866 P.2d 152 (Ariz.Tax 1993), TX 92-00157, Bonn & Jensen Chartered v. Arizona Dept. of Revenue

Docket Nº:TX 92-00157.
Citation:866 P.2d 152, 177 Ariz. 170
Case Date:December 09, 1993
Court:Tax Court of Arizona

Page 152

866 P.2d 152 (Ariz.Tax 1993)

177 Ariz. 170




No. TX 92-00157.

Tax Court of Arizona.

December 9, 1993

Page 153

[177 Ariz. 171] Bonn, Luscher, Padden & Wilkins, Chartered by D. Michael Hall, Phoenix, for plaintiff.

Newmark, Irvine, Macpherson & Mrgray, P.A. by Ian Macpherson, Phoenix, for defendant.



The issue in this case is whether a taxpayer has "reported" property which previously escaped taxation by filling out and filing a Form 82-520, 1 after being requested to do so by a county, or whether, in order to have adequately "reported" escaped property, the taxpayer must affirmatively state somewhere in the Form 82-520 itself or in another document that specific property listed on the Form 82-520 has previously escaped taxation.

During 1988, 1989 and 1990, Bonn & Bonn Partnership owned a building located at 805 North Second Street in Phoenix, Arizona. Bonn & Bonn leased its building to the law firm of Bonn & Pohlman, then to the successor law firm of Bonn & Jensen. 2 The law firm has been in existence and practicing in some form at the 805 North Second Street location since at least 1982.

In 1987 and 1988 the Maricopa County assessor sent to Bonn & Bonn Partnership a State of Arizona Business Property Statement, Form 82-520, which requests the taxpayer to report the original cost and year of acquisition of personal property and additions and changes to the property in subsequent years. Included in the Form is a

Page 154

[177 Ariz. 172] Schedule "Q" 3 which requests the taxpayer to "list below other personal property located at your place of business which you do not own." Paul Bonn, both a partner in Bonn & Bonn and a member of the law firm practicing at the 805 North Second Street address, filled out, signed and filed, on behalf of Bonn & Bonn, both the 1987 and the 1988 Form 82-520. In both years Mr. Bonn left Schedule "Q" blank, not listing the property located in the building which belonged to the tenants Bonn & Pohlman or Bonn & Jensen. 4

In 1991, as part of a routine canvass of personal property in the county, the assessor's office discovered Bonn & Jensen corporation. Upon discovery, the assessor sent to Bonn & Jensen a Form 82-520 requesting that any business personal property be reported for taxation purposes. Bonn & Jensen complied with the request and completed the Form 82-520 reporting the original cost, type and year of acquisition of its personal property. Schedule "U," which requested a list of "unreported personal property for prior years" was left blank. Nowhere on its 1991 Form 82-520 did Bonn & Jensen state that taxes had not previously been paid on any of the property listed. The Form 82-520 was timely returned to the assessor.

Upon receipt of Bonn & Jensen's Form 82-520, the assessor valued and listed the property reported on the form. The assessor also performed a desk audit and determined that all of the property listed had previously escaped taxation. Subsequently, in addition to the 1991 taxes due, Bonn & Jensen was billed for, and timely paid under protest, the escaped tax, penalties and interest imposed for 1988, 1989 and 1990. Bonn & Jensen is seeking a refund of the escaped tax, penalties and interest.

Bonn & Jensen takes the position that even though it did not specifically state that its property had escaped taxation, it reported this fact by filling out and filing the Form 82-520. It asserts that when the 1991 Form 82-520 is read as a whole it is obvious that Bonn & Jensen was "reporting" that its property had previously escaped taxation. Therefore, it concludes, it should be liable only for the 1991 taxes and relieved of having to pay escaped taxes, penalties and interest for 1988, 1989 and 1990. On the 1991 Form, Bonn & Jensen stated that it had been in business since 1982, it listed all of its property with acquisition dates back to 1982, and noted that the assessor had filled out a "New Account" form for the firm of Bonn & Jensen (apparently indicating that the assessor considered the firm a new one which did not own property in prior years). In its argument to this Court, Bonn & Jensen also pointed out that, although the Form they received from the assessor contained an area designed to list the property of the firm which had been taxed in prior years, that area was blank, indicating the assessor did not believe Bonn & Jensen had any property subject to taxation in prior years. 5 In sum, Bonn & Jensen concludes because the assessor had all the information it needed to determine whether the property listed had escaped taxation in prior years, Bonn & Jensen had therefore "reported" the escaped property.

Maricopa County (the County) takes the position that in order for Bonn & Jensen to have "reported" the escaped property and avoid paying escaped taxes and...

To continue reading