Ringier American v. State Dept. of Revenue
| Decision Date | 05 December 1995 |
| Docket Number | CA-TX,No. 1,1 |
| Citation | 184 Ariz. 250,908 P.2d 64 |
| Parties | RINGIER AMERICAN, fka W.A. Krueger Company, a corporation, Plaintiff Petitioner-Appellant, v. STATE of Arizona DEPARTMENT OF REVENUE; Maricopa County, a body politic and corporate; Tom Rawles, Jim Bruner, Betsey Bayless, Ed King and Mary Rose Wilcox, as members of the Maricopa County Board of Supervisors; Pete Corpstein, in his capacity as Maricopa County Assessor; and Doug Todd, in his capacity as Maricopa County Treasurer, Defendants Respondents-Appellees. 94-0010. |
| Court | Arizona Court of Appeals |
Appellant Ringier American ("Ringier") appeals from a written tax court judgment dismissing its special action under Ariz.Rev.Stat.Ann. ("A.R.S.") § 11-506 for a partial refund of personal property taxes for tax years 1987 to 1990. We hold that Ringier's claims are not cognizable under A.R.S. § 11-506, and that because Ringier failed to timely pursue the proper statutory procedures for appellate review, no remedy is available. The tax court's judgment is therefore affirmed.
In 1990, Appellants Maricopa County, et al. ("DOR") audited Ringier's personal property tax statements for tax years 1987-1990. The audit found that Ringier had improperly classified certain equipment in preparing and filing its property tax statements for those years. These improper classifications resulted in more favorable depreciation schedules which, in turn, resulted in lower taxes for Ringier.
Later that same year, DOR reclassified the equipment and issued a tax bill for an additional $51,970.29 in property taxes for the years 1987 through 1990. The revised tax bill had a due date of January 14, 1991, and a delinquency date of February 13, 1991. Ringier's subsequent petition for review with the Maricopa County Assessor's Office challenging the revised taxes was denied. The Maricopa County Board of Equalization also denied review. Ringier then appealed to the State Board of Tax Appeals, but before the Board heard the matter, a settlement was reached reducing the amount owed in taxes to $43,430.07. The Board thereafter entered an order permitting Ringier to withdraw its appeal. Ringier received a tax bill for the new amount on April 3, 1991, which it paid in full a few weeks later.
On April 9, 1993, more than two years after paying the revised taxes, Ringier filed a pleading with the tax court entitled "Petition for Special Action and Complaint and Appeal from Denial of Tax Refund." Ringier claimed that it should receive a tax refund because DOR lacked the statutory authority to retroactively impose additional taxes based on revaluation of property. Ringier further argued that the retroactive assessment unduly discriminated against it. The court dismissed the section of the pleading entitled "Petition for Special Action," noting that "[a] special action is not appropriate where there is an appeal." The court treated the other portion of the pleading as an appeal from the State Board of Tax Appeals under A.R.S. § 42-176. Ringier thereafter filed a motion for reconsideration arguing that its special action should not have been dismissed because § 11-506 requires that review must be by way of special action. The court denied the motion, stating that claims under § 11-506 are limited to refunds arising from an "erroneous assessment" and that Ringier's claims did not meet this requirement. However, Ringier continued to assert that its claim for relief was based on A.R.S. § 11-506.
DOR then filed a motion seeking, alternatively, dismissal or judgment on the remainder of Ringier's action. DOR asserted that Ringier failed to state a claim under § 11-506 because there was not an "erroneous assessment," and, in the alternative, that the original tax bill was not paid before delinquency. Ringier opposed the motion, arguing that the retroactive assessment of taxes was illegal and therefore constituted an "erroneous assessment" under the statute, and that DOR waived any possible delinquency claim.
The tax court concluded that Ringier's tax refund claims were not cognizable under § 11-506, and that Ringier should have raised its claims by way of timely appeal. Because the statutory filing deadline for any possibly applicable tax appeal statute had already passed, the court granted DOR's motion to dismiss. Following the entry of a final judgment, Ringier timely appealed to this court.
We first address Ringier's claim that the tax court erroneously dismissed its special action under A.R.S. § 11-506 based on the availability of an appeal. Ringier argues that property tax appeals and § 11-506 claims are merely alternative remedies and that, therefore, the tax court wrongly dismissed its special action. For this proposition, Ringier cites S & R Properties v. Maricopa County, 178 Ariz. 491, 875 P.2d 150 (App.1993). In S & R, each of numerous taxpayers brought separate special actions in the tax court, claiming that the petitioner's property had been misclassified, and that, as a result, each had paid excessive real property taxes and were entitled to refunds pursuant to A.R.S. §§ 11-505 and 11-506 (1990). Id. at 496, 875 P.2d at 155.
In S & R, we characterized A.R.S. § 11-506 as "a simple, alternative means of correcting indisputable assessment errors." Id. at 501, 875 P.2d at 160. We went on to delineate the kinds of claimed error that may serve as the basis of claims under § 11-506:
[W]e do not believe that the taxpayer can never obtain a refund for prior years without having appealed in the current tax year. If the November 1 deadline for filing an appeal has passed when a taxpayer discovers an error, and the error is clear and indisputable either from the County's own records or the taxpayer's claim, DOR should verify that error, and the County should issue a refund without the necessity of a formal appeal. [Citation omitted.]
On the other hand, if an alleged erroneous assessment cannot be determined without the resolution of disputed issues of fact and the assessment of credibility of witnesses, and such error has not been adjudicated in the appeal process, it is not an error that can be "verified" by DOR. The function of the appeal process is to resolve disputed issues of fact and law between taxpayers and the taxing authority. We believe the legislature did not intend for the refund process to be used as a forum to litigate such issues. Consequently, a taxpayer who fails to appeal an alleged erroneous assessment, the determination of which depends on the adjudication of disputed issues of fact or law, may not litigate his right to a refund under section 11-506.
Id. at 501-02, 875 P.2d at 160-61 (emphasis added).
S & R indicates that whether a claim for refund could have been brought as an appeal to the tax court is not determinative of the availability of relief under A.R.S. § 11-506. Therefore, we examine Ringier's claim for sufficiency under § 11-506, notwithstanding that the claim could have been made by timely appeal.
DOR contends that A.R.S. § 11-506 remedies only "clear and indisputable" assessment errors, and that this case does not involve such errors. We agree. S & R instructs that a special action under A.R.S. § 11-506 may be granted only where the assessment error is so plain that DOR may easily verify it and issue a refund without the need for a formal appeal. In such cases, no questions of fact or law must be resolved, and formal appellate procedures are unnecessary. Here, Ringier is claiming that DOR exceeded its statutory authority and unduly discriminated against Ringier. In order to determine if the tax assessment at issue was erroneous, the tax court would necessarily have to decide disputed factual and legal issues, including whether DOR properly reclassified Ringier's property and, if so, whether a tax may be retroactively imposed to recover any apparent deficiency. S & R makes it clear that these types of factual and legal questions are reserved solely for the appeals process and may not be litigated under § 11-506. See Bull HN Info. Systems v. Arizona Dep't of Revenue, 203 Ariz.Adv.Rep. 25, --- Ariz. ----, --- P.2d ---- (App. Nov. 16, 1995) ().
Ringier contends that because it has invoked In re Westward Look Development Corp., Inc., 138 Ariz. 88, 673 P.2d 26 (App.1983), in support of its claim that the assessor utterly lacked authority to collect additional taxes based on the audit and revaluation of property, the claim here is not subject to any reasonable dispute. In Westward Look, Division Two of this court held that, where real property has been undervalued due to the assessor's own error, the county treasurer could not collect additional taxes on the previously taxed property after its revaluation. Id. at 89, 673 P.2d at 27. DOR disputes the applicability of Westward Look to Ringier's situation on a variety of asserted grounds.
Critically, in this case, the tax court found that the initial improper valuations resulted from Ringier's improper classification of its equipment in its property tax statements. In a similar case, the attempted application of Westward Look to prevent the collection of back taxes after an assessor's audit was rejected. Aleasco, Inc. v. Maricopa County, 177 Ariz. 291, 867 P.2d 861 (Tax 1994). The tax court in Aleasco determined that Westward...
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