Wiegand v. Heffernan

• Decision Date: 13 April 1976
• Citation: 170 Conn. 567,368 A.2d 103
• Court: Connecticut Supreme Court
• Parties: Edwin L. WIEGAND et al. v. Gerald J. HEFFERNAN, Tax Commissioner.

Page 103

368 A.2d 103

170 Conn. 567

Edwin L. WIEGAND et al. v. Gerald J. HEFFERNAN, Tax Commissioner.

Supreme Court of Connecticut.

April 13, 1976.

[170 Conn. 568] Frank, s. Berall, New London, with whom was Frank N. Eppinger, New London, for appellants (plaintiffs).

Richard K. Greenberg, Asst. Atty. Gen., with whom were Ralph G. Murhpy, Asst. Atty. Gen., and, on the brief, Carl R. Ajello, Atty. Gen., for appellee (defendant).

Before HOUSE, C.J., and LOISELLE, BOGDANSKI, LONGO and BARBER, JJ.

BARBER, Associate Justice.

The plaintiffs have appealed to the Superior Court, pursuant to § 12-522 of the General Statutes, from decisions by the defendant tax commissioner disallowing their claims for refunds of capital gains and dividends taxes paid in accordance with chapter 224 of the General Statutes. The parties stipulated for a reservation to this court upon an agreed statement of facts. The advice of this court is sought upon the four questions set out in the footnote. ¹

The agreed upon statement of facts reveals the following: The plaintiffs, husband and wife, were residents and domiciliaries of Connecticut for several years prior to July 15, 1971, living in an apartment in Greenwich. On June 24, 1971, they left Connecticut, en route to Nevada, arriving in Nevada on July 7, 1971. On July 15, 1971, they signed a two-year lease for an apartment in Reno, Nevada, becoming residents and domiciliaries of Nevada on that date and thereby abandoning their Connecticut residence and domicil. During 1971, the plaintiffs spent thirty-seven days in Connecticut before moving to Nevada, and an additional nineteen days thereafter on their subsequent return to arrange for and supervise the removal of their personal effects to Nevada.

On or about April 14, 1972, the plaintiffs filed a joint Connecticut capital gains and dividends tax return for the period from January 1, 1971, through June 24, 1971. Subsequently, they were advised that they had abandoned their Connecticut domicil only when they established a new residence and domicil in Nevada on July 15, 1971. On about July 11, 1974, they filed an amended teturn for the period from January 1, 1971, through July 6, 1971. The plaintiffs' amended 1971 tax return reported $917,812 in dividends received and $4,571 in capital gains realized through July 6, 1971. No dividends were received between July 6, 1971, and July 15, 1971. The plaintiffs' federal adjusted gross income reported was $255,972. The amended return shows a tax due in the amount of $55,043. Of this amount, $37,054 was timely paid by the plaintiffs and the $17,989 balance, together with $4,857 interest, was paid by them on or about July 10, 1974. On November 10, 1972 the plaintiffs requested a refund of the timely paid tax and, on July 11, 1974, requested a refund of the $17,989 balance and the $4,857 interest paid thereon. The defendant commissioner disallowed said claims.

As originally enacted in June, 1969, chapter 224 of the General Statutes (§§ 12-505-12-522) inposed a tax 'at the rate of six per cent on all gains from the sale or exchange of capital assets occurring after July 1, 1969, which gains have been earned, received, accrued or credited to the taxpayer during his taxable year,' but imposed no tax on dividends. Public Act No. 1, § 25, Spec.Sess., June, 1969. ² 'Taxpayer' was defined by the 1969 act as 'each and every individual resident in this state . . ..' Public Act No. 1, § 26, Spec.Sess., June, 1969. The 1969 act did not define the term 'resident,' but the defendant tax commissioner, pursuant to the authority vested in him by the act, Public Act No. 1, § 39, Spec.Sess., June, 1969, adopted regulations defining 'taxpayer' in terms of domicil and place of abode. ³ Regs., Conn. State Agencies § 12-518-2(a).

In an act effective on August 15, 1971, approved August 23, 1971, the General Assembly reenacted the 6 percent tax on capital gains and imposed a 6 percent tax upon dividends, the tax applying to all capital gains or dividends received or accrued after December 31, 1970. Public Act No. 8, § 10, Spec.Sess., June, 1971. The 1971 act retained the former definition of 'taxpayer' and adopted a definition of 'resident' similar to the definition of 'taxpayer' formerly found in the regulations. ⁴ Public Act No. 8, § 9, Spec.Sess., June, 1971.

The constitutional validity of the 1971 act has been previously upheld by this court in a lengthy opinion; Kellems v. Brown, 163 Conn. 478, 313 A.2d 53, appeal dismissed, 409 U.S. 1099, 93 S.Ct. 911, 34 L.Ed.2d 678; and the plaintiffs do not contend that the act, on its face, is unconstitutional. They do claim (1) that they are not 'taxpayers' as defined by the act, and that if the definition of 'taxpayer' can be construed to include the plaintiffs, then the act is unconstitutionally vague; (2) that the retroactive application to them of a tax enacted after the plaintiffs had abandoned their domicil in this state constitutes a denial of due process; (3) that in the event the act does apply to the plaintiffs, the defendant's construction of a particular exemption provision contained within the act is contrary to the plain language of that provision.

DEFINITION OF 'TAXPAYER'

The 1971 tax act defined a 'taxpayer' as 'each and every individual resident in this state who has earnings received, credited or accrued in any taxable year from gains from the sale or exchange of capital assets, or from dividends subject to tax,' and a 'resident' as 'an individual: (1) who is domiciled ⁵ in this state; provided, if an individual maintains no permanent place of abode in this state, and maintains a permanent place of abode elsewhere, and spends in the aggregate not more than thirty days of the taxable year in this state, he shall be deemed not a resident; or (2) who is not domiciled in this state but maintains a permanent place of abode in this state and is in this state for an aggregate of more than one hundred eighty-three days of the taxable year.' Public Act No. 8, § 9, Spec.Sess., June, 1971 (General Statutes § 12-505).

The plaintiffs contend that since they were not domiciled in Connecticut for the entire year 1971 and did not spend more than 183 days in this state in that year, they fall within neither class of 'resident' as defined in § 12-505, and thus are not within that section's definition of a 'taxpayer.' In support of their contention, they point out that the § 12-505 definition of 'resident' derives from a tax department regulation defining 'taxpayer' under the 1969 act. The regulation covered three classes of persons; those domiciled in Connecticut; those not domiciled in Connecticut but maintaining a permanent place of abode in the state and spending more than 183 days per year there; and those domiciled in Connecticut for a portion of the year. The plaintiffs argue that, since the statute covers only two of the three classes covered by the regulation, the General Assembly must have intended to exclude the third class (those domiciled for a portion of the year).

We do not find the plaintiffs' argument persuasive. Section 12-505 clearly and explicitly defines two classes of residents: (1) those who are domiciled in this state, and (2) those who are not. In the stipulation of facts, the plaintiffs concede that they were domiciliaries of Connecticut for several years prior to July 15, 1971. The only domiciliaries of Connecticut who are not classified as 'residents' are those who (1) maintain no permanent place of abode in this state, and (2) maintain a permanent place of abode elsewhere, and (3) spend not more than thirty days of the taxable year in this state. The plaintiffs concededly maintained a permanent place of abode in Connecticut and thus do not come within the exclusion. They were properly classified as 'residents' and thus 'taxpayers' under the statutory definitions.

The case of Shell Oil Co. v. Ricciuti, 147 Conn. 277, 285, 160 A.2d 257, relied upon by the plaintiffs, stands for the proposition that the legislature is presumed to have knowledge of administrative regulations which predate legislation. Presuming, as the plaintiffs urge, that the General Assembly knew that the tax commissioner's regulations covered three possible classes of persons, we need not conclude that the General Assembly, in adopting legislation which provided for only two classes of persons, intended to exclude those in the third class from its definition. ⁶ It is more probable that the General Assembly simply intended to abolish the distinction between those persons domiciled in Connecticut for a portion of the year and those domiciled here for the full year. It is significant that § 12-505 was amended by 1973 Public Act No. 356, § 1, further defining 'taxable year' to mean 'that portion of such year as either commences when a taxpayer becomes a resident or ends when a taxpayer ceases to be a resident of this state.' '(A)n amendment which in effect construes and clarifies a prior statute must be accepted as the legislative declaration of the meaning of the original act.' Hartford v. Suffield, 137 Conn. 341, 346, 77 A.2d 760, 762; Atwood v. Regional School District No. 15, 169 Conn. 613, 623, 363 A.2d 1038 (37 Conn.L.J., No. 22, pp. 8, 11); see also Erlenbaugh v. United States, 409 U.S. 239, 243-44, 93 S.Ct. 477, 34 L.Ed.2d 446. The absence in the 1971 enactment of the language later added, specifically mentioning part-year residents, cannot be construed as providing part-year residents with a loophole by which they may entirely escape tax liability.

The plaintiffs' second claim, that the statutory definition of 'resident' is so badly drafted as to be void for vagueness under the due process clause, requires little discussion. The 1971 act was drafted with considerable haste, ⁷ and, as we stated in Kellems v. Brown, supra, 163 Conn. 496, 313 A.2d 63, '(t)he act is not free from ambiguity and certainly lacks the clarity to be desired and expected in...