Gates Rubber Co. v. State Bd. of Equalization of State of Colo.

Decision Date21 February 1989
Docket NumberRE-1,R-1,Nos. 87SC259,87SC260,RE-4,R,s. 87SC259
Citation770 P.2d 1189
PartiesGATES RUBBER COMPANY; Honeywell Information Systems, Inc.; and Samsonite Corporation, Petitioners, v. The STATE BOARD OF EQUALIZATION OF the STATE OF COLORADO; the County Board of Equalization for the County of Adams, State of Colorado; Arapahoe County Board of Equalization; Board of Equalization of the County of Boulder, State of Colorado; John Murphy, Margaret Markey, and Robert Jenkins, In Their Official Capacities as Members of the Board of Equalization of the County of Boulder; El Paso County Board of Equalization; County Board of Equalization and the Board of County Commissioners for the County of Jefferson, State of Colorado; Larimer County Board of Equalization and the Board of County Commissioners for the County of Weld, State of Colorado; Jefferson County School District; and Weld County School District; Board of Equalization of the City and County of Denver and the City and County of Denver, Respondents. ADOLPH COORS COMPANY; Coors Porcelain Company; and Coors Container Company, Petitioners, v. The STATE BOARD OF EQUALIZATION OF the STATE OF COLORADO; the County Board of Equalization for the County of Adams, State of Colorado; Arapahoe County Board of Equalization; Board of Equalization of the County of Boulder, State of Colorado; John Murphy, Margaret Markey, and Robert Jenkins, In Their Official Capacities as Members of the Board of Equalization of the County of Boulder; El Paso County Board of Equalization; County Board of Equalization and the Board of County Commissioners for the County of Jefferson, State of Colorado; Larimer County Board of Equalization and the Board of County Commissioners for the County of Larimer, State of Colorado; County Board of Equalization and the Board of County Commissioners for the County of Weld, State of Colorado; Jefferson County School District; and Weld County School District, Respondents.
CourtColorado Supreme Court

Bradley, Campbell & Carney and Victor F. Boog, Golden, and Gorsuch, Kirgis, Campbell, Walker and Grover, Malcolm M. Murray, and Vicki J. Fowler, Denver, for petitioners.

Stephen H. Kaplan, City Atty., and Robert F. Strenski, Asst. City Atty., Denver, for respondent City and County of Denver.

Larry Vana, County Atty., and James E. Heiser, Asst. County Atty., Littleton, for respondent Arapahoe County.

Beth Whittier, County Atty., and John Franklin, Asst. County Atty., Colorado Springs, for respondent El Paso County.

Charles P. Siner and James D. Robinson, Brighton, for respondent Adams County Bd. of Equalization.

Patrick R. Mahan, County Atty. and Joanne Smith, Asst. County Atty., Golden, for respondent Jefferson County.

Isaacson, Rosenbaum, Spiegleman, Woods, Levy & Snow, P.C. and Edward T. Ramey, Denver, for State Bd. of Assessment Appeals of the State of Colo.

VOLLACK, Judge.

We granted certiorari to determine the rate of interest a prevailing taxpayer is entitled to recover when following the protest and adjustment procedure in sections 39-5-122, 39-8-106, 39-8-108, and 39-8-109, 16B C.R.S. (1982). Following the judgment of the court of appeals in BQP Industries, Inc. v. State Board of Equalization, 694 P.2d 337 (Colo.App.1984), the Denver District Court ordered the Colorado State Board of Equalization and various county boards of equalization (collectively the Boards) to refund an overpayment of taxes in the 1979 and 1980 tax years to B.A. Leasing Corporation, Gates Rubber Company, Honeywell Information Systems, Inc., Samsonite Corporation, Adolph Coors Company, Coors Porcelain Company, Coors Container Company, and other taxpayers (collectively the Taxpayers). In addition, the district court ordered the Boards to pay the Taxpayers interest on the overpayment of taxes at the annual rate of six percent under section 39-8-109, rejecting the Taxpayers' claim that they were entitled to recover interest at the annual rate of twelve percent under section 39-10-114(1)(b), 16B C.R.S. (1982). The court of appeals affirmed the judgment of the district court in B.A. Leasing Corp. v. State Board of Equalization, 745 P.2d 254 (Colo.App.1987), based on its analysis of the applicable statutes and Board of Assessment Appeals v. Benbrook, 735 P.2d 860 (Colo.1987). While we do not entirely agree with the reasoning of the court of appeals, we affirm its conclusion that the Taxpayers are entitled to recover interest on the overpayment of taxes at the annual rate of six percent.

I.

This case arose as a dispute as to whether depreciation of certain personal business property could be allowed after the base year of 1973 so as to lower the amount of tax each Taxpayer would be required to pay in the 1979 and 1980 tax years. Assessors of various counties decided that depreciation could not be allowed after the base year, and valued the properties at a rate the Taxpayers believed to be excessive. Following a series of appeals begun under section 39-5-122, the Denver District Court upheld the decision of the assessors. 1 The court of appeals reversed the judgment of the district court in BQP Industries, Inc. v. State Board of Equalization, 694 P.2d 337 (Colo.App.1984), holding that the Taxpayers were entitled to depreciate the property after the base year. 2 This became a final judgment when this court denied the petition for certiorari on January 21, 1985, and its propriety is not now before us. The court of appeals remanded the case to the district court with directions to enter judgment in favor of the Taxpayers.

On August 27, 1985, the district court ordered the Boards to reduce their valuations of the personal business property and to refund the overpayment of taxes to the Taxpayers. 3 The district court also awarded the Taxpayers interest from the date of overpayment at the annual rate of six percent pursuant to section 39-8-109, rejecting the Taxpayers' claim that they were entitled to recover interest at the annual rate of twelve percent pursuant to section 39-10-114(1)(b). 4

The Taxpayers appealed to the court of appeals solely on the issue of whether the district court erred in awarding them interest at the annual rate of six percent for overpayment of taxes due to failure to permit depreciation of personal property beyond the base year of 1973.

The court of appeals affirmed the judgment of the district court in B.A. Leasing Corp. v. State Board of Equalization, 745 P.2d 254 (Colo.App.1987). It concluded that the Taxpayers were entitled to recover interest at the annual rate of six percent pursuant to section 39-8-109. It recognized that two procedures for correcting assessment errors had been created by the General Assembly: the protest and adjustment procedure of section 39-5-122, and the abatement and refund procedure of sections 39-1-113 and 39-10-114. The court of appeals noted that the original purpose of the protest and adjustment procedure was to permit appeals of incorrect property valuations by the county assessors, while the purpose of the abatement and refund procedure was to permit appeals of taxes which were "wholly erroneous or illegal." It stated that these distinctions were to a large extent eliminated by this court in Board of Assessment Appeals v. Benbrook, 735 P.2d 860 (Colo.1987), and held that the "distinctions which remain relate primarily to the time at which the taxpayer commences his administrative proceedings, i.e., prior or subsequent to levy, and at whom they are directed, i.e., the Assessor or the Board of County Commissioners." B.A. Leasing, 745 P.2d at 256. The court of appeals concluded that the Taxpayers should recover interest for the overpayment of taxes at the annual rate of six percent under section 39-8-109 because they had elected to follow the protest and adjustment procedure of section 39-5-122.

II.

The Taxpayers argue that they are entitled to recover interest at the annual rate of twelve percent under section 39-10-114(1)(b) even though their appeal was initiated under section 39-5-122. They disagree with the court of appeals characterization that their appeal represented an "election" to proceed under section 39-5-122. Instead they contend they had no choice but to proceed under section 39-5-122 because three cases which have since been overruled held that failure to proceed under section 39-5-122 would result in dismissal for failure to exhaust administrative remedies. They interpret Board of Assessment Appeals v. Benbrook, 735 P.2d 860 (Colo.1987), to permit a taxpayer who initially sought relief under section 39-5-122 to recover interest under section 39-10-114(1)(b) when the tax was levied erroneously or illegally. The Boards argue that the Taxpayers cannot recover interest under section 39-10-114(1)(b) because they followed the protest and adjustment procedure of section 39-5-122 rather than the abatement and refund procedure of sections 39-1-113 and 39-10-114, and because section 39-10-114(1)(b) did not become effective until after the protests were initiated. 5 We agree with the conclusion of the court of appeals that a taxpayer who prevails after protesting under section 39-5-122 may recover interest under section 39-8-109 but not under section 39-10-114(1)(b).

A.

The protest and adjustment procedure for protesting a property assessment is initiated under section 39-5-122. Section 39-5-122(2) provides in pertinent part that a taxpayer may protest a property valuation to the county assessor "[i]f any person is of the opinion that his property has been valued too high, or has been twice valued or is exempt by law from taxation, or that he did not own taxable property on the assessment date, or that property has been erroneously assessed to him." Section 39-5-122(3) permits a taxpayer whose protest to the assessor was denied to appeal to the county board of equalization. A taxpayer who loses at the county board of equalization may appeal to the Colorado State Board of Assessment Appeals, see § 39-8-108(...

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