In re Tax Application of Lietz Constr. Co.
Decision Date | 31 May 2002 |
Docket Number | No. 86,987.,86,987. |
Citation | 273 Kan. 890,47 P.3d 1275 |
Parties | In the Matter of the Application of LIETZ CONSTRUCTION Co. For Exemption from Ad Valorem Taxation in Wabaunsee County, Kansas |
Court | Kansas Supreme Court |
J. Lyn Entrikin Goering, of Topeka, argued the cause and was on the briefs for appellant Wabaunsee County.
Victor W. Miller, of Topeka, argued the cause for appellees, and Merle Lietz and Nora Lietz, appellees, were on the brief pro se.
William E. Waters, of Kansas Department of Revenue, was on the brief for amicus curiae Mark S. Beck, Director of Property Valuation.
The opinion of the court was delivered by
Appellant Wabaunsee County challenges the decision of the Kansas Board of Tax Appeals (BOTA) granting Merle and Nora Lietz, d/b/a Lietz Construction Company (Lietz Construction), exemptions from ad valorem property tax on machinery and equipment pursuant to K.S.A. 2001 Supp. 79-201j(a). At issue is whether Lietz Construction's bulldozers, dirt scrapers, a road grader, an excavator, and the trailers that carry them qualify as "farm machinery and equipment ... actually and regularly used in any farming or ranching operation," within the meaning of K.S.A. 2001 Supp. 79-201j(a), and, if so, whether the statute is unconstitutional. The appellant invoked the jurisdiction of the Court of Appeals pursuant to K.S.A. 2001 Supp. 74-2426(c)(3). The matter was transferred to this court on its own motion pursuant to K.S.A. 20-3018(c).
In February 2000, Merle and Nora Lietz filed an application for a tax exemption with BOTA. The initial request for exemption was filed with the county appraiser where the property was principally located, Wabaunsee County, pursuant to K.S.A. 1998 Supp. 79-213.
Lietz Construction indicated that "[a]ll equipment is used in our business as a soil conservation contractor doing work for farmers and ranchers as well as any other dirt work." They also indicated that no other individuals or organizations used the property.
Lietz Construction included within the application a remand order dated June 8, 1999, from BOTA entitled "In the Matter of the Application of Kramer, Douglas T. for Exemption from Ad Valorem Taxation in Jefferson County, Kansas." Originally, BOTA had denied exemption to Kramer on a dozer, dirt scraper, and ripper, pursuant to K.S.A. 79-201j, because the applicant had indicated that he also used the equipment for commercial purposes. In its order of June 9, 1999, however, BOTA complied with the judicial decision of the Shawnee County District Court and granted exemption.
Robert Miller, Wabaunsee County Appraiser, reviewed the application as required by K.S.A. 2001 Supp. 79-213. Miller found the facts as stated by the applicant to be true, but recommended that no relief be granted because the property was also used for commercial purposes. Miller did not request a hearing on the matter.
On August 17, 2000, David Patton, chairman of BOTA, sought further information from Lietz Construction concerning the use of the equipment. In a letter dated September 13, Lietz Construction responded that it was "a soil conservation contractor and [we] use our equipment 75-80 percent of the time for that purpose doing work for area farmers." In addition, it listed uses for the equipment:
BOTA notified Lietz Construction and Wabaunsee County that a hearing would be set and asked Lietz Construction to come prepared to answer questions concerning the uses of the property and whether the applicant was registered with the farm services office.
A hearing on the matter was conducted on January 10, 2001, a the Docking State Office Building in Topeka. Merle and Nora Lietz appeared without counsel to represent themselves and Lietz Construction.
Wabaunsee County submitted one exhibit, a conditional use permit issued by the Wabaunsee County Commissioners allowing Merle and Nora Lietz to operate a rock quarry on their property. Lietz Construction also submitted one exhibit consisting of photographs of the equipment and a Kansas Land Improvement Contractor Association newsletter entitled "Kansas Board of Tax Appeals Grants Property Tax Exemption to KLICA Member."
Counsel for Wabaunsee County conducted an examination of Merle Lietz at the BOTA hearing. When questioned about jobs performed other than employment on farms constructing terraces and other conservation work, Lietz responded that about 20 percent of Lietz Construction jobs were non-farm related. In regard to the rock quarry, Lietz testified that another party took rock from their property, but their equipment was only used to uncover the rock and to do the reclamation work after quarrying was finished. Lietz later reemphasized that 80 percent of time their equipment was used solely for the soil conservation reclamation and improvement work and that the work at the quarry was not included in that 80 percent. Further, Lietz stated that since he had been in business there was not a year where his equipment was used less than 50 percent of the time for soil conservation or land improvement work.
Counsel for Wabaunsee County argued that the statutory term farm machinery and equipment should not be construed to include construction equipment simply because that equipment was used for constructing terraces on farms. According to Wabaunsee County, using that analysis could lead an accountant preparing tax returns exclusively for farmers to claim that his or her computer qualified as farm equipment. Wabaunsee County characterized the work being done as construction dirt work, not agriculture.
In response, Nora Lietz stated:
BOTA issued its findings and decision in an order dated February 20, 2001. The order reads, in pertinent part:
Wabaunsee County petitioned BOTA to reconsider its decision, but BOTA denied the motion on March 13, 2001, finding that no new evidence had been presented to convince it that the original order should be modified or that reconsideration should be granted. On April 12, 2001, Wabaunsee County filed its direct appeal of BOTA's order pursuant to K.S.A. 2001 Supp. 74-2426(c)(3), requesting that the Court of Appeals reverse BOTA's findings of fact and conclusions of law. Following a K.S.A. 20-3018(c) transfer, the matter is before this court and is ripe for review.
On appeal, Wabaunsee County challenges BOTA's legal determination that earth-moving equipment such as bulldozers, scrapers, road graders, and excavators used in soil conservation work for farmers may qualify for ad valorem tax exemption under K.S.A. 2001 Supp. 79-201j(a).
In an appeal from an order of BOTA, K.S.A. 77-621 controls an appellate court's scope of review. See K.S.A. 2001 Supp. 74-2426(c) ( ).
Within The Act for Judicial Review and Civil Enforcement of Agency Actions, K.S.A. 77-621(a)(1) provides that unless "this act or another statute provides otherwise ... [t]he burden of proving the invalidity of agency action is on the party asserting invalidity." Additionally, K.S.A. 77-621(c) specifies that this court may grant relief from an order of BOTA only if we determine that:
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