DocketNumber: TC 4571.
Citation Numbers: 17 Or. Tax 427
Judges: <bold>HENRY C. BREITHAUPT, Judge.</bold>
Filed Date: 7/7/2004
Status: Precedential
Modified Date: 1/13/2023
No party contests the basic rule that taxpayers are entitled to fees only pursuant to statute or agreement. Further, no party asserts the existence of an agreement or a statutory basis for award of fees other than ORS
1. Does ORS
2. If ORS
3. If the court may exercise its discretionary authority under ORS
The department argues that the fee statute applies to cases commenced in the Tax Court after January 1, 2002. Relying on the fact that the Tax Court is one court with two divisions, the department reasons that proceedings in the court were commenced prior to January 1, 2002, when the complaint in the Magistrate Division was filed. On that basis, the department concludes that the case is not covered by the fee statute.
The department also argues that because the fee statute permits the Tax Court judge to award fees with respect to proceedings in the Magistrate Division, it is more reasonable to measure the effective date provision according to the first filing in the court so that the statute is not applied midway through litigation.
The department states there is no legislative history on the effective date provision. Taxpayers point to no legislative history, but assert that the plain language of the effective date provision is adequate support for their conclusion that if the "proceeding before the tax court judge" is commenced after January 1, 2002, the fee statute applies and permits a full award for fees incurred at both the Magistrate and Regular Divisions. Taxpayers ground their argument primarily on the fact that fees may be awarded only in proceedings before the Tax Court judge.
Although taxpayers are not entirely clear in their claim, it appears that they assert that the application of the fee statute is determined by when the proceeding in the Regular Division was commenced, although they expect to *Page 431 recover fees with respect to the prior Magistrate Division proceeding as well. In taxpayers' view, the proceeding in the Regular Division is the only one considered in applying the effective date provision and the proceeding in the Magistrate Division is considered only as to the amount of the award — not regarding whether an award can be made under the effective date provision.
1. Thus, both taxpayers and the department adopt either/or positions. Taxpayers measure only by reference to the commencement of the proceeding in the Regular Division, while the department measures only by reference to the commencement of the proceeding in the Magistrate Division. No party addresses whether the effective date provision should be read as referring to individual proceedings before both divisions of the court. However, the text and context of the effective date provision supports the conclusion that the proper construction of the provision is as follows: in proceedings commenced in the Regular Division after January 1, 2002, fees may be awarded, but Magistrate Division fees are recoverable only if the proceeding in that division commenced after January 1, 2002, as well.
2. The text of the effective date provision uses the termproceedings without distinction as to which division is involved. In both the statute and amendment to which the effective date provision relates, and in numerous other places in the statutes governing this court, the legislature demonstrated a clear ability to designate particular division proceedings. Statutes such as ORS
However, in the effective date provision the reference is to the commencement of proceedings, without any limitation on which division is involved. Because proceedings can be commenced in both divisions and, under ORS
Because no language will be implicitly added by construction, the effective date provision will be applied as follows:
1. If neither the proceeding in the Magistrate Division nor the proceeding in the Regular Division was commenced after January 1, 2002, no fees may be awarded.
2. If proceedings in both the Magistrate Division and the Regular Division were commenced after January 1, 2002, fees may be awarded with respect to each proceeding.
3. If, as occurred in the case at hand, the Magistrate Division proceeding was commenced before January 1, 2002, but the Regular Division proceeding was commenced after January 1, 2002, fees may be awarded only for the proceeding commenced after January 1, 2002 — the Regular Division proceeding.
3, 4. The above construction of the effective date provision is consistent with the approach the legislature took at the time it added the provisions of ORS
5. At the time the provisions on income tax fee awards were added to the statutes, the Magistrate Division had not yet been created. However, at that time the resolution of a tax dispute still involved a series of proceedings or stages. The department conducted an administrative hearing with respect to the dispute, from the outcome of which a de novo appeal to this court was provided. Oregon Laws 1971, chapter
"(2) If, in any proceeding under this section involving taxes upon or measured by net income in which an individual taxpayer is a party, the court grants a refund claimed by the taxpayer or denies in part or wholly an additional assessment of taxes claimed by the department to be due from the taxpayer, the court may allow the taxpayer in addition to costs and disbursements:
"(a) Reasonable attorney fees for the proceeding under this section and for the prior proceeding in the matter, if any, before the department; and
"(b) Reasonable expenses as determined by the court. Expenses include accountant fees and fees of other experts incurred by the individual taxpayer in preparing for and conducting the proceeding under this section and the prior proceeding in the matter, if any, before the department."
As to the effective time, Oregon Laws 1971, chapter
"(1) Except as otherwise provided in subsections (2) and (3) of this section, the amendment of ORS
305.490 by section 1 of this Act and section 3 of this Act shall apply to proceedings in which the complaints or petitions are filed in the Supreme Court or the tax court on or after the effective date of this Act and to proceedings involving appeals by *Page 434 individual taxpayers to the Department of Revenue in which the written petitions are filed with the department on or after the effective date of this Act.
"* * * * *
6. The approach of the 1971 Legislative Assembly suggests strongly that if the 2001 Legislative Assembly had considered the effective date provision in more detail, the rule adopted would have been consistent with the conclusion this court has reached. Thus, this court concludes that in 2001 the legislature would have followed the same approach as the legislature did in 1971 when it was presented with the situation of multiple appeals in one matter and a request for award of fees: fees would be awarded only for stages or proceedings in the matter that were initiated after the effective date of the legislation."(3) Where an appeal under ORS
305.490 is initiated on or after the effective date of this Act, no recovery shall be allowed under paragraphs (a) and (b) of subsection (2) of ORS305.490 for a prior proceeding, if any, in the matter initiated in the department before the effective date of this Act."
The court concludes that for fees to be available under the fee statute, one of the appeals to the Tax Court must have commenced after January 1, 2002. If the appeals to the Magistrate Division and the Regular Division commenced after that date, fees in both proceedings may be recovered. However, where, as here, only the Regular Division appeal occurred after January 1, 2002, fees may be recovered for that proceeding but not for any prior proceeding.
B. Should fees be awarded?
7. As to the Regular Division proceedings in this matter, fees may be awarded. However, all parties recognize any award is within the discretion of this court. Should such fees be awarded here? All parties acknowledge that ORS
Taxpayers urge the court to recognize that the legislative intent in the adoption of ORS
8. Taxpayers argue that in property tax matters a taxpayer may face both the department and a county as opponents, and that this should be considered in the fee award calculation. The legislature has specified that in the Regular Division the department must be the defendant. ORS
Taxpayers also argue that whereas a taxpayer must hire counsel in the Regular Division, governments get "free" representation. Taxpayers acknowledge, however, that the costs of government representation are borne by the taxpayers of the state. In the view of the court, the representation of the government position is not free, but rather paid for by the taxpayers who are, in many ways, the government. The benefits and burdens of the government positions are, like the costs of asserting those positions, borne by the citizens of the state or county. The same is true for the private litigant. The above matters are, in the court's view, neutral with regard to the issue of fee awards.
9. Taxpayers assert that language in Dept. of Rev. v.Rakocy,
10. Any hollow victory element in the analysis is even more problematic in property tax disputes within the context of Measure 50. As taxpayers recognize, even a taxpayer victory that produces a reduced real market value may not result in actual economic relief where the maximum assessed value is below the real market value found for the property. Taxpayers assert that a liberal policy on fee awards to property owners is justified, in part, because of the risk that a victory in litigation may net no actual monetary relief. That could be true if issues of general importance were involved in the case and the resolution of those issues would benefit or clarify the law for many property owners. However, in cases involving only valuation disputes, the cost of litigation compared to its benefits appears to the court to be simply one of the risks that must be considered.
This court indicated in Rakocy that its approach to an award of fees may be more liberal than that of the Oregon Supreme Court. Id. at 392. In Rakocy, however, ambiguous government regulations or forms were at issue and, in any event, no fees were awarded. In contrast, the case at hand involves a classic valuation dispute. Looking at the factors in ORS
IT IS ORDERED that no costs or disbursements will be awarded to any party under TCR 68 B, and
IT IS FURTHER ORDERED that the judgment shall not include an award of fees or costs under ORS