Cities with refund procedures in their tax ordinances should assume those procedures are unenforceable.
On August 10, 2026, a unanimous California Supreme Court held that the Government Claims Act occupies the entire field of claim-presentation requirements for claims for money or damages against local public entities, and that a city therefore may not require a taxpayer to complete a local administrative refund process as a precondition to presenting a Government Claims Act claim. Tesoro Refining & Mktg. Co. v. City of Carson, No. S289952 (Cal. Aug. 10, 2026).
The ordinance. Carson’s voter-approved Oil Industry Business License Tax imposes a quarterly tax of one-quarter percent of gross receipts on refinery and petroleum-storage operators. Carson, Cal., Mun. Code § 63505. The same ordinance built its own refund machinery: a written request to the finance director, id. § 63515, with an appeal to the city manager, id. § 63523. After an audit produced a deficiency assessment for December 2017 through June 2018, Tesoro paid under protest and filed a claim with the city clerk, using Carson’s own Government Claims Act form. The City demurred for failure to exhaust the ordinance’s procedures, and both the superior court and the Second District agreed.
The holding. Chief Justice Guerrero, writing for a unanimous court, reversed. Building on McWilliams v. City of Long Beach, 56 Cal. 4th 613 (2013), which brought local tax refund claims within the Act, and Volkswagen Pacific, Inc. v. City of Los Angeles, 7 Cal. 3d 48, 62 n.7 (1972), the Court concluded that the Act’s history, text, and structure show a legislative intent to occupy the field. A local refund request is itself “a claim for money or damages” under California Government Code section 905; sections 63515 and 63523 simply prescribed a different way to present one, so they were preempted.
Three points give the opinion its reach. First, labels are irrelevant: “The relevant inquiry is not how the City characterizes its procedures, but what field of regulations the Legislature intended to occupy.” Second, exhaustion does not rescue a preempted procedure, and the Court found Carson’s process duplicative in any event, since the Act’s presentation requirement already gives the entity its chance to investigate and settle. Third, the Court rejected Carson’s home rule argument outright, citing article XI, section 12 of the California Constitution and McWilliams: home rule does not limit the Legislature’s authority to prescribe claims procedures for charter cities.
What the Court left standing. Footnote 3 preserves refund procedures for property taxes, sales and use taxes, and other local taxes prescribed by the Revenue and Taxation Code or another state statute, which fall within section 905’s exceptions; California Government Code section 935 continues to let local entities prescribe procedures for those excepted claims. Exhaustion also survives untouched for claims that are not claims for money or damages. Footnote 4 expressly declines to decide whether a prepayment appeal of a deficiency notice is a separate administrative remedy a taxpayer must exhaust. That question is the one likely to be litigated next.
What to do now.
Inventory every locally imposed tax, fee, and assessment, and identify which refund procedures rest on state statute and which rest only on the local code.
Repeal or recast the latter. A procedure framed as optional, or as post-claim settlement machinery, is not a “precondition.”
Stop demurring on local-exhaustion grounds in postpayment refund suits, and re-examine pending matters where that defense was asserted.
Preserve the prepayment assessment appeal as a distinct process, separately noticed, if the ordinance has one.
