Did California owe credit interest when it approved a vehicle manufacturer's Lemon Law claim for sales-tax reimbursement?

Plain-English summary

After an informal discussion with Legal staff member Warren Astleford, Refund Section Supervisor Robert L. Buntjer requested written confirmation that manufacturers should not receive credit interest when the Board granted Lemon Law claims. The complete September 16 request, attached statute, discussion record, examples, and applied claims are not reproduced.

Civil Code section 1793.25 governed a vehicle manufacturer's claim for sales-tax reimbursement after making Lemon Law restitution to a customer. Subdivision (c) generally incorporated the Sales and Use Tax Law's refund procedures but expressly excluded sections 6902.1, 6903, 6907, and 6908.

Section 6907 was the provision authorizing credit interest on tax overpayments. Tax counsel therefore concluded that California could approve the manufacturer's reimbursement claim but could not pay credit interest on it.

The memorandum rejected an alternative reading that would have made the expressly excluded refund sections apply when consistent with the Lemon Law provision. It found that reading unreasonable and contrary to the rules that particular expressions qualify general ones and that a specific statute controls a general one. No applied claim, manufacturer, customer, vehicle, restitution record, refund amount, appeal, or later outcome is supplied.

The live annotation publishes only the section 1793.25(c) exclusion and no-interest conclusion. It omits the alternate readings, statutory maxim, two cases, request and informal-discussion provenance, named staff, and missing claim record.

Common questions

Was the reimbursement itself prohibited?

No. The memorandum addressed only credit interest on an approved reimbursement claim.

Why did the general credit-interest statute not apply?

Civil Code section 1793.25(c) expressly excepted Revenue and Taxation Code section 6907 from the incorporated refund provisions.

Citations and references

• California Civil Code section 1793.25(c) — quoted to incorporate Revenue and Taxation Code Article 1 beginning with section 6901 while excepting sections 6902.1, 6903, 6907, and 6908; complete statute, definitions, procedures, amendments, later history, and current law not supplied
• California Civil Code section 3534 — quoted for the maxim that particular expressions qualify general ones; complete text, application limits, amendments, later history, and current law not supplied
• California Revenue and Taxation Code section 6907 — described as authorizing credit interest in some circumstances on overpaid tax; complete text, definitions, conditions, amendments, later history, and current law not supplied
• California Revenue and Taxation Code Article 1 beginning with section 6901 and excluded sections 6902.1, 6903, 6907, and 6908 — complete texts, relationships, amendments, later history, and current law not supplied
• Lake v. Reed (1997) 16 Cal.4th 448, 464 — quoted for a specific statute controlling a general one; opinion, facts, complete holding, other analysis, and later history not supplied
• Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1165-1166 — cited for reasonable construction consistent with legislative intent rather than absurd consequences; opinion, facts, exact quotation, complete holding, other analysis, and later history not supplied
• September 16, 2002 memorandum to Assistant Chief Counsel Janice Thurston — complete request, attached statute, informal-discussion record, examples, applied claims, restitution records, amounts, and calculations not reproduced
• October 21, 2002 Senior Tax Counsel Randy Ferris memorandum — no agency reply, applied claim, manufacturer, customer, vehicle, restitution, refund amount, appeal, or later outcome supplied
• Official Annotation 320.0048.050's section 1793.25(c) exclusion, no-interest conclusion, and date — omits the alternate readings, statutory maxim, cases, provenance, named staff, missing records, later outcome, and reliance status and supplies no additional claim record

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/320-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/320-0048-050.pdf

Original ruling text

State of California

Board of Equalization
Telephone (916) 322-0437

Memorandum

Legal Department - MIC:82

320.0048.050
To

:

Robert L. Buntjer
Supervisor, Refund Section (MIC:39)

From

:

Randy Ferris
Senior Tax Counsel (MIC:82)

Subject

:

Credit Interest on Lemon Law Claims

Date

:

October 21, 2002

Your memorandum to Assistant Chief Counsel Janice Thurston, dated September 16, 2002, has been assigned to me for reply. In your memorandum, you request a legal opinion regarding credit interest. Specifically, you state: “Attached is a copy of Civil Code Section 1793.25 regarding reimbursement of sales tax to vehicle manufacturers after restitution is made to customers. This section appears to bar payment by the Board of credit interest to the manufacturer. “During a recent informal discussion, Mr. Warren Astleford of [the Legal staff] seemed to agree with this interpretation. However, we’d appreciate [it] if you would provide us with written confirmation that credit interest should not be paid when Lemon Law claims are granted to vehicle manufacturers.” DISCUSSION Subdivision (c) of Civil Code section 1793.25 provides as follows: “(c) The manufacturer’s claim for reimbursement and the [State Board of Equalization]’s approval or denial of the claim shall be subject to the provisions of Article 1 (commencing with Section 6901) of Chapter 7 of Part 1 of Division 2 of the Revenue and Taxation Code, except Sections 6902.1, 6903, 6907, and 6908 thereof, insofar as those provisions are not inconsistent with this section.” (Emphasis supplied.)

Robert L. Buntjer

-2-

October 21, 2002
320.0048.050

While two interpretations of this provision are possible, only one is reasonable. In the first (and reasonable) interpretation, the expressions “the provisions of Article 1 (commencing with Section 6901) of Chapter 7 of Part 1 of Division 2 of the Revenue and Taxation Code” and “those provisions” are synonymous (i.e., “those provisions” do not refer to the excepted sections 6902.1, 6903, 6907 and 6908). In the second (and unreasonable) interpretation, the excepted sections would be synonymous with “those provisions.” This second interpretation would result in subdivision (c) of Civil Code section 1793.25 making the absurd pronouncement that the expressly excepted (general) statutes of the Sales and Use Tax Law pertaining to overpayments and refunds would not apply to the extent that these excepted statutes are consistent with Civil Code section 1793.25 (i.e., the excepted statutes would only apply when they were inconsistent with Civil Code section 1793.25). Whereas the first interpretation is consistent with the Civil Code maxim that “[p]articular expressions qualify those which are general,” the second interpretation would make a mockery of this maxim. (See Civ. Code, § 3534; see also Lake v. Reed (1997) 16 Cal.4th 448, 464 [“a more specific statute controls over a more general one”].). The unreasonable second interpretation would also violate the canon of statutory construction dictating that statutes should be construed to produce reasonable results consistent with legislative intent, not absurd consequences. (Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d 1142, 1165-1166.). Based on the foregoing, Civil Code section 1793.25, subdivision (c), expressly prohibits the Board from applying Revenue and Taxation Code section 6907 to manufacturers’ claims for sales tax reimbursement under Civil Code section 1793.25 (i.e., “Lemon Law claims”). As you know, Revenue and Taxation Code section 6907 is the statute that authorizes the Board to pay credit interest, under certain circumstances, to overpayments of tax amounts. Thus, Civil Code section 1793.25, subdivision (c), expressly prohibits the payment of credit interest when the Board approves manufacturers’ Lemon Law claims for sales tax reimbursement. I trust that my response suffices to provide the written confirmation you are seeking. If any questions or concerns remain, please do not hesitate to contact me.

RMF:rmf

cc:

Mr. Brian Manuel (MIC:39)