Nicolynn Properties LLC v. Dept. of Rev. , 21 Or. Tax 320 ( 2013 )

320 December 30, 2013 No. 41
IN THE OREGON TAX COURT
REGULAR DIVISION
NICOLYNN PROPERTIES LLC,
Plaintiff,
v.
DEPARTMENT OF REVENUE,
Defendant.
(TC 5172)
Plaintiff (taxpayer) appealed from a Magistrate Division decision as to prop-
erty tax. Defendant Department of Revenue (the department) answered with a
motion for summary judgment on the ground that taxpayer’s appeal was time-
barred, as had been ruled in the Magistrate Division. Taxpayer argued that the
county assessor had failed to follow the statutory steps of ORS 311.223(1) and
(2) that the statute says “shall” be taken before any notice is given to a taxpayer
under ORS 311.223(2), including correction of the roll. Taxpayer also argued that
the notice ultimately given by the county was not compliant with the require-
ments of ORS 311.223(2) and further argued in opposition to summary judgment
that the department, in the record it had made, had not established that there
was no question of material fact before the court. Granting the department’s
motion, the court ruled that taxpayer’s appeal was time-barred, and that factual
issues asserted by taxpayer were not material because they were premised on an
incorrect reading of the statutes as to measurement of the statute of limitations,
but that while taxpayer was barred from proceeding under appeal provisions
stated in ORS 311.223, the court would potentially be able to address some of
taxpayer’s claims under ORS 305.288 if taxpayer could show that it qualified
under that statute. The case was therefore continued for potential consideration
of the applicability of ORS 305.288.
Oral argument on Defendant’s Motion for Summary
Judgment was held July 24, 2013, in the courtroom of the
Oregon Tax Court, Salem.
Cary B. Stephens, Barnhisel Willis Barlow & Stephens
PC, Corvallis, filed a response and argued the cause for
Plaintiff (taxpayer).
Douglas M. Adair, Senior Assistant Attorney General,
Department of Justice, Salem, filed the motion and argued
the cause for Defendant Department of Revenue (the
department).
Decision rendered December 30, 2013.
HENRY C. BREITHAUPT, Judge.
Cite as 21 OTR 320 (2013) 321
I. INTRODUCTION
In this property tax case, Plaintiff (taxpayer)
asserts that summary judgment should not be granted to
Defendant (the department) because questions of material
fact remain to be decided in order to determine if taxpayer’s
complaint was timely filed in this court.
II. FACTS
The facts about which the parties agree or have
otherwise been established in the record are these. By
notices dated March 3, 2012, the Department of Assessment
of Benton County (the county) gave to taxpayer and taxpayer
received Notices of Intent to Add Value Due to A Clerical
Error. The notices related to the years 2006 through 2011.
The notices were given pursuant to ORS 311.205 to 311.208
and informed taxpayer of a right to appear and show cause
under ORS 311.219.
Under date of April 10, 2012, taxpayer’s counsel filed
a written appearance with the county setting forth reasons
why additional value should not be added to the assessments
for the years in question. Under date of May 1, 2012, the
county, on letterhead of the division of “Finance, Auditing
& Tax Collection,” informed taxpayer of the amounts of tax
due for the years in question and to which tax statements in
future years those additional amounts would be added. The
notice was sent to the last known address of taxpayer and
sent by certified mail. Taxpayer received the May 1, 2012,
notice. The notice informed taxpayer that if it did not agree
with the assessments, it could appeal to the Magistrate
Division of this court within 90 days of the notice.
Taxpayer filed a complaint in the Magistrate
Division of this court on September 18, 2012, naming as
defendants the county and the Department of Revenue.
The complaint related to and challenged the actions of the
county. The department moved to dismiss the complaint on
the ground that it was not filed within the time allowed by
statute. The magistrate handling the matter granted that
motion and from that decision taxpayer appeals to this divi-
sion of the court.
322 Nicolynn Properties LLC v. Dept. of Rev.
III. ISSUE
Is the complaint of taxpayer filed in the Magistrate
Division time-barred?
IV. ANALYSIS
Measured from the May 1, 2012, date of the notice
of assessment given to taxpayer, the complaint of taxpayer
is time-barred. The actions of the county were taken under
ORS 311.205 to 311.208.1 ORS 311.205(3) provides that the
procedure both for action of an assessor and for dispute
and appeal of such action is as set forth in ORS 311.216 to
311.232. ORS 311.223(4) requires that an appeal be made
within 90 days of the date of the correction of the roll.
Oregon Administrative Rule (OAR) 150-311.223(4)
provides that the date of correction of the roll is the date
of notice given to the taxpayer under ORS 311.223(4). The
appeal of taxpayer in this case came more than 90 days after
the May 1, 2012, date of notice and therefore, applying the
department’s rule, more than 90 days after the correction of
the roll is considered to have occurred.
Taxpayer argues however that the county assessor
did not follow, or has not adequately shown that he did fol-
low, the statutory steps of ORS 311.223(1) and (2) that the
statute says “shall” be taken before any notice is given to the
taxpayer under ORS 311.223(2), including correction of the
roll. Taxpayer also argues that the notice ultimately given by
the county was not compliant with the requirements of ORS
311.223(2).
In opposition to the motion for summary judgment
based, as it is, on the defense of the bar of the statute of lim-
itations, taxpayer argues that the department, in the record
it has made, has not established that there is no question of
material fact. In particular, on the premise that the certain
steps that the statutes say the assessor “shall” take prior
to sending notice, taxpayer argues that there remain ques-
tions of fact as to whether, and when, the county corrected
1
Unless otherwise noted, all references to the Oregon Revised Statutes
(ORS) are to 2011.
Cite as 21 OTR 320 (2013) 323
the roll and whether it took the other actions listed in ORS
311.223 as required of it.
A question of fact as to when the roll was corrected,
or any other predicate step to the issuance of the notice
described in ORS 311.223(1), and identified by taxpayer,
would be material only in certain cases. Here, the question
would be material only if the statute of limitations on appeal
to this court did not begin to run until the step was taken.
The department asserts that whatever the proce-
dural or substantive problems may have been with what the
county assessor did or did not do, the court may only address
those matters if taxpayer brought them to the court by way
of an appeal within the time limited by the statute—within
90 days after the correction of the roll. Stated differently,
the department asserts that even if the steps identified by
taxpayer are not taken, the statute of limitations nonethe-
less begins to run. The department asserts that given this
application of the statutes, there are no material facts at
issue, even if the actual date of the correction of the roll has
not been established.
As to the measurement of the 90-day period, the
department invokes its rule OAR 150-311.223(4) which
provides:
“For purposes of ORS 311.223(4) and 311.229 the ‘roll is
corrected’ on the date the assessor sends the notice to the
taxpayer’s last known address by certified mail as required
in 311.223(2).”
Taxpayer does not challenge the validity of the
department’s rule. Therefore the only task remaining is to
construe the rule and determine its application in this case.
The court notes two points about this rule. First, in begin-
ning the time measurement period from the date of notice,
the rule does not begin the time measurement period any
earlier than the date of the notice. If the roll was corrected
before the date the notice was given, the rule does not count
the time period between roll correction and notice against
the taxpayer.
Second, taxpayer argues that a notice to a taxpayer
sent by certified mail to the last known address of taxpayer
324 Nicolynn Properties LLC v. Dept. of Rev.
is nonetheless not a starting point under the rule unless a
notice of an assessor states the date of the correction of the
roll.2 Taxpayer argues that, even after application of the
rule, a deficient notice is not sufficient to trigger the running
of the statute of limitations.
However, this reading inserts into the rule more
than is contained there. The rule only concerns what date is
the beginning of the time calculation called for by the stat-
ute. In doing so it does not purport to address what may or
may not be logically or legally required prior to that date or
what the effect of a deficiency in the notice itself may be.3
Instead the rule simply, but importantly, specifies as the
beginning date for calculation of time limitations, the date
on which a notice of adverse action is sent by certified mail
and last known address. There is no question of fact as to
the date on which that occurred in this case.
Neither the statute nor the rule state or imply that
the notice given must be correct in all respects. The purpose
of the rule is obviously to specify a date easily known to
taxpayers and the government on which to start computing
the limitations period.4 The statute and rule focus on when
a notice is given and not on the substantive accuracy of the
2
It is not clear to the court whether taxpayer is also complaining that the
notice it received is inadequate because it was sent by the office of Finance,
Auditing & Tax Collection of the county rather than the Assessor’s Office. The
letter refers to a previous notice of action from the Assessor’s Office for the same
accounts and years. To the extent that taxpayer is attempting to benefit from
such complaints, its arguments are not well taken. Such minor discrepancies,
even if they existed, would not support a decision that this notice and the preced-
ing notice did not fairly put taxpayer on notice that adverse action had been taken
by the county and in respect of the taxation of identified property. The May 1,
2012, notice also clearly set forth the appeal time applicable to the adverse action.
3
The court’s reference to requirements prior to the date of notice addresses
several arguments of taxpayer regarding failure of the department to establish
when other actions that the statutes contemplate will occur prior to the date of
notice of adverse action that in fact occurred. An example of such a predicate
action is the provision by the assessor of a written statement to the tax collector
under ORS 311.223(1). Taxpayer asserts that the record does not establish when
this occurred.
4
The rule does not establish, as a matter of fact, when the roll was actu-
ally corrected. It only provides a date on which the roll is deemed to have been
corrected, solely for purposes of measuring appeal time. To the extent that the
actual date of roll correction would be important to a claim or defense, the parties
could, in a proceeding that was timely brought, litigate that question.
Cite as 21 OTR 320 (2013) 325
notice or the correctness of county action preceding giving of
notice.5
Taxpayer’s argument is that in order to trigger the
statute of limitations the notice triggering the start of the
limitations period must be free of procedural or substantive
defects. That position equates to a position that a notice that
has defects associated with it is void ab initio rather than
voidable if properly challenged. As was the case in Clifford
Parsons, Trustee v. Dept. of Rev., (Parsons Trust) 21 OTR
331 (2013) decided this day, the statutes here do not permit
that conclusion. To the contrary, the statutory scheme, as
in Parsons Trust, contemplates that there may be errors or
deficiencies in the action of the government or notice of that
action but provides a process for timely raising objections to
such actions.
The contrary proposition, advanced by taxpayer,
does not find support in the case law. Indeed, the depart-
ment’s position in this case is consistent with case law devel-
opments with respect to challenges to the content of tax
notices or alleged procedural defects occurring prior to the
giving of notice to a taxpayer of adverse action.
One case addressing such a question is Preble
v. Dept. of Rev., 331 Or 320, 14 P3d 613 (2000). In Preble,
the statute required a notice to the taxpayer of potential
adverse action. Further, the statute required that the notice
contain a certification that the assessment was not made for
the purpose of improperly extending the statute of limita-
tions. Notice was given to the taxpayer, but the notice did
not contain the statutorily described certification.
Our Supreme Court held that the statutorily
required certification was just that—required. Therefore
the court held that the notice was defective procedurally and
would, unless the department was barred by a time limita-
tion, have to be reissued with the required certification. An
examination of the factual background in Preble indicates
5
This case does not present facts where the government does not fairly put
a taxpayer on notice that an adverse action has been taken. Further, there is a
right to be heard about the action. Accordingly, the basic requirements of due
process have been met. Taxpayer here does not argue otherwise.
326 Nicolynn Properties LLC v. Dept. of Rev.
that the taxpayer brought its challenge to the adequacy
of the notice to the court within the time set by statute.6
Indeed, the opinions of this court and the Supreme Court
did not even mention any contention that the taxpayer had
not been timely in bringing its challenge to the adequacy of
the notice to this court.
In Anaconda Company v. Dept. of Rev., 278 Or 723,
565 P2d 1084 (1977) the statute in question, ORS 314.405(2)
(1973), required the department to hold a pre-assessment
conference within one year after giving notice of a proposed
deficiency. The department did not hold the conference and
the taxpayer argued that the failure to do so rendered the
assessment of a deficiency void. The Supreme Court held
that the mandatory language of the statute was to be given
effect and voided the assessment. It did so, however, in a con-
text where, as revealed in the opinion of the Supreme Court
and the records of this court, the taxpayer filed its complaint
in this court within the time allowed by statute after final
action by the department.7 This court also notes that the
decision in Anaconda discusses certain “mandatory” mat-
ters that may have more to do with proper public adminis-
tration of a law rather than protections of taxpayers in the
face of government action. As the Supreme Court said in
Anaconda: “Thus procedures designed to protect individuals
dealing with an agency more likely are meant to be ‘manda-
tory’ than provisions, equally obligatory, that are designed
to assure legally and fiscally correct public administration
in general, though the text or background of a particular
enactment may show otherwise.” 278 Or at 728. Similarly
the nature and extent of the disadvantage sought to be
avoided by the procedure can bear on the probable intent
with respect to noncompliance. See Childs v. Marion County,
6
The procedural history of the case as revealed in the opinions in this court
and the Supreme Court are not conclusive on this point, but it appears that the
taxpayer perfected his appeal in this court within the statutory time limit. That
time limit was measured from the issuance of the department decision that, as
with all cases litigated before the creation of the Magistrate Division, came after
an administrative procedure and hearing at the department and the issuance of
a decision by the department.
7
The opinion of the Supreme Court recites that the order of the department
was issued on August 11, 1975. The records of the Tax Court show that the appeal
of the taxpayer was filed on October 13, 1975, within the 60-day period then
allowed by statute for appeal of department orders. ORS 314.460 (1975).
Cite as 21 OTR 320 (2013) 327
163 Or 411, 97 P2d 955 (1940). Thus a holding setting aside
action for failure to comply with one protective requirement
of a statute does not necessarily mean that failure to comply
with other directives in the same or a similar statute will
necessarily lead to the same result. See, e.g., Childs, 163 Or
at 415; Equitable Savings & Loan Association v. State Tax
Commission, 3 OTR 1, aff’d 251 Or 70, 444 P2d 916 (1967).
Similar results occurred in Boardman Tree Farm
v. Morrow County Assessor, 20 OTR 361 (2011), where an
alleged defect in the procedural steps by a county prior to
notice of disqualification of a property from special assessment
was considered. However that consideration came in a context
where the taxpayer brought the challenge to the procedure
within the time limited by statute.8 In Boardman Tree Farm
the asserted defect in procedure was similar in character to
that which taxpayer asserts in this case, namely an asserted
failure by the government to take an action—an inspection—
which was a statutory predicate to the final decision to dis-
qualify the property from a favorable tax program. In this
case taxpayer asserts that the predicate action of actual roll
correction, and certain other steps, has not been shown to
have occurred.
In yet another special assessment disqualification
case, Eby v. Dept. of Rev., 15 OTR 247 (2000), a defective form
of notice was declared to be such, but again in the context of
a timely appeal to this court. In Eby, the statute required the
department give the taxpayer notice that the property had
been disqualified from special assessment. The record and
decisions in Eby, both in the Magistrate Division and this
division, establish that the taxpayer timely appealed the
disqualification decision of the assessor to the department.9
Following action by the department, the taxpayer timely
8
In Boardman Tree Farm the notice of disqualification was issued on August 7,
2009. The appeal to the Magistrate Division was filed on August 24, 1999, within
the statutory time limitation.
9
The stipulation of facts filed in the Magistrate Division indicates that the
notice of disqualification was sent June 6, 1997. The decision of the magistrate
indicates that the action was timely appealed to the department. The decision of
the magistrate also indicates that the department issued its opinion and order
on April 10, 1998, and the appeal to the Magistrate Division was filed on July 10,
1998, within the statutory time limit.
328 Nicolynn Properties LLC v. Dept. of Rev.
appealed to this court.10 Ultimately the Regular Division of
this court held that the notice was inoperative because it did
not contain statutorily required statements. The court con-
cluded that the purported disqualification had not legally
occurred. Eby thus stands in the line of several cases in
which challenges to notices or acts statutorily required prior
to the giving of notice by the government have been suc-
cessful, but only after a timely challenge to the government
action in the courts.
In this case, taxpayer has identified no case where
a challenge to government actions preceding an adverse
action, or the content of a notice of such action, was allowed
in a case brought after the time for appeal had expired.11
Indeed, if the law was as taxpayer here asserts,
the statutory time limits established by the legislature
would be rendered virtually meaningless. Taxpayers, like
taxpayer here, could allege procedural or substantive mis-
steps and, having only alleged them, and the reasons the
challenger believes them to be missteps, have potentially
unlimited time within which to challenge the action of the
government. Indeed, taxpayer here argues that the statute
of limitations as to bringing this matter to court has not
even yet begun to run. Why? Because alleged failure of the
government to follow procedural steps that taxpayer argues
are predicate requirements or conditions which must occur
before the statute of limitations on challenge to that action
begins to run.
But, of course, such a result would be based only on
the assertions of taxpayer and not on any determination by
the court that taxpayer’s position was correct. That view is
essentially one that renders the statement of time limits by
the legislature dependent upon the untested views of a tax-
payer as to the validity of government action.
10
See Eby, 15 OTR at 249.
11
In Clifford Parsons, Trustee v. Dept. of Rev., decided this day, the taxpayer
relied on Smith v. Dept. of Rev., 17 OTR 357 (2004) and Safley v. Jackson County
Assessor, TC-MD 030555E (Jan 28, 2000)(slip op). For the reasons discussed in
the opinion in that case, neither case supports the position of the taxpayer in that
case or this case.
Cite as 21 OTR 320 (2013) 329
And, of course, if that argument is good for the tax-
payer “goose,” it would be good for the government “gander.”
Time limits within which the government must, for exam-
ple, assess taxes would be indefinitely extended so long as
the government asserted that its actions were compliant
with statutory requirements. Only after litigation of that
contention, with the attendant expenditure of time and
money, would the matter be settled. However, the very same
decision would conclude the timeliness and substantive
challenge.
Such a construction of the statutes yields an unrea-
sonable result which the court will not attribute to the leg-
islature as its purpose. The legislature created a process
by which taxpayers may challenge government action and
argue that it is procedurally or substantively defective.
However the challenge must come within time limits. And
the time limits restrictions are to be resolved prior to consid-
eration of the case on the merits.
In this case, after application of a department rule
that is reasonable and unchallenged, the time limit for
appeal is 90 days from the date of the notice given to this
taxpayer. On this record, there is no question that the notice
was received or that it informed taxpayer of what adverse
action had been taken.12
In light of the foregoing, there are no material fac-
tual disputes that would preclude entry of summary judg-
ment in favor of the department. The factual issues asserted
by taxpayer are not material because they are premised on
an incorrect reading of the statutes as to measurement of
the statute of limitations.
The department, in the reply memorandum in sup-
port of its motion, acknowledged that even if taxpayer is
barred from proceeding under the appeal provisions stated
in ORS 311.223, this court would potentially be able to
12
Taxpayer argues that because of the wording of the March 3, 2012, notice
and the May 1, 2012, notice, it was not certain what, if any, action had been
taken. There is however no question that the May 1, 2012, notice stated precisely
what the economic consequences of the action taken by the county would be and
that disagreement with that result required an appeal within a specified time
period.
330 Nicolynn Properties LLC v. Dept. of Rev.
address taxpayer’s claims, at least for some years, under
ORS 305.288. The benefit of ORS 305.288 would be available
if taxpayer could show that it qualified under that statute.
The case will be continued for potential consider-
ation of the applicability of ORS 305.288. If taxpayer seeks
the benefit of that statute, it must do so by way of an amended
complaint raising the issue. Taxpayer must file any such
amended complaint within thirty days of the date of this
order or judgment will issue consistent with this order.
V. CONCLUSION
Now, therefore,
IT IS ORDERED that this matter is continued for
further consideration of the applicability of ORS 305.288;
and
IT IS FURTHER ORDERED that Plaintiff shall
file an amended complaint within thirty days from the date
of this order.