St. Louis Southwestern Ry. Co. v. State Tax Com'n, 68014
| Decision Date | 01 August 1986 |
| Docket Number | No. 68014,68014 |
| Citation | 713 S.W.2d 830 |
| Parties | ST. LOUIS SOUTHWESTERN RAILWAY CO., Appellant, v. STATE TAX COMMISSION, Respondent. |
| Court | Missouri Supreme Court |
Katrina Bakewell, Louis F. Bonacorsi, St. Louis, for appellant.
William L. Webster, Atty. Gen., Melodie A. Powell, Asst. Atty. Gen., Jefferson City, for respondent.
Taxpayer, St. Louis Southwestern Railway Company (hereafter "taxpayer" ), appeals from a judgment of the circuit court affirming the decision of the State Tax Commission (hereafter "the Commission" ), denying taxpayer leave to amend its petition for review of a franchise tax determination. At issue are the procedural requirements for obtaining a refund of state taxes. This case, therefore, involves the construction of the revenue laws of this state. We have jurisdiction pursuant to Mo. Const. art. V, § 3. The judgment of the circuit court is affirmed.
Our review of the Commission's decision is ordinarily limited to whether that decision was "supported by competent and substantial evidence upon the whole record, or whether it was arbitrary, capricious, unreasonable, unlawful or in excess of its jurisdiction." Evangelical Retirement Homes of Greater St. Louis, Inc. v. State Tax Commission, 669 S.W.2d 548, 552 (Mo. banc 1984); § 536.140.2, RSMo 1978. Since this case involves only the application of the law to the facts, this Court could also determine the relevant facts for itself, giving due deference to the Commission's expertise and opportunity to observe the witnesses. Id.; § 536.140.3, RSMo 1978. However, for present purposes the relevant facts are undisputed.
In April, 1975, taxpayer filed a franchise tax report for the tax year 1975 as required by § 147.020, RSMo 1978 (amended Laws of Missouri, 1979, p. 343), showing Missouri taxable assets of $57,793,028. Taxpayer paid the $28,897.00 its tax report showed due. Subsequently, the Director of Revenue issued taxpayer a franchise tax statement showing a tax liability of $29,629.25 on assets of $59,258,502. Taxpayer paid and protested the additional $742.83 in tax and interest due. On June 27, 1975, taxpayer filed a claim for refund of franchise tax paid in the amount of $742.83. The stated ground for the claim for refund was that
The method used in determining the 1975 corporate franchise tax against the St. Louis Southwestern Railway Company was erroneous.
Taxpayer and the Director of Revenue attempted to reconcile the $742.83 difference unsuccessfully. The Director of Revenue issued his final tax determination on January 21, 1976, refusing taxpayer's claim for refund.
Pursuant to § 138.430, RSMo 1978 (amended Laws of Missouri, 1983, p. 430), taxpayer filed its Petition for Review with the State Tax Commission on March 12, 1976. Taxpayer claimed error in the Director's inclusion of investments in stock and debt obligations of various companies "not located in the State of Missouri and whose assets were not employed within the State of Missouri" with taxpayer's capital and surplus. Taxpayer also challenged the Director's decision to include in its capital and surplus items in cash held by the taxpayer for its employees including payroll deductions, federal income tax withholdings, state and local tax withholdings, employee deductions for United States savings bonds, and funds being held for distribution to bondholders upon presentation of the bondholders' coupons.
On January 16, 1979, taxpayer sought to continue its hearing for an indefinite time because "the matters which would be covered at the hearing are essentially identical to issues which are involved in two other hearings scheduled before the Commission ... involving the Missouri Pacific Railroad Company and the St. Louis-San Francisco Railway Company...." The motion did not indicate the nature of the "essentially identical" issues which would be addressed in these other hearings.
Following a resolution in those proceedings, the Commission held an evidentiary hearing on taxpayer's petition for review on September 20, 1982. The Director and taxpayer filed a stipulation of facts. On March 14, 1983, taxpayer sought to file an amended petition for review with the State Tax Commission which asserted a new, third ground for protest in addition to the two previously stated grounds, claiming that the Department of Revenue
failed to reduce surplus of petitioner by the amount by which accelerated depreciation and amortization allowed for income tax purposes was greater than book depreciation for assets. 1
To its amended petition for review, taxpayer attached an amended franchise tax report showing taxable Missouri assets reduced from $57,793,028 to $34,549,669, a new tax liability of $17,275 and a refund due taxpayer of $12,365. Taxpayer also filed a motion for leave to file its amended petition for review. The Commission denied taxpayer's motion. Taxpayer appealed to the circuit court. The circuit court affirmed the Commission's decision. Taxpayer's appeal to the Court of Appeals was ordered transferred to this Court. Mo. Const. art. V, § 11.
Section 136.035 RSMo 1978, states in pertinent part:
1. The director of revenue from funds appropriated shall refund any overpayment or erroneous payment of any tax which the state is authorized to collect....
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3. No refund shall be made by the director of revenue unless a claim for refund has been filed with him within two years from the date of payment. Every claim must be in writing under oath and must state the specific grounds upon which the claim is founded. (Emphasis added).
The procedure provided in § 136.035.3 is the taxpayer's exclusive remedy for obtaining a tax refund. Ellsworth Freight Lines, Inc. v. Missouri Highway Reciprocity Commission, 568 S.W.2d 521, 524 (Mo. banc 1978), cert. den. 440 U.S. 901, 99 S.Ct. 1204, 59 L.Ed.2d 449 (1979); State ex rel. Brady Motorfrate, Inc. v. State Tax Commission, 517 S.W.2d 133, 137 (Mo.1974). In creating this exclusive remedy, we believe the General Assembly intended to avoid unnecessary appeals of tax refund matters by requiring taxpayers to seek a resolution of their claims for refund at the department level.
Such a procedure necessarily requires that the Director of Revenue be apprised of the...
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