Opinion ID: 2831600
Heading Depth: 2
Heading Rank: 1

Heading: refunds under article ii, section 40

Text: First, AUTO contends that article II, section 40 refunds are limited to cases where the tax was paid by a taxpayer who did not owe it. While this is an interesting question, no Washington case has found such an implicit constitutional requirement. Tiger Oil does not establish that proposition. In relevant part, the Court of Appeals was considering a provision of chapter 82.38 RCW that granted interest on certain refunded taxes that were erroneously paid. Tiger Oil Corp., 88 Wn. App. at 937 (citing RCW 82.38.180(3)). The Tiger Oil court had no occasion to consider the deep nature of refunds under article II, section 40. Nor did the other cases called to our attention, WOHVA, 176 Wn.2d 225, and Northwest Motorcycle Ass 'n v. 16 Automotive United Trades Org. v. State, No. 89734-4 Interagency Committee for Outdoor Recreation, 127 Wn. App. 408, 110 P.3d 1196 (2005). More importantly, AUTO has not established that the tribes were legally obligated to pay the tax outside of their contractual agreement to do so. Thus, a factual predicate for our consideration of this issue is not present. Whether the legislature has overcome tribal immunity turns on whether the legal incidence falls on the tribe. Chickasaw Nation, 515 U.S. at 458-59. This was not meaningfully briefed or considered at the trial court level, squarely presented as an issue for review, or argued in the briefs. We leave for another day, with the proper parties, whether the State successfully moved the legal incidence of the tax away from the tribal retailers. Thus, we treat AUTO's assertion that the legal incidence of the tax has moved off of the tribal reservation as not proved and leave for another day whether a refund must be based on taxes paid when not owed. Second, AUTO argues that the disbursements to the tribes are not refunds because they do not provide a sufficient targeted and substantial benefit to the taxpayers who paid the tax. This seems to be predicated on the belief that the refund must benefit the class of taxpayers who paid the tax, rather than the taxpayers who bought the tax burdened fuel. While this is not a proposition of law that has been squarely examined in our case law, we conclude our case law does not support it. Under the tax schema in place at the time of both 17 Automotive United Trades Org. v. State, No. 89734-4 WOHVA and Northwest Motorcycle, the taxes would have (or, at least, should have) been paid up the distribution chain and passed on to users who may or may not have owed it. Former RCW 82.36.035 (2005); former RCW 82.36.020 (1983). The courts did not consider whether the refunds benefited the class of those higher up the distribution chain who were legally obligated to pay the tax; the court considered whether the refunds benefited the class of those who purchased tax burdened fuel. WOHVA, 176 Wn.2d at 228-29; Nw. Motorcycle, 127 Wn. App. at 414-15. Analogously, here, the refunds were given to the tribes who successfully argued in federal court albeit under an earlier version of our taxing schema that they did not owe the tax and yet purchased tax burdened fuel. Tribal Fuel Tax Agreement Report, supra, at 2; Squaxin Island Tribe, 400 F. Supp. 2d at 1262. The refunds were paid to tribal governments under contracts that limited their use to various government purposes. That is sufficient targeting. We find the refunds to the tribes sufficiently benefit the affected taxpayers. The State also provides little controlling helpful authority on the nature of refunds, but it has the benefit of the legislature's plenary authority to legislate, the presumption of constitutionality, and the plain language of the constitution that allows [r]efunds authorized by law for taxes paid on motor vehicl~ fuels, WASH. CONST. art. II,§ 40(d). AUTO has not established that the refunds to the tribes under agreements executed pursuant to RCW 18 Automotive United Trades Org. v. State, No. 89734-4 82.36.450(1) and related statutes are not refunds for the purposes of article II, section 40. We find that the disbursements to the tribes under RCW 82.36.450 are refunds as contemplated by article II, section 40(d).