San Francisco Amends Business Tax Ordinance - Board Of Review Eliminated

On February 19, 2004, San Francisco Mayor Gavin Newsom approved recent changes to San Francisco's Business Tax ordinance adopted by the Board of Supervisors on February 19, 2004. These changes become effective March 20, 2004, 30 days after signing by the Mayor. Most of the changes consolidate various exemptions, definitions and other administrative provisions, as amended, that apply to the Payroll Expense Tax Ordinance (Article 12-A) and other Articles of the Business and Tax Regulation Code, and place them in Article 6 (Common Administrative Provisions). However, the amendments also contain significant changes such as elimination of the Board of Review, increasing the statute of limitations for refund claims to one (1) year from six months, decreasing the statute of limitations period for assessments from four to three years and including stock options in the definition of payroll expense. The amendments also are directed at various legal and procedural issues experienced by the City in recent litigation and amends various provisions concerning enforcement and collection of taxes, including third party taxes. The Tax Collector and the City Attorney have expanded roles due to the various amendments.

Board of Review Eliminated

Former Sections 6.14-2 (Board of Review, Appeals; Exhaustion) and 6.14-3 (Board of Review; Additional Powers and Duties) have been repealed effective March 20, 2004. From and after the effective date of the repeal of said sections, the Board of Review lacks jurisdiction to accept any new petition for redetermination or petition for refund, or any modification or amendment to such petitions pending before the Board of Review upon such effective date. Section 6.14-1(a). With respect to pending petitions, the Board is to promptly review and rule upon all petitions for redetermination and petitions for refund. Section 6.14-1(b).

The Board shall cease to exist when a certification is filed with the Mayor that it has ruled on or otherwise disposed of all petitions. Section 6.14-1(d). The repeal of Section 6.14-3 also results in the Board lacking jurisdiction to approve or disapprove any rule or regulation adopted by the Tax Collector. Section 6.14-1(c).

Refunds

The most significant change relating to refunds is the repeal of the six month statute of limitations. Now the person that paid the tax can file a claim "within the later of one year of payment of such amount or when the return accompanying such payment was due."1 Section 6.15-1(a). The refund claim must now be filed with the Controller rather than the Tax Collector and the claim shall be on a form furnished by the Controller. A claim may be returned to the person if it was not presented using the form. Section 6.15-1(b).

The amendment to Section 6.15-1 also establishes various deadlines for the City Attorney, rather than the Tax Collector, in reviewing refund claims. Within 20 days after the claim is presented, the City Attorney shall give written notice of its insufficiency. Upon receipt of the claim, the City Attorney shall forthwith request an investigation by the Tax Collector who shall submit a report with respect to the claim and recommendation thereon to the City Attorney within 30 days. The City Attorney may reject any and all claims the Controller forwards to the City Attorney, and shall notify the claimant of such rejection. Section 6.15-1(a).

The City Attorney shall allow, reject or otherwise act upon the claim for refund in a manner specified in Government Code section 912.6 within 45 days after it is presented to the Controller. The claimant may deem the claim for refund denied and seek judicial relief if the City Attorney does not act upon the claim within the 45-day period, or such extended period to which the claimant has agreed. Section 6.15-1(d).2

Section 6.15-1(a) as amended also contains new provisions regarding the settlement authority of the City Attorney. It is provided that the City Attorney may allow or compromise and settle refund claims if the amount is $25,000 or less. Allowance or compromise and settlement of claims under this section in excess of $25,000 shall require the written approval of the City Attorney and approval of the Board of Supervisors by resolution.

Exhaustion of Administrative Remedies

There are two sections entitled "Exhaustion of Administrative Remedies." On their face, they seem to be consistent...