Kimbrough v. Idaho Bd. of Tax Appeals (In re Kimbrough)
| Decision Date | 04 February 2011 |
| Docket Number | No. 36726.,36726. |
| Citation | 247 P.3d 644,150 Idaho 417 |
| Parties | In the Matter of the Appeal of Walter & Judith Kimbrough, from the Decision of the Canyon County Board of Equalization for the Tax Year 2007. Walter KIMBROUGH and Judith Kimbrough, Petitioners–Appellants, v. IDAHO BOARD OF TAX APPEALS and Canyon County Board of Equalization, Respondent. |
| Court | Idaho Supreme Court |
Thompson Law Firm, Meridian, attorneys for petitioners. Kristen R. Thompson argued.
Hon. Bryan F. Taylor, Canyon County Prosecutor, Caldwell, for respondents. Ty A. Ketlinski argued.
Walter and Judith Kimbrough appeal the district court's decision affirming the Canyon County Board of Equalization's assessment of their farm and homesite. They contend that the Canyon County Assessor should have applied the agricultural-land exemption to the acre on which their farmhouse sits rather than classifying it as a homestead. They also assert that their homesite valuation was excessive.
In 2004, Walter and Judith Kimbrough, Appellants, purchased a small farm in rural Canyon County, Idaho. Of their parcel, 0.66 acres underlie a public right-of-way and are exempt from taxation, leaving 14.76 subject to assessment. The Kimbroughs have dedicated most of their land to growing alfalfa, but just over two acres contain agricultural outbuildings and the Kimbroughs' home. The Canyon County Assessor apparently always exempted 13.76 acres of the Kimbroughs' farm from taxation under I.C. § 63–604, which allows an exemption for land actively devoted to agriculture. It then assessed at market value the remaining acre, which included the Kimbroughs' house (the "homesite").1 Between 2002 and 2006, the Assessor had valued the entire property at $209,200, but in 2007 the total assessment more than doubled to $419,200. The County attributed nearly all of the added assessment to the increased value of the homesite and residential improvements.
The Kimbroughs appealed their 2007 property-tax assessment to the Canyon County Board of Equalization and then to the Idaho Board of Tax Appeals (the "BTA"), both of whom are Respondents in this case, but both affirmed the assessment. They next appealed to the district court, which held a trial de novo on the valuation the County applied to the homesite. The district court issued findings from the bench, which it augmented later in the Amended Supplemental Findings of Fact and Conclusions of Law. The court held that the County was correct to value the one-acre homesite and residential improvements at market value separately from the Kimbroughs' agricultural acreage and that the valuation was not arbitrary or discriminatory.
On appeal, the Kimbroughs argue that the Idaho Tax Commission's regulations illegally require counties to assess at market value homesites that are contiguous with property that is agriculturally exempt under I.C. § 63–604. They assert that homesites should be subject to the agricultural-land exemption. Alternatively, they challenge the comparable sales the County relied upon in valuing their homesite. Respondents counter that only land actually devoted to agriculture can be exempt under I.C. § 63–604 and, further, that the County used a widely accepted appraisal method by using the best available comparable sales to value the Kimbroughs' homesite.
1. Whether the County must apply the agriculture exemption under I.C. § 63–604 to homesites that are contiguous with land actively devoted to agriculture.
2. Whether the County's valuation of the Kimbroughs' homesite was arbitrary, oppressive, or discriminatory.
3. Whether the Kimbroughs are entitled to attorney fees under I.C. § 12–117.
The district court held a trial de novo pursuant to I.C. § 63–3812(c).2 "Where the district court conducts a trial de novo in an appeal of a BTA decision, this Court defers to the district court's findings of fact that are supported by substantial evidence, but exercises free review over the district court's conclusions of law." Canyon Cnty. Bd. of Equalization v. Amalgamated Sugar Co., 143 Idaho 58, 60, 137 P.3d 445, 447 (2006). The interpretation of a statute is a question of law subject to free review. Callies v. O'Neal, 147 Idaho 841, 847, 216 P.3d 130, 136 (2009).
"All property within the jurisdiction of this state, not expressly exempted, is subject to assessment and taxation." I.C. § 63–601. Tax exemptions are generally disfavored—they are never presumed and cannot be extended by judicial construction. Housing Sw., Inc. v. Washington Cnty., 128 Idaho 335, 337, 913 P.2d 68, 70 (1996) (citing Owyhee Motorcycle Club, Inc. v. Ada Cnty., 123 Idaho 962, 964, 855 P.2d 47, 49 (1993) ). Thus, unlike most tax statutes, ambiguous provisions related to deductions, exemptions, and credits are "construed strongly against the taxpayer." Canty v. Idaho State Tax Comm'n, 138 Idaho 178, 182, 59 P.3d 983, 987 (2002) (). This Court will follow the plain meaning of an unambiguous statute, but will engage in statutory construction if a provision is ambiguous. Hayden Lake Fire Prot. Dist. v. Alcorn, 141 Idaho 307, 312, 109 P.3d 161, 166 (2005). Administrative rules are interpreted the same way as statutes. Brandon Bay, Ltd. P'ship v. Payette Cnty., 142 Idaho 681, 683, 132 P.3d 438, 440 (2006).
The statute at issue in this case allows farm owners to exempt land actively devoted to agriculture. It provides:
I.C. § 63–604(1) (emphasis added).3 In addition to meeting the above criteria, taxpayers who own parcels of five acres or less must also show that their property generates a certain amount of income in order to qualify for the agriculture exemption. Id. § 63–604(1)(b).
The Tax Commission has issued regulations interpreting this exemption to apply only to acreage that actually qualifies for the agriculture exemption, not to associated homesites. It defines a "homesite" as "that portion of land, contiguous with but not qualifying as land actively devoted to agriculture, and the associated site improvements used for residential and farm homesite purposes." IDAPA 35.01.03.645.01.a. Although homesite acreage counts toward the five-acre threshold, it is not exempt under § 63–604. The Commission requires that homesites and their associated improvements be assessed at market value each year. IDAPA 35.01.03.645.02.
The parties agree that the Kimbroughs are entitled to the agriculture exemption for the land on which they raise alfalfa. They also agree that the Kimbroughs' one-acre homesite is not actively devoted to growing any crops or otherwise producing agricultural products. They disagree over whether the Kimbroughs' homesite is nonetheless exempt under the language of § 63–604, offering two competing interpretations of that provision. Respondents assert that homesite acreage is only relevant when determining whether a parcel of farmland is large enough to qualify for the agricultural exemption. The Kimbroughs, on the other hand, argue that § 63–604 also unambiguously exempts the homesite itself in addition to the land actively devoted to agriculture because the statute states that "the total area of such land, including the homesite," must exceed five acres.
The Kimbroughs have their own interpretation of I.C. § 63–604, but not all interpretations are reasonable. "A statute is ambiguous when the language is capable of more than one reasonable interpretation." Farber v. Idaho State Ins. Fund, 147 Idaho 307, 311, 208 P.3d 289, 293 (2009) (citing Porter v. Bd. of Trustees, 141 Idaho 11, 14, 105 P.3d 671, 674 (2004) ). A statute is not ambiguous if the parties simply offer different interpretations to the Court. Id. Idaho Code § 63–604(1) expressly states that it only applies to "land which is actively devoted to agriculture." In Ada County Board of Equalization v. Highlands, Inc., 141 Idaho 202, 108 P.3d 349 (2005), this Court explicitly held that land is only exempt under this provision if there is "some actual use" of the land for agriculture or that it is in a crop-rotation program. This Court held in that case that land leased to a rancher was not exempt because it was not actually used for grazing. 141 Idaho at 207, 108 P.3d at 354 ; see also Roeder Holdings, L.L.C. v. Bd. of Equalization, 136 Idaho 809, 814, 41 P.3d 237, 242 (2001) () overruled on other grounds by Ada Cnty. Bd. of Equalization., 141 Idaho at 206, 108 P.3d at 353. In light of the statute's plain language and how this Court has previously interpreted it, it is unreasonable to read § 63–604 as exempting land from taxation if the land is not actually devoted to crop or livestock production and is not in a crop-rotation program. The statute unambiguously does not exempt contiguous homesites.
The Kimbroughs' homesite is not exempt under § 63–604 because it is not devoted to agriculture. At trial, Walter Kimbrough conceded that they do not raise alfalfa on over two acres of their land, yet the County only assessed one acre at market value for their homesite—it still allowed them to apply the agricultural exemption to over one additional acre of land that is not actually devoted to alfalfa...
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