Case Name: UNITED STATES of America, the Zia Company, and Los Alamos Constructors, Inc., Appellants, v. BUREAU OF REVENUE and Commissioner of Revenue, State of New Mexico, Appellees
Court: Court of Appeals of New Mexico
Jurisdiction: New Mexico
Decision Date: 1975-01-08
Citations: 87 N.M. 164
Docket Number: No. 1217
Parties: UNITED STATES of America, the Zia Company, and Los Alamos Constructors, Inc., Appellants, v. BUREAU OF REVENUE and Commissioner of Revenue, State of New Mexico, Appellees.
Judges: SUTIN, J., concurs.
Reporter: New Mexico Reports
Volume: 87
Pages: 164–170

Head Matter:
531 P.2d 212
UNITED STATES of America, the Zia Company, and Los Alamos Constructors, Inc., Appellants, v. BUREAU OF REVENUE and Commissioner of Revenue, State of New Mexico, Appellees.
No. 1217.
Court of Appeals of New Mexico.
Jan. 8, 1975.
John F. McNett, Victor R. Ortega, James B. Grant, T. B. Keleher, Keleher & McLeod, Albuquerque, Scott P. Crampton, Meyer Rothwacks, Bennet N. Hollander, John J. McCarthy, Charles E. Stratton, George F. Lynch, Crombie J. D. Garrett, Washington, D. C., for appellants.
David L. Norvell, Atty. Gen., John C. Cook, Sp. Asst. Atty. Gen., Santa Fe, for appellees.

Opinion:
OPINION
WOOD, Chief Judge.
The Bureau of Revenue issued tax assessments against two United States Atomic Energy Commission contractors — Zia (The Zia Company) and LACI (Los Ala-mos Constructors, Inc.). The assessments were for the period January 1, 1966 through June 30, 1967. The taxes were as sessed under the Emergency School Tax Act and the Compensating Tax Act as those Acts were worded during the assessment period. The United States is a party because the contracts with Zia and LACI obligate the United States to provide funds necessary to defray all costs incurred in the performance of the contracts, including taxes. The United States, Zia and LACI protested the assessments. The Commissioner overruled the protests and held that the assessments were valid. The United States, Zia and LACI appeal directly to the Court under § 72-13-39, N.M.S.A.1953 (Repl.Vol. 10, pt. 2, Supp.1973). Various issues are raised but two are dispositive. They are: (1) liability for the emergency school tax under the "fixed fee" portion of the contracts; and (2) estoppel.
Liability for Tax on the Fixed Fee
The contracts provided that Zia and LACI were to receive a fixed fee for their services. The United States, Zia and LACI have conceded that the emergency school tax assessed on the basis of the fixed fee, together with interest, was due and owing.
Estoppel
Between 1947 and 1961 there were eight written opinions pertaining to liability for either school or compensating taxes in situations similar to the factual situation in this appeal. The opinions are variously signed — some were by the Commissioner of Revenue, some by attorneys for the Bureau of Revenue, and one by an Assistant Attorney General. The opinions are directed either to Zia, the Atomic Energy Commission or to the Director of the School Tax Division. The opinions are to the effect that neither school tax nor compensating tax would be owed under the facts of this case.
It is stipulated that: "The failure of Zia and LACI to pay any of the taxes assessed was pursuant to and in reliance on the . [written opinions]."
We agree with the Bureau that the estoppel provisions of § 72-13-73, N.M.S.A. 1953 (Repl.Vol. 10, pt. 2, Supp.1973) are not applicable. See Dona Ana Develop. Corp. v. Commissioner of Revenue, 84 N. M. 641, 506 P.2d 798 (Ct.App.1973). This, however, does not dispose of the estoppel issue.
The Tax Administration Act contains a savings clause. Laws 1965, ch. 248, § 79, reads:
"The Tax Administration Act does not apply to taxes the liability for payment of which was incurred prior to its effective date, or to any act done prior thereto. The payment, collection or enforcement of such taxes is to be accomplished according to the provisions of appropriate statutes previously in force and in every manner as though the Tax Administration Act had not been enacted."
The Tax Administration Act was effective on January 1, 1966. Laws 1965, ch. 248, § 78. Since the assessment was subsequent to the effective date, we have jurisdiction to review the validity of the assessment on direct appeal. Since the time period of the assessment was subsequent to the effective date, we are not concerned with the portion of the savings clause dealing with tax liability incurred prior to the effective date of the Tax Administration Act. See Transamerica Leasing Corp. v. Bureau of Revenue, 80 N.M. 48, 450 P.2d 934 (Ct.App.1969).
Our concern is with prior acts. The written opinions were acts done prior to the effective date of the Tax Administration Act. As we read the savings clause, the effect of those prior acts on the assessments in this case is to be determined on the basis of prior statutes and without regard to the estoppel provisions of § 72-13-73, supra.
The prior statute is § 72-16-47, N.M.S. A.1953 (Repl.Vol. 10, pt. 2). That act provides for an equitable estoppel against "the state, its officers, departments or divisions" upon a showing "that said taxes or any part thereof were not paid pursuant to a written rule or regulation of the school tax division of the bureau of revenue which rule or regulation shall have been, at the time of said action or suit, in effect for a period of not less than three [3] years . . .
This section is applicable if the written opinions can be considered "rules" of the School Tax Division of the Bureau of Revenue. "Rule" is not defined in § 72-16-47, supra. Section 72-13-23(B) (2), N.M.S.A.1953 (Repl.Vol. 10, pt. 2, Supp. 1973) states:
"[R]ulings are written statements of the commissioner, of limited application to one or a small number of taxpayers, interpreting the statutes to which they relate, ordinarily issued in response to a request for clarification of the tax consequences of a specified set of circumstances."
The meaning of "rulings" in § 72-13-23(B)(2), supra, can be considered as the meaning of "rules" in § 72-16-47, supra. In addition, the legislative intent as to the meaning of "rules" can be taken from the preamble to § 72-16-47, supra. See Laws 1949, ch. 101, § 1. The preamble refers to taxpayers who "acted in good faith relying upon the interpretation placed upon said act in good faith by state officials . ." (Our emphasis.) On the basis of the legislative intent expressed in the preamble, the interpretations of state officials acting in good faith can be considered as the meaning of "rules" in § 72-16-47, supra. Compare State ex rel. Malone v. Crile, 34 N.M. 520, 284 P. 762 (1929). Under either of these approaches, we hold that the written opinions in this case were "rules" within the meaning of § 72-16-47, supra.
Excepting the liability for school tax on the "fixed fee," which has been conceded, we hold the Bureau is estopped from collecting the school taxes involved in this case.
Section 72-16-47, supra, applies only to school tax matters. There is no statute providing for estoppel against the State in compensating tax matters. Yet the facts for estoppel in connection with the compensating tax are as strong as the facts pertaining to the school tax. At least four of the written opinions state there is no liability for compensating tax.
We recognize that in the absence of a statute providing for estoppel, generally estoppel will not be applied against the State. See Ross v. Daniel, 53 N.M. 70, 201 P.2d 993 (1949). Yet two New Mexico decisions hold that estoppel should be applied "where right and justice demand it." Silver City Consol. Sch. Dist. No. 1 v. Board of Regents, 75 N.M. 106, 401 P.2d 95 (1965); City of Carlsbad v. Neal, 56 N.M. 465, 245 P.2d 384 (1952). The Bureau repeatedly assured the taxpayers that compensating tax was not to be paid and the taxpayers relied on that assurance. The Bureau's action in seeking to collect the compensating tax raises a question of an unconstitutional change in policy. See Rask v. Board of Bar Examiners, 75 N.M. 617, 409 P.2d 256 (1966); Compare State v. Clark, 79 N.M. 29, 439 P.2d 547 (1968).
The circumstances of this case are such that right and justice require that the Bureau be estopped to collect the compensating tax. We so hold.
We affirm the Commissioner's Decision and Order insofar as it upholds liability for school tax and interest on the "fixed fee" portion of the contracts. We reverse the remainder of the Decision and Order on the basis that the Commissioner erred in refusing to hold the Bureau was es-topped to collect the remainder of the school tax and all of the compensating tax.
It is so ordered.
SUTIN, J., concurs.
HERNANDEZ, J., specially concurs.