APPEAL from an order of the Superior Court of the County of Los Angeles, Mark V. Mooney, Judge. (Los Angeles County Super. Ct. No. BC429267)
The opinion of the court was delivered by: Mosk, J.
CERTIFIED FOR PUBLICATION
Plaintiff and appellant Hillel Chodos (Chodos) is a lawyer practicing in the City of Los Angeles. Defendant and respondent City of Los Angeles (City) required Chodos to pay additional City business tax based on gross receipts that included what Chodos claimed were out-of-pocket costs and reimbursement of fees paid to independent counsel.
Chodos brought this action for declaratory relief. The City demurred to Chodos's complaint on the ground that Chodos did not comply with what the City refers to as the "pay first litigate later" rule. The trial court sustained the demurrer without leave to amend. We affirm, holding that Chodos must first pay the disputed amount and then sue for a refund.
Chodos filed a complaint for declaratory relief in which he alleges that as a lawyer in the City, the City, after an audit, required he pay an additional amount of $13,155.47 for his business tax based on reimbursements he received for out-of-pocket costs and for fees paid to independent associated counsel. The City demurred on the ground that Chodos failed to allege that he paid the tax and was challenging the tax by way of a refund action. For this reason, according to the City, Chodos has not stated facts sufficient to state a declaratory relief cause of action. The trial court sustained the demurrer without leave to amend, and Chodos appealed. Chodos failed to supply a reporter's transcript of the hearing. Neither party relies upon anything that occurred at the hearing. (See Cal. Rules of Court, rule 8.120(b).)
We treat the demurrer as admitting all material facts and review the trial court's determination de novo. (McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415; Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
Under Los Angeles Municipal Code (LAMC) section 21.15, subdivision (c), the City's Office of Finance may audit and examine the records of taxpayers to determine if the correct amount of tax was reported and paid. If the Director of Finance determines that an incorrect amount of tax was reported by the taxpayer, the Director of Finance makes a deficiency determination. (LAMC, § 21.15(i).)
Deficiency determinations are made through the assessment procedures provided in LAMC section 21.16. First the Office of Finance serves the taxpayer a notice of assessment, giving notice of the taxes owed. (LAMC, § 21.16(a).) The taxpayer may then request a hearing, which would be before an Assessment Review Officer (ARO), or the taxpayer may request that the ARO hearing be waived. (LAMC, § 21.16(b), (d), (e).) The ARO may decrease, affirm, or increase the assessment. (LAMC, § 21.16(f).) The taxpayer then has the option of having the ARO's decision reviewed by a Board of Review, if one is established. ...