Case Title: ABRAMS v FEAVER

Citation: 

Docket Number: 84-053

State: montana

Court: Montana Supreme Court

Date: 1984-08-06T00:00:00Z

Document:
NO. 8 4 - 5 3 I N THE SUPREME COURT OF THE STATE 0 F MOIilTANA 1 9 8 4 GALE ABRAMS, e t a l . , P l a i n t i f f s and A p p e l l a n t s , ELLEN FEAVER, D i r e c t o r of t h e Montana D e p a r t m e n t of R e v e n u e , D e f e n d a n t and R e s p o n d e n t . APPEAL FROM: D i s t r i c t C o u r t of t h e F i r s t 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 C o u n t y of L e w i s & C l a r k , T h e H o n o r a b l e G o r d o n R. B e n n e t t , Judge presiding. COUNSEL OF RECORD: F o r A p p e l l a n t s : G e o r g e T . R a d o v i c h , B i l l i n g s , M o n t a n a F o r R e s p o n d e n t : R. B r u c e M c G i n n i s , D e p t . of R e v e n u e , H e l e n a , Montana p - S u b m i t t e d on B r i e f s : June 2 8 , 1 9 8 4 D e c i d e d : A u g u s t 1 6 , 1 9 8 4 C l e r k Mr. Justice John Conway Harrison delivered the Opinion of the Court. This is an appeal froin the District Court of the First Judicial District, in and for the County of Lewis and Clark, refusing to order a refund of taxes withheld from the appellants1 paychecks. Appellants raise one issue on appeal. The issue is whether the Department of Revenue's actions in correcting tax payers withholding exemptions was a denial of due process of law. The appellants, after filing a petition for a declaratory judgment and a writ of prohibition, moved for a summary judgment. Hearing on the motion was held on June 30, 1983, with both parties represented by counsel. Following the filing of briefs by both parties, the matter was deemed fully submitted on August 22, 1983. The appellants1 petition for a declaratory judgment and writ of prohibition is based on the undisputed fact that the appellants were not given notice or opportunity to be heard prior to the Department of Revenue's decision not to allow the exemptions filed by the appellants on their Federal W-4 forms. Appellants contend the Department of Revenue lacks authority to alter the Federal W-4 forms, and, even if it has such authority, due process required that the appellants be given notice and an opportunity for a hearing before the Department disallows the number of exemptions claimed on the W-4 forms. The appellants were employees of various employers in Colstrip, Rosebud County, Montana, employed for the purpose of b u i l d i n g e l e c t r i c a l p l a n t s 3 and 4. J u s t p r i o r t o Christmas i n 1981, t h e Department of Revenue n o t i f i e d them by l e t t e r , a t t a c h e d t o t h e i r checks, t h a t a change had been made i n t h e i r number of dependents. P a r t of t h a t l e t t e r s t a t e d : " I f t h e r e a r e any q u e s t i o n s , t h e employee is t o n o t i f y Betsy P h i l l i p s , F i e l d Audit Bureau, Income Tax D i v i s i o n , P.O. Box 5805, Helena, Montana 59604." The a p p e l l a n t s had on f i l e w i t h t h e i r employers F e d e r a l W-4 forms, which t h e y a l l e g e were t h e o n l y forms a v a i l a b l e f o r t h e purpose of d e c l a r i n g t h e amount of w i t h h o l d i n g t o b e t a k e n from t h e i r wages. Each of t h e s e forms claimed "exempt" s t a t u s o r e x c e s s "allowances" which a r e allowed u n d e r f e d e r a l law. T h e s e f o r m s w i t h t h e i r a l l e g e d exemptions a r e n o t g i v e n t o t h e t a x department of t h e S t a t e of Montana b u t a r e on f i l e w i t h t h e employer and t h e a u d i t system f o r t h e Department of Revenue. The Department of Revenue a n n u a l l y conducts an a u d i t a t t h e employer's o f f i c e t o check t h e w i t h h o l d i n g and t a x forms t h e y have on f i l e . I n t h e f a l l of 1981, d u r i n g t h i s t y p e o f a n a u d i t , t h e S t a t e d e t e r m i n e d t h a t c e r t a i n employees of t h e B e c h t e l Power C o r p o r a t i o n were n o t e n t i t l e d t o c e r t a i n exemptions t h a t may o r may n o t have been allowed by t h e f e d e r a l government. T h i s d e t e r m i n a t i o n b r o u g h t a b o u t t h e l e t t e r s e n t i n December 1981, n o t i f y i n g t h e employees of a change of s t a t u s i n t h e i r exemptions. A p p e l l a n t s argue i n t h i s a c t i o n t h a t t h e y a r e n o t c h a l l e n g i n g t h e a u t h o r i t y of t h e Department of Revenue, under proper c i r c u m s t a n c e s , t o withhold from wages f o r t h e a n t i c i p a t e d income t a x l i a b i l i t y of wage e a r n e r s . They acknowledge t h a t both t h e S t a t e and t h e F e d e r a l Government have followed t h i s p r o c e d u r e f o r y e a r s , and it h a s been upheld many times. A p p e l l a n t s a r e c h a l l e n g i n g t h e p r o c e d u r e followed by t h e Department of Revenue; a l t e r e i n g t h e W-4 forms. A p p e l l a n t s a l l e g e t h a t i n s o a l t e r i n g t h e s e forms w i t h o u t p r o p e r n o t i c e , t h e i r r i g h t s u n d e r t h e F i f t h Amendment were v i o l a t e d . A p p e l l a n t s c i t e Akhtar v. Van D e Wetering (Mont. 1 9 8 2 ) , 642 P.2d 149, 39 St.Rep. 470, and Schend v. Thorson ( 1 9 7 6 ) , 170 Mont. 5, 549 P.2d 809. N e i t h e r c a s e is on p o i n t w i t h t h e problem p r e s e n t e d h e r e and w i l l n o t be f u r t h e r d i s c u s s e d . S e c t i o n 15-30-202, MCA, p r o v i d e s t h a t e v e r y employer making a payment of wages, s h a l l w i t h h o l d f rom t h e wages " a t a x determined i n accordance w i t h t h e w i t h h o l d i n g t a x t a b l e s which s h a l l be p r e p a r e d and i s s u e d by t h e department." The s t a t u t e c l e a r l y g i v e s t h e D e p a r t m e n t o f Revenue t h e a u t h o r i t y t o d e t e r m i n e t h e amount of w i t h h o l d i n g t a x through c e r t a i n t a x t a b l e s . Answering t h e problem o f due p r o c e s s i n t h i s t a x c o l l e c t i o n f i e l d , due p r o c e s s is n o t o f f e n d e d i f t h e p a r t y c o n t e s t i n g t h e t a x e s is a f f o r d e d an o p p o r t u n i t y t o c h a l l e n g e t h e c o l l e c t i o n of a t a x a t any t i m e b e f o r e a c o n c l u s i v e judgment. See, G a l l u p v. Schmidt ( 1 9 0 2 ) , 183 U.S. 300, 22 S.Ct. 162, 46 L.Ed 207. S t a t e c o u r t s have c o n s t r u e d t h i s r u l e t o mean t h a t a taxpayer is n o t d e p r i v e d of h i s p r o p e r t y w i t h o u t due p r o c e s s of law i f he h a s an o p p o r t u n i t y t o q u e s t i o n t h e v a l i d i t y of t h e t a x a t some s t a g e i n t h e p r o c e e d i n g s . See, S t a t e ex r e 1 Douglas v. S t a t e Board of E q u a l i z a t i o n and Assessment ( 1 9 7 9 ) , 205 Neb. 130, 286 N.W.2d 729; Chicago S h e r a t o n Corp. v. Zaban ( 1 9 7 8 ) , 71 I11.2d 8 5 , 373 N.E.2d 1318. Even if the State has seized the property for payment of taxes, it has been held constitutionally sound to postpone the opportunity for a hearing until after payment of delinquent taxes. Peters v . Sjoholm (1981), 95 'vJash.2d 871, 631 P.2d 937, cert denied, 455 U.S. 914, 102 S.Ct. 1267, 71 L.Ed.2d 455; Fuentes v. Shevin (1972), 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556. Here, appellants had the opportunity to challenge the number of exemptions allowed and their payment of state income tax through the tax refund procedure set forth in section 15-30-149, MCA. Such a procedure satisfies due process requirements since the appellants were given the opportunity through a hearing, if necessary, to contest this amount of taxes due. As noted above, in tax cases due process does not require that appellants receive notice and hearing prior to the withholding. Appellants have the opportunity to contest the validity of the Department's administrative actions and the amount of the withholding through exhaustion of the administrative remedies in the refund procedures. As long as they are afforded this opportunity, due process has been fulfilled. Following the hearing, the trial court held that there were no genuine issues of fact before it. Since appellants had notice and opportunity to address the issue of due process, summary judgment was proper and was granted under the authority of Hereford v. Hereford (1979), 183 Mont. 104, 598 P.2d 600, and Rule 56(c), M.R.Civ.R. The judgment of the District Court is affirmed. We concur : 2 4 4. "&&A Chief Justice