William v. Dir. of Revenue

• Decision Date: 06 December 2011
• Docket Number: No. WD 73415.,WD 73415.
• Citation: William v. Dir. of Revenue, 358 S.W.3d 514 (Mo. App. 2011)
• Parties: William and Suzanne STONER, Appellants, v. DIRECTOR OF REVENUE, State of Missouri, Respondent.
• Court: Missouri Court of Appeals

358 S.W.3d 514

William and Suzanne STONER, Appellants,

v.DIRECTOR OF REVENUE, State of Missouri, Respondent.

No. WD 73415.

Missouri Court of Appeals, Western District.

Dec. 6, 2011.As Modified on Denial of Rehearing

Jan. 31, 2012.

Raymond I. Plaster, Springfield, MO, for Appellants.

Chris Koster, Attorney General, Mark E. Long, Assistant Attorney General, Jefferson City, MO, for Respondent.

Before Division II: MARK D. PFEIFFER, Presiding Judge, and JOSEPH M. ELLIS and VICTOR C. HOWARD, Judges.

MARK D. PFEIFFER, Presiding Judge.

William and Suzanne Stoner appeal from the judgment of the Circuit Court of Cole County, Missouri (“trial court”), in favor of the Director (“Director”) of the Missouri Department of Revenue (“MO–DOR”) on the Director's claim against the Stoners for breach of a 2007 delinquent tax repayment agreement that the Stoners entered into for the repayment of delinquent 1993 and 1994 tax debts. We affirm.

Factual and Procedural Background¹

William and Suzanne Stoner, husband and wife, were part owners of Branson Hills Associates, LP, and Croston– Everett Development Corporation—two businesses that bought and developed land outside of Branson, Missouri, in the early 1990s. The companies intended to turn the land into a mixed-use planned community. But the land-development deals eventually turned sour, causing the Stoners' businesses to close in 1996. After the businesses closed, the Internal Revenue Service (“IRS”) audited the Stoners.

In November and December 2001, the IRS determined that the Stoners owed additional taxes for tax years 1993 and 1994. For tax year 1993, the IRS determined the Stoners owed $118,476.23. For tax year 1994, the IRS determined that the Stoners owed $57,184.80. However, the IRS did not notify the MO–DOR of the increased tax assessment until May 3, 2002.² Thereafter, the MO–DOR sent the Stoners two notices of adjustment later in 2002, informing them that they owed back taxes for 1993 and 1994.

In January 2007, the Clerk of the Missouri Supreme Court sent Mr. Stoner, a Greene County attorney, notice that his law license would be suspended for his failure to pay the 1993 and 1994 taxes. On March 1, 2007, the Stoners entered into a repayment agreement (“Delinquent Tax Payment Agreement”) to pay the delinquent taxes to the MO–DOR. The Delinquent Tax Payment Agreement signed by the Stoners required payments of $1,000 each month for the months of March, April, and May of 2007, and then a final balloon payment in June 2007 in the amount of $193,638.57.

The Stoners made the first three payments of $1,000, but instead of paying the June 2007 balance-due payment, they filed a petition against the Director on May 29, 2007, seeking a declaration that the Director was time-barred from pursuing collection of the 1993 and 1994 delinquent tax debts and from notifying the Missouri Supreme Court that Mr. Stoner was delinquent on a past tax obligation. The Director responded by filing a counterclaim against the Stoners in August 2007 seeking the remaining payment obligation due under the Delinquent Tax Payment Agreement. After a bench trial, the trial court entered judgment in favor of the Director on all claims by and between the parties. The Stoners timely appeal.

Standard of Review

On appeal from a court-tried civil case, the judgment of the trial court will be sustained “unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law.” Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). “Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is ‘against the weight of the evidence’ with caution and with a firm belief that the decree or judgment is wrong.” Id.

Point I

In their first point on appeal, the Stoners contend the trial court erred in finding that the statute of limitations on their tax liability did not bar the Director's counterclaim. According to the Stoners, under the “Implementing Agreement for the Agreement on Coordination of Tax Administration” between the IRS ³ and MO–DOR, the Director should have received notice about the IRS determinations of the subject additional tax liability obligations of the Stoners no later than January 2002, not May 2002. ⁴ Thus, the Stoners argue, the Director's counterclaim was filed outside what they claim to be the applicable statute of limitations.

The statute of limitations is an affirmative defense, and the Stoners bear the burden of proving that it bars the Director's claim. Powel v. Chaminade Coll. Preparatory, Inc., 197 S.W.3d 576, 580 (Mo. banc 2006). The statute begins to run “when the damage resulting therefrom was sustained and capable of ascertainment.” Id. Under section 143.861.3, ⁵ recovery of back taxes shall be pursued by the Director “in the same manner as provided by law in civil actions.” A civil action for liability under a statute, other than a penalty or forfeiture, has a statute of limitations of five years. § 516.120(2).⁶ The Director's counterclaim, however, did not assert a section 143.861.3 statutory entitlement to payment of delinquent taxes. Instead, the Director sued the Stoners on a breach of contract theory resulting from the Stoners' breach of the written Delinquent Tax Payment Agreement, an agreement subject to a ten-year statute of limitations. § 516.110(1).

While the Director did not file suit against the Stoners pursuant to section 143.861.3 within five years of May 3, 2002—the date the trial court expressly concluded that the Director had notice of the Stoners' tax delinquency from the IRS—the Director did enter into a Delinquent Tax Payment Agreement with the Stoners on March 1, 2007. Under the Delinquent Tax Payment Agreement, the Stoners were to make three consecutive monthly $1,000 payments beginning in March 2007 (which they did) and a final lump sum payment of $193,638.57 in June 2007 (which they did not).⁷ Thus, the written Delinquent Tax Payment Agreement triggered a ten-year statute of limitations time period under section 516.110(1),⁸ and the Director's counterclaim against the Stoners to enforce the written terms of payment of the Delinquent Tax Payment Agreement was clearly filed within the applicable statute of limitations time period.⁹

Point I is denied.

Point II

In their second point on appeal, the Stoners argue that because the Greene and Webster County tax liens filed against them ¹⁰ were not converted into judgments under section 143.902, within five years, any claims arising under the liens are time-barred. Because the Director's counterclaim against the Stoners was a breach of contract claim and not a tax lien enforcement claim, the Stoners' second argument on appeal is legally irrelevant. As the following analysis reflects, tax lien enforcement via section 143.902 is cumulative of all other remedies available to the Director for the collection of tax debts.

Under section 143.902.1(2), if a taxpayer does not pay taxes when due and for which there is a final assessment, the Director may file a certificate of lien with the clerk of the county court where the taxpayer lives, owns property, or has a place of business. In this case, the Director filed such liens against the Stoners in Webster and Greene Counties.

Once a lien is filed, the clerk of the circuit court is to “file such certificate and enter it in the record of the circuit court for judgments and decrees.” § 143.902.1(2). “From the time of the filing of the certificate of lien ... with the clerk of the circuit court, the amount of the tax, interest, additions to tax and penalties specified therein shall have the full force and effect of a default judgment of the circuit court until satisfied.” § 143.902.1(2). “Execution shall issue at the request of the director of revenue or his agent as provided in the case of other judgments.” § 143.902.1(2). Further, under section 143.902.1(1), a tax lien “shall expire ten years after the certificate of lien was filed” with the recorder's office. The Director can re-file a tax lien within that ten-year period, extending the lien for another ten years. § 143.902.1(1). Unless the liens are released by the Director, they remain in place for that ten-year period. During that time period, the lien is attached to the Stoners' “real or personal property or interest in real or personal property owned by the [Stoners] or acquired in any manner by the [Stoners] after the filing of the certificate of the lien.” § 143.902.1(1). If the Stoners do not satisfy the tax liens, the Director may request that the liens be executed. § 143.902.1(2). The Director can request that they be so executed but is not required to do so under the statutory language.

The Stoners essentially argue that section 516.120(2) ¹¹ operates to reduce the legal effect and enforcement of a ten-year certificate of lien created under section 143.902.1. While the Stoners' argument is a novel theory, it is irrelevant to the subject proceeding in that the Director's judgment is based upon a contract, not statutory, theory. And, clearly, the lien-judgment remedy contemplated in section 143.902.1(2) is not the exclusive method of pursuing a tax debt. The lien-judgment remedy can be taken “in addition to other collection methods given the director of revenue,” such as the Director's counterclaim in this case. § 143.902.1(3).

For the reasons addressed in our analysis of Point I, the Director was not time-barred from seeking enforcement of the Stoners' breach of the Delinquent Tax Payment Agreement, a legal theory that was cumulative to any rights the Director may have possessed under section 143.902.1.

Point II is denied.

Point III

In their third point on appeal, the Stoners argue that they ¹² did not voluntarily enter into the Delinquent Tax Payment Agreement or voluntarily make payments pursuant to any such agreement, but instead, the agreement and payments...