Title
County Counsel recommending the Board deny a unitary property tax refund claim in the amount of $581.63, plus interest, received from ExteNet Systems (California) LLC for Tax Year 2020-21.
FUNDING: General Fund.
Body
DISCUSSION / BACKGROUND
ExteNet Systems (California) LLC submitted a refund claim, alleging that the statutory formula used to calculate its property tax rate is unconstitutional. Under Article XIII, sec. 19 of the California Constitution, the State Board of Equalization (“State BOE”) is charged with annually valuing and assessing the taxable property of a telecommunications company operating across the state as one unit. Property so valued and assessed is known as “unitary property.” Once the unitary property is assessed, the State BOE transmits to each county the assessed value of the portion of property located within the individual county. The amount of unitary property assessments attributed to the county by the State BOE are then taxed in accordance with the statutory formula. County auditors have no discretion on their calculation of the unitary tax rate; they are required to impose a tax on unitary property using the rate calculation formula prescribed in Rev. & Tax. Code § 100.
Other telecommunication companies, including Sprint, AT&T, Pacific Bell, and T-Mobile West, have previously submitted similar refund claims, which were denied. Other counties that have received similar refund claims have also uniformly denied these claims. Lawsuits have been filed in other counties to determine whether the unitary tax rate is constitutional. In Santa Clara County, the Sixth District Court of Appeal concluded that the statutory formula for calculating the unitary tax rate is constitutional. (County of Santa Clara v. Superior Court (AT&T Mobility) (2023) 87 Cal.App.5th 347.) A petition for review of the Sixth District appellate court’s opinion was denied by the California Supreme Court. Litigation is currently in progress in Riverside County (4th District Court of Appeal), Napa County (1st District Court of Appeal), and Placer County (3rd District Court of Appeal).
No prior claim has been submitted by ExteNet Systems (California) LLC for previous fiscal years. The property tax amount at issue in this refund claim was properly calculated by the Auditor-Controller’s Office using the calculation formula mandated in state law. Consequently, it is recommended that the Board of Supervisors deny the claim.
ALTERNATIVES
The County is required to tax all state assessed unitary property as set out in Rev. & Tax. Code § 100. If the requirements are not followed, the County will not be in compliance.
PRIOR BOARD ACTION
The Board denied similar refund claims from other telecommunication companies, including Pacific Bell / AT&T Mobility, T-Mobile West, and Sprint, for prior fiscal years (Legistar file 24-0511).
OTHER DEPARTMENT / AGENCY INVOLVEMENT
N/A
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
No fiscal impact in denying the claim.
CLERK OF THE BOARD FOLLOW UP ACTIONS
N/A
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Janeth SanPedro, Assistant County Counsel