MT DEPT OF REVENUE v JARRETT

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No. 84-551 I N THE SUPREME COURT O THE STATE O MONTANA F F 1985 THE DEPARTMENT O REVENUE O THE F F STATE O MONTANA, F P e t i t i o n e r and A p p e l l a n t , -vsAMOS JARRETT , Respondent and Respondent. APPEAL F O : R M D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , I n and f o r t h e County of Y e l l o w s t o n e , The Honorable W i l l i a m J. S p e a r e , Judge p r e s i d i n g . COUNSEL O RECORD: F For A p p e l l a n t : L a r r y G. S c h u s t e r , Dept. of Revenue, H e l e n a , Montana For Respondent: Amos J a r r e t t , p r o s e , B i l l i n g s , Montana S u b m i t t e d on B r i e f s : Decided: Clerk - March 1 4 , 1985 M ~ Y 3 1 1985 2 Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. Amos Jarrett, respondent, was denied a request for a tax refund by the Yellowstone County Commissioners. He appealed to the Yellowstone County Tax Appeal Board which found in his favor. The Department of Revenue appealed to the State Tax Appeal Board which determined that respondent was due a tax refund. The Department filed for judicial review and both parties moved for summary judgment. The District Court entered summary judgment in favor of the respondent. The Department appeals. The respondent owns a lot in Yellowstone County. the For years tax 1978 through 1981 respondent received assessment notices stating that the annual assessment on the lot was $14,510. protest. He paid the taxes each year without In 1982, the Department of Revenue discovered the lot was not in a special improvement district as had been originally believed and facilities. it did not have access to sewer The Department of Revenue reappraised the lot and reduced the assessment from $1.4,510 to $7,418. In June of 1982, respondent contacted the Yellowstone County Commissioners, the Yellowstone County Assessor and the Yellowstone County Treasurer requesting a tax refund for the years 1978 through 1981. At the request of the Yellowstone County Commissioners, the Yellowstone County Assessor and the appraisers of the Department of Revenue investigated the matter and submitted a memorandum to the Commissioners. They expressed been an opinion that the property had not erroneously appraised in 1978, but that the value of the property had decreased between 1978 a.nd 1982 because of a change in Treasurer development believed pattern. respondent was The due Yellowstone a refund County but the c o m m i s s i o n e r s d e n i e d a r e f u n d , w h i c h , i f g r a n t e d , would have amounted t o $512.35. r e s p o n d e n t a p p e a l e d t o t h e Yel-lowstone County I n 1983, Tax Appeal Board. The Board found for respondent. The Department o f Revenue t h e n a p p e a l e d t o t h e S t a t e Tax Appeal Board. The State Board concluded that an erroneous a s s e s s m e n t had b e e n made i n 1978 and was c a r r i e d o n t h e t a x rolls from 15-8-601, the 1979 through 1981 and, therefore, MCA a c o r r e c t i o n c o u l d b e made. Yellowstone County Tax Appeal under § The Board a f f i r m e d Board's decision and ordered a t a x refund f o r respondent. The Department o f Revenue f i l e d f o r j u d i c i a l r e v i e w o f t h e S t a t e Tax Appeal Board d e c i s i o n i n t h e Y e l l o w s t o n e County D i s t r i c t Court. Both p a r t i e s moved f o r summary judgment. On O c t o b e r 1 5 , 1984, t h e D i s t r i c t C o u r t e n t e r e d summary judgment i n favor of t h e respondent. From t h a t a d v e r s e d e c i s i o n , t h e Department o f Revenue a p p e a l s t o t h i s C o u r t . A p p e l l a n t p r e s e n t s t h e f o l l o w i n g i s s u e on a p p e a l : Does t h e S t a t e Tax Appeal Board h a v e any a u t h o r i t y t o change t h e v a l u e o f p r o p e r t y f o r p a s t t a x y e a r s , p u r s u a n t t o 15-8-601, MCA, when a taxpayer has not filed any a d m i n i s t r a t i v e a p p e a l s a s t o t h o s e tax y e a r s ? The d i s p o s i t i v e i s s u e b e f o r e t h i s C o u r t i s w h e t h e r t h e taxpayer erroneous MCA, is entitled to a s s e s s m e n t made a refund of on his taxes paid land. due t o a n Section 15-1-402, s e t s o u t t h e p r o c e d u r e by w h i c h a t a x p a y e r may p r o t e s t t h e payment o f a t a x h e b e l i e v e s t o b e i n c o r r e c t . It states i n pertinent part: "15-1-402. t o recover. Payment o f t a x e s u n d e r p r o t e s t - action " (1) The p e r s o n upon whom a t a x o r l i c e n s e fee i s b e i n g imposed may p r o c e e d u n d e r 15-1-406 o r may, b e f o r e t h e t a x o r l i c e n s e f e e becomes d e l i n q u e n t , pay u n d e r w r i t t e n p r o t e s t t h a t p o r t i o n o f t h e t a x o r license fee protested. The payment must: (a b e made t o t h e o f f i c e r d e s i g n a t e d a u t h o r i z e d t o c o l l e c t i t ; and (b) s p e c i f y t h e grounds o f p r o t e s t . and " (2) A f t e r having exhausted t h e a d m i n i s t r a t i v e a p p e a l s a v a i l a b l e u n d e r T i t l e 1 5 , c h a p t e r s 2 and 75, a p e r s o n o r h i s l e g a l r e p r e s e n t a t i v e may b r i n g an a c t i o n i n any c o u r t o f c o m p e t e n t j u r i s d i c t i o n a g a i n s t t h e o f f i c e r s t o whom s a i d t a x o r l i c e n s e f e e was p a i d o r a g a i n s t t h e c o u n t y o r m u n i c i p a l i t y i n whose b e h a l f t h e same was c o l l e c t e d and t h e department o f revenue." (emphasis added) s t a t u t e i s permissive This n o t mandatory. A taxpayer can o n l y use t h i s p r o t e s t procedure i f he i s aware t h a t h i s t a x e s may b e i n c o r r e c t a t t h e t i m e h e p a y s them. who d o e s taxes not under 15-1-402, at protest and can not receive a n o t pay h i s refund under § MCA. For case i s being overtaxed w i l l know h e A taxpayer the victim of hand, refund. The there an e r r o n e o u s a s s e s s m e n t , must be a n o t h e r way S t a t e Tax Appeal o b t a i n a t a x refund under § Board 15-8-601, to allowed MCA. as i n the obtain a tax respondent to S e c t i o n 15-8-601, MCA s t a t e s a s f o l l o w s : "15-8-601. Assessment r e v i s i o n - c o n f e r e n c e f o r review. (1) Whenever t h e d e p a r t m e n t o f r e v e n u e d i s c o v e r s t h a t any t a x a b l e p r o p e r t y o f a n y p e r s o n has in any year escaped assessment, been erroneously assessed, or been omitted from taxation, t h e d e p a r t m e n t may a s s e s s t h e same provided t h e p r o p e r t y i s under t h e ownership o r c o n t r o l o f t h e same p e r s o n who owned o r c o n t r o l l e d it at the time it escaped assessment, was e r r o n e o u s l y a s s e s s e d , o r was o m i t t e d from t a x a t i o n . A l l s u c h r e v i s e d a s s e s s m e n t s must b e made w i t h i n 10 y e a r s a f t e r t h e end o f t h e c a l e n d a r y e a r i n which t h e o r i g i n a l a s s e s s m e n t was o r s h o u l d h a v e b e e n made. " In the recent F l a t h e a d County, In Eagle, the of Eagle Communications, (Mont. 1 9 8 4 ) , 685 P.2d t h i s Court held t h a t Department of case § 15-8-601, Inc. 912, 4 1 S t . R e p . v. 1303, MCA c r e a t e s no power i n t h e Revenue t o r e f u n d t a x e s u n l a w f u l l y c o l l e c t e d . plaintiff, Eagle Communications Inc. , paid t h e i r t a x e s under p r o t e s t pursuant t o within 90 days filed a lawsuit assessment of t h e i r property. 15-1-402, alleging fox each payment. an and erroneous While i t s l a w s u i t was p e n d i n g E a g l e p a i d t a x e s u n d e r p r o t e s t , however, action MCA, The it d i d n o t f i l e an Department of Revenue d e t e r m i n e d t h a t an e r r o n e o u s a s s e s s m e n t had b e e n made, but t h e County T r e a s u r e r r e f u s e d t o r e f u n d t a x e s t h a t had a l r e a d y been d i s b u r s e d b e c a u s e no a c t i o n had been commenced on them. In an a c t i o n t o r e c o v e r t h e s e t a x e s , Eagle maintained t h a t t h e Department o f Revenue had a d u t y u n d e r S 15-8-601, MCA, to provide assessment. This a refund Court of taxes denied the paid on refund an and erroneous stated as follows: " H e r e , t h e Department h a s a g r e e d t o a r e a s s e s s m e n t . It i s t h e refund i t s e l f t h a t i s a t i s s u e . However, s e c t i o n 15-8-601, MCA c r e a t e s no a u t h o r i t y f o r t h e Department t o r e f u n d e r r o n e o u s l y c o l l e c t e d t a x e s . I t a p p e a r s t h e r e f u n d f u n c t i o n was g r a n t e d t o t h e T r e a s u r e r , a s s e t f o r t h i n s e c t i o n 15-1-402, MCA because the Treasurer collects and controls disbursements o f t a x funds. S e c t i o n 15-8-601, MCA i n s p e a k i n g o n l y o f a s s e s s m e n t by t h e D e p a r t m e n t , i s c o n s i s t e n t w i t h t h i s d i v i s i o n o f d u t i e s between t h e T r e a s u r e r and Department. "We h o l d t h a t t h e Department o f Revenue h a s no d u t y u n d e r s e c t i o n 15-8-601, MCA t o p r o v i d e a r e f u n d o f t a x e s p a i d on an e r r o n e o u s a s s e s s m e n t . " Clearly, refund. S 15-8-601, MCA makes no p r o v i s i o n Unlike Eagle, t h e recourse o f a v a i l a b l e t o t h i s respondent. § 15-1-402, for a tax MCA i s n o t Respondent was n o t aware an e r r o n e o u s a s s e s s m e n t had been made on h i s l a n d and c o u l d n o t have known t o f i l e h i s t a x e s u n d e r p r o t e s t . S e c t i o n 15-16-601, respondent. MCA p r o v i d e s t h e n e c e s s a r y r e l i e f f o r It s t a t e s i n p e r t i n e n t p a r t : "15-16-601. Taxes o r p e n a l t i e s i l l e g a l l y c o l l e c t e d t o be refunded. ( 1 ) ( a ) Any t a x e s , p e r centum, and c o s t s p a i d more t h a n o n c e o r e r r o n e o u s l y o r i l l e g a l l y c o l l e c t e d o r any amount o f t a x p a i d f o r which a t a x p a y e r i s e n t i t l e d t o a r e f u n d u n d e r 15-16-612 o r a n y p a r t o r p o r t i o n o f t a x e s p a i d which were m i s t a k e n l y computed o n government bonus o r s u b s i d y r e c e i v e d by t h e t a x p a y e r may, by o r d e r o f t h e b o a r d o f c o u n t y commi.ssioners, be r e f u n d e d by t h e c o u n t y t r e a s u r e r . Whenever any payment s h a l l have been made t o t h e s t a t e t r e a s u r e r a s p r o v i d e d i n 15-1-504 and it s h a l l a f t e r w a r d s a p p e a r to the satisfaction of t h e board of county c o m m i s s i o n e r s t h a t a p o r t i o n o f t h e money s o p a i d s h o u l d be r e f u n d e d a s h e r e i n p r o v i d e d , s a i d b o a r d o f c o u n t y c o m m i s s i o n e r s may r e f u n d s u c h p o r t i o n o f s a i d t a x e s , p e n a l t i e s , and c o s t s s o p a i d t o t h e s t a t e t r e a s u r e r , and upon t h e r e n d e r i n g o f t h e r e p o r t r e q u i r e d by 15-1-505 t h e c o u n t y c l e r k and recorder s h a l l c e r t i f y t o t h e s t a t e auditor, i n s u c h form a s t h e s t a t e a u d i t o r may p r e s c r i b e , a l l amounts s o r e f u n d e d , and i n t h e n e x t s e t t l e m e n t o f t h e county t r e a s u r e r with t h e s t a t e , t h e s t a t e a u d i t o r s h a l l g i v e t h e county t r e a s u r e r c r e d i t f o r t h e s t a t e ' s p o r t i o n o f t h e amounts s o r e f u n d e d . " (emphasis added) The f o l l o w i n g s e c t i o n , § 15-16-602, MCA s t a t e s : "15-16-602. Concurrent remedies. Section 1.5-16-601 s h a l l n o t b e deemed o r c o n s t r u e d t o b e i n c o n f l i c t with t h e provisions of p a r t 4 of chapter 1, b u t 15-16-601 and t h e p r o v i s i o n s o f s u c h p a r t 4 s h a l l p r o v i d e and a f f o r d c o n c u r r e n t r e m e d i e s . " Clearly, lieu of protest, S the 15-1-402, b u t when available, MCA S 15-16-601, the MCA was n o t meant t o b e u s e d requirements MCA recourse of S of paying 15-1-402, a taxpayer can o b t a i n a refund under MCA § in under i s not 15-16-601, . Section erroneously 15-16-601, may be provides MCA refunded by the that county o r d e r - -e b o a r d - c o u n t y c o m m i s s i o n e r s . " of th of taxes paid treasurer, "by The Y e l l o w s t o n e Board o f County Commissioners d e n i e d r e s p o n d e n t ' s r e q u e s t f o r a t a x refund. However, respondent has followed t h e proper procedure f o r appealing t h a t decision. Respondent appealed S e c t i o n 15-15-101, to the MCA p r o v i d e d County Tax Appeal Board. f o r such appeals a s follows: "(2) The c o u n t y t a x a p p e a l b o a r d must m e e t on t h e t h i r d Monday o f A p r i l i n e a c h y e a r t o h e a r p r o t e s t s c o n c e r n i n g a s s e s s m e n t s made by t h e d e p a r t m e n t o f revenue . . . . " (3) I n connection w i t h any such a p p e a l , t h e c o u n t y t a x a p p e a l b o a r d may c h a n g e a n y a s s e s s m e n t o r f i x t h e a s s e s s m e n t a t some o t h e r l e v e l . . ." The Yellowstone County Tax Appea 1 Board properly r e v i e w e d t h e r e s p o n d e n t ' s c a s e and d e t e r m i n e d r e s p o n d e n t was due a r e f u n d . of P u r s u a n t t o $ 15-15-104, Revenue a p p e a l e d MCA, t h e Department t h a t d e c i s i o n t o t h e S t a t e Tax Appeal Board. The S t a t e Tax Appeal Board i s a b l e t o h e a r a p p e a l s and make its own determinations under S 15-2-301, which MCA, states, i n part: " ( 2 ) A t t h e time o f giving such n o t i c e , t h e s t a t e b o a r d may r e q u i r e t h e c o u n t y b o a r d t o c e r t i f y t o it t h e minutes o f t h e proceedings r e s u l t i n g i n such action and a l l t e s t i m o n y t a k e n i n connection therewith. The s t a t e b o a r d may, i n i t s d i s c r e t i o n , determine t h e appeal on such r e c o r d i f a l l p a r t i e s r e c e i v e a copy o f t h e t r a n s c r i p t and a r e p e r m i t t e d t o s u b m i t a d d i t i o n a l sworn s t a t e m e n t s , o r t h e s t a t e b o a r d may h e a r f u r t h e r t e s t i m o n y .... "(4) I n c o n n e c t i o n w i t h any a p p e a l u n d e r t h i s s e c t i o n , t h e s t a t e board s h a l l n o t b e bound by common law and s t a t u t o r y r u l e s o f e v i d e n c e o r r u l e s o f d i s c o v e r y and may a f f i r m , r e v e r s e , o r modify any decision. The d e c i s i o n o f t h e s t a t e t a x a p p e a l shall be final and binding upon all board i n t e r e s t e d p a r t i e s u n l e s s r e v e r s e d o r m o d i f i e d by j u d i c i a l review." The S t a t e Tax Appeal Board a g r e e d w i t h t h e c o u n t y b o a r d and ordered a refund. J u d i c i a l review of t h a t d e c i s i o n has I n r e v i e w i n g w e a r e bound by t h e f i n d i n g s o f f a c t followed. made by t h e a d m i n i s t r a t i v e t r i b u n a l s a b s e n t a c l e a r a b u s e o f discretion. resulted The s t a t e board i n a mistaken levy. found an erroneous T h i s f i n d i n g was c o n t r a r y t o t h e f i n d i n g of t h e c o u n t y c o m m i s s i o n e r s . The e v i d e n c e was i n d i s p u t e and t h e f i n d i n g c o u l d go e i t h e r way. o u t by this Court in Devel. o f Montana, I n c . appraisal t h e recent c a s e o f A s was p o i n t e d Northwest (Mont. 19831, 6 6 1 P.2d Land & 44, 40 S t . R e p . 470, when w e q u o t e d t h e D i s t r i c t C o u r t . " [ i l t i s w i t h i n t h e Board's province a s f a c t - f i n d e r t o g i v e c e r t a i n e v i d e n c e more w e i g h t t h a n o t h e r evidence. The B o a r d ' s c h o i c e o f t h e l o w e r amount was w i t h i n i t s power and s i n c e t h e r e i s e v i d e n c e i n t h e r e c o r d t o s u p p o r t s u c h f i n d i n g it must s t a n d . " W e f i n d s u b s t a n t i a l c r e d i b l e evidence t o support t h e findings o f t h e S t a t e Tax A p p e a l Board. I t i s t h e o p i n i o n o f t h i s C o u r t t h a t u n d e r S 15-16-601, MCA r e s p o n d e n t should r e c e i v e a t a x refund f o r t h e erroneous a s s e s s m e n t made on h i s l a n d i n 1978 t h r o u g h 1981. to the Yellowstone Board instructions to the order of Yellowstone i s s u e a refund t o respondent. Justices County W e remand Commissioners County with Treasurer to

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