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Published: June 2011

CA files amicus brief in tax refund case

Coalition: Property tax refunds

Consumer Action signed onto an amicus brief in support of the plaintiff, Estuardo Ardon, who alleges that his local municipality illegally collected taxes and refused to pay a refund on those levies. Ardon argued that the Los Angeles Telephone Users’ tax was unconstitutional, and taxpayers have the right to file a class action suit seeking refunds.

Below is an overview of the case:

It is not unusual for local governments to impose a number of small inconspicuous taxes that translate into millions of dollars for the jurisdictions. Items like property taxes are visible and feature refund policies laid out in California’s tax code. Other charges like telephone utilities’ taxes (TUT) are less noticeable and can yield income of up to ten percent of telephone charges.

In 2006, Ardon discovered the TUT had been collecting taxes on long distance and bundled services despite several court rulings that the federal telephone tax did not apply to these services. Ardon filed an administrative refund claim on behalf of himself and other taxpayers. The claim was rejected, prompting Ardon to file for relief, using a case called City of San Jose v. Superior Court as a precedent. In a 2008 Second Appellate district case the court rules that class refund claims to recover local taxes were permissible. Nevertheless, the same appellate court refused to apply the City of San Jose ruling to Mr. Ardon’s case. The California Supreme Court is now reviewing the state Court of Appeal’s opinion to clarify the discrepancy between the two cases.

The amicus brief states in part:
“Local governments should not be permitted to retain illegally collected taxes merely because they claim to have planned upon the flow of such illegally collected funds.”

Lead Organization

Patricia Sturdevant, Esq.

Other Organizations

National Association of Shareholder and Consumer Attorneys |The Utility Reform Network | Consumer Federation of California | The Tax Foundation

More Information

Permitting Class Refund Actions Protects California Taxpayers Against Illegal Taxes: Ardon v. City of Los Angeles

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