Jones v. State, Dept. of Revenue
| Decision Date | 02 June 1995 |
| Docket Number | No. S-94-135,S-94-135 |
| Parties | Terry L. JONES and Patricia K. Jones, Appellants, v. STATE of Nebraska, DEPARTMENT OF REVENUE, and M. Berri Balka, Tax Commissioner, Appellees. |
| Court | Nebraska Supreme Court |
Syllabus by the Court
1. Declaratory Judgments: Appeal and Error. In an appeal from a declaratory judgment, an appellate court, regarding questions of law, has an obligation to reach its conclusion independent from the conclusion reached by the trial court.
2. Jurisdiction: Appeal and Error. Whether a question is raised by the parties concerning jurisdiction of a lower court or tribunal, it is not only within the power but the duty of an appellate court to determine whether the appellate court has jurisdiction over the matter before it.
3. Judgments: Jurisdiction: Appeal and Error. When no factual dispute is involved, determination of a jurisdictional issue is a matter of law which requires an appellate court to reach a conclusion independent from the trial court's conclusion on the issue.
4. Injunction: Taxation. Injunctive relief is available only where a tax is void or levied for an illegal or unauthorized purpose.
5. Declaratory Judgments: Taxation. Pursuant to Neb.Rev.Stat. § 25-21,149 (Cum.Supp.1994), a declaratory judgment is available to test the constitutionality of a tax statute.
6. Constitutional Law: Statutes: Appeal and Error. The alleged unconstitutionality of a statute presents a question of law which must be determined by an appellate court independently from the conclusion reached by the trial court.
7. Constitutional Law: Statutes: Proof. The burden of establishing that a statute is unconstitutional rests upon the party claiming the statute is unconstitutional.
Robert B. Creager, of Berry, Anderson, Creager & Wittstruck, P.C., Lincoln, for appellants.
Don Stenberg, Atty. Gen., and L. Jay Bartel, Lincoln, for appellees.
Terry L. Jones and Patricia K. Jones brought this action against the State of Nebraska, Department of Revenue (Department), and State Tax Commissioner M. Berri Balka. [248 Neb. 159] The Joneses sought declaratory and injunctive relief in a petition which alleged that Neb.Rev.Stat. § 77-1783 (Reissue 1990) is unconstitutional on its face and as applied to the Joneses. The district court ruled that it lacked jurisdiction to grant the requested relief and dismissed the case. The Joneses appeal.
In an appeal from a declaratory judgment, an appellate court, regarding questions of law, has an obligation to reach its conclusion independent from the conclusion reached by the trial court. County of Lancaster v. State, 247 Neb. 723, 529 N.W.2d 791 (1995).
The case was tried to the court based upon the following stipulated facts: Terry Jones was the president and treasurer of Jones Oil Company, Inc. (Jones Oil), and Patricia Jones was the secretary. Jones Oil sold motor vehicle fuel products which were subject to various state and federal taxes, including Nebraska motor vehicle fuel taxes. Jones Oil ceased operations sometime after February 1, 1990, when the U.S. Internal Revenue Service seized all records of the company.
For the period of January 1 through March 31, 1990, Jones Oil filed Nebraska motor vehicle fuel tax returns with the Department, reporting sales or transfers of motor vehicle fuels upon which excise taxes were due. Jones Oil made no payment of the tax liability at the time the returns were filed, but subsequently remitted payments and credits totaling $33,474.56. The last payment made by Jones Oil was received by the Department in July 1990.
By letters dated August 24, 1990, the Department issued each of the Joneses a "Notice of Proposed Determination of Personal Liability," advising them that the Department intended to seek payment of the motor
vehicle fuel taxes from them as corporate officers liable for payment under § 77-1783. On September 21, Terry Jones sent to the Department a letter which he characterized as a formal protest of the proposed determination of personal liability. On October 1, the Department notified him that[248 Neb. 160] [p]rovisions for an oral hearing do not apply to a Notice of Proposed Determination of Personal Liability until the liability is actually personally assessed and the tax, penalty, and interest is paid in full, or a bond is posted to cover the outstanding liability. The department does wish to informally hear any argument you wish to present establishing why you should not be held personally liable for these taxes.
Terry Jones then requested a meeting to discuss the personal liability for the taxes. On October 30, 1990, Terry Jones and two certified public accountants designated as his representatives met with representatives of the Department. Following the meeting, one of the accountants sent a letter to the Department "to restate our position as outlined at our meeting on October 30, 1990." The letter stated that Jones Oil did not dispute the liability as determined by the Department, but that Jones Oil wanted to "apply credits from taxes paid, within the statute of limitations, on customer accounts that have been determined to be worthless."
On June 13, 1991, the Department issued to each of the Joneses a "Notice and Demand for Payment," demanding payment of the unpaid taxes plus a penalty and interest totaling $51,451.09. The demand for payment was based upon the Department's determination that as officers of the company, the Joneses were personally liable under § 77-1783 for payment of the taxes. Terry Jones responded by a letter of June 18, reiterating the position outlined in the accountant's letter.
In July 1991, the Joneses each filed with the Department a document entitled "Administrative Appeal of Notice of Tax Liability and Demand for Hearing." The Joneses demanded a prompt hearing on the determination that they were personally liable for any corporate taxes. The documents stated that the Joneses were not financially able to pay the taxes and that it was unconstitutional to require payment of the taxes as a precondition to a hearing. In response, the Department advised the Joneses that it could not accept the "Administrative Appeal of Notice of Tax Liability and Demand for Hearing" as a properly filed refund claim and that the Department could not grant a formal hearing on the tax liability unless the statutory [248 Neb. 161] requirements of § 77-1783 were timely met.
In August 1991, the Joneses instituted this action for declaratory and injunctive relief, challenging the assessment procedure set forth in § 77-1783. The Joneses' petition asserted that the district court had jurisdiction to hear the constitutional claims and stated that the Joneses were "without funds and/or resources in which to either pay the tax, or post a bond for the tax, and as such, are not able to comply with the provisions of Neb.Rev.Stat. § 77-1783."
The Joneses assert a violation of due process, claiming § 77-1783(2) and (3) is unconstitutional on its face under article I, § 3, of the Nebraska Constitution and the 14th Amendment to the U.S. Constitution because § 77-1783(1) permits the Department to make a determination of law as to personal liability without adequate and proper notice and hearing, the Joneses' right to a hearing or an appeal from the liability determination is contingent upon payment of the taxes, and § 77-1783 provides for no meaningful and timely judicial review of the Department's determination of liability.
The Joneses also assert a deprivation of their right to equal protection, as guaranteed by the 14th Amendment to the U.S. Constitution, in that they are treated differently than similarly situated taxpayers who protest income tax liability determinations under Neb.Rev.Stat. §§ 77-2776 through 77-2778 (Reissue 1990). Those taxpayers are afforded a hearing pursuant to § 77-2778 without being required to pay the disputed tax or post a bond. The Joneses allege that § 77-1783 discriminates against those who are unable to pay the taxes and those who are indigent.
The Joneses requested a determination of the constitutionality of § 77-1783 and a permanent injunction barring collection of the
taxes until they are given notice and a meaningful judicial review of the Department's determination. The district court initially granted a temporary injunction. The court subsequently determined that it did not have jurisdiction to grant the requested relief, vacated the temporary injunction, and dismissed the actionThe Joneses claim that the district court erred in finding that [248 Neb. 162] it lacked jurisdiction and in failing to conclude that the provisions of § 77-1783 are unconstitutional as applied to the Joneses.
We first address the district court's determination that it did not have jurisdiction to grant the relief prayed for in the Joneses' petition. The district court referred to Neb.Rev.Stat. § 77-3908(1) (Reissue 1990), which prohibits any action to enjoin the collection of a tax. The court stated: "Even if this court did have jurisdiction it appears that NebRevStat section 77-1783(2) and (3) does not either on its face or as applied to the plaintiffs, violate plaintiffs['] rights to due process or equal protection of the law."
Whether a question is raised by the parties concerning jurisdiction of a lower court or tribunal, it is not only within the power but the duty of an appellate court to determine whether the appellate court has jurisdiction over the matter before it. WBE Co. v. Papio-Missouri River Nat. Resources Dist., 247 Neb. 522, 529 N.W.2d 21 (1995). When no factual dispute is involved, determination of a jurisdictional issue is a matter of law which requires an appellate court to reach a conclusion independent from the trial court's conclusion on the...
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