Budget Rent-A-Car of Tulsa v. State ex rel. Oklahoma Tax Com'n

• Citation: 773 P.2d 736
• Decision Date: 02 May 1989
• Docket Number: No. 67729,RENT-A-CAR,67729
• Parties: BUDGETOF TULSA, Appellant, v. STATE of Oklahoma ex rel. OKLAHOMA TAX COMMISSION, Appellee.
• Court: Supreme Court of Oklahoma

Page 736

773 P.2d 736

1989 OK 67

BUDGET RENT-A-CAR OF TULSA, Appellant, v. STATE of Oklahoma ex rel. OKLAHOMA TAX COMMISSION, Appellee.

No. 67729.

Supreme Court of Oklahoma.

May 2, 1989.

Richard R. Stutsman, Marsh, Roberts, Marrs, Shacklett & Fears, P.C., Tulsa, for appellant.

J. Lawrence Blankenship, Gen. Counsel, Midwest City, Joe Mark Elkouri, Successor Gen. Counsel, Robert B. Struble, Oklahoma City, for appellee.

OPALA, Vice Chief Justice.

The dispositive issue presented for our review is whether the appellant-taxpayer is entitled to a tax refund because its payment of motor vehicle excise tax was made through an "error of fact." We answer in the negative.

THE ANATOMY OF LITIGATION

Budget Rent-A-Car of Tulsa [taxpayer] rents automobiles on a short-term basis. For business operations the taxpayer is required to own a large fleet of vehicles. Its inventory is maintained through periodic acquisitions effected as need arises to replace individual cars of which disposition is made.

During 1983 and 1984 the taxpayer purchased a number of automobiles. Upon taking title to these cars, the taxpayer paid excise tax imposed by 68 O.S.Supp.1982 § 2103, ¹ though it could have claimed the exemption provided by 68 O.S.Supp.1982 § 2105(i). ² The latter section permits a taxpayer engaged in the car rental business to obtain a nontransferable title without payment of the required excise tax. During these years the taxpayer also paid the rental tax due under 68 O.S.Supp.1982 § 2110. ³

Upon discovering that it had held some of the 1983 and 1984 automobiles for more than twelve months, the taxpayer wrote a letter to the Oklahoma Tax Commission [Commission] in 1986, requesting a refund of the excise tax ⁴ previously paid on these vehicles. The taxpayer claimed a refund was proper under 68 O.S.1981 § 227 because the excise tax had been paid through "an error of fact." ⁵ The Director of the Motor Vehicle Division denied the request. His decision states that the taxpayer knew all the facts at the time it paid the excise tax.

The matter was then heard by an administrative law judge who concluded the payment of excise tax ⁶ was based on a business determination and not on a mistake of fact. ⁷ Based on the judge's recommendation, the Commission issued its order denying the refund. The Court of Appeals reversed and remanded with instructions to grant the refund. The appellate court's decision rests on the view that (a) the Commission's order resulted in double taxation in contravention of legislative intent ⁸ and (b) § 227 should be construed liberally to permit a court's rectification of a statutorily unintended result.

We grant certiorari to clarify apparent misperceptions about the meaning of the phrase "error of fact" within the context of § 227.

I

TAXES VOLUNTARILY PAID ON EXEMPT PROPERTY ARE NOT

RECOVERABLE ABSENT A SPECIFIC STATUTE CONFERRING

SUCH CLAIM ON THE TAXPAYER

The record indicates the taxpayer was fully cognizant of the available § 2105(i) exemption when it paid the motor vehicle excise tax on cars it purchased during 1983 and 1984. The taxpayer also understood that a tax would be levied on the rental proceeds generated by those cars. Yet, at the time of each purchase the taxpayer chose not to claim the exemption because it did not want to incur the twenty-percent penalty imposed by § 2105(i) for failure to hold an automobile the required twelve-month period.

Generally, taxes voluntarily paid on exempt property are not recoverable absent a specific statute conferring such right. ⁹ This rule is necessary for orderly and efficient administration of governmental affairs. ¹⁰ The antithesis of this principle is that an erroneous tax involuntarily paid because of duress (i.e., compulsion) or mistake of fact may be recovered. ¹¹ The law's mistake-of-fact exception is implicitly recognized by § 227 where the statute speaks of "error of fact." ¹²

Here, the taxpayer was free to avoid payment of the excise tax at the time it purchased a vehicle. The taxpayer had satisfied the prerequisites for § 2105(i) and, hence, was entitled to the exemption irrespective of the time it may have then intended to hold the car. ¹³ The taxpayer simply was not compelled to pay excise tax on the automobiles it purchased.

II

FAILURE TO CLAIM EXEMPTION FROM THE MOTOR VEHICLE EXCISE TAX

BECAUSE OF AN UNCERTAIN BUSINESS CLIMATE DOES NOT

CONSTITUTE AN ERROR OF FACT UNDER 68 O.S.1981 § 227

The taxpayer claims it was unable accurately to predict how long it would hold a car in its inventory because of a changing market and uncertain economic conditions. This inability, it argues, constitutes an error of fact contemplated by § 227. We disagree.

In Vinson Supply Co. v. Oklahoma Tax Comm'n, ¹⁴ we reasoned that a change in material facts occurring after the payment of use tax constitutes an error of fact for § 227 purposes. ¹⁵ More specifically, the case stands for the rule that there must be a change in a material fact which is within the control of someone other than the taxpayer. ¹⁶ Accordingly, where the taxpayer controls all material facts, there can be no error of fact to support a claim for refund. A fact is material when it, alone or in part, causes the tax to be statutorily due and payable. ¹⁷

The taxpayer here had sole charge over the taxable event--the purchase of the automobiles and the concomitant transfers of legal titles. The taxpayer also controlled all facts pertinent to the exemption. We are not unaware that statewide fluctuations in the used-car market are beyond the taxpayer's control, but consideration of economic reality is not a fact material to the taxable event. ¹⁸ Rather, it is merely a factor the taxpayer must consider when deciding whether to claim the exemption.

Even giving § 227 a liberal construction, ¹⁹ we must hold today the taxpayer voluntarily paid vehicle excise tax because of an improvident business decision, not through an error of fact.

III

ANY DOUBLE TAXATION ARISING FROM OKLAHOMA'S VEHICLE EXCISE

TAX AND RENTAL TAX RESULTS NOT FROM ARBITRARY

STATE ACTION, BUT FROM TAXPAYER'S

VOLUNTARY PAYMENT OF EXCISE TAX

Although the taxpayer testified it understood the taxing scheme prescribed by §§ 2103, 2105 and 2110, it now contends double payment on the same property is impermissibly mandated by a cluster of conflicting and ambiguous enactments. Failure to refund the excise tax, it argues, is a denial of due process. We agree that by paying tax on both the automobiles and the rental proceeds they generated, the taxpayer has in effect paid levies intended to apply in the alternative. Even so, there is here no double taxation in violation of the Fourteenth Amendment of the U.S. Constitution. Payment of two levies, when only one of them might have been sufficient, if caused by a voluntary taxpayer election and not by arbitrary state action, does not offend any constitutional mandate. ²⁰

By urging that the statutes are ambiguous, the taxpayer is essentially claiming it paid the excise tax through a misinterpretation of law. ²¹ This claim is inconsistent with testimony that the taxpayer understood the motor vehicle excise tax scheme at the time it paid the tax. Additionally, even assuming the claim were meritorious, it would be barred by § 227's one-year limitation ²² because the taxpayer's refund claim for excise tax paid on automobiles held more than twelve months would necessarily have been brought more than one year after the payment of such tax.

In sum, we hold that during 1983 and 1984 the taxpayer voluntarily paid vehicle excise tax because of an improvident business decision, not an error of fact.

CERTIORARI IS GRANTED; THE OPINION OF THE COURT OF APPEALS IS VACATED AND THE COMMISSION'S ORDER IS AFFIRMED.

HODGES, LAVENDER, SIMMS and SUMMERS, JJ., concur.

HARGRAVE, C.J., and DOOLIN and KAUGER, JJ., dissent.

1 The terms of 68 O.S.Supp.1982 § 2103 provide in pertinent part:

"(a) There is hereby levied an excise tax of two percent (2%) of the value of each vehicle, upon the transfer of legal ownership of any such vehicle registered in this state ..., except as otherwise provided in Sections 2101 through 2108 of this title. The tax hereby levied shall be due at the time of the transfer of legal ownership or first registration in this state of such vehicle, and shall be collected by the Tax Commission at the time of the issuance of a certificate of title for any such vehicle.... The excise tax levied by this section shall be delinquent from and after the twentieth day after the legal ownership or possession of any vehicle is obtained...." [Emphasis added.]

Section 2103 was later amended in 1985, 1986, 1987 and 1988 [Okl.Sess.L.1985, Ch. 179, § 90; Okl.Sess.L.1986, Ch. 68, § 1; Okl.Sess.L.1987, Ch. 6, § 13; Okl.Sess.L.1988: Ch. 156, § 4, Ch. 179, § 5, Ch. 204, § 10, Ch. 240, § 6].

2 The relevant parts of 68 O.S.Supp.1982 § 2105 are:

"An original or a transfer certificate of title shall be issued without the payment of the excise tax ... for:

(i) Any vehicle which is purchased by a person to be used by a business engaged in renting motor vehicles without a driver.... Provided that any such vehicle exempted from the excise tax by this subsection which is later sold or title transferred prior to the expiration of twelve (12) months shall cause to become due and payable immediately from the seller the amount of excise tax which would have been due had this exemption not been granted plus a penalty of twenty percent (20%). Provided further that when this exemption is claimed the Oklahoma Tax Commission shall issue a nontransferable title and shall not issue a transferable title prior to the expiration of twelve (12) months or the payment of the excise tax plus penalty as provided herein. For all other tax purposes vehicles herein exempted shall be treated as though the excise tax has been paid." [Emphasis added.]

Section 2105 was later amended in 1986 and 1988 [Okl.Sess.L.1986: Ch. 172, § 6, Ch. 284, § 14; ...