Opinion ID: 835098
Heading Depth: 3
Heading Rank: 1

Heading: ORS chapter 307's relationship to the central assessment scheme

Text: The department's first theory is that certain contextual clues in the statutory scheme reveal that the legislature did not intend the business inventory exemption to apply to centrally assessed property: (1) inventories of centrally assessed taxpayers are expressly assessable; and (2) the business inventory exemption statute neither expressly references the central assessment statutes, nor is it part of the central assessment scheme. As we explain below, none of the department's propositions is convincing. According to the department, the fact that the legislature expressly included inventories as property that is assessable under ORS 308.510(1) demonstrates that the legislature did not intend to exempt that property from taxation. The department's contention on that point is necessarily premised on its view that assessment is synonymous with taxation. That is, the department urges that [a]ll property listed in ORS 308.510(1) is taxable under the central assessment statutes, if used or held by a company in a business designated as centrally assessed under ORS 308.515. Because the term inventories is included in the scope of centrally assessed property, the department contends inventories are, in turn, taxable. Taxpayer, on the other hand, argues that it is irrelevant whether inventories [are] included in the scope of property that is centrally assessed, because that merely determines how the property is to be assessed ( i.e., centrally or locally), not whether it is taxed. We decline to engage in the complicated and nuanced analysis of whether and when assessment is taxation. That is so, because, even if we were to agree with the department that, as a general rule, property that is assessed is ultimately taxed, the legislature has clearly demonstrated that there are express exceptions. That is, some property expressly assessable under ORS 308.510(1) (all property used or held by a company under ORS 308.515(1) required to be centrally assessed) is exempt from taxation. See, e.g., ORS 308.558(5) (exempting aircraft of foreign-owned carriers); ORS 308.559(2)(a) (exempting aircraft undergoing major work); ORS 308.665(1) (exempting private railroad cars undergoing major work). Accordingly, the department's contention is refuted by the statutory scheme itself. [10] The department next asserts that when the legislature provides a tax exemption for centrally assessed property, it does so only by either codifying the exemption within the central assessment scheme ( i.e., ORS 308.505 to 308.665) or by expressly referencing the central assessment statutes. According to the department, because the business exemption statute meets neither criterion, it does not apply to centrally assessed taxpayers. We disagree with the department's premises and, therefore, with its conclusions. We first disagree with the department's contention that, when the legislature has provided a tax exemption for centrally assessed taxpayers, it has done so only within the central assessment statutory scheme. True, the central assessment statutes do contain provisions that exempt centrally assessed property from taxation, as well as provisions that designate certain property as not centrally assessable. See, e.g., ORS 308.558(5) (exempting aircraft of foreign-owned carriers); ORS 308.559(2)(a) (exempting aircraft undergoing major work); ORS 308.665(1) (exempting private railroad cars undergoing major work); ORS 308.510(1) (excluding certain intangible property from central assessment); ORS 308.515(3) (excluding specific property from central assessment  e.g., property of interstate ferries). However, those provisions, by their terms, apply only to centrally assessed property, and not to locally assessed property. See ORS 308.510(1) (intangible personal property subject to central assessment); ORS 308.515(1) (property of air transportation, water transportation, and private railcar transportation companies subject to central assessment). It makes particular sense for the legislature to include them in the central assessment scheme because, as a practical matter, they apply to nothing else. The fact that the legislature has included tax exemptions for centrally assessed property in the central assessment scheme thus does not foreclose the possibility that it has and also would do so through the exemption and taxation provisions in ORS chapter 307. Rather, an exemption that applies more generally to both locally and centrally assessed property would more appropriately be located in ORS chapter 307  a chapter of general applicability. To the extent that the department suggests that ORS chapter 307 and the central assessment statutes are two separate schemes of taxation  in addition to separate schemes for assessment  we further disagree. The legislature has expressly differentiated the assessment processes for centrally assessed and locally assessed property. See ORS 308.005-308.343 (general assessment scheme); ORS 308.505-308.665 (central assessment scheme); D.R. Johnson Lumber Co., 318 Or. at 335-36, 866 P.2d 1227 (explaining the provisions of general applicability and the particular assessment schemes in ORS chapter 308). ORS chapter 307, on the other hand, is not about assessment at all. It is a chapter pertaining to taxation and exemption, and contains no provision limiting its application to locally assessed taxpayers. Thus, ORS chapter 307 is a chapter of general applicability. At the very least, if the legislature intended to create a separate system of taxation and exemption for centrally and locally assessed taxpayers, it has neither declared as much nor structured the statutes in that way. We acknowledge that, in certain circumstances, the legislature has expressly treated the taxation and exemption of the two categories of taxpayers differently. See, e.g., ORS 307.030(2) (taxing intangible personal property of centrally assessed taxpayers and exempting it for all others). [11] But that fact is further evidence that the taxation and exemption provisions in ORS chapter 307 generally encompass centrally assessed taxpayers, because the legislature has demonstrated that it knows how to expressly exclude centrally assessed taxpayers from those provisions when it opts to do so. Because ORS 307.400 does not expressly remove centrally assessed property from its reach, the most natural conclusion to draw is, as we have described, that the legislature intended that the exemption apply to centrally assessed and locally assessed taxpayers alike. The department disagrees and asserts that any provisions that expressly remove centrally assessed property from the scope of a statute's exemption are merely redundant. Citing Thomas Creek Lumber and Log Co. v. Dept. of Rev., 344 Or. 131, 138, 178 P.3d 217 (2008), the department argues that the legislature is not prohibited from saying the same thing twice. According to the department, the fact that ORS 307.400 does not contain such a redundant reference does not mean that its exemption must be applied to centrally assessed property. Again, we disagree. In Thomas Creek Lumber and Log Co., this court adopted the department's proposed interpretation of a tax code statute over the taxpayer's: although the department's interpretation    does lead to a redundancy in [one subsection of the statute], taxpayer's interpretation [was] more problematic, because it impermissibly omitted words from and rendered entirely without effect a subsection of another statute. Id. at 137, 178 P.3d 217. The court reasoned that, although the department's interpretation made some words in another statute redundant, nothing prohibits the legislature from saying the same thing twice. Id. at 138, 178 P.3d 217. The court further reasoned that the department's interpretation was preferable, because it would `give effect to' more of the `provisions or particulars' of both statutes than [the] taxpayer's proposed interpretation. Id. (citing ORS 174.010). Contrary to the department's position, Thomas Creek Lumber and Log Co. does not stand for the broad principle that an interpretation rendering provisions of a statute redundant is generally permissible. The general rule is that this court interprets statutes to give effect to all provisions. See ORS 174.010 (where there are several provisions or particulars such construction is, if possible, to be adopted as will give effect to all); Union Pac. R.R. Co. v. Bean, 167 Or. 535, 549, 119 P.2d 575 (1941) (a construction of a statute that renders certain provisions unnecessary will not be adopted by the court, and it should not be presumed that any provision is redundant or useless). Thomas Creek Lumber and Log Co. does not conflict with that general rule. Rather, it stands for the more modest proposition that an interpretation rendering a provision redundant is preferable when it gives effect to more provisions or particulars of the applicable statutes than would some other interpretation. The department suggests that that would be the case here, arguing that taxpayer's proposed interpretation omits and renders ineffective the substantive definition of assessable property in the form of `inventories,' `appliances,' `merchandise,' and `all other goods' in ORS 308.510(1). As already noted, however, 557 Or. at 552-54, ___ P.3d at ___-___, property may be both centrally assessed and exempt from taxation. Thus, taxpayer's proposed construction would not render those provisions inoperable. Moreover, even were we to assume, arguendo, that taxpayer's proposed interpretation would render ineffective the provision in ORS 308.510(1) requiring assessment of inventories, the department's proposed interpretation would render several more provisions  the multiple provisions in ORS chapter 307 removing centrally assessed taxpayers from the statutes' effect  useless. Accordingly, the department's proposed construction is not preferable under the circumstances. We also disagree with the department that, when the legislature provides a tax exemption for centrally assessed property outside the central assessment scheme, the legislature uniformly does so by expressly cross-referencing the central assessment statutes. That contention is foreclosed by the existence of exemption statutes in ORS chapter 307 that are silent as to central assessment, but that necessarily apply to centrally assessed property. For example, as the department concedes, ORS 307.126 (exempting Federal Communications Commission licenses) applies to the property of centrally assessed taxpayers, even though the statute does not refer expressly to those taxpayers or otherwise reference the central assessment statutes. See ORS 308.515(1)(h) ([c]ommunication companies subject to central assessment). See also ORS 307.205 (exempting real property owned by a railroad that is temporarily being put to a public alternate transportation use). [12] Based on the foregoing analysis of the text and context, we conclude that the legislature did not intend to limit the business inventory exemption statute, ORS 307.400, to locally assessed taxpayers.