Title
County Counsel recommending the Board deny two claims for tax refunds in the amount of $105,435 and $35,220, plus interest, from Pacific Bell and AT&T Mobility, LLC respectively for unitary property taxes paid for Tax Year 2018/19.
FUNDING: General Fund.
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DISCUSSION / BACKGROUND
The Clerk of the Board of Supervisors received two tax refund claims from Pacific Bell and AT&T Mobility, LLC requesting a return of $105,435 and $35,220, plus appropriate interest, for taxes levied for fiscal year 2018-19.
Pacific Bell and AT&T Mobility, LLC are one of several telecommunications companies pursuing refund claims against a number of counties, 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.
Pacific Bell and AT&T Mobility, LLC submitted a refund claim for prior fiscal year 2016-17 which the County denied. Other counties that have received similar refund claims from utility companies, such as telephone service providers, have also uniformly denied these claims. Litigation is currently in progress in Riverside County and Santa Clara County to determine whether the statutory tax rate imposed on telecommunication companies complies with Article XIII, Section 19 of the California Constitution. In the Santa Clara County case, the Sixth District Appeals Court concluded that the statutory tax rate prescribed in Rev. & Tax. Code § 100 is constitutional. (County of Santa Clara v. Superior Court (AT&T Mobility) (2023) 87 Cal.App.5th 347.) The telecommunication companies filed a petition for review of the Sixth District’s opinion, which the California Supreme Court recently denied. The litigation in Riverside County is still pending.
The property tax amounts at issue in the refund claims were 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 claims.
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
On 5/4/2021, the Board denied a similar refund claim from Pacific Bell and AT&T Mobility, LLC for fiscal year 2016-17; Legistar 21-0676.
OTHER DEPARTMENT / AGENCY INVOLVEMENT
Auditor's Office
CAO RECOMMENDATION / COMMENTS
Approve as recommended.
FINANCIAL IMPACT
There will be no fiscal impact if the claim is denied as recommended.
CLERK OF THE BOARD FOLLOW UP ACTIONS
N/A
STRATEGIC PLAN COMPONENT
N/A
CONTACT
Janeth SanPedro, Assistant County Counsel