City of Modesto v. National Med, Inc.

Appellant, City of Modesto (City), is requesting this court to reverse a judgment denying the City relief on its complaint to recover an alleged business license tax deficiency from respondent, National Med, Inc. (NMI). The trial court ruled that the business license tax ordinance that was operative for the tax years at issue was unconstitutional as applied to NMI because it imposed a tax on business activities occurring outside of the City.

The City has not appealed from the finding that its ordinance was unconstitutional. Rather, the City has amended its business license tax ordinance to provide for apportionment and has adopted apportionment guidelines. The City is requesting this court to remand the matter to the City’s finance director (Finance Director) for a recalculation of NMI’s alleged tax deficiency using the City’s recently adopted apportionment guidelines.

However, in the context of this litigation, the City is not entitled to the remedy it seeks. The underlying complaint was filed to enforce an alleged business tax deficiency that was based on the former unconstitutional ordinance. The City concedes that the Finance Director’s decision finding this…