McClain v. Sav-On DrugsAnnotate this Case
The Supreme Court affirmed the judgment of the trial court and court of appeal sustaining Defendants’ demurrer in this case, holding that customers who have paid sales tax reimbursement on purchases they believe to be exempt from sales tax are not authorized to file suit to compel the retailers to seek a tax refund from the California Department of Tax and Fee Administration (Department) when there has been no determination by the Department or a court that the purchases are exempt.
A customer who has paid excess sales tax reimbursement has no statutory remedy to obtain a refund from the Department directly. In Javor v. State Board of Equalization, 12 Cal.3d 790 (1974), however, the Supreme Court authorized a customer suit to compel certain retailers to seek a tax refund where the Board of Equalization, upon determining that the retailers had collected excess sales tax reimbursement, had promulgated rules to provide refunds to overpaying customers. The lower courts declined to extend Javor to authorize a similar judicial remedy under the circumstances of this case. The Supreme Court affirmed, holding that plaintiffs in this case did not have an equitable cause of action to compel the retailers to seek a refund of sales taxes paid to the State.