Opinion ID: 2344070
Heading Depth: 1
Heading Rank: 13

Heading: The statute requiring a statement upon cessation of exempt use

Text: Finally, the County argues it can retroactively tax the aircraft under K.S.A. 79-214 because the owners failed to notify the county appraiser when the exempted property ceased to be used exclusively for the exempt purpose. BOTA agreed with the County and held that the taxpayers were required to file a statement indicating the property was no longer used for an exempt purpose at the time E.N.T. Associates was decided, although it then held that any penalties should be abated due to excusable neglect as permitted by K.S.A. 79-1422(c) because the owners could not foresee that the law would change during the tax years at issue. The district court reversed this rationale, holding instead that the owners were not required to report a change in use when there was never a change in exempt use and a determination of exempt use had been the very subject and nexus of the tax exemption procedure. We agree with the district court and hold that the owners were not required to report a change in use under K.S.A. 79-214. When exempted property ceases to be used exclusively for an exempt purpose the property owners must submit a statement to the county appraiser within 30 days, indicating the property is no longer used for the exempt purpose. If that statement is not timely filed, the property is subject to penalties prescribed in K.S.A. 79-1422. K.S.A. 79-214. But it is important to emphasize that at the time BOTA first entered an order exempting the airplanes under K.S.A. 79-201k First, the owners used the aircraft for their business purposes only (leasing to third parties). Moreover, the parties stipulated that there was never a change in the use of this property between the time of the original proceeding and the grievance hearings, so it is counterintuitive for the County to argue that the property ceased to be used for an exempt purpose. As the district court held, the use of the aircraft continued in the same manner as when BOTA originally held the owners qualified for an exemption. At its core, the reality is simply that the County's understanding of the law changed, so the County is trying now to stretch K.S.A. 79-1422 beyond its intended purpose to reopen a valid, final judgment for these particular taxpayers. In short, issue preclusion prevents the County from retroactively taxing the aircraft for the years in which the owners had a valid exemption order. And neither K.S.A. 79-1427a nor K.S.A. 79-1422 provides a statutory mechanism to reopen the original exemption orders. The judgment of the district court remanding the matter to BOTA with direction to dismiss is affirmed. BEIER, J., not participating. RULON, C.J., and BRUCE T. GATTERMAN, District Judge, assigned. [1]