Kendal v. Cason
| Decision Date | 22 March 1990 |
| Docket Number | No. 88CA1850,88CA1850 |
| Citation | 791 P.2d 1227 |
| Parties | Kerry L. KENDAL and Bessie M. Herrod, Plaintiffs-Appellants, v. Forrest CASON, in his official capacity as Executive Director of the Colorado Department of Administration; the Colorado Department of Administration; John Tipton, in his official capacity as the Executive Director of the Colorado Department of Revenue; and the Colorado Department of Revenue, Defendants-Appellees. . IV |
| Court | Colorado Court of Appeals |
Legal Aid Soc. of Metropolitan Denver, Anne B. Stockham and Hugh McClearn, Denver, for plaintiffs-appellants.
Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., and Antony B. Dyl Asst. Atty. Gen., Denver, for defendants-appellees.
Opinion by Judge JONES.
Plaintiffs, Kerry L. Kendall and Bessie M. Herrod, appeal from the dismissal of their action challenging the state's offset of their tax refunds against their debts to the state. The trial court dismissed this action based on plaintiffs' failure to exhaust their administrative remedies prior to seeking judicial relief. We affirm.
In March 1986, the defendant state agencies offset Kendall's 1985 state income tax refund of $88.10 against her unpaid debt of that exact amount to University Hospital for outpatient services. Similarly, in April 1986, the defendant state agencies offset Herrod's 1985 state income tax refund of $385.49 against her unpaid debt of $409.71 to University Hospital for both inpatient and outpatient treatment. These offsets were taken pursuant to §§ 24-30-202.4(3)(a)(II), C.R.S. (1988 Repl.Vol. 10A) and 39-21-108(3)(a)(I), C.R.S. (1989 Cum.Supp.).
In March 1988, plaintiffs brought this action in the district court, seeking to recover the 1985 tax refunds which they claim were illegally seized. In their complaint, plaintiffs alleged that the offsets of their tax refunds by the defendant state agencies violated the statutory scheme authorizing such offsets because their debts to the state were not reduced to judgment prior to the offsets.
Although the allegation that judgments had not been obtained is undisputed, nevertheless, before the offsets were taken, the defendant state agencies did give plaintiffs written notice of their intent to offset the tax refunds against the debts. The notices sent also advised plaintiffs of their right to an administrative hearing to contest the offsets and described the manner in which plaintiffs could request such a hearing. See § 24-30-202.4(3)(a)(II) (); 1 Code Colo.Reg. 101-6 §§ 1.41.03 & 1.41.04 (1986) (). Plaintiffs did not seek any administrative hearings regarding the offsets. See 1 Code Colo.Reg. 101-6 § 1.41.04 (1986) ().
The district court ruled that it lacked subject matter jurisdiction to hear the case because plaintiffs had failed to exhaust their administrative remedies in connection with the offsets and, accordingly, dismissed the action.
On appeal, plaintiffs contend that exhaustion of their administrative remedies regarding the offsets was not necessary. We disagree.
The general rule is that the failure to exhaust administrative remedies prior to seeking judicial relief is a jurisdictional defect. Hoffman v. Colorado State Board of Assessment Appeals, 683 P.2d 783 (Colo.1984). This is especially true in cases involving tax matters, and thus, if there are complete, adequate, and speedy administrative remedies available for alleged tax irregularities, a taxpayer must exhaust them. Hoffman v. Colorado State Board of Assessment Appeals, supra.
Here, since each of the debts involved was under $500, plaintiffs were given the opportunity for an administrative hearing before the offset of their tax refunds against their debts was taken, as required by § 24-30-202.4(3)(a)(II). In such an administrative hearing, plaintiffs could have challenged both the propriety of the offset procedure and the validity of the debt. See 1 Code Colo.Reg. 101-6 § 1.41.07 (1986) ().
Therefore, plaintiffs' claim that the offsets violated the statutory scheme because their debts had not been reduced to judgment could have been raised at the administrative hearing, and plaintiffs could have received their tax refunds by pursuing their administrative remedies if they had prevailed at such a hearing. See 1 Code Colo.Reg. 101-6 § 1.41.07 (1986).
Moreover, we are not persuaded by plaintiffs' argument that whether the offsets were illegal involves an issue of statutory interpretation which can only be resolved by a court of law.
First, the issue did not involve statutory interpretation. Initially, it...
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