Case Title: HECKERT v. STATE BOARD OF EQUALIZATION, DEPT. OF REVENUE

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2000-12-19T00:00:00Z

Document:
HECKERT v. STATE BOARD OF EQUALIZATION, DEPT. OF REVENUE2000 WY 21015 P.3d 216Case Number: 99-277Decided: 12/19/2000Supreme Court of Wyoming
 
THE ESTATE OF BARBARA K. 
HECKERT, Appellant (Petitioner), v.WYOMING STATE BOARD OF 
EQUALIZATION; and WYOMING DEPARTMENT OF REVENUE, Appellees (Respondents).

Certification from the 
District Court of Laramie County, The Honorable Edward L. Grant, 
Judge.

Thomas N. Long 
of Thomas N. Long, P.C., Cheyenne, Wyoming; and Thomas P. Sweeney of Richards, 
Layton & Finger, P.A., Wilmington, Delaware, Representing 
Appellant.Gay Woodhouse, Attorney General; Michael L. Hubbard, Deputy 
Attorney General; and Cathleen D. Parker, Assistant Attorney General, Cheyenne, 
Wyoming, Representing Appellees.

Before 
LEHMAN, C.J., and THOMAS, MACY,* GOLDEN, and HILL, 
JJ.

* Retired June 2, 
2000.

THOMAS, 
Justice.

[¶1] The issue 
posed is the authority of the State of Wyoming to impose a transfer tax on the 
Wyoming estate of a decedent when the entire Wyoming estate is deducted from the 
federal gross estate in determining the federal taxable estate. The Wyoming 
Department of Revenue (the Department) imposed a transfer tax upon the Estate of 
Barbara K. Heckert (the Estate) in the amount of $30,283.95. That figure was 
computed by applying to the maximum federal estate tax credit for state 
inheritance or transfer taxes a ratio derived from the portion of the gross 
estate situate in Wyoming as compared to the total gross estate for purposes of 
the federal estate tax. A corollary question is presented concerning the 
application of the phrase in Wyo. Stat. Ann. § 39-6-810 (Michie 1997) "without 
increasing the aggregate of federal and state death, transfer or succession 
taxes upon any estate." Another argument asserts the unconstitutionality of the 
statute. The Estate appeals the transfer tax imposed by the Department and 
upheld by the Wyoming State Board of Equalization (the Board). The language of 
the Wyoming statute imposes a transfer tax in "the ratio which the Wyoming gross 
estate bears to the value of the federal gross estate * * *," and justifies the 
imposition of the Wyoming tax. Wyo. Stat. Ann. § 39-6-812 (Michie 1997). We hold 
that the Department correctly applied the relevant statutes in determining the 
transfer tax on the Estate. We affirm the Findings of Fact, Conclusions of Law, 
Decision and Order of the Board.

[¶2] The Brief 
of Appellant, filed on behalf of the Estate, presents this statement of the 
issue:

Whether the State of 
Wyoming is entitled to a portion of the federal state death tax credit when the 
Wyoming property does not give rise to any of the federal estate tax liability 
because it qualifies for the marital deduction for federal estate tax purposes 
and thus is not included in the taxable estate for federal estate tax 
purposes.

[¶3] The Brief 
of Appellee, filed on behalf of the Department, states the issues 
as:

I. Under Wyoming law is 
the state entitled to impose an estate tax computed as a portion of the federal 
state death tax credit as a result of the decedent owning property in the State 
of Wyoming at the time of her death?

II. Was the State Board 
of Equalization correct in its conclusion of law that the federal marital 
deduction provided by 26 U.S.C. § 2056 is to be deducted from the federal gross 
estate for federal estate tax purposes and not the Wyoming gross estate for 
state tax purposes?

III. Has the petitioner 
carried its burden of proof?

[¶4] Barbara 
Heckert, a resident of Pennsylvania, owned property in Wyoming at the time of 
her death on August 31, 1995. The Wyoming property consisted of both real and 
tangible personal property owned in joint tenancy with her husband with right of 
survivorship, and a separately owned parcel of property. Her will devised and 
bequeathed all of her interests in real property, and all her tangible personal 
property, to her husband. Upon her death, her half of the property owned in 
joint tenancy passed to her husband by operation of law.

[¶5] The 
Department initially imposed a transfer tax in the amount of $41,706.02, but 
later amended the amount of $30,283.95. The Estate appealed the transfer tax, 
asserting that Wyoming was not entitled to any tax attributable to the federal 
estate tax credit for state death taxes. Because the facts were not in dispute, 
the Board did not conduct a hearing; but, instead, received briefs from the 
parties. The Board issued its Findings of Fact, Conclusions of Law, Decision and 
Order on June 14, 1999, in which the Board affirmed the Department's imposition 
of estate tax in the amount of $30,283.95. The Estate filed a Petition for 
Review of Administrative Action in the district court, and, pursuant to a joint 
motion by both parties, the district court certified the case to this Court 
under the provisions of W.R.A.P. 12.09(b).

[¶6] In cases 
certified to this Court pursuant to W.R.A.P. 12.09(b), we apply the same 
standards for review that would have pertained in the district court. U S West 
Communications, Inc. v. Wyoming Public Service Com'n, 989 P.2d 616, 618 (Wyo. 
1999). Those criteria are found in Wyo. Stat. Ann. § 16-3-114(c)(ii) (Lexis 
1999), which provides that the reviewing court shall:

(ii) Hold unlawful and 
set aside agency action, findings and conclusions found to 
be:

(A) Arbitrary, 
capricious, an abuse of discretion or otherwise not in accordance with 
law;

(B) Contrary to 
constitutional right, power, privilege or immunity;

(C) In excess of 
statutory jurisdiction, authority or limitations or lacking statutory 
right;

(D) Without observance of 
procedure required by law; or

(E) Unsupported by 
substantial evidence in a case reviewed on the record of an agency hearing 
provided by statute.

[¶7] We must 
affirm an agency's findings of fact that are supported by substantial evidence, 
U S West Communications, Inc., 989 P.2d  at 618, and facts that are not disputed 
are treated as properly supported. We apply de novo review to an agency's 
conclusions of law, and affirm them only if the agency correctly applied the 
appropriate rule of law to the facts. Id. The burden of persuasion that the 
agency failed to apply the law correctly is assigned to the party challenging 
the ruling, in this case, the Estate.

[¶8] The actions 
of the agency are presumed to be correct, and it is the appellant's burden to 
show that the agency did not comply with the law. Butts v. Wyoming State Bd. of 
Architects, 911 P.2d 1062, 1065 (Wyo. 1996).

[¶9] Frank v. 
State By and Through Wyoming Bd. of Dental Examiners, 965 P.2d 674, 677 (Wyo. 
1998).

[¶10] The 
parties to this case do not dispute the facts, and they agree that the 
applicable law is set forth in Wyo. Stat. Ann. §§ 39-6-810 and 39-6-812. Those 
statutes provide:

W.S. 39-6-810 through 
39-6-813 are intended to take full advantage for Wyoming of the credit which is 
allowed as a deduction from the federal estate tax liability of estates of 
decedents, for state taxes upon property or transfer thereof by reason of death, 
without increasing the aggregate of federal and state death, transfer or 
succession taxes upon any estate.

Wyo. Stat. Ann. 
§ 39-6-810.

[¶11] A tax is 
imposed on the transfer of property constituting the Wyoming gross estate of 
every decedent. The amount of tax is the maximum state death tax credit allowed 
to a Wyoming estate as a credit against federal estate taxes under the laws of 
the United States for estate, inheritance, legacy and succession taxes actually 
paid to the several states times the ratio which the Wyoming gross estate bears 
to the value of the federal gross estate, or the maximum state death tax credit 
allowable to a Wyoming gross estate, whichever is greater.

Wyo. Stat. Ann. 
§ 39-6-812.

[¶12] The 
parties do not agree on the meaning and application of the controlling statutes, 
making a review of our rules of statutory construction 
pertinent:

Recently, in Flores v. 
Flores, 979 P.2d 944, 946 (Wyo. 1999), we discussed the standard of review for 
questions of statutory interpretation:

"Statutory interpretation 
is a question of law, so our standard of review is de novo. . . . If the 
conclusion of law is in accordance with the law, we affirm it; if it is not, we 
correct it." May v. May, 945 P.2d 1189, 1191 (Wyo. 1997) (citing Parker Land and 
Cattle Co. v. Wyoming Game and Fish Comm'n, 845 P.2d 1040, 1042 (Wyo. 
1993)).

[¶13] "We 
endeavor to interpret statutes in accordance with the Legislature's intent. We 
begin by making an `inquiry respecting the ordinary and obvious meaning of the 
words employed according to their arrangement and connection. § Parker Land and 
Cattle Company v. Wyoming Game and Fish Comm'n, 845 P.2d 1040, 1042 (Wyo. 1993) 
(quoting Rasmussen v. Baker, 7 Wyo. 117, 133, 50 P. 819, 823 (1897)). We 
construe the statute as a whole, giving effect to every word, clause, and 
sentence, and we construe together all parts of the statute in pari 
materia."

[¶14] Cargill v. 
State, Dept. of Health, Div. of Health Care Financing, 967 P.2d 999, 1001 (Wyo. 
1998) (quoting Wyoming Workers' Safety and Compensation Div. v. Bruhn, 951 P.2d 373, 376 (Wyo. 1997)).

[¶15] Fontaine 
v. Board of County Com'rs of Park County, 4 P.3d 890, 895 (Wyo. 
2000).

[¶16] The 
resolution of this case depends upon a determination of the amount of the state 
death tax credit that is allowed, or allowable, to Heckert's gross estate in 
Wyoming. The Wyoming tax at issue here is known as a "pick up" tax. The amount 
of the tax is computed as the portion of the state death tax credit, provided 
for in 26 U.S.C. § 2011 that is allowed or allowable to the Wyoming gross estate 
of the decedent. In other words, the state imposes, or "picks up," a tax 
proportional to the credit that the federal government allows against the 
federal estate tax. The state death tax credit is computed by applying statutory 
rates to the decedent's federal adjusted taxable estate, which is defined in 26 
U.S.C. § 2011 as the federal taxable estate minus $60,000.00. The federal 
taxable estate is the federal gross estate minus deductions. All property 
bequeathed to a surviving spouse, as well as the decedent's share of jointly 
owned property, qualifies for the marital deduction1 and is deducted from the federal 
gross estate in calculating the federal taxable estate.

[¶17] The method 
prescribed by the statutes for arriving at the credit for state death taxes is 
succinctly explained in this way in a case relied upon by the 
Estate:

Section 2011 provides for 
a credit against the Federal estate tax for State death taxes paid in respect of 
any property included in the gross estate. Section 2011(b) limits the amount of 
the available credit to specified percentages of the adjusted taxable estate. 
The adjusted taxable estate is determined by reducing the taxable estate by 
$60,000. Sec. 2011(b). The taxable estate is determined by deducting from the 
value of the gross estate the deductions provided for in sections 
2053-2056.

Estate of Owen 
v. C.I.R., 104 T.C. 498, 514 (U.S. Tax Ct. 1995) (footnote 
omitted).

[¶18] Pursuing 
that method in the case at hand, the federal gross estate consisted of all the 
property Heckert owned at the time of her death, including her half of the 
property owned jointly with her husband. Her property in Wyoming consisted of 
real property and tangible personal property, most of which was jointly owned 
with her husband. Heckert bequeathed her separately owned Wyoming property, and 
her share of their jointly owned Wyoming property, to her husband. All of 
Heckert's Wyoming property was included in the federal gross estate in computing 
her federal taxable estate.

[¶19] In 
endeavoring to meet the assigned burden of persuasion that, in imposing the 
transfer tax, the Department and the Board failed to act in accordance with law 
or in excess of statutory right, the Estate presents three arguments. First, the 
Estate contends that imposition of the transfer tax is proscribed by the 
language of Wyo. Stat. Ann. § 39-6-810 that provides "without increasing the 
aggregate of federal and state death, transfer or succession taxes upon any 
estate." This argument relies on the fact that the Estate paid estate taxes in 
Pennsylvania, which exceeded the federal estate tax credit. The Estate then 
argues that because the Wyoming property was not included in the federal taxable 
estate, it did not contribute to the federal estate tax credit. Finally, the 
Estate asserts that imposition of the Wyoming transfer tax violates the due 
process clause of the Fourteenth Amendment to the Constitution of the United 
States because the effect is to impose a tax on property situate in 
Pennsylvania.

[¶20] There is 
no question that the clear and unambiguous language of the statute imposes the 
transfer tax on the gross estate, and it is limited by the ratio of the Wyoming 
gross estate to the federal gross estate. The reference to the Wyoming gross 
estate is in the context of the federal gross estate and captures the amount of 
the Wyoming gross estate included in the federal gross estate as the property 
subject to the transfer tax. The definition in Wyo. Stat. Ann. § 39-6-811(a)(v) 
(Michie 1997) requires that interpretation:

"Wyoming gross estate" 
means the value of the federal gross estate of a decedent excluding the value of 
real or tangible personal property which has an actual situs outside Wyoming at 
the time of death of the decedent, and excluding the value of intangible 
personal property owned by a decedent not domiciled in 
Wyoming.

[¶21] The 
intention of the legislature to impose the tax upon the Wyoming gross estate in 
proportion to the total federal gross estate could not have been expressed more 
clearly. The statute is silent as to any adjustments on that figure parallel to 
the federal estate tax deductions, and the tax is limited to the 
amount

[¶22] allowed to 
a Wyoming estate as a credit against federal estate taxes under the laws of the 
United States for estate, inheritance, legacy and succession taxes actually paid 
to the several states times the ratio which the Wyoming gross estate bears to 
the value of the federal gross estate, or the maximum state death tax credit 
allowable to a Wyoming gross estate, whichever is greater.

[¶23] Wyo. Stat. 
Ann. § 39-6-812. The Wyoming tax is imposed on the Wyoming gross estate without 
any adjustment that might prevent its inclusion in the federal taxable estate. 
There is no ambiguity in this statutory language, and we eschew the suggestion 
that we legislate in that regard.

[¶24] We are 
informed, with respect to this issue, by the decision of this Court in Luman v. 
Resor, 406 P.2d 527, 529 (Wyo. 1965):

We consider first the 
executors' appeal, No. 3409, in which it is argued that the judgment is 
erroneous because it increases the aggregate of Federal and state taxes imposed. 
Emphasis is placed by appellant upon that portion of the title of the Act which 
provided for an additional State inheritance tax "in all cases where the full 
Federal Tax credit is not otherwise collectible"; the last phrase of § 39-338, 
"without increasing the aggregate of federal and state death, transfer or 
succession taxes upon any estate," and § 39-341, "The total federal and state 
inheritance and estate taxes upon any estate, shall not be increased under this 
act * * * above the total amount which would be due without reference hereto." 
No case is cited except Kelsey v. Taft, 72 Wyo. 210, 263 P.2d 135, for the 
unchallenged principle that a tax measure will not be effected by any means 
other than a clear, definite, and unambiguous statement of the legislative 
authority. The argument hinges then upon the unsupported statement that the 
Wyoming legislature in specifically mentioning the death, transfer, succession, 
inheritance, and estate taxes in §§ 39-338 and 39-341 emphasized that it was 
referring to "all state death taxes, by whatever state imposed," and not 
referring to State death taxes imposed by Wyoming. On the other hand, the board 
urges that the word "state" refers to Wyoming only. In so doing, it places 
reliance upon Simco v. Shirk, 146 Tex. 259, 206 S.W.2d 221, which cites State v. 
Wiess, 141 Tex. 303, 171 S.W.2d 848, 147 A.L.R. 460; but, as the executors 
observe, that case is not parallel to our situation since the Texas statute 
specifically provided for circumstances wherein an estate was situated partly 
within Texas and partly outside. However, the trial court's decision was, 
unmistakably, that it considered "state" in these additional tax statutes 
synonymous with "Wyoming," and we find nothing in the executors' brief or 
argument which is sufficient to overturn that logical 
holding.

[¶25] (Footnote 
omitted.) It is clear that the phrase "without increasing the aggregate of 
federal and state death, transfer or succession taxes upon any estate" included 
in Wyo. Stat. Ann. § 39-6-810 does not encompass death taxes imposed in other 
jurisdictions. It is limited to the aggregate of the federal tax and the Wyoming 
tax. If this were not so, Wyoming probably never could share in the federal 
estate tax credit for state taxes except in those situations in which the 
statutory formula of the other jurisdiction was identical to that in Wyoming. We 
perceive no legislative intent to so limit the Wyoming 
tax.

[¶26] In 
structuring its second argument, the Estate relies upon Estate of Owen, 104 T.C. 498. This second argument posed by the Estate leads to a substitution of the 
words "taxable estate" for the words "gross estate" in Wyo. Stat. Ann. § 
39-6-812. The argument is that since the Wyoming estate was not included in the 
federal taxable estate, it made no contribution to the federal estate tax credit 
for state taxes. That claim effectively is foreclosed by this language of the 
United States Tax Court:

Under section 2011(a), a 
condition for allowance of the credit for State death taxes is that the State 
death taxes have been paid "in respect of any property included in the gross 
estate." The amounts of the 1984 and 1986 gifts are not properly includable in 
decedent's gross estate. It follows that no credit is allowable for the Kansas 
inheritance tax imposed with respect to the amounts of these gifts. * * 
*

* * 
*

[¶27] Thus, 
under the statutory scheme, because the amounts of the gifts are not includable 
in the gross estate, it follows that they are not includable in the taxable 
estate, and so not includable in the adjusted taxable estate, and so not taken 
into account under section 2011(b) in determining the amount of the maximum 
credit allowable for State death taxes.

[¶28] Estate of 
Owen, 104 T.C.  at 516-17. In its argument, the Estate concedes that the property 
in Wyoming was included in the federal gross estate, and that fact clearly 
distinguishes Estate of Owen in which the property never was included in the 
gross estate. The proposition that property that is deducted from the gross 
estate after being included is not includable in the computation cannot be 
derived from Estate of Owen without straining the ratio decidendi of that 
court.

[¶29] As to the 
third argument posed by the Estate, the language of the Wyoming statute defining 
the "Wyoming gross estate" clearly limits the reach of the statute to Wyoming 
real and tangible personal property. The Estate relies upon language out of 
context in Luman, but the earlier quotation from that case is more informative 
on this issue. The clear language of the statute cannot be read to include any 
property in Pennsylvania in the formula for computing the Wyoming tax. The 
statute would only be unconstitutional, as asserted by the Estate, if it 
included Pennsylvania property in the computation formula, and it does 
not.

[¶30] We hold 
that the Estate has failed to sustain its burden of persuasion in this Court 
just as it failed to sustain its burden before the Board. The Findings of Fact, 
Conclusions of Law, Decision and Order of the State Board of Equalization is 
affirmed.

Footnotes

1 26 U.S.C. § 
2056.