Ware v. Idaho State Tax Commission

• Citation: 98 Idaho 477,567 P.2d 423
• Decision Date: 11 July 1977
• Docket Number: No. 12008,12008
• Parties: A. E. WARE and Ruby L. Ware, husband and wife, Gerald O. Talbot and Jean Talbot, husband and wife, Charles Robertson and Lois Robertson, husband and wife, Herman Vogt and Leona Vogt, husband and wife, and Harry C. Skinner and Gertrude Skinner, husband and wife, Plaintiffs-Appellants and Cross- Respondents, v. IDAHO STATE TAX COMMISSION, Defendant-Respondent and Cross-Appellant. Dorothea L. BICKMORE, Mable S. Clore and Henry C. Buchanan, Intervening Plaintiffs and Appellants, v. IDAHO STATE TAX COMMISSION, Defendants and Respondents.
• Court: United States State Supreme Court of Idaho

Page 423

567 P.2d 423

98 Idaho 477

A. E. WARE and Ruby L. Ware, husband and wife, Gerald O. Talbot and Jean Talbot, husband and wife, Charles Robertson and Lois Robertson, husband and wife, Herman Vogt and Leona Vogt, husband and wife, and Harry C. Skinner and Gertrude Skinner, husband and wife, Plaintiffs-Appellants and Cross- Respondents, v. IDAHO STATE TAX COMMISSION, Defendant-Respondent and Cross-Appellant.

Dorothea L. BICKMORE, Mable S. Clore and Henry C. Buchanan, Intervening Plaintiffs and Appellants, v. IDAHO STATE TAX COMMISSION, Defendants and Respondents.

No. 12008.

Supreme Court of Idaho.

July 11, 1977.

Dean E. Miller and Gerald L. Weston, Gigray, Miller, Downen & Weston, Caldwell, for appellants and cross-respondents.

Theodore V. Spangler, Jr., Deputy Atty. Gen., Wayne L. Kidwell, Atty. Gen., Boise, for respondent and cross-appellant.

BISTLINE, Justice.

We are asked to review the record below on two separate appeals, both taken from a final judgment which was entered following the presentation of motions for summary judgment. The defendant in the proceedings below, Idaho State Tax Commission, appeals a $90.00 judgment, for tax refund, awarded against it in favor of the original plaintiffs who brought the action A. E. and Ruby Ware, Gerald and Jean Talbot, Charles and Lois Robertson, Herman and Leona Vogt, and Harry C. and Gertrude Skinner. Of the $90.00 awarded, the Talbots received judgment for $10.00; each of the other couples recovered $20.00.

Other plaintiffs in the action, who became such by intervention, were Dorothea L. Bickmore, Mable S. Clore, and Henry C. Buchanan. The final judgment in the trial court denied them any relief on their claims on the basis that they, unlike the original plaintiffs, had not filed for the refund involved here. The intervening plaintiffs appeal from the judgment insofar as it denied them any relief. The plaintiffs also contended in the trial court that they were entitled to maintain the action as a class action, alleging that they brought "this action for themselves and for and on behalf of all other persons similarly situated." The final judgment denied any right in any of the plaintiffs to maintain the suit as a class action. All plaintiffs join in appealing from that determination.

The entire controversy arises out of, and our concern here is with, that portion of the tax law which had for its purpose to give a nominal tax benefit to older citizens of this state whose earned income is nominal, or even nil, but who nonetheless are required to pay sales tax on their purchases. Because the purchases of such persons are more often than not groceries, the direct tax credit which the law provides, and which is herein involved, is commonly referred to as either the sales tax credit or the grocery tax credit. Where it exceeds the taxpayer's tax, it may become a refund.

The Code section around which this controversy revolves is I.C. § 63-3024(d). The immediate problem resulted from an amendment to this section which was passed by the 1971 Legislature. ¹ The problem is confined to that one year. As this statute read prior to the 1971 amendment, the grocery tax credit, against taxes due under the income tax laws of Idaho, was allowable to any and all Idaho individual taxpayers the same to be at the rate of $10.00 per each personal exemption, as claimed on the taxpayer's Idaho income tax return. A 65-year-old taxpayer, however, whose income was such that he used none, or less than all, of his one or more $10.00 credits, upon application, could gain a refund of the credit, or portion thereof, which was not used as an offset against any income tax owed. To illustrate how it was prior to 1971, a 65-year-old taxpayer, with earned income making him liable to payment of state income tax in the amount of $27.00, and having three personal exemptions of $10.00 each, would apply $27.00 of his $30.00 credit to pay his tax, and gain a $3.00 refund. If his income tax exceeded $30.00, he would have a $30.00 offset against it, but he would get no refund.

The language of the statute, as amended in 1971, footnote 1, supra, however, states that the 65-year-old taxpayer, for that year, is entitled to a refund of $10.00 for each of the allowable exemptions. All individual taxpayers, whether over or under 65 years of age, were entitled to a credit of $10.00 for each of their personal exemptions, but the 65-year-old taxpayer, could have that credit, and at the same time obtain a refund in the amount of $10.00 for each of the personal, 65-or-over, and blindness and dependents' exemptions to which he was entitled.

PART I. JUDGMENT FOR THE ORIGINAL PLAINTIFFS.

On its appeal the primary contention of the Tax Commission is that no such benevolence was intended by the 1971 Legislature, and that the judgment for the original plaintiffs should be reversed. The Tax Commission argues here, as it did to the trial court, that the evidence "establishes the existence of a simple clerical error on the part of the legislature." The Tax Commission assigns as judicial error the failure of the trial court to agree with that Commission contention. The trial court's conclusion of law was:

"Idaho Code 63-3024(d), as it was in effect for the tax year 1971, contains no ambiguity or obvious errors which can be interpreted or construed by this Court or which would be subject to administrative interpretation or construction by the defendant, STATE TAX COMMISSION."

The Tax Commission concedes that there is no ambiguity in the language of the statute as amended. It argues here, as it did below, that the courts should remedy what it decries as the hurried-up last-minute mistake of the legislature, citing Keenan v. Price, 68 Idaho 423, 195 P.2d 662 (1948), for the proposition that "Obvious clerical errors or misprints will be corrected or words read in if the omission or error is plainly indicated and the true meaning is obvious, and the operation of the enactment would be otherwise defeated." Relying heavily upon that case, the Tax Commission argues that "The omission by the 1971 legislature of the words 'and has been allowed none, or less than all, of the credit allowed by this subsection', renders the section irrational. The $10 tax credit is intended by the Legislature to be a means of refunding to taxpayers sales taxes paid on groceries. But, the legislature knew that many elderly people who necessarily purchase groceries do not earn enough money to be required to file or pay individual income taxes and were, as a result, denied the benefit of the tax credit. The Legislature therefore, provided that these individuals should be granted a $10 cash refund. In other words, the refund was provided to remedy an unfair discriminatory effect against elderly people with little or no income. The construction urged by the Plaintiffs in this case in relation to 1971 would have exactly the opposite effect. They argue that all persons over the age 65 should be entitled to the refund regardless of whether or not they were able to take advantage of the tax credit."

We can readily agree that the legislature knew that many elderly people who have to buy groceries, and pay sales tax thereon, do not earn enough money to have taxable income. Indeed, many of the elderly do not earn any money; many are dependent on social security payments, and there has been many a hue and cry raised against these persons paying back 3% on what little they receive each month. The legislative intent, as discerned from the plain language of the amended statute, and as held by the trial court, was that all 65-year-old persons, whether bringing in earned income or not, should be refunded $10.00, $20.00, or $30.00 of their sales tax payments. It has all the aspect of of humanitarian legislation, and we are not at all persuaded by the argument of the Commission that we should hold that the legislature acted irrationally. Nor can we agree with its contention that "House Bill 309 on its face has every appearance of clerical error." It has no objective appearance of clerical error. We have painstakingly reviewed the official journals of both Houses, but find no evidence to substantiate the Commission's argument that there was a clerical error on the part of the legislature. The bill is easily understood, and whether it was or was not sound for the legislature to have granted this refund to the senior citizens of this state is not for the courts to say. Day Mines v. Lewis, 70 Idaho 131, 212 P.2d 1036 (1949); Herndon v. West, 87 Idaho 335, 393 P.2d 35 (1964); V-1 Oil Co. v. State Tax Commission, 98 Idaho 140, 559 P.2d 756 (1977).

The Tax Commission, in essence arguing that the legislature knew not what it was doing in passing the 1971 amendment, turns to the adoption of its own Regulation 24(f), as being controlling over the plain legislative language. This regulation was adopted by the Commission on June 28, 1971, supposedly to implement the provision of the statute which stated that refunds were available to those qualified "upon making application therefor at such time and in such manner as may be prescribed by the state tax commission." Bending the legislative enactment to its own fancy as to what the legislature should have done, the regulation promulgated by the Commission stated this: ²

"The refund will be computed by multiplying the number of personal exemptions to which the individual is entitled by $10 and subtracting from the result any amount used to offset income tax due. If the full $10 per person has been used to offset the income tax due, no claim for refund will be accepted." (Emphasis added.)

The argument with which we are presented is bottomed on the premise that compliance with the Idaho Administrative Procedures Act, in particular I.C. §§ 67-5217 and -5218, without any subsequent legislative disapproval, produces a regulation with the effect of statutory law. The Commission is asking this Court to take note of the...