Gajanan v. City and County of S.F. CA1/2
The owners and operators of six San Francisco boutique hotels filed suit against the City and County of San Francisco and its Office of the Treasurer and Tax Collector (collectively, the City) seeking refunds of about $1.7 million in penalties the City had assessed for failure to timely file returns and pay certain hotel taxes. The hotel owners and operators contended they were entitled to refunds under section 6.17-4 of the San Francisco Business and Tax Regulations Code because, exercising ordinary care, they had hired and then relied on an employee to file the returns and make the payments, only to learn after the taxes were past due that the employee was dishonest and had never filed the returns or paid the taxes. After an eight-day bench trial, judgment was entered in favor of the hotel owners and operators.
The City raises two main arguments in this appeal.
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