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On August 10, 2026, the California Supreme Court issued a unanimous decision in Tesoro Refining & Marketing Company LLC v. City of Carson, No. S289952, __ Cal. 5th __ (2026), holding that California’s Government Claims Act provides the exclusive procedures for taxpayers to seek refunds of local taxes, and that the Legislature has preempted any additional procedures that a local government might try to impose for such refunds. Partner Chris Skinnell argued the case in June.

The decision stems from a long-running dispute between Nielsen Merksamer’s client, Tesoro Refining & Marketing Company, which operates an oil refinery in the City of Carson. In 2017, Carson’s voters adopted Measure C, which imposed a license tax on refiners, and Tesoro immediately began paying the tax in accordance with long-standing practices in other jurisdictions.

In 2022, Carson concluded that Tesoro had underpaid its taxes for 2017 and 2018 and issued a notice of deficiency. Tesoro promptly paid the additional amounts due and filed a claim for refund under the Government Claims Act, asserting that (1) Carson’s deficiency notice was barred by the statute of limitations and (2) its calculations failed to comply with constitutional and statutory rules regarding the allocation of business activity amongst multiple jurisdictions.

Carson moved to dismiss the case on the ground that Tesoro had failed to comply with a number of procedural requirements in the City’s municipal code before filing the lawsuit. The trial court and the Court of Appeal agreed.

The Supreme Court agreed with Tesoro, however, that “a local government entity cannot, consistent with the [Government Claims Act], require a person to comply with such a procedure as a precondition to submitting a tax refund claim” and that the “history, text and structure of the GCA—as well as th[e] court’s own precedents—establish that the Legislature intended the GCA to occupy the entire field concerning presentation requirements for money and damages claims against local government entities.” The Court reversed the decision of the Court of Appeal and remanded the case for further proceedings on the merits of Tesoro’s constitutional and statutory claims.