, to recover the taxes (Rev. & Tax. Code §§5140-5141).

An application for reduction of an assessment, which is also intended to constitute a claim for refund pursuant to Revenue and Taxation Code section 5097, shall be deemed denied on the date the final installment of the taxes becomes delinquent or on the date the county board of equalization makes its final determination on the application, whichever is later (Rev. & Tax. Code §5141).

Ordinarily a taxpayer must exhaust all of the available administrative remedies before resorting to action in court, but an exception is made when the assessment has no legal effect. Therefore, if the taxpayer makes payment under protest in this situation, he/she may immediately resort to a court action (Exchange Bank v. Sonoma County, App. 131 Cal. Rptr. 216).

If the plaintiff fails to have the defendants served with a summons within one year after the action is commenced in superior court, the court must dismiss the proceedings (Rev. & Tax. Code §5147). The action may be extended if the parties have filed a stipulation in writing or the party against whom the action is prosecuted has made a general appearance in the action.

If the board of supervisors fails to act on the claim for a period exceeding six months following the filing of the claim, the failure amounts to a rejection and authorizes the taxpayer to commence an action to recover the amount of the claim (Otis v. San Francisco, 170 Cal. 98 [148 P. Rptr. 933]).

The plaintiff in any action to recover taxes must be the person who paid the taxes or his/her executor, administrator or guardian. The court is prohibited from rendering judgment for any other plaintiff (Rev. & Tax. Code §5140).

1631. UNCLAIMED REFUNDABLE AMOUNTS
After the time limitation for filing a claim for refund has expired under Revenue and Taxation Code section 5097 (M-1624 and M-5711), any unclaimed amounts that are otherwise refundable may be transferred to the county general fund on order of the board of supervisors (Rev. & Tax. Code §5102).

1632. INTEREST ON REFUNDS
In any action in which the recovery of a penalty assessed pursuant to paragraph (1), (2), or (3) of subdivision (a) of Revenue and Taxation Code section 830 (failure to file property statements) is allowed by the court, the plaintiff shall be entitled to interest on the penalties for which recovery is allowed, at the applicable rate or rates in effect and payable on a refund of tax, as provided in Revenue and Taxation Code section 5151. This interest shall be payable from the date of filing of the claim for refund (but in no event earlier than the date of payment of the penalty or installments thereof sought to be refunded) to the date of entry of judgment. This accrued interest shall be included in the judgment.

Interest at the greater of three percent per annum or the county pool apportioned rate shall be paid on all refunds of ten dollars ($10) or more if the taxpayer has filed a claim for refund within 30 days after receiving notice of overpayment, pursuant to Revenue and Taxation Code section 2635. The interest must be paid on amounts refunded to a taxpayer for any reason (Rev. & Tax. Code §5151). When interest is due the taxpayer, it must be computed pursuant to Revenue and Taxation Code section 5151.