State Tax Commission v. Western Electronics, Inc.
| Decision Date | 05 June 1978 |
| Docket Number | No. 12466,12466 |
| Citation | 580 P.2d 72,99 Idaho 226 |
| Parties | STATE TAX COMMISSION, Plaintiff-Respondent, v. WESTERN ELECTRONICS, INC., a corporation, dba Freight Outlet, Steve Brown, Mike Brown and Pat Brown, Defendants-Appellants. |
| Court | Idaho Supreme Court |
Dennis L. Cain of Sallaz, Scanlan, Beer & Cain, Boise, for defendants-appellants.
Wayne L. Kidwell, Atty. Gen., Dean W. Kaplan, Asst. Atty. Gen., Boise, for plaintiff-respondent.
In November 1972, Steve Brown, as president of Western Electronics, Inc. d/b/a Freight Outlet (a Nevada corporation with its principal place of business in Utah), applied for an Idaho sales tax permit. A permit was issued to Western Electronics, Inc. d/b/a Freight Outlet. The application listed Steve Brown, Mike Brown, and Pat Brown as the officers of Western Electronics, Inc.
Freight Outlet filed sales tax returns (Steve Brown signed the returns) each month from September 1974 through February 1975, indicating that sales tax was collected from customers during this period. The sales tax collected has not been paid to the state. The State Tax Commission on August 28, 1975 sent a Notice of Deficiency Determination to each of the defendants by certified mail. No protest to this deficiency was filed.
On May 28, 1976 a complaint was filed in district court by the State Tax Commission against Western Electronics, Inc. d/b/a Freight Outlet, and individually against Steve Brown, Mike Brown, and Pat Brown. Personal service was obtained on all defendants in Utah. Although on June 17, 1976 an appearance was entered by defendants' attorney, no answer to the complaint was ever filed. On September 22, 1976 the State Tax Commission moved for summary judgment, pursuant to I.R.C.P. 56(b).
Defendants filed an affidavit in opposition to this motion. The sole basis given for the opposition was that the State Tax Commission had failed to name a party necessary to the suit, that party being Boise Freight Outlet, Inc., an Idaho corporation.
On October 18, 1976, after a hearing, the trial court issued an order granting the motion for summary judgment. Defendants appeal this order, now contending they are not the proper parties who have a duty to account for the taxes.
Summary judgment should be granted only when the pleadings, depositions, admissions, and affidavits, liberally construed in favor of the party opposing the summary judgment, show that no genuine issue as to any material fact exists. I.R.C.P. 56(c); Salmon Rivers Sportsman Camps, Inc. v. Cessna Aircraft Co., 97 Idaho 348, 544 P.2d 306 (1975).
Defendants admit that Western Electronics, Inc. is clearly liable for the owing taxes. However, defendants on appeal contest the individual liability of Steve, Mike, and Pat Brown. Defendants specifically cite I.C. § 63-3627(a) 1 as requiring the state to prove the individual as having "the duty to account for and pay over any tax imposed by this act" before that person can be found liable for taxes owing. For the first time on appeal the defendants contend that state has not shown which, if any, of the individual defendants had that duty.
The sales tax permit was granted to Western Electronics, Inc. on the application of Steve Brown, the president. The sales tax returns (filed on the sales tax permit number issued to Western Electronics, Inc.) were signed by Steve Brown as president. Defendants now contend that Boise Freight Outlet, Inc. is the actual party owing taxes and that the State Tax Commission should be suing that corporation. A sales tax permit is not assignable and is valid only for the person in whose name it is issued. I.C. § 63-3620(b). Western Electronics could not transfer this liability to another person or corporation.
Steve Brown, Pat Brown, and Mike Brown were all listed as officers of Western Electronics, Inc. on the sales tax permit issued to Western Electronics, Inc. d/b/a Freight Outlet. Because they were listed as officers, they were each sent by certified mail a Notice of Deficiency Determination pursuant to I.C. § 63-3629. Any taxpayer served with a Notice of Deficiency Determination has thirty days to protest this determination. I.C. §§ 63-3631(a), 3632(a).
If the taxpayer does not file a protest with the state tax commission or an action in the district court within the time prescribed in the first subsection of this section, the deficiency shall be assessed and shall become due and payable upon notice and demand from the state tax commission.
The deficiency upon which the complaint here is based was not protested within the thirty days as prescribed. Steve, Mike, or Pat Brown have not, at any time, contested any lack of notice or service upon them.
The deficiency has "hardened" because of the passage of time without protest. Therefore, Steve, Mike, and Pat Brown cannot now be heard to deny liability when that issue was not raised before.
California has previously ruled, in a case involving a nearly identical statute and a similar fact situation, that a taxpayer cannot complain of errors in computation of tax liability "when it refused to avail itself of its administrative remedies to prevent or correct such errors." People v. West Pub. Co., 35 Cal.2d 80, 216 P.2d 441, 445 (1950); California Revenue & Taxation Code § 6561 (Deering 1975).
In West, the defendant did not protest the liability within the thirty day period and therefore was barred from claiming in court that it was not liable for the tax owed.
Steve Brown, Mike Brown, and Pat Brown are each personally liable for the tax owed. The district court order granting summary judgment is affirmed.
Costs to respondent.
This case was improperly decided by summary judgment disposition without due regard for the limited purpose of such proceedings. In Collord v. Cooley, 92 Idaho 789, 451 P.2d 535 (1969), this Court stated:
"The courts are in entire agreement that the moving party for summary judgment has the burden of showing the absence of any genuine issue as to all the material facts, which, under applicable principles of substantive law, entitle him to judgment as a matter of law." (Emphasis added.)
92 Idaho at 795, 451 P.2d at 541.
The complaint alleged as to the liability of the individual defendants:
Steve Brown, Mike Brown and Pat Brown, as officers of the Western Electronics, Inc., were held individually liable for sales tax, penalty and interest to date in the amount of $6,348.02 owing by Western Electronics, Inc., to the State of Idaho under Idaho Code § 63-3627 . . ..
The motion for summary judgment stated only
There is no genuine issue as to any material fact and Plaintiff is entitled to judgment as a matter of law on the undisputed facts appearing in the Complaint and records submitted therein.
with the supporting affidavit saying only
Western Electronics, Inc., a corporation, dba Freight Outlet, Steve Brown, ...
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