Dept. of Rev. v. Rainsweet, Inc. (TC 5206) , 21 Or. Tax 494 ( 2014 )

494 September 16, 2014 No. 62
62
21 OTR
Dept.
2014 of Rev. v. Rainsweet, Inc. (TC 5206) September 16, 2014
IN THE OREGON TAX COURT
REGULAR DIVISION
DEPARTMENT OF REVENUE,
Plaintiff,
v.
RAINSWEET, INC.,
and RS Growers Inc.,
Defendants.
(TC 5206)
Plaintiff Department of Revenue (the department) appealed a Magistrate
Division decision where Defendants (taxpayer) had prevailed in their argument
that the department had abused its discretion refusing to take jurisdiction of
disputes as to certain property tax accounts. The parties agreed that the rele-
vant administrative rule provided that the department would proceed to a merits
hearing if all parties to the proceeding agreed to facts indicating a likely error
on the rolls. In the department’s supervisory hearing, the relevant county did
not agree with any facts asserted by taxpayer. On the basis that the parties to
the proceeding did not agree on facts, the department did not proceed to a merits
hearing. Taxpayer argued that the provisions of OAR 150-306.126(1)(6) required
that the governmental unit responsible for the valuation of a portion of industrial
property is responsible for defending that appraisal in “any appeals,” reasoning
that a petition under ORS 306.115 was an “appeal” and concluding that because
the case involved industrial property to be appraised under ORS 306.126, only
the department should have been considered a party to the petition. Granting
the department’s motion, the court ruled that the interpretation by the depart-
ment of its own rule was that the county was a party to the petition and that the
department did not abuse its discretion by interpreting its rule OAR 150-306.115
as allowing it to consider the position of the county. Because that decision was not
inconsistent with any statute or rule and was not clearly wrong, the department
did not abuse its discretion by refusing to proceed to a merits hearing.
Oral argument on cross-motions for summary judgment
was held June 30, 2014, in the courtroom of the Oregon Tax
Court, Salem.
Douglas M. Adair, Senior Assistant Attorney General,
Department of Justice, Salem, filed the motion and
argued the cause for Plaintiff Department of Revenue (the
department).
David A. Hilgemann, Garrett Hemann Robertson PC,
Salem, filed the cross-motion and argued the cause for
Defendants (taxpayer).
Decision for Plaintiff rendered September 16, 2014.
Cite as 21 OTR 494 (2014) 495
HENRY C. BREITHAUPT, Judge.
I. INTRODUCTION
This matter is before the court on cross-motions
for summary judgment. As the appeals relate to a decision
by Plaintiff (the department) that it did not have jurisdic-
tion over the matters under ORS 306.115, the record is that
made in the supervisory hearing held by the department.
In the Magistrate Division, Defendants (taxpayer)
prevailed in their argument that the department had abused
its discretion in concluding that it would not take jurisdic-
tion of disputes as to certain accounts. From that decision
the department appeals.
II. FACTS
The tax year at issue is 2010-11.1 This appeal
relates to only certain of the accounts as to which taxpayer
sought relief under ORS 306.115. The accounts in question
contained both land and improvements to land.2
The improvements to land in the accounts were
such that the department had the responsibility to appraise
improvements to the land. ORS 306.126 (providing for
department appraisal of industrial properties). However,
pursuant to OAR 150-306.126(1)(2) Polk County (the county)
had the responsibility to appraise the land.
1
Taxpayer originally sought review in the department for tax years 2008-
09, 2009-10, and 2010-11. The Magistrate Division decision granted summary
judgment to the department on all claims for the 2008-09 and 2009-10 tax years.
Rainsweet Inc. & RS Growers Inc. v. Polk Co. Assessor, TC-MD No 130049N, 2013
WL 6283069, at *5-7 (Dec 3, 2013). Because the department appealed only the
Magistrate Division’s denial of summary judgment on certain accounts for the
2010-11 tax year, and taxpayer did not file a cross-appeal, only the 2010-11 tax
year is at issue.
2
Eight accounts are not at issue in this case. Taxpayer originally sought
review in the department for 11 accounts, five containing only land, four con-
taining both land and improvements to land, one containing only personal prop-
erty, and one containing only improvements to land. The Magistrate Division
decision granted summary judgment to the department on eight of the accounts
and denied summary judgment to the department on three accounts that con-
tained both land and improvements to land. Rainsweet, 2013 WL 6283069, at
*6-7. Because the department appealed only the Magistrate Division’s denial
of summary judgment on the remaining accounts, and taxpayer did not file a
cross-appeal, only three of the accounts containing both land and improvements
remain at issue.
496 Dept. of Rev. v. Rainsweet, Inc. (TC 5206)
At the supervisory hearing on this matter, the
department considered the county to be a party to the pro-
ceeding. The county stated that it did not agree with any
facts asserted by taxpayer in its petition. Based on that posi-
tion, the department declined to proceed to a merits hearing
and denied the petition for relief.
III. ISSUE
The issue is whether the department abused its
discretion in considering the county to be a party to the
proceeding.
IV. ANALYSIS
Taxpayer concedes that the issue is the decision of
the department to consider the county to be a party to the
proceeding. That decision was coupled with the provisions of
OAR 150-306.115(4)(b)(A) that provide the department will
proceed to a merits hearing if all parties to the proceeding
agree to facts indicating a likely error on the rolls.3 In the
supervisory hearing on this matter, the county did not agree
with any facts asserted by taxpayer. On the basis that the
parties to the proceeding did not agree on facts, the depart-
ment did not proceed to a merits hearing.
Taxpayer also concedes that the review by this
court is to be for abuse of discretion in the actions of the
department. Here the relevant action of the department
is the interpretation and application of its rule, OAR 150-
306.115(4)(b)(A) so as to include the county as a party to the
petition.
The legislature has placed few, if any, constraints
on the department in connection with its power under ORS
306.115 to correct the property tax roll when, in the discre-
tion of the department, there is reason to do so.4 The depart-
ment has promulgated rules requiring it to conduct merits
hearings but only when stated conditions exist.
3
There are other bases in OAR 150-306.115(4) for the department to pro-
ceed to a merits hearing. Taxpayer does not argue that any of those other bases
apply in this case.
4
The court’s references to the Oregon Revised Statutes (ORS) are to 2009.
Cite as 21 OTR 494 (2014) 497
The condition at issue here is the existence, or not,
of agreement of parties to a petition as to facts indicating
a likely error on the roll. The interpretation by the depart-
ment of its own rule is that the relevant county is a party to
the petition.
In cases where an agency charged with adminis-
tration and enforcement of a statute adopts interpretative
regulation, courts give that interpretation “careful consid-
eration.” Knapp v. City of North Bend, 304 Or 34, 41, 741
P2d 505 (1987) (citing Van Ripper v. Liquor Cont. Com., 228
Or 581, 593, 365 P2d 109 (1961)). In this case, even more
deference is appropriate because the statute vests broad
discretion in the agency. The court concludes that there is
nothing unreasonable about the interpretation made by the
department in this case. Quite to the contrary, it appears
to the court that there are good reasons for the department
to include the county as a party whose views or positions
on facts should be considered in determining whether the
department will continue to a merits hearing.
As stated above, in this case industrial property is
involved and appraisal responsibilities are divided between
the department and the county. In each of the accounts
at issue, land and improvements are components of the
account. Accordingly, under the decision in Flavorland
Foods v. Washington County Assessor, 334 Or 562, 54 P3d
582 (2002), the aggregate values of land and improvements
would be considered in applying the provisions of Measure
50 in order to determine the assessed value of all property
in the account.5
Further, the county, after receipt of the appraisal
conclusions of the department as to industrial improvements,
administers the levy and collection of tax. ORS 306.126(2);
ORS Chapter 311. Finally, if a successful challenge to the
appraisal of the property in the account ensues, the county
is the entity with the responsibility to make refunds. ORS
311.806(1)(a) - (b).
The department rules under ORS 306.115 provide
that county officers and taxpayers are the ones who can
5
Or Const, Art XI, § 11(1)(a).
498 Dept. of Rev. v. Rainsweet, Inc. (TC 5206)
initiate a petition. OAR 150-306.115(1). In this case tax-
payer initiated the petition, but the department solicited
and received a response from the county as to its view of
the factual matters involved in the case. It appears that
if a county were to initiate a petition as to a property, the
department would solicit, and take into account, the views
of the taxpayer involved in the process of determining how
to proceed.
Taxpayer asserts, however, that the provisions
of OAR 150-306.126(1)(6) require a different conclusion.
That rule of the department provides that the governmen-
tal unit responsible for the valuation of a portion of indus-
trial property is responsible for defending that appraisal
in “any appeals.” Taking that provision as its premise,
taxpayer then reasons that a petition under ORS 306.115
is an “appeal.” Taxpayer then concludes that because this
case involves industrial property to be appraised under ORS
306.126, only the department should be considered a party
to the petition.
Taxpayer’s position is not well taken. First, taxpayer
overlooks the fact that in each of the accounts at issue, land
valued by the county was at issue in the petition that was
filed. Therefore, even if a petition is an “appeal,” the county
would, under taxpayer’s view of OAR 150-306.126(1)(6),
need to be involved because the county would have the duty
to defend its valuation of land.
Additionally, it has long been settled that a peti-
tion under ORS 306.115 is not an appeal. Ohio State Life
Ins. Co. v. Dept. of Rev., 12 OTR 423 (1993). The process is
not a remedy for a taxpayer or an assessor. Rather, it is one
process, among several, designed to assist the department
in its administration of the property tax laws. Indeed, it is
that purpose that supports the conclusion that actions of
the department pursuant to its role under ORS 306.115 are
reviewed only for an abuse of discretion.
The department did not abuse its discretion by
interpreting its rule OAR 150-306.115 as allowing it to con-
sider the position of the county in this matter. That decision
was not inconsistent with any statute or rule and was not
clearly wrong.
Cite as 21 OTR 494 (2014) 499
V. CONCLUSION
The motion of the department is granted and the
cross-motion of taxpayer is denied. Now, therefore,
IT IS ORDERED that Plaintiff’s Motion for
Summary Judgment is granted;
IT IS FURTHER ORDERED that Defendants’
Cross-Motion for Summary Judgment is denied; and
IT IS FURTHER ORDERED that costs shall be
awarded to neither party.