Narmore v. Kawafuchi

• Decision Date: 29 September 2006
• Docket Number: No. 26812.,26812.
• Citation: 143 P.3d 1271
• Parties: In the Matter of the Tax Appeal of Bobby R. NARMORE, Appellant-Appellant v. Kurt KAWAFUCHI, Director of the Department of Taxation, State of Hawai`i, Appellee-Appellee.
• Court: Hawaii Supreme Court

Page 1271

143 P.3d 1271

In the Matter of the Tax Appeal of Bobby R. NARMORE, Appellant-Appellant v. Kurt KAWAFUCHI, Director of the Department of Taxation, State of Hawai`i, Appellee-Appellee.

No. 26812.

Supreme Court of Hawai`i.

September 29, 2006.

Bobby R. Narmore, appellant-appellant, on the briefs, pro se.

Hugh R. Jones and Damien A. Elefante, Deputy Attorneys General, on the briefs, for appellee-appellee.

NAKAYAMA, ACOBA, and DUFFY, JJ.; and LEVINSON, J., dissenting, with whom MOON, C.J., joins.

Opinion of the Court by ACOBA, J.

We hold that (1) Hawai`i Revised Statutes (HRS) § 232-17 (2001)<sup>1</sup> and Rules of the Tax Appeal Court of the State of Hawai`i (RTAC) Rule 2(a),² requiring Appellant-Appellant Bobby R. Narmore (Narmore) to serve a copy of his "Notice of Appeal to Tax Appeal Court" on Appellee-Appellee Kurt Kawafuchi, Director of the Department of Taxation, State of Hawai`i (the Department), is not jurisdictional and, hence, failure to comply with such language did not deprive the Tax Appeal Court (the tax court)³ of jurisdiction to hear Narmore's appeal, inasmuch as (a) under the plain and unambiguous language of HRS § 232-17, it is the filing of the "Notice of Appeal to Tax Appeal Court" with the tax court, and not the filing of a copy of the "Notice of Appeal to Tax Appeal Court" with the "assessor" Department,⁴ that initiates a tax appeal and (b) this court will not presume that the legislature erroneously neglected to include language that would make service jurisdictional, and (2) Narmore was not prejudiced by the Department's failure to provide him with a certified copy of the "Decision[s]" filed by the Board of Review for the First Taxation District (the Board) as required by HRS § 232-7 (2001).⁵ Accordingly, the tax court's July 8, 2004 "Order Granting [Department's] Motion to Dismiss Filed on January 9, 2003" and July 8, 2004 final judgment in favor of the Department and against Narmore are vacated and this case is remanded to the tax court for further proceedings consistent with this opinion.

I.

At some point in early 1993, Narmore brought his 1984, 1985, 1986, 1987, 1988, and 1989 federal income tax forms, as well as other tax information to the Department for an audit for the purpose of determining if he owed any additional excise tax. This was done in conjunction with the Department's "Non-Filer Program."⁶ Narmore reviewed his tax forms and information with a Department employee and then left them with the Department for further review. Narmore asserts that after the Department finished an "audit" of his forms and information, they were returned to him and he was assessed no taxes, penalties or interest, but was informed that the Department would contact him later if necessary.

On October 24, 1996, Narmore received a notice from the Department's Oahu Collection Branch, Collection Division (the collection division) informing him that he had a current account balance of $12,872.53 and that he had not filed several "General Excise" and "Net Income Individual" tax returns. The notice requested that, by November 4, 1996, Narmore provide a "Statement of Financial Condition and Other Information" and all tax returns that he had not filed. One of the tax returns requested was Narmore's "Annual Return" for 1989.

Narmore asserts that he reminded the Department that he had furnished tax information in 1993, an "audit" was conducted, and he was not assessed any taxes for 1989. He further maintains that two Department audit supervisors informed him that there was no record that they had received his documents in 1993, but that a third employee "confessed" to reviewing the documents in 1993 and stated that the information was in the Audit Division.

At some time in December of 1996, Narmore submitted his "Annual Return Reconciliation General Excise/Use Tax Return for Calendar Year 1989" (first 1989 tax return). Although the first 1989 tax return in the record is not legible, the parties agree that it was signed by Narmore and dated December 17, 1996. They also agree that pursuant to the first 1989 tax return, Narmore owed $12,179.93. At this time, Narmore also remitted a $13,000.00 check, dated December 16, 1996, to the Department for payment of his taxes.

The parties, however, disagree on the circumstances surrounding the creation of an additional "Annual Return Reconciliation General Excise/Use Tax Return for Calendar Year 1989" (second 1989 tax return). The second 1989 tax return contains Narmore's signature, is dated December 17, 1996, is date stamped "Received" on December 16, 1996, and reflects an amount due of $5,365.92. Narmore asserts that the second 1989 tax return was purportedly "drastically forged" by the Department:

[A] comparison of [the first 1989 tax return] to [the second 1989 tax return] clearly showed that the Department had taken a duplicate of [the first 1989 tax return]; reduced the amount of taxes, deleted the penalty and interest entries; date-stamped [the second 1989 tax return] 16 December 1996; and thereafter, repeatedly testified under oath that Narmore had filed [the first 1989 tax return] on 16 December 1996, that the amount of taxes was $5,365.92, that this amount was paid on 16 December 1996, and the Department had waived the penalty and interest on 16 December 1996.

The Department, on the other hand, denies that the second 1989 tax return was forged, and instead contends that "[a]t the time [Narmore] submitted his 1989 general excise annual return in 1996, [Narmore] owed $12,179.93; however, the Department waived penalties and interest, reducing the tax amount due to $5,365.92," so that the Department made the appropriate amendment.⁷

Either in late December of 1996 or early January of 1997, Narmore verbally notified the Department that he intended to file an appeal with the Board. On January 7, 1997, the Department processed the second 1989 tax return and posted a payment of $5,365.92 to Narmore's general excise tax liability for 1989. The balance of Narmore's $13,000 payment, made by check dated December 16, 1996, was applied to other outstanding tax liabilities.

On January 17, 1997, Narmore wrote to the Department stating that, because the statute of limitations provided in HRS § 237-40 (2001)⁸ had expired, he could not be deemed to owe additional taxes for the 1989 tax year. He also requested the necessary forms to appeal to the Board. In a letter dated February 26, 1997, the Department responded that inasmuch as a return was not filed until December 16, 1996 for the 1989 tax year, the statute of limitations had not run. The February 26, 1997 letter stated that Narmore's additional liability was $5,365.92.⁹

II.

On or about March 17, 1997, Narmore appealed to the Board. In his "Notice of Appeal," Narmore made an "objection to the assessment" of $12,179.93 for the 1989 tax year. Narmore asserted that he had delivered tax forms and information to the Department in 1993, that the Department had reviewed his tax forms and information, but not completed his tax return for the 1989 tax year, and that if he had known that the Department was not going to complete the tax return, he would have completed it himself. In a letter to the Board dated April 13, 2002, the Department asserted that (1) the statute of limitations provided in HRS § 237-40(a) did not begin to run until December 16, 1996 when Narmore filed the second 1989 tax return, (2) Narmore failed to file an annual return, as required by HRS § 237-33 (2001)¹⁰ until December 16, 1996, (3) the tax forms and information Narmore provided to the Department in 1993 did not constitute filing a return, (4) Narmore was aware or should have been aware of the statute of limitations under HRS § 237-40(a), and (5) Narmore was not aggrieved by an assessment of taxes inasmuch as the taxes he paid were in accordance with the second 1989 tax return.

Narmore's appeal was heard by the Board on August 1, 2002.¹¹ That same day, the Board rendered its "Decision," finding in favor of the Department in the amount of $5,365.00. The August 1, 2002 "Decision" did not indicate the basis of the Board's determination. At the bottom of the "Decision" form was a notation advising Narmore of the procedure he should comply with if he disagreed with the Board's decision, stating as follows:

If you disagree with the Board's Decision, you may appeal to the Tax Appeal Court within thirty days after the date the Decision was filed. The Tax Assessor may also appeal. If you should decide to appeal the Decision to the Tax Appeal Court, the appeal must be made in writing and comply with the requirements prescribed in [HRS § 232-17 (2001)], and the Rules of the Tax Appeal Court.

The August 1, 2002 "Decision" was sent to Narmore via certified mail on August 21, 2002. Narmore's wife received and signed for the August 1, 2002 "Decision" on August 23, 2002. On or about August 23, 2002, Narmore informed the Department that he required more time to consult with an attorney regarding an appeal to the tax court. The Board, therefore, refiled its August 1, 2002 "Decision" on August 28, 2002, thus providing Narmore an additional thirty days to file his appeal. The August 28, 2002 "Decision" indicated that it was based on a determination that "[t]he evidence demonstrates that the assessment is proper and valid." The August 28, 2002 "Decision" was also sent to Narmore via certified mail. Narmore received and signed for the August 28, 2002 "Decision" on September 9, 2002.

III.

A.

On September 26, 2002, Narmore filed his "Notice of Appeal to Tax Appeal Court" in the tax court. Therein, he claimed the amount of tax in controversy was $12,179.93 plus accumulated interest from December 16, 1996 and asserted that he had paid the tax under protest. He reiterated his previous argument that the Department was barred by the statute of limitations from collecting excise taxes from him for the 1989 tax year insofar as he had provided tax forms and...