Garg

In this case of first impression, we hold that litigation expenses awarded to a taxpayer under Revenue and Taxation Code section 7156 are not subject to an offset by the state under Government Code sections 12419.4 and 12419.5 against taxes owed, or claimed to be owed, by the taxpayer. We conclude that a contrary rule would effectively nullify section 7156 and would thereby undermine an important mechanism for the enforcement of the citizen protections created by the Harris-Katz California Taxpayers’ Bill of Rights. (§ 7080 et seq.; hereafter the Taxpayers’ Bill of Rights.)

The People of the State of California, by and through the State Board of Equalization (hereafter the Board) appeal from a judgment of the trial court by which the court (1) found the Board had improperly offset against an alleged underlying tax liability $32,464.97 in litigation costs, including attorney fees, which were awarded pursuant to section 7156 in a related action (People ex rel. State Bd. of Equalization v. Garg (Super. Ct. L.A. County, 1994, No. BC003842)) to plaintiffs Anand G. Garg, Hira L. Khanna and the partnership of Garg and Khanna (hereafter, collectively Garg); (2) found Garg to be…