NO. 84-53 INTHE SUPREME COURT OF THE STATE 0FMOIilTANA 1984

GALE ABRAMS, etal., Plaintiffsand Appellants,

ELLEN FEAVER, Directorof the Montana Departmentof Revenue, Defendantand Respondent.

APPEAL FROM: DistrictCourtof theFirstJudicial District, Inand forthe Countyof Lewis & Clark, TheHonorableGordonR. Bennett, Judgepresiding.

COUNSEL OF RECORD:

ForAppellants: GeorgeT. Radovich, Billings, Montana

ForRespondent: R. BruceMcGinnis, Dept. of Revenue, Helena, Montana

pSubmittedon Briefs: June 28, 1984 Decided: August 16, 1984

Clerk

### Mr. Justice John Conway Harrison delivered the Opinion of the Court.

This is an appeal froin theDistrictCourt of the First JudicialDistrict, in and for the County of Lewis and Clark, refusing to order a refund of taxes withheld from the appellants1paychecks. 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 FederalW-4 

### forms, and,

even if it has such authority,dueprocess 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 thepurpose of building electrical plants 3 and 4. Just prior to Christmas in 1981, the Department of Revenue notified them by letter, attached totheir checks, that a change had been made in their number of dependents. Part of that letter stated: "If there areany questions, the employee is to notify Betsy Phillips, Field Audit Bureau, Income Tax Division, P.O. Box 5805, Helena, Montana 59604." The appellants had on file with their employers Federal W-4 forms, which they allege were the only forms available for the purpose of declaring the amount of withholding to be taken from their wages. Each of these forms claimed "exempt" status or excess "allowances" which are allowed under federal law. These forms with their alleged exemptions are not given tothe tax department of the State of Montana but are on filewith the employer and the audit system for theDepartment of Revenue. The Department of Revenue annually conducts an audit at the employer's office to check the withholding and tax forms they have on file. In the fall of 1981, during this type of an audit, the State determined that certain employees of theBechtel Power Corporation were not entitled to certain exemptions thatmay or may nothave been allowed by thefederalgovernment. This determinationbroughtabout the letter sent inDecember 1981, notifying the employees of a change of statusintheir exemptions. Appellants argue in this action that they are not challenging the authority of the Department of Revenue, under proper circumstances, to withhold from wages for the anticipated income tax liability of wage earners. They acknowledge that both the State and the Federal Governmenthave followed this procedure for years, and it has been upheld many times. Appellantsarechallenging theprocedure followed by the Department of Revenue; altereing the W-4 forms. Appellants allege that in so altering these forms without proper notice, their rights under the Fifth Amendment were violated. Appellants cite Akhtar v. Van De Wetering (Mont. 1982), 642 P.2d 149, 39 St.Rep. 470, and Schend v. Thorson (1976), 170Mont. 5, 549 P.2d 809. Neither case

### ison point with the problem presented here and will not be further discussed. Section 15-30-202, MCA, provides that every employer making a payment of wages, shallwithhold from thewages "a taxdetermined inaccordance with thewithholding tax tables which shall be prepared and issued by the department." The statute clearly gives the Department of Revenue the authoritytodetermine the amount of withholding tax through certain tax tables. Answering the problem of due process in this tax collection field, due process is not offended if the party contesting thetaxes is afforded an opportunity tochallenge the collection of a tax at any time before a conclusive judgment. See, Gallup v. Schmidt (1902), 183U.S. 300, 22 S.Ct. 162, 46 L.Ed 207. State courts have construed this ruletomean that a taxpayer is notdeprivedof hisproperty without due process of law if he has an opportunity to question the validity of the tax at some stage in the proceedings. See, State ex re1 Douglas 

### v. State Board of Equalization and Assessment (1979),205Neb. 130, 286 N.W.2d 729; Chicago Sheraton Corp. v. Zaban (1978), 71 I11.2d 85,

### 373N.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, 92S.Ct. 1983,32L.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 ahearing, if necessary, to contest this amount of taxesdue. As noted above, in tax cases due process does not require that appellants receive notice and hearing prior to thewithholding. 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 thehearing, the trial courtheld 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),183Mont. 104, 598P.2d 600,and Rule 56(c), M.R.Civ.R. The judgment of the District Court is affirmed.We 

### concur: 

# 24 

# 4."&&A Chief Justice