Tax Foundation Defends Consumers’ Rights in California Supreme Court

December 18, 2012

Refunds Demanded from Unconstitutional Telephone Tax

Washington, D.C., December 18, 2012—The Tax Foundation is defending the right of taxpayers to receive full refunds from an illegally collected tax in a legal brief filed this week with the California Supreme Court. The brief supports compelling the city of Long Beach, California to offer refunds to taxpayers from a now-repealed telephone tax in an efficient and cost-effective manner.

The case, McWilliams v. City of Long Beach, involves a local telephone tax which was, according to plaintiffs, collected unconstitutionally between 1979 and 2006. California law establishes a procedure for taxpayers to file a group refund claim, known as a class claim, which allows a large number of citizens to pursue their refunds collectively. Long Beach, however, claims it is not bound by the state law, and instead requires taxpayers to file separate refund claims.

The trial court in this case ruled in favor of Long Beach, and the California Supreme Court has agreed to hear the appeal. If Long Beach wins, the practical effect will be that the city will keep most of its illegally collected revenue because it is unlikely all past taxpayers will pursue individual refund claims.

“We support the class claim option because it fosters accountability and requires government revenue agencies to adopt a fair and transparent refund process,” said Tax Foundation Vice President for Legal and State Projects Joseph Henchman. “California lawmakers chose to give consumers an efficient, reasonable method for pursuing group claims in state courts. The city of Long Beach should be expected to follow this procedure and offer full refunds of these illegally collected taxes.”

The amicus brief in the case of McWilliams v. City of Long Beach was jointly submitted by Consumer Action, the National Association of Shareholder and Consumer Attorneys (NASCAT), and the Tax Foundation’s Center for Legal Reform, which educates the legal community about economics and principled tax policy.

The Tax Foundation is a nonpartisan research organization that has monitored fiscal policy at the federal, state and local levels since 1937. To schedule an interview, please contact Richard Morrison, the Tax Foundation’s Manager of Communications, at 202-464-5102 or

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