City of Anaheim v. Superior Court

Under article XIII, section 32 of the California Constitution, a taxpayer who wishes to challenge the assessment of a state tax must pay the disputed amount of tax before seeking recourse in the courts to recover the amount assessed. This constitutional provision, commonly known as the “pay first” rule, allows “ ‘revenue collection to continue during litigation so that essential public services dependent on the funds are not unnecessarily interrupted.’ ” (State Bd. of Equalization v. Superior Court (1985) 39 Cal.3d 633, 638 [ 217 Cal.Rptr. 238 , 703 P.2d 1131 ], citing Pacific Gas & Electric Co. v. State Bd. of Equalization (1980) 27 Cal.3d 277, 283 [ 165 Cal.Rptr. 122 , 611 P.2d 463 ].)

In this case, the City of Anaheim assessed a “transient occupancy tax” (TOT) against a number of online travel companies (OTC’s) and ultimately concluded that the OTC’s owed taxes, plus interest, in the collective amount of more than $21 million. Without paying the assessed amounts, the OTC’s filed superior court actions seeking mandamus and declaratory relief against the City of Anaheim and its administrative hearing officer, Michael Miller (collectively, City). Citing the “pay first”…