R Communications, Inc. v. Sharp

• Citation: 839 S.W.2d 947
• Decision Date: 23 September 1992
• Docket Number: No. 3-91-390-CV,3-91-390-CV
• Parties: R COMMUNICATIONS, INC., f/k/a R N Communications, Inc., Appellant, v. Honorable John SHARP, Comptroller of Public Accounts of the State of Texas, Appellee.
• Court: Court of Appeals of Texas

Page 947

839 S.W.2d 947

R COMMUNICATIONS, INC., f/k/a R N Communications, Inc., Appellant, v. Honorable John SHARP, Comptroller of Public Accounts of the

State of Texas, Appellee.

No. 3-91-390-CV.

Court of Appeals of Texas,

Austin.

Sept. 23, 1992.

Rehearing Overruled Oct. 14, 1992.

Ralph C. Perry-Miller, Perry-Miller, Beasley & Hume and Mark H. How, Short, How, Frels & Tredoux, Dallas, for appellant.

Dan Morales, Atty. Gen. and Gregory E. Perry, Asst. Atty. Gen., Austin, for appellee.

Before CARROLL, C.J., and ABOUSSIE and B.A. SMITH, JJ.

ON MOTION FOR REHEARING

B.A. SMITH, Justice.

The prior opinion of this Court, dated August 26, 1992, is withdrawn and the following is substituted therefor.

R Communications, Inc. (the Corporation) sought review of a sales tax deficiency assessed by the Comptroller of Public Accounts ("Comptroller") without first paying the taxes allegedly owed. The Tax Code requires a taxpayer to make payment with a written protest before filing suit to contest the legality or accuracy of taxes assessed. Tex.Tax Code Ann. § 112.051(a) (Pamph.1992). The district court of Travis County dismissed the suit for want of jurisdiction.

On appeal the Corporation argues that the district court had jurisdiction of the suit under the Administrative Procedure and Texas Register Act. See Tex.Rev.Civ.Stat.Ann. art. 6252-13a, § 19 (Pamph.1992) ("APTRA"). Alternatively, the Corporation contends that section 112.051 of the Tax Code is unconstitutional in that it imposes an impossible condition on an insolvent taxpayer. The Corporation argues that the payment requirement offends equal protection and due process guarantees under the federal constitution, and violates the state constitutional right of open access to courts to pursue a remedy by due course of law. See U.S. Const. amends. V, XIV; Tex. Const. art. I, § 13. We conclude that the Tax Code does not violate the open courts provision of the state constitution. We reaffirm earlier holdings that the jurisdictional requirements of the Tax Code in section 112.051 do not offend the taxpayer's other constitutional rights and cannot be avoided by APTRA section 19. We also overrule the Corporation's complaint that sections 112.101 and 112.108 of the Tax Code impose unconstitutional restrictions on the taxpayer's right to seek injunctive relief and a declaratory judgment. The trial court correctly determined that it had no jurisdiction over this cause and we affirm its order of dismissal.

BACKGROUND

R Communications sells, installs and repairs telephone systems. From 1980 to 1984, the invoices of the Corporation did not separate the cost of materials sold from the cost of services rendered. The Corporation maintained records of what the charges were for and remitted to the Comptroller taxes due on its sales but not on its service charges. In late 1984, the Comptroller audited the company and assessed a deficiency of approximately $85,573.

The Corporation's petition for a redetermination, see Tex.Tax Code Ann. § 111.009 (1982 & Pamph.1992), began an administrative process that continued for six years. In January 1991, the administrative law judge's final decision affirmed the taxpayer's liability for $128,575 in taxes and interest. After its motion for rehearing was overruled, the Corporation filed suit on April 8, 1991, seeking judicial review under section 19 of APTRA and asking the court to determine its tax liability under the Uniform Declaratory Judgments Act. See Tex.Civ.Prac. & Rem.Code Ann. § 37.002(a) (1986 & Supp.1992). The Corporation never paid the tax deficiency.

The Comptroller filed pleas to the jurisdiction, noting the Corporation's failure to pay the taxes assessed, see Tax Code § 112.051, and its failure to meet the prerequisites for seeking injunctive relief in a tax-collection proceeding. See Tax Code § 112.101. The Comptroller also cited the statutory prohibition against declaratory judgments in tax matters, see § 112.108, and denied that APTRA section 19 conferred jurisdiction on the court. The trial court dismissed the cause on July 8, 1991.

In six points of error, the Corporation contends: (1) that the trial court had jurisdiction to hear this appeal under APTRA section 19; (2) that the jurisdictional requirements of Tax Code section 112.051 are unconstitutional; (3) that the prohibition against declaratory judgments, Tax Code section 112.108, is unconstitutional; (4) that the prerequisites to seeking injunctive relief, Tax Code section 112.101, are unconstitutional; (5) that governmental immunity

does not bar the Comptroller's liability for attorney's fees; and (6) that the court erred in dismissing the taxpayer's "cross-action" against the City of Arlington and the State of Texas.

APTRA DOES NOT GRANT TAXPAYERS A RIGHT OF APPEAL

In the first point of error, the Corporation complains of the trial court's failure to find jurisdiction to entertain its petition for judicial review under APTRA section 19. Texas courts have previously determined that APTRA section 19 does not confer a direct right of review on taxpayers. In Robinson v. Bullock, 553 S.W.2d 196 (Tex.Civ.App.1977, writ ref'd n.r.e.), cert. denied, 436 U.S. 918, 98 S.Ct. 2264, 56 L.Ed.2d 759 (1978), a taxpayer who failed to meet the taxation statute's jurisdictional requirements for judicial review argued that APTRA section 19 conferred jurisdiction on the court to hear its suit. The appellate court reasoned this could be true only if APTRA implicitly repealed the substantive rights and procedural remedies granted under the tax statutes, and noted that repeal by implication was disfavored. Id. at 198. Unless a new statute specifically repeals an earlier statute, or is repugnant to it, the two acts should be construed in a manner to allow both to stand. Id. Finding that APTRA did not specifically repeal the procedural requirements for review under the tax statutes, the court detected

no real or substantial repugnancy between Article 1.05, which grants the taxpayer a substantive right and a remedial mode of questioning the validity of a tax statute, and the later general procedural route provided by Section 19 of Article 6252-13a to effect appeal from an adverse ruling of a State agency.

Id. at 198. ¹ Because APTRA does not repeal the jurisdictional requirements of the Tax Code, APTRA does not create a right of review when a taxpayer has failed to satisfy those requirements. See also Bullock v. Adickes, 593 S.W.2d 805, 807-08 (Tex.Civ.App.1980, writ ref'd n.r.e.); Motorola, Inc. v. Bullock, 586 S.W.2d 706, 709 (Tex.Civ.App.1979, no writ).

We conclude that APTRA does not repeal the jurisdictional requirements of section 112.051 of the Tax Code. Section 19 of APTRA, therefore, does not permit a taxpayer who fails to comply with the jurisdictional requirements of the Tax Code to proceed with a petition for judicial review. We overrule the first point of error.

CONSTITUTIONALITY OF SECTION 112.051

In its second point of error, the Corporation insists that by requiring payment of a deficiency assessment before filing suit, section 112.051 infringes on its constitutional rights. The Corporation argues that, for the insolvent taxpayer, payment presents an "impossible condition" that forecloses the opportunity for a meaningful appeal. The Corporation claims that section 112.051 unconstitutionally restricts its rights to due process and equal protection under the federal constitution, and its right to equal protection and open access to courts under the Texas Constitution. See U.S. Const. amend. XIV; Tex. Const. art. I, §§ 3, 13.

Due Process. A long line of United States Supreme Court cases establishes that a taxation scheme that provides for legal challenges only after taxes have been collected does not offend due process. "All governments, in all times, have found it necessary to adopt stringent measures for the collection of taxes, and to be rigid in the enforcement of them." Cheatham v. United States, 92 U.S. 85, 88, 23 L.Ed. 561 (1876). The Court has upheld statutes that provide only "corrective justice," i.e. tax refunds, as constitutional in recognition of the government's strong need to secure its revenues promptly:

[T]he government has the right to prescribe the conditions on which it will subject Id. at 89; see also Rosewell v. LaSalle Nat.'l Bank, 450 U.S. 503, 101 S.Ct. 1221, 67 L.Ed.2d 464 (1981) (tax scheme requiring payment of property tax before seeking refund does not violate equal protection or due process of law); Phillips v. Comm'r of Internal Revenue, 283 U.S. 589, 599, 51 S.Ct. 608, 612, 75 L.Ed. 1289 (1931) ("[I]t has already been shown that the right of the United States to exact immediate payment and to relegate the taxpayer to a suit for recovery is paramount."); Dodge v. Osborn, 240 U.S. 118, 36 S.Ct. 275, 60 L.Ed. 557 (1916) (proposition that requiring payment before taxpayer can seek refund violates due process is entirely without merit); State R.R. Tax Cases, 92 U.S. 575, 613-14, 23 L.Ed. 663 (1876).

itself to the judgment of the courts in the collection of its revenues.... If there existed in the courts, State or National, any general power of impeding or controlling the collection of taxes, or relieving the hardship incident to taxation, the very existence of the government might be placed in the hands of a hostile judiciary. While a free course of remonstrance and appeal is allowed within the departments before the money is finally exacted, the general government has wisely made the payment of the tax claimed, whether of customs or of internal revenue, a condition precedent to a resort to the courts by the party against whom the tax is assessed.

As recently as 1990, the Supreme Court declared, "[I]t is well established that a State need not provide predeprivation process for the exaction of taxes" to satisfy due process. McKesson v. Division of Alcoholic Beverages, 496 U.S. 18, 37, 110 S.Ct. 2238, 2251, 110 L.Ed.2d 17 (1990).

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