Facts

A proposition was passed in San Francisco called Prop. Q. Afterward, the City and County of San Francisco imposed penalties and interest on Long & Levit LLP, allegedly for underreporting liability for payroll expense taxes.

PLAINTIFF'S CONTENTIONS: Long & Levit argued that the city should refund tax penalties it assessed. Long & Levit contended that the penalties could not be assessed without finding that Long & Levit was negligent.

DEFENDANT'S CONTENTIONS: Defendants moved for summary judgment, arguing that reasonable care was not exercised by the plaintiff, and therefore, it should not receive a refund of either interest or penalties. Specifically, defendants argued that the city found there to be negligence at several points in the administrative process, and that the penalties were properly imposed when the Tax Collector made the final determination that there was negligence at the hearing on Long & Levit's petition for redetermination. Defendants argued that penalties were properly imposed because the plaintiff failed to act with ordinary care when it omitted partner distributions from its payroll expense tax base in contravention of the clear language and intent of the ordinance. Defendants argued that plaintiff excluded the partner distributions from its payroll expense tax base, based on the opinion of a tax advisor with insufficient expertise in the subject matter. Defendants contended the tax advisor didn't meaningfully review the applicable law prior to providing his advice to the plaintiff and didn't advise plaintiff that it should omit the partner distributions from its payroll expense tax base.

Result

The court found that the Tax Collector's determination was proper. Summary judgment was granted on behalf of the defendant.