Town of Burnsville v. Cline
| Decision Date | 14 December 1992 |
| Docket Number | No. 21227,21227 |
| Citation | 425 S.E.2d 186,188 W.Va. 510 |
| Court | West Virginia Supreme Court |
| Parties | TOWN OF BURNSVILLE, a Municipal Corporation, Petitioner, v. Honorable Danny O. CLINE, Judge of the Circuit Court of Braxton County; Kwik-Pik, Inc., a West Virginia Corporation; Seventy-Niner, Inc., a West Virginia Corporation; and Roger M. Nettles, individually, and as Officer and Shareholder of Said Corporations, Respondents. |
Syllabus by the Court
1. Syllabus point 5, Armco, Inc. v. Hardesty, 172 W.Va. 67, 303 S.E.2d 706 (1983).
2. "Where there is intentional discrimination against a taxpayer by knowingly applying a different formula to the computation of its taxes from that generally used for all other taxpayers in similar circumstances, such discrimination cannot be excused as a sporadic deviation and the aggrieved taxpayer is entitled to have its taxes computed in the same manner and on the same basis as the favored taxpayers." Syllabus point 3, Matter of U.S. Steel Corp., 165 W.Va. 373, 268 S.E.2d 128 (1980).
3. " Syllabus point 1, The Daily Gazette Company v. Caryl, 181 W.Va. 42, 380 S.E.2d 209 (1989).
4. The legislative intent to keep confidential the contents of all tax returns, including B & O tax returns, is clear.
5. It would not violate the confidentiality requirements of W.Va.Code § 11-10-5d(a) to permit a review of the roll of B & O taxpayers since every person or company involved in a business or occupation is assumed to pay B & O taxes, and the list would contain only the names of the taxpayers, not the actual contents of the tax returns.
Robert Reed Sowa, Sutton, for petitioner.
Joseph M. Wagoner, Haller & Wagoner, Weston, for respondents, Kwik-Pik, Seventy-Niner and Nettle.
This case involves a petition for a writ of prohibition filed by the Town of Burnsville (Town) against the respondents, the Honorable Danny Cline, Judge of the Circuit Court of Braxton County, Kwik-Pik, Inc., Seventy-Niner, Inc., and Roger M. Nettle. The petition for a writ of prohibition was intended to prevent the respondents from obtaining information regarding the Business & Occupation tax (B & O tax) paid by other taxpayers in the Town of Burnsville.
The Town of Burnsville filed a lawsuit against the respondents, Kwik-Pik, Inc., and Seventy-Niner, Inc., in order to collect certain business and occupation taxes that the Town contends was owed to them by the respondents. The suit was based upon this Court's decision in Town of Burnsville v. Kwik-Pik, Inc., 185 W.Va. 696, 408 S.E.2d 646 (1991). In that case, this Court ruled that Burnsville's B & O tax was constitutional and remanded the cases back to the circuit court for further proceedings.
Upon remand, the Town filed a motion for summary judgment, to which the respondents filed a motion to dismiss and answer which asserted that the B & O tax was being selectively enforced and prosecuted against them. The respondents also filed a motion for production and inspection in which they requested that the Town's B & O tax returns and other information of third-party taxpayers who were not party to this suit be made available to them for review. However, by order of March 4, 1992, Judge Cline agreed that the Town was selectively enforcing the B & O tax provisions against the respondent and permitted discovery of the Town's B & O tax returns. It is from that final order that the petitioner files this petition for a writ of prohibition, in an attempt to prevent Judge Cline from permitting the respondents to review those tax returns.
Article X, § 1 of the West Virginia Constitution guarantees that "taxation shall be equal and uniform throughout the State, and all property, both real and personal, shall be taxed in proportion to its value...." 1 It is well recognized in both State and federal law that tax rates, although different for different classes, must be equal and uniform within the individual class. In Allegheny Pittsburgh Coal Co. v. County Commission of Webster County, 488 U.S. 336, 109 S.Ct. 633, 102 L.Ed.2d 688 (1989), the United States Supreme Court ruled that the Equal Protection Clause of the United States Constitution is applicable in some taxation cases: "The Equal Protection Clause 'applies only to taxation which in fact bears unequally on persons or property of the same class.' " Id. at 343, 109 S.Ct. at 637, 102 L.Ed.2d at 697 (citations omitted). "The equal protection clause ... protects the individual from state action which selects him out for discriminatory treatment by subjecting him to taxes not imposed on others of the same class." Id. at 343, 109 S.Ct. at 637, 102 L.Ed.2d at 698 (citations omitted). The Court concluded that the Equal Protection Clause allows the state to divide different types of property into different classes, which are each assigned an appropriate tax burden. The differing tax rates are proper as long as the division and resulting tax burdens are not arbitrary or capricious. 2
In Armco v. Hardesty, 172 W.Va. 67, 303 S.E.2d 706 (1983), rev'd 467 U.S. 638, 104 S.Ct. 2620, 81 L.Ed.2d 540 (1984), this Court ruled that taxation must be uniform within individual classifications. Although the United States Supreme Court reversed the decision and held that the West Virginia B & O tax unconstitutionally discriminated against interstate commerce, syllabus point 5 of Armco remains valid:
Section 1 of Article X of the West Virginia Constitution does not require that the same rate of business and occupation tax be applied to all classes of business activity and callings to which the tax is applied. The Legislature may prescribe different rates for different businesses and callings, but the rate of taxation must be uniform and equal within each classification.
This Court faced a similar situation in Matter of U.S. Steel Corp., 165 W.Va. 373, 268 S.E.2d 128 (1980), where U.S. Steel Corp. alleged they were being assessed taxes on real property at a rate higher than other similarly situated companies. In holding U.S. Steel was the victim of improper discrimination in the assessment, we ruled that:
Where there is intentional discrimination against a taxpayer by knowingly applying a different formula to the computation of its taxes from that generally used for all other taxpayers in similar circumstances, such discrimination cannot be excused as a sporadic deviation and the aggrieved taxpayer is entitled to have its taxes computed in the same manner and on the same basis as the favored taxpayers.
Id. at syl. pt. 3. This case involves somewhat different facts, in that the respondents complain that similarly situated taxpayers pay no tax, rather than a reduced tax. Nonetheless, we believe that syllabus point 3 of U.S. Steel is analogous to this case. If the respondents can prove that they are being taxed at a different rate than other taxpayers in similar circumstances, then they are entitled to force the city to tax the other taxpayers at the proper B & O tax rate. Without access to the B & O tax returns, however, it is virtually impossible for the respondents to prove that the other similarly situated taxpayers have not paid B & O taxes. Thus, our next step is to review the confidentiality provisions of the West Virginia Tax Administration and Procedure Act to determine if there is a way for the respondents to view the B & O tax returns in question.
It is well recognized in this State that the West Virginia Freedom of Information Act is liberally construed. " Syl. pt. 1, The Daily Gazette Company v. Caryl, 181 W.Va. 42, 380 S.E.2d 209 (1989). West Virginia Code § 29B-1-1 et seq. (1986) provides for the release of all public records to any person, unless otherwise expressly prohibited by section four of the Act. The general rule allowing disclosure, however, is subject to an exception for information otherwise "exempted from disclosure by statute." W.Va.Code § 29B-1-4(5) (1986). Thus, we must determine if any exceptions exist under our statute. 3
The issue of confidentiality in the West Virginia Tax Procedure and Administration Act and tax compromise information was discussed in Daily Gazette Co., Inc. v. Caryl, 181 W.Va. 42, 380 S.E.2d 209 (1989). Citing Spencer v. Yerace, 155 W.Va. 54, 180 S.E.2d 868 (1971), the Court in Caryl concluded that under the theory of statutory construction and legislative intent, the Court must examine W.Va.Code § 11-10-1 et seq. "in its entirety in order to determine a purpose of the legislature in enacting this statute." Id. 380 S.E.2d at 211.
West Virginia Code § 11-10-5d(a) (1987) provides the general rule for confidentiality of tax information and the exceptions from the general rule:
Except when required in an official investigation by the tax commissioner into the amount of tax due under any article administered under this article or in any proceeding in which the tax commissioner is a party before a court of competent jurisdiction to...
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