Moncrief v. Wyoming State Bd. of Equalization

• Decision Date: 07 July 1993
• Docket Number: No. 92-228,92-228
• Citation: 856 P.2d 440
• Parties: W.A. MONCRIEF, Jr.; and BHP Petroleum Company, Inc., a Delaware corporation, Petitioners (Petitioners), v. WYOMING STATE BOARD OF EQUALIZATION and its members Nancy Freudenthal, Marvin Applequist and Terry Rubald, in their official capacities in the Wyoming Department of Revenue and Taxation, Respondents (Respondents).
• Court: Wyoming Supreme Court

Page 440

856 P.2d 440

W.A. MONCRIEF, Jr.; and BHP Petroleum Company, Inc., a Delaware corporation, Petitioners (Petitioners), v. WYOMING STATE BOARD OF EQUALIZATION and its members Nancy Freudenthal, Marvin Applequist and Terry Rubald, in their official capacities in the Wyoming Department of Revenue and Taxation, Respondents (Respondents).

No. 92-228.

Supreme Court of Wyoming.

July 7, 1993.

Algirdas M. Liepas of Wiederspahn, Lummis & Liepas, P.C., Cheyenne, for M.A. Moncrief, Jr.

Robert T. McCue and William J. Thomson of Dray, Madison & Thomson, P.C., Cheyenne, for BHP Petroleum Co., Inc.

Joseph B. Meyer, Atty. Gen., and Michael L. Hubbard, Sr. Asst. Atty. Gen., for respondents.

Before MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, JJ.

TAYLOR, Justice.

W.A. Moncrief, Jr. and BHP Petroleum Company, Inc. (Taxpayers) seek judicial review of an administrative determination rendered by the Wyoming State Board of Equalization (Board). Through an audit, the Wyoming Department of Revenue (Department) determined that the Taxpayers failed to include ad valorem tax reimbursements when valuing natural gas production for the years 1975 through 1986 for purposes of the state severance tax. ¹ The Department notified the Taxpayers of the additional severance tax and demanded payment, as well as interest, from the date the unpaid tax would have been due. The Taxpayers objected to the amount of interest, claiming that interest should not have accrued until after notice and demand were issued. On appeal, the Board affirmed the Department's interest calculations. The Taxpayers now seek review of the Board's decision. We affirm.

The Taxpayers present the issue as:

Did the Board of Equalization's decision that preassessment interest accrues on severance tax deficiencies constitute a reversible error of law?

The Department and the Board frame the issue as For severance tax purposes, where the taxpayer has failed to report elements of value in a self-assessment system, should interest be assessed from the date the taxes should have been paid in the first instance or from the date the taxpayer was notified of a deficiency?

BACKGROUND AND PROCEEDINGS

The Department conducted an audit of the sales of natural gas produced from the Madden Deep Unit, located in Fremont and Natrona Counties, Wyoming. ² Through the audit, the Department discovered that the Taxpayers, when valuing their natural gas production for purposes of the state's severance tax during the years 1975 to 1986, neglected to include the value of ad valorem tax reimbursements. ³ Based on the audit information, the Department assessed both Taxpayers additional severance tax on the value of the reimbursements and charged interest from the date the tax was originally due. ⁴ Both Taxpayers objected to the additional assessment and filed an appeal before the Board.

On appeal to the Board, the Taxpayers solely objected to the imposition of interest from the date the tax would have been due, arguing that interest should have accrued only from the date of notice of the additional tax. On May 19, 1992, the Board issued an order, including findings of fact and conclusions of law, which affirmed the Department's interest calculation. On June 18, 1992, the Taxpayers filed petitions for judicial review in the district court. Their individual appeals to the Board were later consolidated by stipulation and order. On October 21, 1992, the district court entered an order certifying the cases to this court.

DISCUSSION

STANDARD OF REVIEW

Since the Board's decision was certified to this court through W.R.A.P. 12.09, "we review the decision 'under the appellate standards applicable to a reviewing court of the first instance.' Amax Coal v. State Bd. of Equalization, 819 P.2d 825, 828 (Wyo.1991) (quoting Application of Campbell County, 731 P.2d 1174, 1175 (Wyo.1987))." Schulthess v. Carollo, 832 P.2d 552, 556 (Wyo.1992). The Taxpayers and the Department agree that this appeal is concerned only with a review of the Board's conclusions of law. Therefore, we must determine if the Board's conclusions are in accordance with law. Union Pacific R. Co. v. Wyoming State Bd. of Equalization, 802 P.2d 856, 860-61 (Wyo.1990).

STATUTORY INTERPRETATION

The Taxpayers' position is that the Board's interpretation of Wyo.Stat. § 39-6-307(c) (1985), and its predecessors, is not in accordance with law. Wyo.Stat. § 39-6-307(c), which was in effect during the production The Department, on the other hand, fully supports the conclusions of the Board as set out in the Board's order of May 19, 1992:

                years of 1981 to 1986, provided that "[i]nterest at the rate of eighteen percent (18%) per annum shall be added to all delinquent taxes." 5  (Emphasis added.)   The thrust of the Taxpayers' argument is that the additional unpaid tax discovered by the Department's audit did not become delinquent until after the Taxpayers were notified in 1988 and 1990 that they owed additional tax.  The Taxpayers maintain that the additional tax was unassessed until the Department's audit and that their original valuations, which neglected the ad valorem reimbursements, were simply deficient.  Thus, because the unpaid additional tax was merely deficient and not delinquent, then Wyo.Stat. § 39-6-307(c), and its predecessors, did not permit interest charges until after notice of the additional tax
                

7. By statute, each mineral severance taxpayer has at least three obligations: (a) to fully and accurately report all production volumes; (b) to fully and accurately report all value (price) received for the mineral product at the completion of mining consistent with statutes, rules, instructions and recognized appraisal principles; and (c) to pay no less than the tax computed by the Department based upon its initial assessment. The State as well has at least three obligations: (a) to reasonably review taxpayer information received, and notify the taxpayer of any apparent errors; (b) to follow the laws, rules, instructions and recognized appraisal principles in the valuation of the product; and (c) to notify the taxpayer of the value and the tax due.

8. If there are unauthorized acts, errors or omissions by the taxpayer in fulfilling its obligation to report production volumes and price (value), the discovery of which by the Department may lead to a severance tax assessment, said assessment is properly characterized as a delinquent tax. * * * Any undervaluation in this situation results in delinquent tax, thus interest accrues from the date the taxes were originally due.

When interpreting statutes, we follow an established set of guidelines. First, we determine if the statute is ambiguous or unambiguous. "A 'statute is unambiguous if its wording is such that reasonable persons are able to agree to its meaning with consistence and predictability.' " Parker Land and Cattle Co. v. Wyoming Game and Fish Com'n, 845 P.2d 1040, 1043 (Wyo.1993) (quoting Allied-Signal, Inc. v. Wyoming State Bd. of Equalization, 813 P.2d 214, 220 (Wyo.1991)). "A statute is ambiguous if its meaning is uncertain, doubtful, or if a single term can fairly be said to mean different things." Amoco Production Co. v. State, 751 P.2d 379, 381 (Wyo.1988). We determine whether a statute is ambiguous or not by " 'inquiry respecting the ordinary and obvious meaning of the words employed according to their arrangement and connection.' " Parker Land and Cattle Co., 845 P.2d at 1042 (quoting Rasmussen v. Baker, 7 Wyo. 117, 133, 50 P. 819, 823 (1897)).

Although the initial fourteen words of Wyo.Stat. § 39-6-307(c) are concise and clear in their purpose, that clarity is clouded by the final two words, "delinquent taxes." Neither the terms delinquent nor delinquent tax are defined within the Wyoming tax statutes; therefore, we look for their plain and ordinary meaning. Delinquent, when used as an adjective, has primarily two meanings. First, it is said to mean "due and unpaid at the time appointed * * *." Black's Law Dictionary 428 (6th ed. 1990). See also Webster's Third New International Dictionary 597 (1971). Second, the term also refers to "failing in duty * * * offending by neglect or violation of duty or of law." Webster's, supra, at 597.

Upon careful review of the language of the severance tax statutes, which existed at the time the Taxpayers neglected to include the value of reimbursements, it is unclear whether delinquent was intended to encompass In 1975, the statutes stated:

only one of these meanings or both. Since the original Wyoming severance tax was enacted, delinquent has been used in several sections.

The tax levy provided for by W.S. 39-227.1 through 39-227.11 [Severance Tax Act], is payable to the department of revenue and taxation of Wyoming annually, on July 1, and is delinquent if unpaid by September 1. The amount of the tax shall be computed upon the gross production for the preceding calendar year, as described in W.S. 39-227.1:1.

Wyo.Stat. § 39-227.2 (1975 Cum.Supp.) (emphasis added).

Wyo.Stat. § 39-6-304 (1985) provided, in part:

(a) Except as provided in subsection (c) of this section, each taxpayer liable for a tax under W.S. 39-6-302 or 39-6-303 shall remit quarterly tax payments to the department. The payment shall be determined by the taxpayer based on actual production during the quarter, values computed in accordance with subsection (b) of this section and the tax rates prescribed in this article. The quarterly tax payments are due and delinquent if not paid:

(i) On or before May 15 for production during the first quarter of the current calendar year;

(ii) On or before August 15 for production during the second quarter of the current calendar year;

(iii) On or before November 15 for production during the third quarter of the current calendar year; and

(iv) On or before March 1 for production during the fourth quarter of the preceding calendar year.

* * * * * *

(e) The balance is due and delinquent if not paid to the...