Dairyland Harvestore, Inc. v. Wisconsin Dept. of Revenue

• Decision Date: 17 July 1989
• Docket Number: No. 88-1748,88-1748
• Citation: 447 N.W.2d 56,151 Wis.2d 799
• Parties: DAIRYLAND HARVESTORE, INC., Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF REVENUE, Respondent. BADGERLAND HARVESTORE SYSTEMS, INC. f/n/a Badgerland Harvestore Products, Petitioner-Appellant,d v. WISCONSIN DEPARTMENT OF REVENUE, Respondent.dd
• Court: Wisconsin Court of Appeals

Page 56

447 N.W.2d 56

151 Wis.2d 799

DAIRYLAND HARVESTORE, INC., Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF REVENUE, Respondent.

BADGERLAND HARVESTORE SYSTEMS, INC. f/n/a Badgerland

Harvestore Products, Petitioner-Appellant,d v. WISCONSIN DEPARTMENT OF REVENUE, Respondent.dd

No. 88-1748.

Court of Appeals of Wisconsin.

Submitted on Briefs May 8, 1989.

Opinion Released July 17, 1989.

Opinion Filed July 17, 1989.

Gaar W. Steiner and Bruce A. Mayerle of Michael, Best & Friedrich, Milwaukee, for petitioner-appellant.

Donald J. Hanaway, Atty. Gen., and Warren D. Weinstein, Asst. Atty. Gen., for respondent.

Before GARTZKE, P.J., and DYKMAN and SUNDBY, JJ.

GARTZKE, Presiding Judge.

Dairyland Harvestore, Inc., and Badgerland Harvestore Systems, Inc., appeal from an order affirming the Wisconsin Tax Appeals Commission's decision that they are not "persons" under sec. 77.59(4), Stats., entitled to file a claim against the Department of Revenue for refund of sales taxes they paid to a retailer or to claim an offset for such sales taxes against their liability for additional sales taxes. The issues are whether the commission properly construed sec. 77.59(4) both before and after its 1980 amendment, whether we should fashion for appellants an equitable remedy under Wis. Const. art. I, sec. 9, and whether the doctrine of equitable recoupment permits appellants to file claims for offsets.

We accept the commission's construction of sec. 77.59(4), Stats.1977, before its amendment effective April 30, 1980. We hold that appellants have no standing to file under the statute before that date. We decline to create an equitable remedy to allow offsets, and we conclude that the doctrine of equitable recoupment is inapplicable. With respect to periods after April 30, 1980, we reject the commission's construction of the statute because that construction conflicts with the statute's legislative history. We therefore reverse in part and affirm in part and remand for further proceedings.

1. BACKGROUND

Dairyland and Badgerland are Wisconsin corporations. They received notices of additional sales and use tax assessment from the department, Dairyland for the tax years 1976 through 1981, and Badgerland for 1979 through 1981. Appellants filed petitions for redetermination and claims of offset. The department denied Dairyland's petition in its entirety and issued a modified notice of additional sales and use tax assessment. The department granted Badgerland's petition in part and issued a modified notice of additional sales and use tax assessment. The department denied the claimed offsets against the deficiencies.

The claimed offsets arose out of refunds on purchases by appellants from A.O. Smith Harvestore Products, Inc. Appellants paid Wisconsin sales taxes to A.O. Smith at the statutory rate for each purchase. A.O. Smith in turn paid the taxes to the department, but later made refunds to appellants which reduced the price of the products they had purchased. A.O. Smith did not, however, refund to appellants the sales taxes on the refunded amounts. The refunds to Dairyland were for the fiscal years ending January 31, 1977 through 1981, and the refunds to Badger were for the years ending January 31, 1979 through 1981.

The commission concluded that each appellant lacked standing under sec. 77.59(4), Stats., to file a claim for a refund of sales taxes paid and therefore lacked standing to claim an offset for sales tax paid. The commission concluded that the doctrine of equitable recoupment was inapplicable and affirmed the department's denial of appellants' petitions for redetermination. Appellants petitioned for judicial review under ch. 227, Stats. The trial court affirmed the commission.

Section 77.59(4), Stats.1977, provides in relevant part:

At any time within 4 years after the due date of the annual information return, a person may ... file with the department a claim for refund of taxes paid by such person. Such claim for refund shall be regarded as a request for determination. The determination thus requested shall be made by the department within one year after the claim for refund is received by it. [Emphasis added.]

Effective April 30, 1980, this section was amended ¹ to provide in relevant part:

At any time within 4 years after the due date of the taxpayer's Wisconsin income or franchise tax return or, if exempt, within 4 years of the 15th day of the 4th month of the year following the close of the calendar or fiscal year, a person may ... file with the department a claim for refund of taxes paid. The claim for refund shall be regarded as a request for determination. The determination thus requested shall be made by the department within one year after the claim for refund is received by it. [Emphasis added.]

Section 77.52(1), Stats., imposes a sales tax on all retailers for the privilege of selling at retail in this state.

The interpretation of the statute is a question of law. Neither the trial court nor this court is bound by the commission's interpretation. NCR Corp. v. Revenue Dept., 128 Wis.2d 442, 447, 384 N.W.2d 355, 358 (Ct.App.1986). If the statute is unambiguous, we apply its terms without deference to the commission's view. Milwaukee v. Lindner, 98 Wis.2d 624, 634, 297 N.W.2d 828, 833 (1980). If the statute is ambiguous, we will accept the commission's interpretation if it has a rational basis, unless it conflicts with the statute's legislative history, judicial precedent, or constitutional prohibitions. Pabst v. Department of Taxation, 19 Wis.2d 313, 323-24, 120 N.W.2d 77, 82 (1963). We will, moreover, assume that the legislature is familiar with and has approved a longstanding interpretation of a statute by the agency charged with its administration. Cf. Town of Vernon v. Waukesha County, 99 Wis.2d 472, 479-80, 299 N.W.2d 593, 598 (Ct.App.1980), aff'd, 102 Wis.2d 686, 307 N.W.2d 227 (1981) (legislature presumed to acquiesce in longstanding administrative construction if it reenacts or amends statute without substantive change).

2. PRE-APRIL 30, 1980 SALES TAXES

All parties appear to assume that if appellants had standing to file claims with the department for sales taxes they paid to A.O. Smith, then they are entitled to offset those sales taxes against additional sales taxes owing for the same taxable years in question. We make the same assumption.

Appellants contend that under the plain meaning of sec. 77.59(4), Stats.1977, before its amendment, they are "persons" who may claim a refund of sales taxes paid. We disagree.

At all relevant times before April 30, 1980, sec. 77.52(1), Stats.1977, imposed the sales tax on A.O. Smith as the retailer. As the "retailer" A.O. Smith was required to file monthly or quarterly sales tax returns, as well as an "annual information return" detailing its total receipts for sales tax purposes. Sec. 77.58(2). A.O. Smith was entitled by virtue of sec. 77.52(3) to collect the sales taxes from appellants, and it is undisputed that it paid the taxes to the department.

In its pre-amendment form, sec. 77.59(4), Stats.1977, was unambiguous. We adopt the succinct analysis of the statute in Rent-A-Truck, Inc. v. Department of Revenue, 8 WTAC 233, 236 (1971), where the commission said,

The word "person" is used twice ...; and within the scope and meaning of that word as used in said section, the word "person" in both instances refers to one and the same person. Section 77.59(4) clearly means that at any time within four years of the due date of a sales tax return of a person required to file a sales tax return, that person may, unless a determination by the department by office or field audit has been made, file with the department a claim for refund of sales taxes paid by such person. ²

Appellants contend that if we adopt the department's interpretation of sec. 77.59(4), Stats.1977, before its amendment, they are denied a right to a legal remedy, contrary to Wis. Const. art. I, sec. 9. This section provides in part that "[e]very person is entitled to a certain remedy in the laws for all injuries ... which he may receive," and means that if no adequate remedy or forum exists for resolution of disputes or provision of due process, the courts can fashion an adequate remedy. Collins v. Eli Lilly Co., 116 Wis.2d 166, 182, 342 N.W.2d 37, 45 (1984). Appellants request that we fashion an equitable remedy. We decline to do so. Tax refunds are statutory. We will not create an end-run around the sales tax refund statute. Appellants' lack of standing to file a refund claim before the 1980 amendment flows from a legislative decision as to who may and who may not obtain a sales tax refund.

We reject appellants' argument that under the doctrine of equitable recoupment they are entitled to a refund and therefore an offset even if they lack standing to file a claim. Under that doctrine, the state may reduce a timely claim for a tax refund by the amount of a deficiency assessment barred by the statute of limitations. American Motors Corp. v. Dept. of Revenue, 64 Wis.2d 337, 351, 219 N.W.2d 300, 307 (1974). Similarly, if a taxing authority makes a timely additional assessment against a taxpayer, the taxpayer may credit a refund claim that would ordinarily be barred by the statute of limitations against the deficiency. Id.

Equitable recoupment "permit[s] a transaction which is made the subject of suit by a plaintiff to be examined in all its aspects, and judgment to be rendered that does justice in view of the one transaction as a whole." Rothensies v. Electric Storage Battery Co., 329 U.S. 296, 299, 67 S.Ct. 271, 272, 91 L.Ed. 296 (1946). For that reason, courts allow claims for equitable recoupment that would otherwise be barred by the statute of limitations as long as the main action is timely. Bull v. United States, 295 U.S. 247, 262, 55 S.Ct. 695, 700 79 L.Ed. 1421 (1935); American Motors Corp., 64 Wis.2d at 351, 219 N.W.2d at 307.

Appellants cite no case,...