Hecla Min. Co. v. Idaho State Tax Com'n
| Decision Date | 05 March 1985 |
| Docket Number | No. 15185,15185 |
| Citation | 108 Idaho 147,697 P.2d 1161 |
| Parties | HECLA MINING COMPANY, a Washington corporation, Plaintiff-Respondent, v. IDAHO STATE TAX COMMISSION, Defendant-Appellant. |
| Court | Idaho Supreme Court |
Jim Jones, Atty. Gen., Lynn E. Thomas, Sol. Gen., Stephen James Lord, Deputy Atty. Gen., Boise, for defendant-appellant.
Robert M. Turnbow and Joseph Henry Uberuaga, II of Eberle, Berlin, Kading, Turnbow & Gillespie, Chartered, Boise, Gary C. Randall, Spokane, Wash., Michael B. White, Wallace, for plaintiff-respondent.
The facts in this case are not in dispute. Enacted in 1935, the Mine License Tax Act, I.C. § 47-1201 (1984) (hereafter MLTA) imposes a license tax on the privilege of mining in Idaho. In the years at issue, the license tax was 3% of the value of the ore extracted. Certain costs, deductions and expenses are allowed as deductions from the gross receipts for the calendar year. These deductions include, among others, a deduction for federal taxes paid or accrued.
Hecla Mining Company (Hecla) is a Washington corporation which operates primarily in northern Idaho. When Hecla filed its mine license tax returns for the years 1966 through 1972 it claimed deductions for federal income taxes paid or accrued. No action was taken by the Tax Commission on the returns. Then, on September 15, 1977 and February 28, 1978, pursuant to I.C. § 63-3068, Hecla notified the Idaho State Tax Commission that final adjustments were made by the Internal Revenue Service to Hecla's federal income tax returns for the years 1966 through 1972, inclusive.
The bulk of the adjustments were made because Hecla's federal income tax liability in the relevant years had decreased, largely due to net operating loss (NOL) carry backs. Federal income taxes paid or accrued were, for these years, allowed as a deduction in determining the net ore value upon which the mine license tax was imposed. On March 6, 1978, within one year after the date of notice of the IRS adjustments, the Tax Commission issued Notices of Deficiency for mine license taxes to correspond to the adjustments which the IRS had made for federal income tax purposes. Since the federal tax amount decreased, the Tax Commission took the position that the mine license tax deduction for federal taxes paid or accrued should decrease correspondingly. The Tax Commission determined that the net ore value was greater for the years 1966-1972, thus creating a mine license tax deficiency for that period. The deficiency or refund amounts were as follows:
Additional Tax Deficiency
Year Refund Interest or (Refund)
---- -------------- ------------ -------------
1966 $ 284.00 $ 207.00 $ 491.00
1967 25,850.00 16,802.00 42,652.00
1968 37,410.00 21,634.00 59,044.00
1969 42,505.00 22,030.00 64,535.00
1970 (5,566.00) (2,551.00) (8,117.00)
1971 (2,425.00) (965.00) (3,390.00)
1972 21.00 7.00 28.00
Total Net Deficiency Amount: $155,243.00
Hecla timely protested the deficiency determination. After administrative re-determination proceedings, the Tax Commission rendered a decision affirming the deficiency determination and denying the relief requested by Hecla's protest. Hecla then sought judicial review in the First Judicial District Court of Shoshone County.
The Tax Commission moved to dismiss and Hecla moved for summary judgment. The trial court granted Hecla's motion holding that the three-year statute of limitations contained in I.C. § 5-218(1) 1 barred the Tax Commission from imposing on Hecla additional mine license taxes for 1966-1972. This appeal followed.
The threshold issue in deciding Hecla's mine license tax liability is whether the Tax Commission's deficiency determinations are barred by a statute of limitations. A brief history of the MLTA is helpful in understanding this issue. As originally enacted, the language of the MLTA was identical to the then existing statute dealing with valuation of mining properties for property tax purposes. 1935 Idaho Sess.Laws (Extraordinary Session) ch. 65, p. 182, now codified at Title 63, ch. 28, I.C. In 1941, the legislature made several changes in the MLTA one of which was the incorporation of a small portion of the Idaho Income Tax Act (hereafter IITA) (I.C. § 63-3001 et seq. (1976)). Those sections of the IITA which were incorporated dealt with various deductions allowable in arriving at net ore value. One of the deductions allowed was for federal income taxes paid or accrued.
From 1941 until 1969 the MLTA remained practically unchanged. The sole enforcement provision of the MLTA during this time was I.C. § 47-1207. That section allowed the state to sue for payment of the tax. There was no statute of limitations incorporated into the MLTA. Therefore, the statute of limitations applicable to suits brought under I.C. § 47-1207 was the general statute of limitations found in I.C. § 5-218(1) which requires that suits be brought within three years from the imposition of liability, i.e., the date the mine license tax was due.
In 1969, the MLTA was again amended to include additional provisions of the IITA. I.C. § 47-1207 was replaced with I.C. § 47-1208 which incorporated a number of administrative enforcement and collection procedures from the IITA. Pursuant to it, the state had three remedies for the collection of mine license taxes: suit in district court, lien foreclosure, or levy or distraint proceedings. I.C. § 47-1208 was further amended in 1972 and again in 1977. 2 The 1977 amendment incorporated I.C. § 63-3068, the statute of limitations of the IITA, into the MLTA, making it expressly retroactive to January 1, 1977.
The district court found and Hecla contends that I.C. § 5-218 is the statute of limitations applicable to this case. The Tax Commission insists that I.C. § 63-3068 is the statute of limitations applicable to this case. We agree with the Tax Commission.
I.C. § 63-3068 provides in pertinent part:
The statute was made effective on January 1, 1977. On September 15, 1977 and February 15, 1978, pursuant to I.C. § 63-3068, Hecla gave notice of final federal adjustments to its taxable income for the years 1966-1972. On March 6, 1978, the Tax Commission issued notices of deficiency to Hecla for mine license taxes due to correspond with the federal adjustments made. Thus, the Tax Commission's deficiency determinations were within one year of Hecla's notice and are therefore not barred by a statute of limitations.
Hecla argues that I.C. § 5-218 was the statute of limitations applicable to actions by the Tax Commission to collect mine license taxes. Hecla insists that the three-year period imposed by I.C. § 5-218 began to run on July 1 of each year following the tax year. Hecla thus concludes that the three-year period has long run for all of the years at issue. It is Hecla's position that I.C. § 63-3068 could not revive a cause of action already barred, and therefore, I.C. § 63-3068 cannot apply to Hecla's 1966-72 mine license tax returns.
Hecla's argument is incorrect for two reasons. First, there is no general right to repose in tax matters. "The shelter of a statute of limitations has never been regarded as a fundamental right, and the lapse of a statute of limitations does not endow a citizen with a vested property right in immunity from suit." Starks v. S.E. Rykoff & Co., 673 F.2d 1106, 1109 (9th Cir.1982). "Where a lapse of time has not invested a party with title to real or personal property, a state legislature may extend a lapsed statute of limitations without violating the fourteenth amendment, regardless of whether the effect is seen as creating or reviving a barred claim." Id. These propositions are true because statutes of limitation involve matters of remedy, not destruction of rights. Cf. Mitchell v. Agents of State, 105 Idaho 419, 423, 670 P.2d 520 (1983). Assuming, but not deciding, that I.C. § 5-218 did apply to the administrative collection and enforcement procedures of I.C. § 47-1208, Hecla's notice to the Tax Commission pursuant to I.C. § 63-3068 validly revived the State's claim. Hecla's notice re-opened the period for the assessment of additional mine license taxes.
Second, we approved the same application of the one-year extension in Union Pac. R. Co. v. State Tax Com'n., 105 Idaho 471, 472, 670 P.2d 878, 879 (1983). There, Union Pacific had properly filed its 1942 tax returns. At the time, the statute of limitations applicable to such returns was three years. 1931 Idaho Sess.Laws (Extraordinary Session) ch. 2, p....
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