Mt. Dept. of Revenue v. Jarrett

No. 84-551

I N THE SUPREME COURT O THE STATE O MONTANA F F

THE DEPARTMENT O REVENUE O THE F F STATE O MONTANA, F

P e t i t i o n e r and A p p e l l a n t ,

-vs-

AMOS JARRETT , Respondent and Respondent.

APPEAL F O : R M D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , I n and f o r t h e County of Y e l l o w s t o n e , The Honorable W i l l i a m J. S p e a r e , Judge p r e s i d i n g .

COUNSEL O RECORD: F

For A p p e l l a n t :

L a r r y G. S c h u s t e r , Dept. of Revenue, H e l e n a , Montana

For Respondent:

Amos J a r r e t t , p r o s e , B i l l i n g s , Montana

S u b m i t t e d on B r i e f s : March 1 4 , 1985

Decided: M ~ Y 3 1 1985 2

-- Clerk

Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. Amos Jarrett, respondent, was denied a request for a tax refund by the Yellowstone County Commissioners. He appealed to the Yellowstone County Tax Appeal Board which found in his favor. The Department of Revenue appealed to the State Tax Appeal Board which determined that respondent was due a tax refund. The Department filed for judicial review and both

parties moved for summary judgment. The District Court entered summary judgment in favor of the respondent. The Department appeals. The respondent owns a lot in Yellowstone County. For the years 1978 through 1981 respondent received tax assessment notices stating that the annual assessment on the lot was $14,510. He paid the taxes each year without protest. In 1982, the Department of Revenue discovered the lot was not in a special improvement district as had been originally believed and it did not have access to sewer facilities. The Department of Revenue reappraised the lot

and reduced the assessment from $1.4,510 to $7,418. In June of 1982, respondent contacted the Yellowstone County Commissioners, the Yellowstone County Assessor and the Yellowstone County Treasurer requesting a tax refund for the years 1978 through 1981. At the request of the Yellowstone County Commissioners, the Yellowstone County Assessor and the appraisers of the Department of Revenue investigated the matter and submitted a memorandum to the Commissioners. They expressed an opinion that the property had not been erroneously appraised in 1978, but that the value of the property had decreased between 1978 a.nd 1982 because of a change in development pattern. The Yellowstone County Treasurer believed respondent was due a refund but the

c o m m i s s i o n e r s d e n i e d a r e f u n d , w h i c h , i f g r a n t e d , would have amounted t o $512.35.

I n 1983, r e s p o n d e n t a p p e a l e d t o t h e Yel-lowstone County Tax Appeal Board. The Board found for respondent. The Department o f Revenue t h e n a p p e a l e d t o t h e S t a t e Tax Appeal Board. The State Board concluded that an erroneous a s s e s s m e n t had b e e n made i n 1978 and was c a r r i e d o n t h e t a x rolls from 1979 through 1981 and, therefore, under § 15-8-601, MCA a c o r r e c t i o n c o u l d b e made. The Board a f f i r m e d the Yellowstone County Tax Appeal Board's decision and ordered a t a x refund f o r respondent.

The Department o f Revenue f i l e d f o r j u d i c i a l r e v i e w o f t h e S t a t e Tax Appeal Board d e c i s i o n i n t h e Y e l l o w s t o n e County D i s t r i c t Court. Both p a r t i e s moved f o r summary judgment. On O c t o b e r 1 5 , 1984, t h e D i s t r i c t C o u r t e n t e r e d summary judgment i n favor of t h e respondent. From t h a t a d v e r s e d e c i s i o n , t h e Department o f Revenue a p p e a l s t o t h i s C o u r t .

A p p e l l a n t p r e s e n t s t h e f o l l o w i n g i s s u e on a p p e a l :

Does t h e S t a t e Tax Appeal Board h a v e any a u t h o r i t y t o change t h e v a l u e o f p r o p e r t y f o r p a s t t a x y e a r s , p u r s u a n t t o

15-8-601, MCA, when a taxpayer has not filed any a d m i n i s t r a t i v e a p p e a l s a s t o t h o s e tax y e a r s ?

The d i s p o s i t i v e i s s u e b e f o r e t h i s C o u r t i s w h e t h e r t h e taxpayer is entitled to a refund of taxes paid due t o a n erroneous a s s e s s m e n t made on his land. Section 15-1-402, MCA, s e t s o u t t h e p r o c e d u r e by w h i c h a t a x p a y e r may p r o t e s t t h e payment o f a t a x h e b e l i e v e s t o b e i n c o r r e c t . It states i n pertinent part:

"15-1-402. Payment o f t a x e s u n d e r p r o t e s t - action t o recover.

" (1) The p e r s o n upon whom a t a x o r l i c e n s e fee i s b e i n g imposed may p r o c e e d u n d e r 15-1-406 o r may, b e f o r e t h e t a x o r l i c e n s e f e e becomes d e l i n q u e n t ,

pay u n d e r w r i t t e n p r o t e s t t h a t p o r t i o n o f t h e t a x o r license fee protested. The payment must:

(a b e made t o t h e o f f i c e r d e s i g n a t e d and a u t h o r i z e d t o c o l l e c t i t ; and (b) s p e c i f y t h e grounds o f p r o t e s t .

" (2) A f t e r having exhausted t h e a d m i n i s t r a t i v e a p p e a l s a v a i l a b l e u n d e r T i t l e 1 5 , c h a p t e r s 2 and 75, a p e r s o n o r h i s l e g a l r e p r e s e n t a t i v e may b r i n g an a c t i o n i n any c o u r t o f c o m p e t e n t j u r i s d i c t i o n a g a i n s t t h e o f f i c e r s t o whom s a i d t a x o r l i c e n s e f e e was p a i d o r a g a i n s t t h e c o u n t y o r m u n i c i p a l i t y i n whose b e h a l f t h e same was c o l l e c t e d and t h e department o f revenue." (emphasis added)

This s t a t u t e i s permissive n o t mandatory. A taxpayer can o n l y use t h i s p r o t e s t procedure i f he i s aware t h a t h i s t a x e s may b e i n c o r r e c t a t t h e t i m e h e p a y s them. A taxpayer who d o e s not know h e i s being overtaxed w i l l n o t pay h i s taxes under protest and can not receive a refund under § 15-1-402, MCA.

For the victim of an e r r o n e o u s a s s e s s m e n t , as i n the case at hand, there must be a n o t h e r way to obtain a tax refund. The S t a t e Tax Appeal Board allowed respondent to o b t a i n a t a x refund under § 15-8-601, MCA. S e c t i o n 15-8-601, MCA s t a t e s a s f o l l o w s :

"15-8-601. Assessment r e v i s i o n - c o n f e r e n c e f o r review. (1) Whenever t h e d e p a r t m e n t o f r e v e n u e d i s c o v e r s t h a t any t a x a b l e p r o p e r t y o f a n y p e r s o n has in any year escaped assessment, been erroneously assessed, or been omitted from taxation, t h e d e p a r t m e n t may a s s e s s t h e same provided t h e p r o p e r t y i s under t h e ownership o r c o n t r o l o f t h e same p e r s o n who owned o r c o n t r o l l e d it at the time it escaped assessment, was e r r o n e o u s l y a s s e s s e d , o r was o m i t t e d from t a x a t i o n . A l l s u c h r e v i s e d a s s e s s m e n t s must b e made w i t h i n 10 y e a r s a f t e r t h e end o f t h e c a l e n d a r y e a r i n which t h e o r i g i n a l a s s e s s m e n t was o r s h o u l d h a v e b e e n made. "

In the recent case of Eagle Communications, Inc. v. F l a t h e a d County, (Mont. 1 9 8 4 ) , 685 P.2d 912, 4 1 S t . R e p . 1303,

t h i s Court held t h a t § 15-8-601, MCA c r e a t e s no power i n t h e Department of Revenue t o r e f u n d t a x e s u n l a w f u l l y c o l l e c t e d . In Eagle, the plaintiff, Eagle Communications Inc. , paid t h e i r t a x e s under p r o t e s t pursuant t o 15-1-402, MCA, and within 90 days filed a lawsuit alleging an erroneous assessment of t h e i r property. While i t s l a w s u i t was p e n d i n g E a g l e p a i d t a x e s u n d e r p r o t e s t , however, it d i d n o t f i l e an action fox each payment. The Department of Revenue d e t e r m i n e d t h a t an e r r o n e o u s a s s e s s m e n t had b e e n made, but t h e County T r e a s u r e r r e f u s e d t o r e f u n d t a x e s t h a t had a l r e a d y been d i s b u r s e d b e c a u s e no a c t i o n had been commenced on them.

In an a c t i o n t o r e c o v e r t h e s e t a x e s , Eagle maintained t h a t t h e Department o f Revenue had a d u t y u n d e r S 15-8-601, MCA, to provide a refund of taxes paid on an erroneous assessment. This Court denied the refund and stated as follows:

" H e r e , t h e Department h a s a g r e e d t o a r e a s s e s s m e n t . It i s t h e refund i t s e l f t h a t i s a t i s s u e . However, s e c t i o n 15-8-601, MCA c r e a t e s no a u t h o r i t y f o r t h e Department t o r e f u n d e r r o n e o u s l y c o l l e c t e d t a x e s . I t a p p e a r s t h e r e f u n d f u n c t i o n was g r a n t e d t o t h e T r e a s u r e r , a s s e t f o r t h i n s e c t i o n 15-1-402, MCA because the Treasurer collects and controls disbursements o f t a x funds. S e c t i o n 15-8-601, MCA i n s p e a k i n g o n l y o f a s s e s s m e n t by t h e D e p a r t m e n t , i s c o n s i s t e n t w i t h t h i s d i v i s i o n o f d u t i e s between t h e T r e a s u r e r and Department.

"We h o l d t h a t t h e Department o f Revenue h a s no d u t y u n d e r s e c t i o n 15-8-601, MCA t o p r o v i d e a r e f u n d o f t a x e s p a i d on an e r r o n e o u s a s s e s s m e n t . "

Clearly, S 15-8-601, MCA makes no p r o v i s i o n for a tax refund. Unlike Eagle, t h e recourse o f § 15-1-402, MCA i s n o t a v a i l a b l e t o t h i s respondent. Respondent was n o t aware an e r r o n e o u s a s s e s s m e n t had been made on h i s l a n d and c o u l d n o t have known t o f i l e h i s t a x e s u n d e r p r o t e s t .

S e c t i o n 15-16-601, MCA p r o v i d e s t h e n e c e s s a r y r e l i e f f o r respondent. It s t a t e s i n p e r t i n e n t p a r t :

"15-16-601. Taxes o r p e n a l t i e s i l l e g a l l y c o l l e c t e d t o be refunded. ( 1 ) ( a ) Any t a x e s , p e r centum, and c o s t s p a i d more t h a n o n c e o r e r r o n e o u s l y o r i l l e g a l l y c o l l e c t e d o r any amount o f t a x p a i d f o r which a t a x p a y e r i s e n t i t l e d t o a r e f u n d u n d e r 15-16-612 o r a n y p a r t o r p o r t i o n o f t a x e s p a i d which were m i s t a k e n l y computed o n government bonus

o r s u b s i d y r e c e i v e d by t h e t a x p a y e r may, by o r d e r o f t h e b o a r d o f c o u n t y commi.ssioners, be r e f u n d e d by t h e c o u n t y t r e a s u r e r . Whenever any payment s h a l l have been made t o t h e s t a t e t r e a s u r e r a s p r o v i d e d i n 15-1-504 and it s h a l l a f t e r w a r d s a p p e a r to the satisfaction of t h e board of county c o m m i s s i o n e r s t h a t a p o r t i o n o f t h e money s o p a i d s h o u l d be r e f u n d e d a s h e r e i n p r o v i d e d , s a i d b o a r d o f c o u n t y c o m m i s s i o n e r s may r e f u n d s u c h p o r t i o n o f s a i d t a x e s , p e n a l t i e s , and c o s t s s o p a i d t o t h e s t a t e t r e a s u r e r , and upon t h e r e n d e r i n g o f t h e r e p o r t r e q u i r e d by 15-1-505 t h e c o u n t y c l e r k and recorder s h a l l c e r t i f y t o t h e s t a t e auditor, i n s u c h form a s t h e s t a t e a u d i t o r may p r e s c r i b e , a l l amounts s o r e f u n d e d , and i n t h e n e x t s e t t l e m e n t o f t h e county t r e a s u r e r with t h e s t a t e , t h e s t a t e a u d i t o r s h a l l g i v e t h e county t r e a s u r e r c r e d i t f o r t h e s t a t e ' s p o r t i o n o f t h e amounts s o r e f u n d e d . " (emphasis added)

The f o l l o w i n g s e c t i o n , § 15-16-602, MCA s t a t e s :

"15-16-602. Concurrent remedies. Section 1.5-16-601 s h a l l n o t b e deemed o r c o n s t r u e d t o b e i n c o n f l i c t with t h e provisions of p a r t 4 of chapter 1, b u t 15-16-601 and t h e p r o v i s i o n s o f s u c h p a r t 4 s h a l l p r o v i d e and a f f o r d c o n c u r r e n t r e m e d i e s . "

Clearly, S 15-16-601, MCA was n o t meant t o b e u s e d in lieu of the S 15-1-402, MCA requirements of paying under protest, b u t when the recourse of S 15-1-402, MCA i s not available, a taxpayer can o b t a i n a refund under § 15-16-601,

MCA . Section 15-16-601, MCA provides that taxes paid

erroneously may be refunded by the county treasurer, "by o r d e r - -e b o a r d - c o u n t y c o m m i s s i o n e r s . " of th of The Y e l l o w s t o n e

Board o f County Commissioners d e n i e d r e s p o n d e n t ' s r e q u e s t f o r a t a x refund. However, respondent has followed t h e proper procedure f o r appealing t h a t decision.

Respondent appealed to the County Tax Appeal Board. S e c t i o n 15-15-101, MCA p r o v i d e d f o r such appeals a s follows:

"(2) The c o u n t y t a x a p p e a l b o a r d must m e e t on t h e t h i r d Monday o f A p r i l i n e a c h y e a r t o h e a r p r o t e s t s c o n c e r n i n g a s s e s s m e n t s made by t h e d e p a r t m e n t o f revenue . . . . " (3) I n connection w i t h any such a p p e a l , t h e c o u n t y t a x a p p e a l b o a r d may c h a n g e a n y a s s e s s m e n t o r f i x t h e a s s e s s m e n t a t some o t h e r l e v e l . . ."

The Yellowstone County Tax Appea 1 Board properly r e v i e w e d t h e r e s p o n d e n t ' s c a s e and d e t e r m i n e d r e s p o n d e n t was due a r e f u n d . P u r s u a n t t o $ 15-15-104, MCA, t h e Department of Revenue a p p e a l e d t h a t d e c i s i o n t o t h e S t a t e Tax Appeal Board.

The S t a t e Tax Appeal Board i s a b l e t o h e a r a p p e a l s and make its own determinations under S 15-2-301, MCA, which states, i n part:

" ( 2 ) A t t h e time o f giving such n o t i c e , t h e s t a t e b o a r d may r e q u i r e t h e c o u n t y b o a r d t o c e r t i f y t o it t h e minutes o f t h e proceedings r e s u l t i n g i n such action and a l l t e s t i m o n y t a k e n i n connection therewith. The s t a t e b o a r d may, i n i t s d i s c r e t i o n , determine t h e appeal on such r e c o r d i f a l l p a r t i e s r e c e i v e a copy o f t h e t r a n s c r i p t and a r e p e r m i t t e d t o s u b m i t a d d i t i o n a l sworn s t a t e m e n t s , o r t h e s t a t e b o a r d may h e a r f u r t h e r t e s t i m o n y .... "(4) I n c o n n e c t i o n w i t h any a p p e a l u n d e r t h i s s e c t i o n , t h e s t a t e board s h a l l n o t b e bound by common law and s t a t u t o r y r u l e s o f e v i d e n c e o r r u l e s o f d i s c o v e r y and may a f f i r m , r e v e r s e , o r modify any decision. The d e c i s i o n o f t h e s t a t e t a x a p p e a l board shall be final and binding upon all i n t e r e s t e d p a r t i e s u n l e s s r e v e r s e d o r m o d i f i e d by j u d i c i a l review."

The S t a t e Tax Appeal Board a g r e e d w i t h t h e c o u n t y b o a r d and ordered a refund. J u d i c i a l review of t h a t d e c i s i o n has followed. I n r e v i e w i n g w e a r e bound by t h e f i n d i n g s o f f a c t made by t h e a d m i n i s t r a t i v e t r i b u n a l s a b s e n t a c l e a r a b u s e o f discretion. The s t a t e board found an erroneous appraisal resulted i n a mistaken levy. T h i s f i n d i n g was c o n t r a r y t o t h e f i n d i n g of t h e c o u n t y c o m m i s s i o n e r s . The e v i d e n c e was i n d i s p u t e and t h e f i n d i n g c o u l d go e i t h e r way. A s was p o i n t e d o u t by this Court in t h e recent c a s e o f Northwest Land & Devel. o f Montana, I n c . (Mont. 19831, 6 6 1 P.2d 44, 40 S t . R e p . 470, when w e q u o t e d t h e D i s t r i c t C o u r t .

" [ i l t i s w i t h i n t h e Board's province a s f a c t - f i n d e r t o g i v e c e r t a i n e v i d e n c e more w e i g h t t h a n o t h e r evidence. The B o a r d ' s c h o i c e o f t h e l o w e r amount was w i t h i n i t s power and s i n c e t h e r e i s e v i d e n c e i n t h e r e c o r d t o s u p p o r t s u c h f i n d i n g it must s t a n d . "

W e f i n d s u b s t a n t i a l c r e d i b l e evidence t o support t h e findings o f t h e S t a t e Tax A p p e a l Board.

I t i s t h e o p i n i o n o f t h i s C o u r t t h a t u n d e r S 15-16-601, MCA r e s p o n d e n t should r e c e i v e a t a x refund f o r t h e erroneous a s s e s s m e n t made on h i s l a n d i n 1978 t h r o u g h 1981. W e remand to the Yellowstone Board of County Commissioners with instructions to order the Yellowstone County Treasurer to i s s u e a refund t o respondent. Justices