Vt. Golf Ass'n, Inc. v. Dep't of Taxes

• Decision Date: 10 August 2012
• Docket Number: No. 11–220.,11–220.
• Citation: 2012 VT 68,57 A.3d 707
• Parties: VERMONT GOLF ASSOCIATION, INC. v. DEPARTMENT OF TAXES.
• Court: Vermont Supreme Court

57 A.3d 707

2012 VT 68

VERMONT GOLF ASSOCIATION, INC.

v.DEPARTMENT OF TAXES.

No. 11–220.

Supreme Court of Vermont.

Aug. 10, 2012.

Paul S. Kulig, Stephen E. Crowley, and John P. Crowley (on the Brief) of Kulig & Sullivan, P.C., Rutland, for Plaintiff–Appellant.

William H. Sorrell, Attorney General, and Danforth Cardozo, III, Assistant Attorney General, Montpelier, for Defendant–Appellee.

Present: REIBER, C.J., DOOLEY, SKOGLUND, BURGESS and ROBINSON, JJ.

SKOGLUND, J.

¶ 1. Vermont Golf Association challenges the superior court's dismissal of its appeal from a decision by the Department of Taxes assessing sales and use tax on prior activities. The court based its dismissal on Vermont Golf's failure to provide security to the Commissioner of Taxes to perfect its appeal to the superior court pursuant to 32 V.S.A. § 9817. We affirm.

¶ 2. Vermont Golf sponsors golf tournaments throughout the state. Golfers pay entry fees to Vermont Golf, which thereafter pays “greens fees” to the golf courses on which the tournaments are held. The Department audited Vermont Golf for the period from March 2001 through February 2008 and assessed sales and use tax on the entry fees. Vermont Golf contested this assessment, and the Department credited it with the tax it had paid on the “greens fees.” Beginning in March 2008, Vermont Golf, under protest, remitted to the Department the sales tax on the full amount of each entry fee it collected. Following a hearing, the Commissioner of Taxes concluded that the entry fees were subject to sales and use tax.

¶ 3. After Vermont Golf appealed to the superior court, the Department notified Vermont Golf that if it failed to pay security pursuant to § 9817, the Department could move to dismiss the appeal. Vermont Golf did not provide security, and the Department moved to dismiss. The superior court concluded that § 9817 mandates security to pursue an appeal, and the court extended the time in which Vermont Golf could provide it. At that point, Vermont Golf offered to give a security interest in its assets, but the Department rejected this offer and renewed its motion to dismiss. Vermont Golf filed a motion under Vermont Rule of Civil Procedure 74(c) for a stay of the Commissioner's decision.

¶ 4. The superior court denied the stay and granted the Department's motion to dismiss the case. The court ruled that Vermont Golf had not complied with § 9817, which it concluded requires security to be posted to perfect an appeal. The court determined that Vermont Golf was required to choose one of three options for providing security: paying the deficiency, depositing the amount of the deficiency with the Commissioner, or filing a bond with the Commissioner in the amount of the deficiency. Vermont Golf's offer of a security interest did not, in the court's view, satisfy the statute. Thus, the court held that even if the court ordered a stay, Vermont Golf's failure to provide security was a jurisdictional defect precluding the appeal from going forward. Accordingly, it granted the motion to dismiss. This appeal followed.

¶ 5. Vermont Golf argues that: (1) failure to give security pending appeal is not a condition of an appeal compelling dismissal; (2) in the alternative, if security pendingappeal is required, post-audit taxes remitted to the Department are a sufficient basis to allow an appeal; and (3) if security pending appeal is not required, the court abused its discretion in denying its motion for a stay. The State contends that: (1) in order to pursue an appeal, § 9817(a) requires taxpayers to “give security, approved by the Commissioner, conditioned to pay the tax levied”; (2) post-audit remittance of taxes is insufficient to obtain judicial review because the statute requires security in the amount of the deficiency; and (3) the court correctly denied Vermont Golf's request for a stay because the requirement that it give security before review was not an “agency decision” under V.R.C.P. 74(a).

¶ 6. Section 9817 of Title 32 provides as follows:

(a) Any aggrieved taxpayer may, within 30 days after any decision, order, finding, assessment or action of the commissioner made under this chapter, appeal to the Washington superior court. The appellant shall give security, approved by the commissioner, conditioned to pay the tax levied, if it remains unpaid, with interest and costs, as set forth in subsection (c) of this section.

(b) The appeal provided by this section shall be the exclusive remedy available to any taxpayer for review of a decision of the commissioner determining the liability of the taxpayer for the taxes imposed.

(c) Irrespective of any restrictions on the assessment and collection of deficiencies, the commissioner may assess a deficiency after the expiration of the period specified in subsection (a) of this section, notwithstanding that a notice of appeal regarding the deficiency has been filed by the taxpayer, unless the taxpayer, prior to the time the notice of appeal is filed, has paid the deficiency, has deposited with the commissioner the amount of the deficiency, or has filed with the commissioner a bond (which may be a jeopardy bond) in the amount of the portion of the deficiency (including interest and other amounts) in respect of which review is sought and all costs and charges which may accrue against the taxpayer in the prosecution of the proceeding, including costs of all appeals, and with surety approved by the superior court, conditioned upon the payment of the deficiency (including interest and other amounts) as finally determined and all costs and charges. If as a result of a waiver of the restrictions on the assessment and collection of a deficiency any part of the amount determined by the commissioner is paid after the filing of the appeal bond, the bond shall, at the request of the taxpayer, be proportionately reduced.

(Emphasis added.)

¶ 7. “When interpreting a statute, our principal goal is to effectuate the intent of the Legislature.” Tarrant v. Dep't of Taxes, 169 Vt. 189, 197, 733 A.2d 733, 739 (1999). If legislative intent is clear from the plain language of the statute, “the statute must be enforced according to its terms” without resorting to other aids to statutory construction. Id. If the statute is ambiguous, however, “legislative intent must be determined through consideration of the entire statute, including its subject matter, [and its] effects and consequences.” Id. Although ambiguous taxation statutes are generally construed in favor of the taxpayer, “absent compelling indication of error, the interpretation of a statute by the administrative body responsible for its execution will be sustained on appeal.” Morton Bldgs., Inc. v. Vt. Dep't of Taxes, 167 Vt. 371, 374, 705 A.2d 1384, 1386 (1997) (quotations omitted).

¶ 8. The first sentence of § 9817(a) provides that any aggrieved taxpayer “may” appeal the Commissioner's decision to the superior court within thirty days of the decision, and the second sentence of the subsection states that the appellant “shall give security” as set forth in subsection (c) “if it [the assessed tax] remains unpaid, with interests and costs.” Although the two conditions of an appeal—filing a notice of appeal within thirty days and posting security—are set forth in two separate sentences in subsection (a) rather than in one sentence, as in a previous iteration of the statute, the subsection plainly makes the posting of security mandatory to perfect an appeal to the superior court.

¶ 9. “Where a statute specifies acts to be done by parties to entitle them to maintain an action or to perfect an appeal, it is generally mandatory.” 3 N. Singer & J. Singer, Sutherland Statutory Construction § 57:23 (7th ed.2011); see id. § 57:15 (stating that statutory provisions “specifying the steps necessary to perfect appeals, are mandatory”). Here, § 9817(a) mandates the posting of security for an appeal to the superior court. Thus, failure to post security is a fatal defect, regardless of whether we consider it to be jurisdictional in nature. Compare Holden v. Campbell, 101 Vt. 474, 476, 144 A. 455, 456 (1929) (“[W]hen the Legislature creates a remedy contingent upon its being asserted within a specified period of time or in a prescribed manner, such requirements must be substantially complied with in order to give the court jurisdiction.”) with Jos. L. Muscarelle Dev. Co. v. Manalapan TP., 13 N.J.Tax 330, 335 (1993) (holding that, whether viewed as jurisdictional or merely quasi-jurisdictional defect, statute required that specified portion of taxes be paid “in order to maintain the appeal”).

¶ 10. In short, § 9817(a) allows any aggrieved taxpayer to appeal to the superior court, but the taxpayer must provide security approved by the Commissioner to cover any tax that remains unpaid. The statute requires that the taxpayer either pay the tax assessed or post approved security as a mandatory condition to appeal the Commissioner's decision to the superior court. “Many states have ‘pay-to-play’ statutes, which generally require that a tax be paid before it can be contested in court.” D. Young, Challenging State and Local Taxes on Constitutional Grounds, 10 J. Multistate Tax'n & Incen. 12, 21 (2000). Requiring the paying of a tax before obtaining judicial review does not violate due process. See Hoffer v. Ancel, 2004 VT 38, ¶ 14, 176 Vt. 630, 852 A.2d 592 (mem.) (noting that United States Supreme Court made this clear in McKesson Corp. v. Div. of Alcoholic Beverages & Tobacco, 496 U.S. 18, 36–37, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990), stating that “due process is fully secured by a system that requires the taxpayer to pay the tax before having a right to contest it by way of refund”); see Akins v. Miss. Dep't of Rev., 70 So.3d 204, 209 (Miss.2011) (citing McKesson and noting that requiring payment of tax “before seeking judicial review has been held to provide taxpayers with a fair opportunity to challenge the validity of the...