RCJ Corp. v. Arizona Dept. of Revenue, Maricopa County

• Citation: 812 P.2d 1146,168 Ariz. 328
• Decision Date: 10 June 1991
• Docket Number: No. TX,TX
• Parties: RCJ CORP., et al. v. ARIZONA DEPARTMENT OF REVENUE, MARICOPA COUNTY. 90-01242.
• Court: Tax Court of Arizona

Page 1146

812 P.2d 1146

168 Ariz. 328

RCJ CORP., et al. v. ARIZONA DEPARTMENT OF REVENUE, MARICOPA COUNTY.

No. TX 90-01242.

Tax Court of Arizona.

June 10, 1991.

[168 Ariz. 329] Fennemore Craig, P.C. by Paul J. Mooney and Jim L. Wright, Phoenix, for plaintiffs-appellants.

Attorney Gen. by Steven R. Partridge, Phoenix, for defendant-appellee Arizona Dept. of Revenue.

Maricopa County Atty. by James D. Winter, Phoenix, for defendant-appellee Maricopa County.

OPINION

MORONEY, Judge.

This is a property tax appeal pursuant to A.R.S. § 42-246 and A.R.S. § 42-177. This matter is before the Court on a Motion to Dismiss by Maricopa County. In its Complaint, the Taxpayer challenges the valuation of its property for the tax year 1990. 1990 property taxes were paid before they became delinquent. However, when suit was filed, second half property taxes for 1989 on the property had not been paid. The sole issue before the Court is whether the Taxpayer's failure to pay the prior year's taxes requires that its suit be dismissed. The Court holds that it does not.

IT IS ORDERED denying the Motion of Maricopa County to Dismiss.

Maricopa County cites to the Court A.R.S. § 42-177 and A.R.S. § 42-204, and argues that they have to be considered in pari materia. If, Maricopa County argues, the two statutes are considered together, they require the payment before delinquency of all taxes levied and assessed against the property, not just the taxes due for the year under review. If this requirement is not met, Maricopa County argues, a taxpayer's challenge to property taxes assessed against it cannot be maintained.

A.R.S. § 42-177 provides the procedure for taking property tax appeals to the Tax Court. Subsection E of § 42-177 provides that certain taxes on the property must be paid as a prerequisite to the appeal.

A.R.S. § 42-177(E) reads as follows:

All taxes levied and assessed against property on which an appeal has been filed by the owner thereof shall be paid under protest prior to the date the tax becomes delinquent. A receipt shall be given for the amount of such tax paid, and within forty-five days a copy of the receipt shall be filed by the owner with the clerk of the tax court. If such taxes are not paid prior to becoming delinquent, or if a copy of the receipt for payment is not so filed, the court shall dismiss the appeal.

By itself, § 42-177(E) is not difficult to interpret. A.R.S. § 42-177, together with A.R.S. § 42-176 and A.R.S. § 42-178, sets forth the manner by which unhappy taxpayers take property tax appeals from the State Board of Tax Appeals to the Tax Court. Section 42-176 is the section which authorizes such appeals. It provides that "[a]ny taxpayer dissatisfied with the valuation or classification of his property as reviewed by the state board of tax appeals may appeal to the superior court in the manner provided by § 42-177 and not otherwise."

A.R.S. § 42-246 authorizes property tax appeals to the Tax Court from other than decisions of the State Board of Tax Appeals. It provides that "[a]ny person dissatisfied with the valuation or classification of his property as determined by the county assessor may appeal to the superior court in the manner provided in A.R.S. § 42-177 on or before November 1."

There is no automatic right to an appeal from a decision by an administrative agency. Such an appeal is a creature of statute. Therefore, the authorizing statute or statutes must be strictly followed. Otherwise there is no jurisdiction in the appellate court to entertain the appeal. County of Pima v. State Dep't of Revenue, 114 Ariz. 275, 560 P.2d 793 (1977) (en banc); Pesqueira v. Pima County Assessor, 133 Ariz. 255, 650 P.2d 1237 (App.1982).

The above quoted portion of § 42-176 directs that appeals from valuation and classification decisions by the state board of tax appeals may only be pursued as authorized by § 42-177. A similar limitation exists in "direct" appeals authorized by § 42-246. It has long been the law that, in an appeal pursuant to § 42-177, the only issues which can be considered are those which involve valuation and classification. County of Maricopa v. Chatwin, 17 Ariz.App. 576, 499 P.2d 190 (1972).

A.R.S. § 42-177(E) is one of six subsections of § 42-177, all six of which set forth requirements for an appeal to the Tax Court. Subsection E requires that taxes levied and assessed against the property on which an appeal has been filed shall be paid prior to the date the tax becomes delinquent.

The intent of this subsection is the subject of discussion in County of Maricopa v. Chatwin, supra. After comparing the language of the statute with its predecessor statutes, the Court of Appeals concluded that the intent of Subsection E ¹ is to allow the dissatisfied taxpayer to pursue his appeal rights under the statute with a minimum of delay, and without the necessity of waiting until the tax rate has been set and the actual amount of the tax determined and paid. Predecessor statutes ² required that the taxes assessed against the property had to be paid before the appeal could be commenced.

A.R.S. § 42-221 defines the valuation date for each property tax year to be January 1. The same statute requires notice to the property owner before the valuation date if the valuation is to be increased over that of the preceding year. Both § 42-176 and § 42-246 set November 1 of the property tax year as the last day by which an appeal may be filed. ³ It is clear from a consideration of the time limits imposed by the various statutes which define property taxation in Arizona that the legislature intended that a tax appeal pursuant to § 42-177 only concern valuation and classification for a single tax year.

Maricopa County argues that "All taxes levied and assessed against property on which an appeal has been filed" includes taxes assessed in prior years which are delinquent when suit is filed. The statutory sentence concludes, "shall be paid prior to the date the tax becomes delinquent." (emphasis added)

If the Court were to accept Maricopa County's version of what the statute intends, there could be no appeal if there had ever been delinquent taxes against the property. An argument can be made that the statutory language is intended only to reach taxes unpaid when suit is filed. There is nothing in the language itself, however, to indicate that the legislature intended so precisely to qualify the word "all". In any case, since one year's unpaid taxes may become delinquent before a subsequent year's valuations are established by the taxing authority, Maricopa County's interpretation of the statutory language could create a class of taxpayers denied a right to an appeal to the Tax Court even before the government does the act which precipitates the appeal.

After considering: the legislative objective in enacting the subsection, as deduced by the Court of Appeals in Chatwin; the limited scope of 42-177 appeals; and, the language of the subsection itself; the Court concludes that subsection E was not intended to reach beyond the single tax year pertinent to the appeal. The Court holds that "[a]ll taxes levied and assessed" means those taxes resulting from the valuation and classification which led to the appeal.

Maricopa County argues that A.R.S. § 42-177 should be read in pari materia with A.R.S. § 42-204. A.R.S. § 42-204 reads as follows.

A. Any person upon whom a tax has been imposed or levied under any law relating to taxation shall not be permitted to test the validity or amount of tax, either as plaintiff or defendant, if any of the taxes:

1. Levied and assessed in previous years against the property of the taxpayer have not been paid.

2. Which are the subject of the action are not paid prior to becoming delinquent.

3. Becoming due on the property during the pendency of the action are not paid prior to becoming delinquent.

B. No injunction, writ of mandamus or other extraordinary writ shall issue in any action or proceeding in any court against the state or an officer thereof, or against any county, municipality or officer thereof, to prevent or enjoin the extending upon the tax roll of any assessment made for tax purposes, or the collection of any tax imposed or levied.

C. Within one year after payment of the first installment of the tax, an action may be maintained to recover any tax illegally collected, and if the tax due is determined to be less than the amount paid, the excess shall be refunded in the manner provided by this title. Interest at the legal rate on the overpayment shall be payable from the date of overpayment. For the purpose of computing interest under any such judgment, if the tax was paid in installments, a pro rata share of the total overpayment shall be deemed attributable to each installment.

D. The department shall be a party to any action brought pursuant to this section.

E. Any taxpayer dissatisfied with the valuation or classification of his property may appeal to the superior court only in the time and manner prescribed in § 42-176, subsections A, B and C or § 42-246, whichever is applicable.

§ 42-204 is different in scope than § 42-177. Section 42-204 contemplates claims for relief from any inappropriate property taxation. It addresses applications for injunctive relief, and authorizes a refund for taxes illegally collected. Not only is its compass not limited to issues of valuation and classification, but § 42-204(E) removes such issues from its purview.

The difference in the application of the two statutes has been the subject of appellate review. In County of Maricopa v. Chatwin, 17 Ariz.App. 576, 580, 499 P.2d 190, 194 (App.1972), in discussing the various approaches a dissatisfied taxpayer could use to seek relief, the Court of Appeals made the following comment. "It is important to note that this statute (§ 42-204) does not designate this approach as an 'appeal', and it is not governed by the procedural provisions of A.R.S. § 42-151 et seq. ...