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TO BE PUBLISHED IN THE OFFICIAL REPORTS
 

OFFICE OF THE ATTORNEY GENERAL
 

State of California
 

JOHN K. VAN DE KAMP
 

Attorney General
 

: 

OPINION : No. 85-1001 

: 

of : JULY 10, 1986 

:
 

JOHN K. VAN DE KAMP :
 

Attorney General :
 

:
 

ANTHONY S. DA VIGO :
 

Deputy Attorney General :
 

:
 

THE HONORABLE JACK C. PARNELL, DIRECTOR, DEPARTMENT 

OF FISH AND GAME, has requested an opinion on the following questions: 

1. What rate of privilege tax shall be paid by a person licensed under 

section 8040 of the Fish and Game Code for imported shrimp other than the species 

Pandalus jordani? 

2. What rate of privilege tax shall be paid by a person licensed under 

section 8040 of the Fish and Game Code who cold smokes salmon for human 

consumption? 

3. For purposes of computing the privilege tax prescribed by section 

8045 of the Fish and Game Code, when must the fish be weighed? 

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4. Does the privilege tax prescribed by section 8045 of the Fish and 

Game Code apply only to the first licensed wholesale dealer or also to subsequent 

licensed wholesalers? 

5. Is the state estopped from collecting privilege taxes prescribed by 

section 8045 of the Fish and Game Code for prior years which were not collected or paid 

because of an erroneous administrative interpretation that such taxes were not due? 

6. Is the state authorized to collect statutory penalties and interest on 

privilege taxes prescribed by section 8045 of the Fish and Game Code for prior years 

which were not collected or paid because of the taxpayer's justifiable reliance upon an 

erroneous administrative interpretation that such taxes were not due? 

7. Is the Director of Fish and Game authorized to forgive the payment 

of privilege taxes prescribed by section 8045 of the Fish and Game Code for prior years 

which were not collected or paid because of an erroneous administrative interpretation 

that such taxes were not due? 

CONCLUSIONS 

1. The rate of privilege tax which shall be paid by a person licensed 

under section 8040 of the Fish and Game Code for imported shrimp other than Pandalus 

jordani is $0.0125 per pound. However, such shrimp which are for human consumption 

and are not thereafter canned or cooked by a licensee are not subject to such tax. 

2. The rate of privilege tax which shall be paid by a person licensed 

under section 8040 of the Fish and Game Code who cold smokes salmon for human 

consumption is $0.0500 per pound, based on the weight in the round. However, salmon 

imported for human consumption and which are thereafter cold smoked are subject to 

such tax only if canned by a licensee. 

3. For purposes of computing the privilege tax prescribed by section 

8045 of the Fish and Game Code, the fish must be weighed when initially purchased, 

received or taken by the taxpayer. However, the tax applicable to salmon, except 

imported salmon offal, is based on the weight in the round. 

4. The privilege tax prescribed by section 8045 of the Fish and Game 

Code applies to the first and to subsequent licensed wholesalers. 

5. Whether the state is estopped from collecting privilege taxes 

prescribed by section 8045 of the Fish and Game Code for prior years which were not 

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collected or paid because of an erroneous administrative interpretation that such taxes 

were not due would depend upon the determination of ultimate facts, e.g., whether the 

case is "unusual," the justification "clear" and the injustice "great." 

6. The state is not authorized to collect statutory penalties and interest 

on privilege taxes prescribed by section 8045 of the Fish and Game Code for prior years 

which were not collected or paid because of the taxpayer's justifiable reliance upon an 

erroneous administrative interpretation that such taxes were not due. 

7. The Director of Fish and Game is not authorized to forgive the 

payment of privilege taxes prescribed by section 8045 of the Fish and Game Code for 

prior years which were not collected or paid because of an erroneous administrative 

interpretation that such taxes were not due. 

ANALYSIS 

The first inquiry concerns the rate of privilege tax owed by a person 

licensed under section 80401 for imported shrimp other than the species Pandalus jordani. 

Section 8040 provides: 

"Every person engaged in any of the following businesses shall 

procure a license for each plant or place of business in which he is so 

engaged: 

"(a) Canning, curing, preserving, packing, or dealing at wholesale in 

fish taken from the waters of this State or brought into this State in a fresh 

condition. 

"(b) Manufacturing fish scraps, fish meal, fish oil, chicken feed, or 

fertilizer from fish or fish offal. 

"(c) Processing or dealing at wholesale in mollusks or crustaceans in 

compliance with the rules and regulations of the commission." 

Section 8045 prescribes the rate of privilege tax: 

"Every person operating under a license issued pursuant to this 

article, in addition to the license fee, and a fisherman as described in 

Section 8015 who sells fish, mollusks, or crustaceans in any load or lot of 

100 pounds or more to persons not licensed pursuant to Section 8040, shall 

1 All section references herein are to the Fish and Game Code. 

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pay a privilege tax for each pound, or fraction thereof, of fish purchased, 

received, or taken by him in accordance with the following schedule: 

Rate per 

pound 

(a) All fish, irrespective of use, except as otherwise 

specified in this section . . . . . . . . . . . . . . . . . . . . . $0.0013 

b) Mollusks and crustaceans irrespective of use, 

excluding squid and crab . . . . . . . . . . . . . . . . . . . 0.0125 

(c) Crab and squid, irrespective of use . . . . . . . . . . . . 0.0019 

(d) Salmon, except imported salmon offal, based 

on the weight in the round, irrespective of use . . . 0.0500 

(e) Sardines irrespective of use . . . . . . . . . . . . . . . . . . 0.0063 

(f) The following fish when used for bait or 

human consumption, except canning . . . . . . . . . . . 0.0125 

(1) Albacore 

(2) Barracuda 

(3) Bluefin 

(4) Broadbill swordfish 

(5) Flying fish 

(6) Frogs 

(7) Giant sea bass 

(8) Halibut 

(9) Saltwater worms 

(10) White sea bass 

(11) Yellowtail 

(g) Anchovy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0006 

Provided, however, that when the price paid as stated on the fish receipt 

required in accordance with Section 8011 is in excess of fifty dollars ($50) 

per ton, the tax on anchovy shall be $0.0013 per pound. 

"All fish, except shrimp (Pandalus jordani) and crab (Cancer 

magister), imported into California from another state or country, and 

which are for human consumption and are not thereafter canned or cooked 

by a licensee, shall not be subject to such a privilege tax. 

"Shrimp (Pandalus jordani) and crab (Cancer magister) imported 

into California from another state or country, irrespective of use, shall not 

be subject to such privilege tax." 

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The exemptions provided in the last two paragraphs are of primary concern. 

Prior to 1971, the exemption, then contained as part of section 8045.5, provided as 

follows: 

"Fish imported into California from another state or country, and 

which are for human consumption and are not thereafter canned or cooked 

by a licensee, shall not be subject to such a privilege tax." 

The purpose of the exemption was to afford protection to importers of "fish, mollusks, or 

crustaceans"2 from double taxation. (Stats. 1970, ch. 549, § 2 [the second section of that 

number].) 

In 1971, section 8045.5 was amended to exclude from its limited exemption 

(i.e., that applicable only to those imported fish which are (1) for human consumption 

and (2) not thereafter canned or cooked by a licensee) "shrimp (Pandalus jordani) and 

crab (Cancer magister)" and to add a second paragraph exempting those specified 

crustaceans3 categorically, i.e., "irrespective of use." (Stats. 1971, ch. 1171, § 5.) By the 

Statutes of 1974, chapter 1207, sections 10 and 11, section 8045.5 was repealed and the 

two exemption paragraphs were added unchanged to section 8045 as set forth above. 

The specific statutory reference is to a particular genus (Pandalus) and 

species (jordani) of Pacific Ocean shrimp. Technical words and phrases are to be 

construed according to such peculiar and appropriate meaning or definition. (Code Civ. 

Proc., § 16; 66 Ops.Cal.Atty.Gen. 152, 153 (1983).) We are advised that Pandalus 

jordani is the major variety of Pacific Ocean edible prawns taken from the most extensive 

range from Alaska to central California. Other species are commercially taken, e.g., 

Pandalus platyceros, from waters off the coast of Santa Barbara. A wide variety of 

species and genera are imported from various locations throughout the world, e.g., the 

European Pandalus annulicornis. In the context of commercial fishing, numerous species 

have been the subject of legislative cognizance. Section 8590 provides: 

"For the purposes of this article, 'prawns' or 'shrimp', or both, include 

all of the following species: 

"(a) Spot prawn (Pandalus platyceros). 

2 The term "fish" includes mollusks and crustaceans. (§ 45.) 

Shrimp and crab are classified as crustaceans. (50 Ops.Cal.Atty.Gen. 131, 133 

(1967).) 

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"(b) Ridgeback prawn (Sicyonia ingentis). 

"(c) Coonstrip prawn (Pandalus danae). 

"(d) Pacific ocean shrimp (Pandalus jordani). 

"(e) Bay shrimp (Crangon franciscorum and Crago sp.). 

"(f) Red rock shrimp (Lysmata californica)." 

Thus, it is manifest that the Legislature is aware of the peculiar and appropriate 

significance of a specified genus and species. It is recognized that the report of the 

Senate Committee on Natural Resources and Wildlife on Assembly Bill 608 (Stats. 1971, 

ch. 1171) refers to the newly exempted categories generally as "imported shrimp" and 

"imported crab" without reference to the scientific designations "Pandalus jordani" and 

"Cancer magister," respectively. However, the use of the terms "shrimp" and "crab," 

even without further designation, has been officially recognized as an alternative means 

of reference to the particular respective genera and species in question. (Title 14, Cal. 

Admin. Code, § 103, subd. (b)(1); cf. § 8023.) 

We find no basis upon which to attribute to the Legislature an intent to 

exempt categorically from taxation any species other than that specifically designated. 

When the term "shrimp (Pandalus jordani)" first appeared in the Statutes of 1971, chapter 

1171, section 5, the Legislative Counsel's Digest indicated in part that the amendment 

"[p]rovides that no privilege tax is applicable to specified shrimp and crab imported from 

another state or country, irrespective of use." (Emphasis added.) Conversely, shrimp 

other than the specified genus and species were not excluded from the limited exemption 

of the penultimate paragraph of section 8045.4 

Consequently, only those shrimp are subject to tax which are (1) taken 

domestically, (2) other than Pandalus jordani and not for human consumption, or (3) 

4 We are not asked nor do we consider any issue concerning the constitutional validity 

of a tax upon imports. (U.S. Const., art. 1, § 10, cl. 2; 24 Ops.Cal.Atty.Gen. 287 (1955); 

compare South Coast Fisheries, Inc. v. Department of Fish & Game (1963) 213 

Cal.App.2d 325, 331-332; Alaska v. Arctic Maid (1961) 366 U.S. 199, 203-204; Schettler 

v. County of Santa Clara (1977) 74 Cal.App.3d 990.) It is assumed for purposes of this 

analysis that the tax is imposed upon a legitimate local taxable event. (Cf. 50 Ops. 

Cal.Atty.Gen. 131, 134 (1967); 43 Ops.Cal.Atty.Gen. 206, 208, (1964).) In any event, 

section 8045 has not been declared unconstitutional by an appellate court within the 

meaning of California Constitution, article III, section 3.5. 

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other than Pandalus jordani and canned or cooked by a licensee. With respect to these, 

the rate of tax specifically applicable under section 8045, subdivision (b) ("crustaceans 

irrespective of use") is $0.0125 per pound. 

The second inquiry concerns the application of a privilege tax to a person 

licensed under section 8040 who cold smokes salmon for human consumption. The rate 

of tax applicable to "salmon, except imported salmon offal, based on the weight in the 

round, irrespective of use," is prescribed in subdivision (d) of section 8045 as $0.0500 per 

pound. This tax would apply to a licensee who cold smokes salmon for human 

consumption. The significant issue arises with respect to salmon which are imported 

from another state or country, and which are for human consumption and are not 

thereafter canned or cooked by a licensee. Such fish are, by virtue of the penultimate 

paragraph of section 8045, not subject to a privilege tax. Thus, if cold smoked salmon 

are "cooked," they are subject to tax under subdivision (d). If not, they are subject to 

such tax only if canned, but are otherwise exempt. 

It may be argued that the term "cooked" refers to fish other than in its fresh 

state. Prior to the amendment to section 8045.5 (Stats. 1970, ch. 549, § 2) which first 

added the exemption for fish imported for human consumption and not thereafter canned 

or cooked by a licensee, the exemption, then contained in section 8045 (Stats. 1957, ch. 

456, § 8045), applied, and had so applied since the statute's inception (Stats. 1917, ch. 

687, § 7), to "Fish so taken or received . . . for human consumption in a fresh state . . . ." 

It is suggested, based upon this legislative history, that "canned or cooked" is simply the 

antithesis of "fresh state." The issue, then, would be whether cold smoked salmon is 

other than fresh. We are advised in this regard that cold smoking is used to prepare lox, a 

delicacy for human consumption, having a consistency similar, if not identical, to raw 

fish. The Legislature has characterized smoking, along with freezing, coldpacking, 

drying, salting and pickling, as common methods of preserving fish. (§ 8042, subd. (b).) 

In any event, the legislative change of terminology must be viewed as 

deliberate. In the absence of some contrary indication, words used in a statute must be 

construed in accordance with their usual and ordinary significance. (Moyer v. Workmen's 

Comp. App. Bd. (1973) 10 Cal.3d 222, 230.) The usual and ordinary import of the word 

"cook" involves the preparation of food for eating by a heating process such as boiling, 

roasting or baking. (Webster's Third New Internat. Dict. (1961), p. 500; Union Pacific 

Railroad Co. v. Ore-Ida Potato Products (9th Cir. 1958) 252 F.2d 505, 508.) According 

to information provided to this office, the process of cold smoking is essentially as 

follows: the fish is cleaned, split and placed in a curing solution consisting of salt and 

sugar. The fish is then stored in a curing room at a temperature of 38F. for approximately 

10 to 14 days. Once cured, the fish is moved to a drying room where the moisture is 

extracted from the fish. The temperature in the drying room is maintained at 

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approximately 75F.-80F. for no more than a few minutes in order to "sweat" the excess 

brine and moisture from the fish. The fish is then placed in either a manual smokehouse 

or an electronic smoker where it is exposed to cold smoke for a few seconds. No heat is 

applied during the smoking process. Based on this description, the fish are not "cooked" 

within the meaning of section 8045. Consequently, salmon which are imported for 

human consumption and thereafter cold smoked are subject to the tax prescribed in 

subdivision (d) of that section only if canned by a licensee. Otherwise, they are exempt. 

The third inquiry concerns the point at which the fish must be weighed for 

purposes of applying the appropriate rate of tax per pound. Section 8045 provides simply 

that the specified rate of tax shall be paid ". . . for each pound, or fraction thereof, of fish 

purchased, received, or taken . . . ." The statute does not otherwise specify the time of 

weighing, whether in the round, headed, gutted, dressed, fileted, processed or cooked, 

with one exception: subdivision (e) of the rate schedule provides that salmon, except 

imported salmon offal,5 shall be weighed in the round.6 

Prior to 1935 (Stats. 1935, ch. 456, § 1), the statute, then section 1015 

(based on Stats. 1917, ch. 687, § 7, as amended by Stats. 1931, ch. 1163, § 3), contained 

no specific reference to salmon, but provided as follows: 

"Every person operating under a license as provided in this article 

shall, in addition to the license fee, pay a privilege tax of two and one-half 

cents for each one hundred pounds, or fraction thereof, of fish purchased, 

received, or taken by him. Fish, excepting mollusks and crustaceans, so 

taken or received, which are utilized for human consumption in a fresh 

state, shall not be subject to such tax." 

By the 1935 statute, specific reference was added to those "who receive salmon from 

fishermen," prescribing a rate of tax "based on the weight of the salmon in the round": 

"Except as otherwise provided herein, every person operating under 

a license as provided in this article shall, in addition to the license fee, pay a 

privilege tax of two and one-half cents for each one hundred pounds, or 

fraction thereof, of fish, other than salmon, purchased, received or taken by 

5 "Fish offal" means the heads, viscera and other parts of fish taken off in preparing 

for canning, preserving, packing and preparing for consumption in a fresh state. (§ 7700, 

subd. (c).) 

6 Fish "in the round" refers to their natural state. (South Coast Fisheries, Inc. v. 

Department of Fish and Game (1963) 213 Cal.App.2d 325, 328.) 

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him. Persons who receive salmon from fishermen shall, in addition to any 

other license fee imposed by this code, pay a privilege tax of one-half cent 

per pound, based on the weight of the salmon in the round. 

"Fish, excepting salmon, and excepting mollusks and crustaceans, so 

taken or received, which are utilized for human consumption in a fresh 

state, shall not be subject to a privilege tax." 

Inasmuch as the special reference to salmon did not appear until 18 years 

following the enactment of the original 1917 version, we perceive no negative inference 

of legislative intent respecting the point at which fish other than salmon must be weighed. 

In the absence of any contrary indication, it is our view that the Legislature intended the 

rate of tax to be applied to the weight of fish in its condition when initially purchased, 

received or taken by the taxpayer. This view is consistent with record keeping 

requirements. Section 8043 provides: 

"Every person operating under a license issued pursuant to this 

article, and every other person dealing in fresh fish, shall keep a book or 

books in which shall be entered: 

"(a) A full and correct record, in the English language, of all fresh 

fish purchased or received by him from fishermen or taken by himself. 

"(b) The names of the different species. 

"(c) The number of pounds so received or caught of each different 

species. 

"(d) The name and address of the person from whom such fish were 

received. 

"The books shall be open at all times for inspection by the 

department." (Emphasis added; see also §§ 8011 through 8024.) 

The fourth inquiry is whether the privilege tax applies to the first or to all 

wholesalers in the commercial chain. The assumption is that a tax has been paid by a 

first-tier wholesaler who purchased and received fish from a fisherman and sold to a 

second-tier wholesaler. Generally, a wholesaler is a merchant middleman who sells 

chiefly to retailers, other merchants or industrial, institutional and commercial users 

mainly for resale or business use. (Webster's Third New Internat. Dict. (1961), p. 2611.) 

Every person who deals at wholesale in fish taken from the waters of this state or 

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imported in a fresh condition, or in mollusks or crustaceans must procure a license. 

(§ 8040.) 

Section 8045 provides in part that "Every person operating under [such] a 

license . . . shall pay a privilege tax . . . ." (Emphasis added.) The character of a tax must 

be determined by its incidents, object, purpose and effect, rather than by nomenclature, 

title or legislative assertion. (Flynn v. City etc. of San Francisco (1941) 18 Cal.2d 210, 

214-215.) While the tax is denominated a "privilege" tax, its measurement in proportion 

to weight may suggest an ad valorem property tax. (See Cal. Const., art. XIII, § 1; cf. 

Pacific Gas & Elec. Co. v. Roberts (1914) 168 Cal. 420.) Although the state constitution 

does not expressly prohibit double taxation, the requirement of article XIII, section 1, that 

property shall be taxed in proportion to its value has been construed as such a prohibition. 

(Flynn v. City etc. of San Francisco, supra, 18 Cal.2d at p. 215; and see, Rev. & Tax. 

Code, § 102.) 

The tax prescribed by section 8045 is not a property tax but a tax on the 

privilege of conducting the business of dealing in fish. (50 Ops.Cal.Atty.Gen., supra, 

133.) In South Coast Fisheries, Inc. v. Department of Fish and Game, supra, 213 

Cal.App.2d at p. 330, the court stated: 

"The tax here before us is denominated by the Legislature as a 

'privilege tax,' and it is imposed upon those who would conduct the 

business activity of packing and processing fish in California. This is made 

clear by the fact that it is applied to those persons who already have 

obtained licenses to engage in the specified businesses and section 8045 

specifically provides that it is not applicable to fish 'which are utilized for 

human consumption in a fresh state.'" 

Further, the measurement of the tax by the weight, quantity or value of the fish 

purchased, received or taken by a processor or dealer at wholesale is not inconsistent with 

its nature as a privilege tax. In South Coast Fisheries, supra, the court continued: 

"Appellants . . . base their arguments upon the premise that such a 

tax cannot be applied if measured by the quantity of raw materials used in 

their business where such materials are in part composed of imports that 

remain, per se, free from taxation at the moment of measurement. They 

appear thus to confuse the nature of the tax with the mode adopted for 

ascertaining its amount. 

"As our California Supreme Court stated in dealing with an 

analogous situation in Ingels v. Riley [(1936) 5 Cal.2d 154, 160]: 'We are 

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of the opinion that if a tax in its nature is a privilege tax, it does not become 

a property tax simply because it is proportioned in amount to the value of 

the property used in connection with the privilege which is taxed. 

[Citations.] . . . "The character of the imposition is not determined by the 

mode adopted in fixing its amount."'" 

As stated in Alaska v. Arctic Maid, supra, 366 U.S. at p. 202, regarding a tax imposed by 

the State of Alaska upon the business of freezing salmon conducted upon freezer ships 

operating in Alaskan waters measured by the value of salmon received for freezing and 

transportation to another state: 

"To be sure, the tax is computed on the 'value' of the fish 'bought or 

otherwise obtained for processing through freezing.' That, however, is the 

measure of the tax, not the taxable event. The taxable event is 'prosecuting' 

the 'business' of 'Freezer ships and other floating cold storages.'" 

Thus, we find no basis for ignoring the plain meaning of section 8045; 

"[e]very person" includes every licensed wholesaler. Thus, we are not presented with a 

constitutional issue which might otherwise arise by virtue of a tax imposed upon one but 

not all members of the same class. 

The fifth inquiry is whether the state is estopped from collecting unpaid 

privilege taxes for prior years because of an erroneous determination by an officer of the 

Department of Fish and Game that such taxes were not due. The basic doctrine of 

equitable estoppel requires the presence of four factors: 

"(1) the party to be estopped must be apprised of the facts; (2) he 

must intend that his conduct shall be acted upon, or must so act that the 

party asserting the estoppel had a right to believe it was so intended; (3) the 

other party must be ignorant of the true state of facts; and (4) he must rely 

upon the conduct to his injury." (City of Long Beach v. Mansell (1970) 3 

Cal.3d 462, 489; Penn-Co v. Bd. of Supervisors (1984) 158 Cal.App.3d 

1072, 1080.) 

The doctrine may be applied against a public agency 

". . . when the elements requisite to such an estoppel . . . are present 

and, in the considered view of a court of equity, the injustice which would 

result from a failure to uphold an estoppel is of sufficient dimension to 

justify any effect upon public interest or policy which would result from the 

raising of an estoppel." (City of Long Beach v. Mansell, supra, at pp. 496-

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497; Penn-Co v. Bd. of Supervisors, supra; see also, County of San Diego 

v. Cal. Water etc. Co. (1947) 30 Cal.2d 817, 826.) 

It has been held in this regard that equitable estoppel shall not operate against a 

government agency unless the resulting injustice is "grave" (County of San Diego v. Cal. 

Water etc. Co., supra) or "manifest" (City of Long Beach v. Mansell, supra, at pp. 498-

499; see Penn-Co v. Bd. of Supervisors, supra, at p. 1081.) 

Further, the party invoking the doctrine of equitable estoppel against the 

government must show extensive reliance; this usually involves many individuals, or a 

plaintiff whose reliance consisted in giving up some fundamental right, or both these 

factors. (Id. at p. 1081; see, e.g., City of Long Beach v. Mansell, supra, at p. 499; Killian 

v. City etc. of San Francisco (1978) 77 Cal.App.3d 1.) Even when sufficient reliance has 

been established, estoppel will not operate to defeat the effective operation of a policy 

adopted to protect the public. (Strong v. County of Santa Cruz (1975) 15 Cal.3d 720, 

725; Fullerton Union High Sch. Dist. v. Riles (1983) 139 Cal.App.3d 369, 378.) 

In Fullerton, the court summarized the factors enunciated in Driscoll v. 

City of Los Angeles (1967) 67 Cal.2d 297 to determine whether the public agency's 

conduct was sufficiently culpable to warrant estoppel: 

"'[W]hether . . . the inaccurate advice or information is negligently 

ascertained, whether or to what extent the agency is certain of the 

information it dispenses, whether the agency purports to advise and direct 

or merely to inform and respond to inquiries, whether the agency acts in 

bad faith, whether the claimant is one who purports to have no knowledge 

or training which would aid him in determining his rights and the public 

agency purports to be informed and knowledgeable, whether the right of 

which the claimant is being deprived is significant, and whether a 

confidential relationship exists between the claimant and the public entity.'" 

(Fullerton Union High Sch. Dist. v. Riles, supra, at p. 380; see also 

Fredrichsen v. City of Lakewood (1971) 6 Cal.3d 353, 358; State of 

California v. Haslett Co. (1975) 45 Cal.App.3d 252, 256-257.) 

With respect to the inquiry presented, it is noted that the "erroneous 

administrative interpretation" as to tax liability constituted a mistake of law and, insofar 

as it was relied upon by a taxpayer, the mistake was bilateral. Ordinarily, equitable 

estoppel presents a question of fact. (Shoban v. Board of Trustees (1969) 276 

Cal.App.2d 534, 546; Shamrock Development Co. v. City of Concord (1981) 656 F.2d 

1380, 1386.) Acts performed in reliance upon a mutual mistake of law do not create an 

estoppel. (Henry v. City of Los Angeles (1962) 201 Cal.App.2d 299; Shamrock 

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Development Co. v. City of Concord, supra.) "An expression of opinion as to a matter of 

law is not a basis for estoppel, at least in the absence of actual or professed special 

knowledge or confidential relationship." (Gilbert v. City of Martinez (1957) 152 

Cal.App.2d 374.) 

Nevertheless, we turn to those cases dealing specifically with the collection 

of taxes. The rationale of those cases is summarized in Fischback & Moore, Inc. v. State 

Bd. of Equal. (1981) 117 Cal.App.3d 627, 632: 

"The board argues, and we agree, that the state is not estopped from 

collecting a tax which was due and owing, even though the state's 

representatives may have previously adopted an incorrect interpretation of 

the law and advised the public that no taxes would become due on a 

particular transaction or transactions. (Market St. Ry. Co. v. Cal. St. Bd. 

Equal. (1955) 137 Cal.App.2d 87, 100, 103.) Under well-settled rules of 

law state officers and state agencies have no power to estop the state from 

collecting a validly owed tax. The reasons behind such a rule are deeply 

imbedded in our governmental structure, which is designed to discourage 

corrupt collusion between government officers and taxpayers to the 

prejudice of the state's revenues. We, therefore, reject plaintiffs' argument 

that the board is estopped from collecting the tax, even though its 

representatives had previously advised plaintiffs no tax would become 

due." 

In Market St. Ry. Co. v. Cal. St. Bd. Equal. (1955) 137 Cal.App.2d 87, 100-102, the court 

stated: 

"The state board cites many cases from this and other jurisdictions to 

the effect that an estoppel based on reliance upon an erroneous construction 

of the statute by an administrative ruling will not lie against the 

government, particularly in tax matters. As a general proposition this is 

sound law. Obviously, a tax administrator should not be permitted by an 

erroneous ruling to exempt a taxpayer from the obligation to pay taxes." 

The court quoted La Societe Francaise v. California Emp. Com. (1943) 56 Cal.App.2d 

534, 553: 

"'It is the general rule that the government does not lose its revenues 

because of an erroneous ruling of an administrative official as to the 

meaning of a tax law. [Numerous citations.] An administrative regulation 

which is in conflict with the statute is invalid and the government is not 

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bound thereby. [Citations.] The duty of the tax officials is to collect taxes 

imposed by law . . . it is generally no defense that taxes were not paid when 

due in reliance on an official ruling of nonliability. The taxpayer is deemed 

to act with knowledge that administrative officials cannot bind the 

government by their erroneous interpretation of tax statutes.'" 

In Illinois Commercial Men's Assn. v. State Bd. of Equal. (1983) 34 Cal.3d 

839, 855, the California Supreme Court appeared to leave unresolved a significant issue: 

"U.S. Fid. & Guar. Co. v. State Bd. of Equal. (1956) 47 Cal.2d 384, 

sets forth the general rules applicable to estoppel of the government in tax 

matters. Estoppel is available only in the 'unusual case' in which its 

justification is 'clear and the injustice great.' The failure to collect the tax 

authorized by a statute is insufficient to justify estoppel, even if the 

taxpayer relies on an erroneous construction of a statute by an official. (Id. 

at pp. 389-390.) Nevertheless, the opinion proceeds to discuss whether 

certain conduct of the Insurance Commissioner constituted a 'clear 

representation' that a portion of the insurer's premiums in that case would 

not be taxed. It concludes that the commissioner's conduct was not such 'as 

would satisfy an estoppel in connection with taxes.' (Id. at p. 392.) We 

need not decide whether even a 'clear representation' by a public official 

that a tax is not payable can immunize a taxpayer from the duty to pay a tax 

authorized by law, because we determine that such representation was not 

made in the present case." 

While one subsequent appellate case has acknowledged the "clear representation" test as 

one of the prerequisites for estoppel in a tax matter (Interinsurance Exchange v. State Bd. 

of Equal. (1984) 156 Cal.App.3d 606, 615), it is not our prerogative here to declare such 

a representation an independently sufficient basis for equitable relief where no appellate 

court in a long line of cases has done so. Nor are we disposed within the context of an 

advisory opinion to engage in evidentiary investigation which would underlie a 

categorical determination of ultimate facts in connection with the inquiry presented, e.g., 

whether this is an "unusual case" in which the justification is "clear and the injustice 

great." (Id. at p. 615.) While we have been presented with no facts which would suggest 

a basis for such a finding, and while we are aware of no case or circumstances in which 

estoppel has been or might be applied against the government in direct contravention of a 

statutory duty to collect taxes (see People ex rel. Franchise Tax Bd. v. Superior Court 

(1985) 164 Cal.App.3d 526, 551-554), the determination as to whether this is such an 

"unusual" case falls, of course, within the peculiar province of a judicial proceeding. 

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The sixth inquiry is whether the state may collect statutory penalties and 

interest on unpaid privilege taxes for prior years because of the taxpayer's justifiable 

reliance upon an erroneous determination by an officer of the Department of Fish and 

Game that such taxes were not due. With respect to such interest and penalties on unpaid 

taxes, section 8047 provides: 

"Privilege taxes imposed by this article shall be paid monthly to the 

department within 30 days after the close of each month. 

"If any tax is not paid within 60 days after the close of the month for 

which it is due, a penalty equal to 10 percent of the tax shall be added to it." 

Section 8048, subdivision (a) provides: 

"If any person operating under a license issued pursuant to this 

article fails to pay any privilege tax imposed under this article at the time 

that it becomes due and payable, the amount thereof, including penalties 

and interest, together with any costs in addition thereto, shall thereupon be 

a perfected and enforceable state tax lien. Such a lien is subject to Chapter 

14 (commencing with Section 7150) of Division 7 of Title 1 of the 

Government Code." (Emphasis added.) 

Nevertheless, while the state, except in an "unusual" case, is not estopped 

from collecting a tax which was due and owing, even though the state's representatives 

have previously adopted an erroneous interpretation of the law and advised the taxpayer 

that no taxes would become due on a particular event or transaction, it may be estopped 

from collecting penalties and interest where the taxpayer justifiably relied on such advice 

and failed to pay the tax. (Fischback & Moore, Inc. v. State Bd. of Equal., supra, 117 

Cal.App.3d at p. 632; Market St. Ry. Co. v. Cal. St. Bd. Equal., supra, 137 Cal.App.2d at 

pp. 99-103; La Societe Francaise v. California Emp. Com., supra, 56 Cal.App.2d at pp. 

552, 555.) In Fischback, supra, at p. 633, the court concluded: 

". . . we deduce a general rule that a taxpayer is not required at its 

peril to know that a state's administrative rulings are erroneous. Although 

the taxpayer's liability for the original tax remains, its liability for penalties 

and interest may be excused. . . . We think collection of interest on an 

unpaid tax whose existence the board itself failed to recognize was 

inequitable and unjustifiable and that the taxpayer is entitled to recover 

amounts paid as interest." 

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It is concluded that the state may not collect statutory penalties and interest on unpaid 

privilege taxes for prior years because of the taxpayer's justifiable reliance upon an 

erroneous administrative interpretation. 

The final inquiry is whether the state may forgive the payment of unpaid 

privilege taxes for prior years because of an erroneous administrative interpretation that 

such taxes were not due. As previously noted, if a licensee fails to pay a privilege tax 

when due, the amount thereof "shall thereupon be a perfected and enforceable state tax 

lien," subject to the provisions of section 7150 et seq. of the Government Code. (§ 8048, 

subd. (a), supra.) 

Article XVI, section 6 of the California Constitution prohibits the 

Legislature from making a gift of public funds or property7/ A transfer of property 

without consideration is a gift. (Civ. Code, § 1146.) Consequently, the release of a tax 

lien, which is public property, without consideration would violate the constitutional 

prohibition. (Community Television of So. Cal. v. County of Los Angeles (1975) 44 

Cal.App.3d 990, 996.) However, the benefit to the state from an expenditure for a 

"public purpose" is in the nature of consideration and the funds expended are therefore 

not a gift even though private persons are benefited therefrom. (Id. at p. 997; County of 

Alameda v. Janssen (1940) 16 Cal.2d 276, 281; Calif. Emp. etc. Com. v. Payne (1947) 31 

Cal.2d 210, 216.) 

In Community Television, it was held that Revenue and Taxation Code 

section 271, subdivision (a)(3), authorizing a proportionate refund with respect to taxes 

on property acquired after taxes had become a lien by an organization qualified for the 

welfare exemption, was in furtherance of that exemption as provided in section 214 of 

said code, and not in violation of the constitutional prohibition. In Schettler v. County of 

Santa Clara (1977) 74 Cal.App.3d 990, escape assessments were levied on imported 

inventory for prior years which had not been collected or paid because of the county's and 

taxpayer's reliance upon judicial interpretation, later overruled, that such goods were 

immune from local taxation. The Legislature then enacted Revenue and Taxation Code 

section 226 (repealed, Stats. 1984, ch. 678, § 13) providing that the validity of the ad 

valorem property tax assessments on goods imported prior to 1976 must be determined 

pursuant to law as it existed before the superseding decision in Michelin Tire Corp. v. 

Wages (1976) 423 U.S. 276. It was contended that the Legislature was not empowered 

7 California Constitution, article XVI, section 6, provides in pertinent part that "The 

Legislature shall have no power . . . to make any gift or authorize the making of any gift, 

of any public money or thing of value to any individual, municipal or other corporation 

whatever. . . ." (Cf. 67 Ops.Cal.Atty.Gen. 31, 33-36 (1984).) 

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by subsequent enactment to remit or surrender the tax which had become due on the lien 

date. The court stated (id. at pp. 1003-1006): 

"Of course, we have no quarrel with respondent's argument that the 

tax lien is a vested right of the taxing body; . . . that as a general proposition 

the Legislature cannot by a subsequent act increase or decrease the rate, 

remit the tax or in any way surrender, impair or limit rights that have 

become fixed and vested (Estate of Skinker, supra). To this general rule, 

however, there is a well recognized exception. It has been consistently held 

that expenditures of public funds or property which involve a benefit to 

private persons are not gifts within the meaning of the constitutional 

prohibition if those funds are expended for a public purpose (California 

Emp. etc. Com. v. Payne (1947) 31 Cal.2d 210, 216; County of San 

Bernardino v. Way (1941) 18 Cal.2d 647, 653; County of Alameda v. 

Janssen (1940) 16 Cal.2d 276, 281; County of Riverside v. Whitlock (1972) 

22 Cal.App.3d 863, 877; Winkelman v. City of Tiburon (1973) 32 

Cal.App.3d 834, 844-846). As stated in City of Oakland v. Garrison 

(1924) 194 Cal. 298, 302: '[W]here the question arises as to whether or not 

a proposed application of public funds is to be deemed a gift within the 

meaning of that term as used in the constitution, the primary and 

fundamental subject of inquiry is as to whether the money is to be used for 

a public or a private purpose. If it is for a public purpose within the 

jurisdiction of the appropriating board or body, it is not, generally speaking, 

to be regarded as a gift.' (Italics added. Accord: Doctors General 

Hospital v. County of Santa Clara, supra, 188 Cal.App.2d at p. 286.) It is 

likewise settled that if a public purpose is served by the expenditure of 

public funds, the constitutional prohibition is not violated even though there 

may be incidental benefits to private persons (Board of Supervisors v. 

Dolan (1975) 45 Cal.App.3d 237, 243; see also: People v. City of Long 

Beach (1959) 51 Cal.2d 875; County of San Diego v. Hammond (1936) 6 

Cal.2d 709; City of Oakland v. Williams (1929) 206 Cal. 315). Even more 

importantly, under an unbroken line of cases the determination of what 

constitutes a public purpose is primarily a matter for the Legislature, and its 

discretion will not be disturbed by the courts so long as that determination 

has a reasonable basis (County of Alameda v. Carleson (1971) 5 Cal.3d 

730, 746; County of Alameda v. Janssen, supra, 16 Cal.2d 276, 281; The 

Housing Authority v. Dockweiler, supra, 14 Cal.2d at pp. 449-450; 

Veterans' Welfare Board v. Jordan, supra, 189 Cal. 124, 145; Community 

Television of So. Cal. v. County of Los Angeles (1975) 44 Cal.App.3d 990, 

997; Board of Supervisors v. Dolan, supra, 45 Cal.App.3d 237, 243). 

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"As noted earlier, in the instant case the Legislature expressly found 

on the one hand that public policy would be served by the enactment 

providing relief from retroactive legislation and on the other that the 

potential retroactive application of Michelin would be manifestly unfair, 

inequitable and unjust and would cause severe economic hardship. In 

support of the latter finding the Legislature pointed out that importers had 

reasonably relied on the previous law and could not reasonably foresee the 

change of law; that as a result of the unexpected tax burden many importers 

would become insolvent and be driven out of business; finally and even 

more importantly, that the adverse effect of retroactive taxes on the 

importing business community would result in a further deterioration of the 

California labor market. 

"That the prevention of undue hardship on employers and the 

correlative deterioration of the employment situation may constitute a valid 

public purpose which duly exempts the legislation from the constitutional 

prohibition against donation of public funds is well illustrated by California 

Emp. etc. Com. v. Payne, supra, 31 Cal.2d 210. In Payne, the plaintiff was 

attempting to collect unemployment contributions from defendant 

employer. Defendant, believing he had less than the minimum number of 

employees, had not filed returns. The applicable statute of limitations was 

suspended if no returns were filed. However, six months prior to the filing 

of the action by the plaintiff, the statute of limitations was changed to 

provide that it was tolled only if the failure to file returns was intentional. 

Although moneys were due and owing and debts had accrued, the court 

determined that the legislative intent was to provide relief for employers 

and it upheld the statute against an attack that it constituted a gift of public 

funds. The court stated, inter alia, as follows: 'The question remains 

whether the retroactive application of the amended statute would conflict 

with the constitutional prohibition against gifts of public money or property 

to private persons. (Cal. Const., art. IV, §§ 22, 31.) It has been held that a 

retroactive amendment to the inheritance tax laws releasing the tax liability 

of an estate was within the constitutional inhibition. [Citations.] 

"'It is well settled, however, that expenditures of public funds or 

property which involve a benefit to private persons are not gifts within the 

meaning of sections 22 and 31 of article IV of the Constitution if those 

funds are expended for a public purpose, which is a matter primarily for 

legislative discretion. [Citation.] It would appear that any incidental 

benefit to the employer in applying this section to existing causes of action 

so as to cut off the commission's right to sue for the contributions where no 

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intent to evade the act is present, may well be outweighed by the public 

benefit which would result if enforcement officers spent their time on fresh 

claims rather than stale ones. An additional element of public benefit is 

present where, as here, the statutory scheme is not purely a revenue 

measure but is enacted as part of a broad social program involving 

continuing contributions and benefits. Whether the employer would be able 

to pay a large assessment, based upon many years of innocent 

delinquencies, becomes important. It is possible that an employer who has 

not made collections from his employees or set aside a fund for the payment 

of the assessments, would be rendered insolvent or bankrupt if compelled to 

pay the amount of the accumulated assessments, plus interest and penalties. 

Under such circumstances, the result would be to force the employer out of 

business, thereby depriving his employees of work and, to that extent, 

defeating the primary object of the legislation which is to protect employees 

against unemployment.' (California Emp. etc. Com. v. Payne, supra, at pp. 

216-217; italics added.) 

"Based upon Payne and the long line of cases cited above, we must 

conclude that the Legislature supplied sufficient reasons in support of its 

conclusion that by the prospective application of Michelin a valid and well 

recognized public purpose is served, and also that this determination of the 

Legislature does have the requisite reasonable basis. Under these 

circumstances, section 226 squarely falls within the exception to the 

general rule prohibiting donation of public funds and its constitutional 

validity must be upheld even though as an incidental matter the importers 

as private individuals also benefit from its provisions." 

Again, a categorical determination of ultimate facts in any case, e.g., 

whether a public purpose would be served, the existence and effect of undue economic 

hardship, etc., must depend upon an evidentiary analysis within the province of an 

essentially judicial proceeding. As noted in Schettler, the court will give primary 

deference to legislative discretion so long as it has a reasonable basis. (Id. at p. 1004; 

Community Television of So. Cal. v. County of Los Angeles, supra, 44 Cal.App.3d at p. 

997.) 

With respect to the inquiry presented, the lack of any such legislative 

pronouncement or indication underscores the absence of any underlying statutory 

authorization8 to forego the collection of taxes for prior years. With respect to an 

8 We are advised that such authorization was proposed as an amendment to Assembly 

Bill 1766 (1985-86 reg. ses.) which died in committee. 

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administrative agency, the court stated in Ferdig v. State Personnel Board (1969) 71 

Cal.2d 96, 103-104: 

"'It is settled principle that administrative agencies have only such 

powers as have been conferred on them, expressly or by implication, by 

constitution or statute. [Citations.] An administrative agency, therefore, 

must act within the powers conferred upon it by law and may not validly 

act in excess of such powers. [Citations.] In accordance with these 

principles, it has been held in this state . . . that when an administrative 

agency acts in excess of, or in violation, of the powers conferred upon it, its 

action thus taken is void. [Citations.]' (See also 66 Ops.Cal.Atty.Gen. 17, 

24 (1983); 63 Ops.Cal.Atty.Gen. 840, 841 (1980).)'" 

With respect to those powers which may be implied, the court expounded in Addison v. 

Department of Motor Vehicles (1977) 69 Cal.App.3d 486, 498: 

"'"But the doctrine of implied powers is not without limitations. It 

cannot be invoked where the grant of express powers clearly excludes the 

exercise of others, or where the claimed power is incompatible with, or 

outside the scope of, the express powers. For a power to be justified under 

the doctrine, it must be essential to the declared objects and purposes of the 

enabling act -- not simply convenient, but indispensable. Any reasonable 

doubt concerning the existence of the power is to be resolved against the 

agency." [Citation.]'" (See also 67 Ops.Cal.Atty.Gen. 325, 330 (1984.) 

Similarly, a public officer has only such powers as have been conferred by 

law, expressly or by implication. (65 Ops.Cal.Atty.Gen. 321, 325 (1982) -- county 

recorder; 65 Ops.Cal.Atty.Gen. 467, 468 (1982) -- Governor; 63 Ops. Cal.Atty.Gen. 840, 

841 (1980) -- State Treasurer without authority and therefore precluded from borrowing 

against time deposits even for purposes of reinvestment at higher rates without increase 

in attendant risk.) We have reached similar conclusions with regard to the authority of 

tax collectors. (68 Ops.Cal.Atty.Gen. 223, 224 (1985); 62 Ops.Cal. Atty.Gen. 504, 508 

(1979).) Hence, it is concluded on purely statutory grounds that the state may not forgive 

the payment of unpaid privilege taxes for prior years.9 

**** 

In view of the conclusion reached herein, it is not necessary to discuss the 

application of California Constitution, article XIII, section 31: "The power to tax may 

not be surrendered or suspended by grant or contract." 

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9