Moses v. Idaho State Tax Com'n, s. 18079

• Decision Date: 01 August 1990
• Docket Number: Nos. 18079,18423,s. 18079
• Citation: 799 P.2d 964,118 Idaho 676
• Court: Idaho Supreme Court
• Parties: Edward J. & Katherine MOSES, husband and wife, Plaintiffs-Appellants, v. IDAHO STATE TAX COMMISSION, Defendant-Respondent. Frank C. and Jeannine CLARK, Jr., Plaintiffs-Respondents, v. IDAHO STATE TAX COMMISSION, Defendant-Appellant.

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799 P.2d 964 118 Idaho 676 Edward J. & Katherine MOSES, husband and wife, Plaintiffs-Appellants,
v.
IDAHO STATE TAX COMMISSION, Defendant-Respondent.
Frank C. and Jeannine CLARK, Jr., Plaintiffs-Respondents,
v.
IDAHO STATE TAX COMMISSION, Defendant-Appellant. Nos. 18079, 18423. Supreme Court of Idaho. Aug. 1, 1990.
Rehearing Denied Nov. 9, 1990.

Cumer L. Green (argued), Green Law Offices, Boise, for plaintiffs-appellants.

Jim Jones, Atty. Gen., Lenard L. Wittlake, Deputy Atty. Gen. (argued), Boise, for defendant-respondent.

McDEVITT, Justice.

These cases have been consolidated into one appeal as the salient facts arise from the same "target" audit and the legal issues are virtually identical. In 1985, both the Moseses and the Clarks lived in Clarkston, Washington, and both Mr. Moses and Mr. Clark worked for Potlatch Corporation ("Potlatch") in Lewiston, Idaho. Both families filed 1985 Idaho income tax returns that utilized I.C. §§ 63-3024 and 63-3027A. These statutory provisions governed the method of computing the Idaho income tax imposed on nonresidents. In 1985, the Idaho Legislature amended I.C. § 63-3027A. The taxpayers contend that the 1985 version of I.C. § 63-3027A allowed them an additional reduction in the tax that I.C. § 63-3024 imposes on non-residents (hence the term "double-dip"). In 1988, the legislature

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[118 Idaho 677] once again amended I.C. § 63-3027A and returned it to its pre-1985 status.

Both Moses and Clark were members of a group of Potlatch Corporation employees who were subject to a "target" audit by the Idaho State Tax Commission. This group was audited in the winter of 1987, and subsequently issued notices of default determination proposing additional income tax and interest. Many of the Potlatch taxpayers, including Moses and Clark, filed a protest and petition for redetermination. The Tax Commission affirmed the audits of both Moses and Clark, assessed tax, and updated the interest. The taxpayers sought judicial review pursuant to I.C. § 63-3049.

In the Moses case, Fourth District Judge Newhouse ultimately granted the Tax Commission's motion for partial summary judgment on the issue of computing taxes. In the Clark's case, Fourth District Judge McKee granted the Clarks' motion for summary judgment on the same question. The Moseses appeal from Judge Newhouse's summary judgment and the Tax Commission appeals from Judge McKee's summary judgment.

ISSUES PRESENTED IN EACH APPEAL

The issue of law presented for determination by this Court is whether the district courts erred in their interpretation of I.C. §§ 63-3024 and 63-3027A. Since the only issue raised is a question of law, the Court's standard of review is free review of the decisions of the district courts. Clark v. St. Paul Property & Liability Ins. Co., 102 Idaho 756, 639 P.2d 454 (1981).

CONSTRUCTION OF APPLICABLE STATUTES

The Idaho Code sections in effect during the tax year commencing January 1, 1985 (which is the only tax year in question) read as follows:

63-3024. Individuals' tax and tax on estates and trusts.--A tax is hereby imposed for each taxable year commencing on and after January 1, 1976, upon every resident individual, trust or estate which shall be measured by his or its taxable income, and upon that part of the taxable income of any nonresident individual, trust or estate derived from sources within the state of Idaho computed as required by section 63-3027A, Idaho Code.

63-3027A. Computing tax of part-year or nonresident individuals, trusts and estates.--In computing the tax of a part-year or nonresident individual, trust or estate, the tax imposed by section 63-3024, Idaho Code, shall be reduced to the proportion that the adjusted gross income of the taxpayer from Idaho sources bears to the total adjusted gross income from all sources.

Prior to 1985, I.C. § 63-3027A had provided as follows:

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